CIMA BA1 · Chapter 3 · Question 3 of 10
What distinguishes a customs union from a free trade area?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Members of a customs union adopt a common external tariff on imports from non-members
Explanation
In a free trade area, members remove barriers between themselves but each sets its own tariffs on non-members. A customs union adds a common external tariff. Free movement of factors of production is a feature of a common market, and a single currency is a feature of monetary union.
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