A customs union goes further than a Free Trade Area and requires its members to implement a common external tariff on imports from outside the Union, whereby the aim is to facilitate goods to move freely throughout the union.
ECONOMIC INTEGRATION: CUSTOMS UNION
An example of a customs union is the established customs union between the European Union and Turkey, which came into effect in 1996.
The customs union offers Turkey improved access to the countries of the European Union. The free circulation of industrial goods and processed agricultural products is guaranteed, there are no more customs duties, and quantitative restrictions such as quotas are prohibited. The customs union involves harmonization of Turkey's commercial and competition policies including intellectual property laws with those of the European Union. A large part of the EU's trade and competition rules is also extended to the Turkish economy.
Another example of a customs union is, notwithstanding its name, Mercosur: Mercado Común del Sur or the Southern Common Market.
Different Forms of Economic Integration: