In a customs union, what is the effect of adopting a common external tariff and removing internal barriers?

• A. It eliminates trade with non-member states.
• B. It imposes different tariffs on different member states.
• C. It adds extra internal paperwork.
• D. It applies a common external tariff to non-member goods and removes internal barriers, simplifying trade.

Answer: (D)

A customs union brings together two ideas: a single tariff on goods coming from outside the group and the removal of barriers to trade inside the group. When a common external tariff is adopted, every member country charges the same duties on non-member goods, so there’s no multiple levels of protection depending on which member country the goods enter. At the same time, removing internal barriers means goods can move freely across borders within the union, with no internal tariffs or restrictive rules slowing or taxing shipments.

The practical effect is that non-member goods face one uniform tariff when entering anyone in the union, while trade among member countries is streamlined and easier because internal borders no longer impose tariffs or heavy restrictions. This combination greatly simplifies and expands trade within the bloc.

The other options don’t fit: eliminating trade with non-member states isn’t the goal or outcome; harmonizing tariffs eliminates differing charges among members, not imposing different ones; and the aim is to reduce internal paperwork and delays, not add extra procedures.