Question

Customs union advantages and disadvantages

Answer 1

Advantages:
1)  Custom helps to promote the trade between the members and reduce the tariffs.
2) This makes the exporting more easy and more profitable as the products cost becomes more competitive with the products at domestic level.
3)Revenue sharing in custom union provides the additional income which otherwise can't happen due to low trade activity.

Disadvantage:
1) The major disadvantage is that the member countries  have to give up some power for taking action or  sovereignty  
2)The larger countries takes more advantage from the economical conditions because when volume of production increase the cost per unit will automatically decrease. 

Answer 2

A customs union is a kind of a trade bloc. It consists of a group of countries which have agreed to charge the same import duties. They usually permit free trade between themselves.

Advantages

1. Custom unions protect domestic industries.

2. The producers get a larger and wider market. They can produce more goods.

3. There are wider sources of goods for the traders so they have greater bargaining power.

4. There are no border controls and trade barriers. This reduces transaction costs.

5. Consumers have a wider choice of goods and can buy at lower prices.

Disadvantages

1. They do not protect the domestic member industries always. Their member neighbours can compete against them.

2. The members have to give up some degree of sovereignty.

3. The bigger member countries get more benefit from the deal compared to the smaller member countries.