From a free trade agreement to a customs union: A bumpy pathway for Arab economic prosperity?

A customs union is an advanced form of economic integration deeper than that of FTAs. Under a customs union, member countries, following the removal of tariffs among them, apply a common external tariff (CET) to imports from the rest of the world. Despite the various benefits of a customs union, progressing from an FTA to a customs union spawns many challenges, most notably the concurrence on a unified tariff structure; the CET that will be applied against third parties; and the mechanism for distributing the revenues collected as well as dealing with the consequences of fiscal revenue distortion, especially for members that depend heavily on customs duty revenues to finance their budgets.

Sustainable Development Goals:

Peace, Justice and Strong Institutions