Question

2) What is a “common external tariff?” What problem does it solve?

Answer 1

A common external tariff refers to the imposition of the same import quotas, custom duties and a common set of trade policies  for a group of countries that form a customs union. The countries may export from any other country outside the union but must pay the same common tariff. The common external tariff policy solves the problem of a common set of countries exporting among each other due to differences in tariff rates. The country having a lower tariff rate may export from another country and resell at a higher price to another country due to higher tariff rate in that country belonging to a common region. This hurts the domestic producers of the higher tariff country. The common tariff solves this problem by providing protectionism to the domestic producers of the common countries.