Canada and the European Union took effect. In 2018, Canada along with
10 other Pacific-Rim countries signed the Comprehensive and Progressive
Agreement for Trans-Pacific partnership.
A customs union is a free trade area in which the member countries
agree to establish a common trade policy with the rest of the world.
Because they have a common trade policy, the members need neither
customs controls on products moving among themselves nor rules of
origin. Once a product has entered any member country it has met the
common rules and regulations and paid the common tariff and so it may
henceforth be treated the same as one that is produced within the union.
An example of a customs union is Mercosur, an agreement linking
Argentina, Brazil, Paraguay, and Uruguay.
A common market is a customs union that also has free movement of
labour and capital among its members. The European Union is by far the
largest example of a common market.
In the fall of 2016, the people of the United Kingdom voted in a national
referendum to leave the European Union. The U.K.’s decision to exit from
the EU—now dubbed “Brexit” by many observers—created the need for a
series of complex negotiations between the U.K. and the countries of the
European Union. These negotiations mostly related to what extent the
U.K. and EU will continue to share an open trading relationship once the
formal ties of EU membership are severed. Since no country has ever
before exited from the EU, much uncertainty was naturally created by the
Brexit decision.