Legal Definitions - common external tariff

A common external tariff refers to a uniform set of import duties (taxes) that all member countries of a customs union or common market apply to goods entering from countries *outside* their economic bloc. This means that regardless of which member country an imported product first enters, it will be subject to the exact same tariff rate. The purpose is to ensure fair competition, prevent goods from "tariff shopping" (entering through the country with the lowest individual tariff), and protect internal industries within the bloc.

• Example 1: The European Union

  A car manufacturer based in Japan wants to export vehicles to customers in Europe. Whether those cars first arrive at a port in Germany, France, or Italy, they will all be subject to the same common external tariff rate set by the European Union. This prevents the manufacturer from trying to ship all cars to, for instance, Portugal if Portugal had a lower individual tariff, and then moving them freely to Germany without further duties. The common external tariff ensures a consistent trade policy for goods entering the entire EU market.

• Example 2: Mercosur

  Imagine a company in China wants to sell electronics to consumers in South America. If they ship their products to Brazil, Argentina, or Uruguay – all members of the Mercosur customs union – the same common external tariff will be applied to those electronics upon entry into any of these countries. This ensures that no single Mercosur member can offer a lower tariff to attract more imports, which could then be freely traded within the union, undermining the economic bloc's collective trade strategy.

• Example 3: Protecting Regional Industries

  Consider a hypothetical "East African Economic Community" (EAEC) comprising Kenya, Tanzania, and Uganda. If the EAEC decides to implement a common external tariff on imported textiles from countries like India, it means that if a textile shipment arrives in Mombasa (Kenya), Dar es Salaam (Tanzania), or Entebbe (Uganda), it faces the identical EAEC-wide tariff. This unified tariff helps protect the textile industries within Kenya, Tanzania, and Uganda from cheaper foreign competition by making imported textiles more expensive, regardless of their specific point of entry into the EAEC.