Final answer:
A customs union abolishes tariffs between member nations and establishes common external tariffs. Free movement of labor, capital, and information is not a fundamental aspect of a customs union but rather of a common market or economic union, such as the European Union.
Step-by-step explanation:
A customs union involves two major elements: first, it abolishes tariffs between the member countries, allowing for free trade within the union, and second, it establishes a common external trade policy for all member countries. This means that the member countries agree upon the tariffs and trade regulations that will apply to all goods entering the union from non-member countries. Such a union can enhance economic integration and can be part of a progression towards a deeper economic integration, potentially leading to an economic union. An economic union, like the European Union (EU), not only includes a common market with free trade in goods, services, labor, and capital but also involves coordinated fiscal and monetary policy.
While a customs union does ensure the free movement of goods within the member countries, it does not necessarily imply the free movement of factors such as labor, capital, and information, which are typically aspects of a common market or an economic union. The European Union, for instance, goes beyond being a customs union, as it seeks to eliminate barriers to the mobility of goods, labor, and capital across member countries.