Undermining uniform external trade policy in a customs union

Steps:

• Define customs union: internal free trade plus identical external tariffs for all members.
• Identify core operation: requires unified trade policy with non-members to prevent trade deflection.
• Evaluate options: check which disrupts external tariff uniformity or allows bilateral deals.
• Select disruptor: option violating common external policy weakens the union.

Why D is correct:

• A customs union demands a single external trade policy; one member's separate deal with a non-member violates this, allowing tariff-free imports that undercut the common tariff and cause trade diversion.

Why the others are wrong:

• A: Currency deviation affects exchange rates and internal trade flows but not the external tariff structure.
• B: Wage differences impact competitiveness and internal resource allocation but preserve the common external tariff.
• C: Migrant worker tests hinder labor mobility, an EU goal, but do not alter goods trade tariffs.

Final answer: D