A customs union is an agreement between or among countries to reduce or eliminate TRADE BARRIERS among its members and have a common set of external TARIFFs for trade outside the union. A customs union is one step beyond a FREE TRADE agreement but below a common market. A freetrade agreement only reduces or eliminates barriers to trade, while a common market also allows the free flow of CAPITAL and resources (including labor) among participating nations. The most widely known customs union is Mercosur, an agreement among Argentina, Brazil, Paraguay and Uruguay, established in 1995. By this agreement, reductions in trade barriers among the four countries increased regional trade, and a common set of external trade barriers stimulated regional investment. Because a customs union is not an economic union (such as the EUROPEAN UNION), it does not include the creation of a common currency. In 2000 and 2001, currency crises in Brazil and Argentina altered EXCHANGE RATES, undermining the basis of trade within the customs union. The only other major customs union is the Southern African Customs Union (SACU), which includes South Africa, Botswana, Lesotho, Swaziland, and Namibia.