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In page Customs union:

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There are trade creation effects and trade diversion effects. The trade creation effect refers to the benefit generated by the transfer of domestic production to other countries in the union with lower costs. The trade diversion effect refers to the loss incurred when a product is imported from a non-member country with lower production costs to a member country with a higher cost. This is the price of joining the customs union. When the trade creation effect is greater than the transfer effect, the combined effect on the member countries is a net gain, which boosts the economies of the member countries; otherwise, it is a net loss and a decline in economic terms.[citation needed]