Victoria 3 is a game about economies and markets, making access to valuable goods one of the most important things you can have for your country. Diplomatic relations are more limited than in other Paradox grand strategy games, since ultimately you’ll be focused on trade and prices rather than treaties and negotiation.
Diplomacy still has a use, however, and one of the best ways to use it is to form a customs union. A large country can use customs unions to further grow their economy, while smaller countries can band together or join one of the Great Powers to enjoy profits they wouldn’t have access to otherwise.
Updated on November 24, 2023 by Matt Arnold: The recent free weekend for Victoria 3 has brought a lot of new players into the game! We’ve updated this guide to help them on their journey to economic hegemony, specifically outlining the differences between a Trade Agreeement and a Customs Union.
What Is A Customs Union?
A customs union is a diplomatic agreement that can be enacted between two countries, and serves as a merger of their national markets. Essentially, both countries will have full and unrestricted access to any goods that the other produces or imports. This creates a larger supply of common goods like grain and wood, keeping prices down, while providing a wider domestic market for luxuries and processed goods, increasing demand and, by extension, the price.
The combined market will be named for the leader of the customs union – typically the country with the highest GDP. For example, if the United States forms a customs union with Costa Rica, then both countries will be considered part of the American Market.
What’s The Difference Between A Customs Union And A Trade Agreement?
In a Customs Union, all parties involved share all their resources. Large countries will be unwilling to join a Customs Union, preferring to head up their own, but you can still get favorable exchanges with them via a Trade Agreement.
A Trade Agreement keeps the two nations’ markets separate, but eliminates all tariffs and Bureaucracy costs of trade routes between them. Essentially, a Trade Agreement gives you the benefit of Free Trade with your nation’s partner, even if you don’t have the Free Trade law enacted.
If you do have the Free Trade Law, Trade Agreements are still a great way to save Bureaucracy for other things, though you’ll need to be sure you have enough Influence to maintain the treaty.
Why Should You Form A Customs Union?
In almost every case in Victoria 3, you want as many goods as possible in your national market. This makes buildings more profitable and makes it easier for pops to buy goods that will increase their standard of living. By forming a customs union and bringing as many nations as possible on board, you increase the amount of goods in your market without having to spend any time or money!
A customs unions can sometimes cause a temporary dip in the prices of the goods you rely on for income, especially if a new signatory also produces a large quantity of that good. In most cases, however, a similar increase in demand will come along with it, balancing the price. If not, you can always export the extra!
Some countries, notably leadership candidates for large formable nations like Germany, can diplomatically annex countries in their customs union that share the same culture. Case-by-case advantages like this are another great reason to expand your customs union whenever you can.
How To Form A Customs Union
You can invite another country to join your customs union – or ask to join theirs, if they’re the leader of one – through the Diplomatic Interactions screen. It’s near the bottom of the listed options, underneath Trade Agreement. You’ll need positive relations and a healthy amount of existing trade with your prospective partner in order for them to accept.
An AI-controlled country is more likely to join your customs union if:
- Your relations are positive (green).
- You have an existing Trade Agreement.
- You have existing trade routes to or from the country – the higher the volume, the better!
- Your GDP significantly exceeds theirs.
Countries are free to leave a customs union at any time, and the union leader can kick other countries out as well. If a country is part of someone else’s customs union but likes you more, you might be able to convince them to switch.
Subject countries – that is, dominions and puppets – are automatically part of their overlord’s customs union. There is no limit to the number of members a customs union can have, and theoretically it’s possible to unite the global economy under a single market.
Next: Victoria 3: Complete Guide To Warfare