Trade · 6 pages · 12 min
A free-trade area drops internal tariffs only, while a customs union also shares one external tariff.
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A free-trade area and a customs union both remove duties on goods moving between their members. They differ at the outside border: members of a free-trade area each keep their own tariffs on non-members, while members of a customs union apply one common external tariff. The opening covers internal duties fall in both, external tariffs stay national in one, and a common external tariff unites.
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