A free trade area eliminates internal tariffs but allows members to set their own external trade policies. A customs union adds a common external tariff, eliminating the need for rules of origin among members.
Free Trade Area vs Customs Union A free trade area and a customs union are two stages of regional economic integration that both eliminate internal trade barriers but differ in how they treat trade with non-members. Understanding the distinction is essential for analyzing trade blocs and the progression of economic integration . Key Takeaways Both eliminate tariffs and quotas on internal trade. A free trade area allows members to set independent external tariffs; a customs union adopts a common