What is the difference between an FTA and a customs union?
• While each member state of an FTA may choose to maintain different external tariffs to nonparticipating countries, member states of a customs union agree to one common policy in applying external tariffs to outside trade partners. The EU is an example of a customs union. France and Germany both apply the same tariffs to imports from the United States. Under the terms of the U.S.-Australia FTA, the United States and Australia may each apply different tariffs to imports from France.
