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What is the main difference between a customs union and a free-trade area?

What is the main difference between a customs union and a free-trade area?

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Asked by Raghad-boodai, Last updated: Apr 10, 2024

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2 Answers

b.Lisa

b.Lisa

b.Lisa
B.Lisa

Answered Dec 12, 2017

In countries that use customs unions identical tariffs are used but in countries that are free trade areas different tariffs structures are used. Because of the unified rules within places that use custom union when goods are traveling between those places and places that are free trade areas the rules of the customs union must still apply.

Given this fact different free trade areas are really only free to impose their own rules if they are trading with other free trade areas. There is all kinds of leadway that can make free trade areas much more pleasant to deal with or much worse to deal with depending on the rules and laws that end up being inforced.

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raghad-boodai

raghad-boodai

raghad-boodai
Raghad-boodai

Answered Sep 04, 2017

Customs union member countries use identical tariffs, whereas free-trade area member countries have different tariff structures
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