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The Difference Between a Free Trade Area and a Customs

Question 133

Multiple Choice

The difference between a free trade area and a customs union is that


A) countries of a free trade area set their own tariff policy with respect to members of the area while countries of a customs union have a uniform tariff policy with respect to members of the union
B) governments receive custom duties (income) from all trade within the customs union countries while the governments of a free trade area don't
C) free trade area countries engage in reciprocity while countries of a customs union can, but need not engage in reciprocity
D) countries of a free trade area set their own tariff policy with respect to nonmembers of the area while countries of a customs union have a uniform tariff policy with respect to nonmembers of the union
E) free trade area countries don't share a common border, such as Canada and Mexico, while custom union countries do

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