A free trade agreement plus a common set of tariffs toward non-members is called

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A common market allows not only free trade, but also free movement of factors of production such as labor and capital. A free trade area eliminates tariffs and trade barriers among member countries, but does not necessarily have a common set of tariffs toward non-members. An economic union goes beyond a common market by also coordinating economic policies among member states, such as monetary and fiscal policies. A customs union, however, not only eliminates tariffs among member countries but also establishes a common set of tariffs toward non-member countries, which is the defining characteristic of the European Union.

A Free Trade Agreement Plus a Common Set of Tariffs