FTA, Customs Union, Common Markets

It is an agreement between two or more countries to reduce

or eliminate custom duties. It also reduces or eliminates nontariff barriers among partner countries. FTAs generally develop elaborate rules of origin to prevent goods from being imported into the FTA member country with the lowest tariff and then transshipped to the country with higher tariffs. So member countries maintain individual tariff schedule for external countries.
The North American Free Trade Area is an example of a FTA

(NAFTA)

 It is the next stage of economic cooperation or

integration after FTA. In addition to FTA it adds a common external tariff on products imports from non member countries. Simply, CU is a FTA plus common external tariff for non member exports to CU. European Union was a custom union before becoming a common market.

 This agreement eliminates all tariffs and other

restrictions on internal trade, adopts a set of common external tariffs and removes all restrictions on the free flow of capital and labor among member nations. It is a unified economy and lacks only political unity to become a political union. The treaty of Rome, which established the European Economic Community (EEC) in 1957 is an example of common market.

 EU citizens have a common passport, can work in any

EU member country and can invest throughout the union without restriction. Latin America boasts three common markets
The Central America Common Market (CACM) The Andean Common Market The Southern Cone Common Market.