D
Key ideas:
A free trade area is an agreement between countries wherein countries agree to trade freely among themselves but set their own barriers for non-member countries.
A customs union is an agreement between countries wherein they agree to trade freely and agree to have common external barriers for non-member countries.
Explanation:
Statement I is incorrect because there are barriers to labour mobility in free trade areas and customs unions.
Statement II is incorrect because a common external tariff distinguishes a customs union from a free trade area
Statement III is correct because, in both free trade areas and customs unions, members agree to trade freely.
Statement IV is incorrect because neither free trade areas nor customs unions have a common currency.