Confederation

A confederation is a union between independent states in which each state retains its sovereignty and is considered equal.
A federation is a union in which member states subordinate themselves to a higher federal level, while retaining certain powers for themselves.

Notes

Switzerland calls itself a confederation, but it has in reality developed into a federation. There are few historical examples of confederations, but federations are quite common.
When established, the EU had more of the character of a confederation than today, but it has become more federal due to successive treaties and extensive judgments from the European Court of Justice.

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