Etiquette: This is a set of rules various parts of the world follow. These 'rules' are little things that tell you what is proper. Ex: You use different types of knifes and forks for different types of food. This shows proper etiquette. It is not bad manners to use your salad knife to cut your fish, you would just not be following the etiquette.
Manners: Manners are what you do in a specific way to be polite, courteous, etc. showing proper manners means making the person around you not feel bad. Ex: You say please and thank you show good manners. You are not 'showing etiquette' while doing this.
Note: Sometimes showing improper etiquette CAN make you show bad manners. Ex: It is in the etiquette rules to congratulate the bride and groom during the wedding. Not doing this also shows bad manners.
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