A common market is an economic integration scenario in which member countries’ trade barriers are reduced, and their external tariffs are uniform. It is a more advanced stage of economic integration than the free trade zone and customs union, but before the economic Union.
The Common Market was a European economic community that existed from 1957 to 1993. It was created to foster economic cooperation among its member states and to reduce trade barriers. The Common Market’s members were Austria, Belgium, Denmark, France, West Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom.
Table of Contents
What is a Common Market?
Definition: A common market is defined as an agreement between many countries that uses a similar external tariff. In a common market, members of the group are permitted to engage in free trade and mobility of labor and capital among one another.
The goal of the trade agreement is to offer all members of the common market enhanced economic advantages. Common markets typically involve countries that are close to one another geographically and share similar economic interests.
Understanding Common Market
A common market provides participating countries with several advantages. First, it allows for the free flow of goods and services among member nations. This increased trade results in more competition and lower prices for consumers.
Second, a common market allows for the free movement of labor and capital among member nations. This increased mobility of resources leads to the more efficient allocation of resources and greater economic growth. Finally, a common market typically results in increased political and economic cooperation among member nations. This increased cooperation can lead to more effective solutions to shared problems and a more stable international system.
In another scenario, the common market is also understood as a local food store that specializes in healthy food, and fresh and locally grown foods. They have a deli with a rotating menu of nutritious and delicious items, as well as a selection of grab-and-go options. Common Market is committed to supporting local producers and communities, and they are always interested in hearing from their customers about what they would like to see on the menu or in the store. Common Market is a great place to shop for healthy, delicious, and locally grown food.
Location in the common market is an important factor to consider when looking for support. Common Market is most likely to provide support if they are situated close to where you live. This is because Common Market wants to be able to easily reach out to its target audience and build a relationship with them. Common Market also needs to be able to easily access resources, like supplies and labor, to support their operations.
History of Common Markets
The first common market was established in 1957 by the Treaty of Rome.
The Common Market was created in order to foster economic cooperation among its member states and to reduce trade barriers.
The Common Market’s members were Austria, Belgium, Denmark, France, West Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom.
In 1967, the Common Market was expanded to include three more member states: Sweden, Finland, and Norway.
In 1973, the Common Market was further expanded to include three additional member states: Denmark, Ireland, and the United Kingdom.
In 1986, the Common Market underwent another expansion with the addition of Spain and Portugal.
In 1990-1991, East and West Germany were unified and became part of the Common Market.
In 1992-1993, the Common Market transformed into the European Union with the ratification of the Maastricht Treaty.
Conditions Required to be Defined as a Common Market
In order to be classified as a common market, the following economic integration conditions must be met-
1. Tariffs
Common external tariffs must be applied to all imports from non-member countries.
2. Free Movement of Goods
There must be the elimination of all internal tariffs and quotas on goods traded among member countries.
3. Free Movement of Services
There must be the elimination of all restrictions on the provision of services across borders.
4. Free Movement of Labor
There must be the elimination of all restrictions on the movement of workers across borders.
5. Free Movement of Capital
There must be the elimination of all restrictions on the movement of capital among member countries.
Common Market Characteristics
- Common external tariffs
- Free movement of goods, services, labor, and capital among member countries.
- Increased trade and economic growth
- Greater political and economic cooperation among members
Common Market Advantages
- Free trade among member nations leads to increased competition and lower prices for consumers.
- The free movement of labor and capital among member nations leads to more efficient allocation of resources and greater economic growth.
- Common markets typically result in increased political and economic cooperation among member nations.
- Common markets can provide a forum for solving shared problems and a mechanism for maintaining stability in the international system.
Common Market Disadvantages
- Common markets can create “trade barriers” for non-member nations.
- Common markets can result in a “race to the bottom” in terms of environmental and labor standards.
- Common markets can increase the risk of “contagion” during economic crises.
- Common markets can centralize power within a small group of countries.
Examples of Common Market
1. European Union (EU)
The European Union (EU) is the most well-known example of a common market. The EU has 28 member states and covers a population of over 500 million people. The EU has its own currency, the euro, and its own Parliament. The EU Common Market is based on the free movement of goods, services, capital, and labor among its member states.
2. Common Market for Eastern and Southern Africa (COMESA)
Another example of a common market is the Common Market for Eastern and Southern Africa (COMESA). COMESA was established in 1994 and has 19 member states. COMESA’s members are Angola, Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe. COMESA has its own Common External Tariff (CET) and is working towards the establishment of a Common Market.
3. Association of Southeast Asian Nations (ASEAN)
The Association of Southeast Asian Nations (ASEAN) is another example of a common market. ASEAN was established in 1967 and has 10 member states. ASEAN’s members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. ASEAN does not have a single currency or a Common External Tariff. However, ASEAN does have several free trade agreements with other regional economic blocs.
4. North American Free Trade Agreement (NAFTA)
The North American Free Trade Agreement (NAFTA) is a common market between the United States, Canada, and Mexico. NAFTA was established in 1994 and has facilitated the free movement of goods, services, and capital among its member states. NAFTA has also led to increased economic growth and investment in the region.
5. Common Market of the South (MERCOSUR)
The Common Market of the South (MERCOSUR) is a common market between Argentina, Brazil, Paraguay, Uruguay, and Venezuela. MERCOSUR was established in 1991 and has since expanded to include Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, Suriname, and Trinidad and Tobago as associate members. MERCOSUR has its own Common External Tariff and is working towards the establishment of a Common Market.
6. Gulf Cooperation Council (GCC)
The Gulf Cooperation Council (GCC) is a common market between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The GCC was established in 1981 and has since become one of the most important economic blocs in the Middle East. The GCC has its own Common External Tariff and is working towards the establishment of a Common Market.
7. East African Community (EAC)
The Common Market of the East African Community (EAC) is a common market between Burundi, Kenya, Rwanda, Tanzania, and Uganda. The EAC was established in 1967 and has since expanded to include Comoros, Djibouti, Eritrea, Ethiopia, South Sudan, and Sudan as associate members. The EAC has its own Common External Tariff and is working towards the establishment of a Common Market.
8. Southern African Development Community (SADC)
The Southern African Development Community (SADC) is a common market between Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe.
The SADC was established in 1980 and has since expanded to include Comoros, Congo, the Democratic Republic of the Congo, Djibouti, Kenya, Lesotho, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe as associate members. The SADC has its own Common External Tariff and is working towards the establishment of a Common Market.
Conclusion!
A common market is an economic bloc consisting of a free trade area with uniform tariffs and other trade regulations.
Common markets are intended to promote the free movement of goods, services, capital, and labor among the member states. Common markets can be found at the regional or global level. Examples of common markets include the EU Common Market, COMESA, ASEAN, NAFTA, MERCOSUR, GCC, EAC, and SADC.
Common markets have several benefits, including increased economic growth and investment, but they also have some disadvantages, such as the risk of creating monopolies. Overall, common markets are a positive step towards regional integration and cooperation.
