A
common market is a type of
trade bloc which is composed of a
customs union with common policies on product
regulation, and
freedom of
movement of the
factors of
production (
capital and
labour) and of
enterprise. The goal is that the movement of
capital, labour, goods, and services between the members is as easy
as within them. This is the fourth stage of
economic integration.
Sometimes a
single market is differentiated as a
more advanced form of
common market. In comparison to a
common market a single market envisions more efforts geared towards
removing the physical (borders), technical (standards) and fiscal
(taxes) barriers among the member states. These barriers obstruct
the freedom of movement of the four factors of production. To
remove these barriers the member states need political will and
they have to formulate common economic policies.
Benefits and costs
A single market has many benefits. With full freedom of movement
for all the factors of production between the member countries, the
factors of production become more efficiently allocated, further
increasing productivity.
For both business within the market and consumers, a single market
is a very competitive environment, making the existence of
monopolies more difficult. This means that inefficient companies
will suffer a loss of market share and may have to close down.
However, efficient firms can benefit from economies of scale,
increased competitiveness and lower costs, as well as expect
profitability to be a result. Consumers are benefited by the single
market in the sense that the competitive environment brings them
cheaper products, more efficient providers of products and also
increased choice of products. What is more, businesses in
competition will innovate to create new products; another benefit
for consumers.
Transition to a single market can have short term negative impact
on some sectors of a national economy due to increased
international competition. Enterprises that previously enjoyed
national market protection and
national
subsidy (and could therefore
continue in business despite falling short of international
performance benchmarks) may struggle to survive against their more
efficient peers, even for its traditional markets. Ultimately, if
the enterprise fails to improve its organization and methods, it
will fail. The consequence may be unemployment or migration.
List of single markets
Proposed
References
- Twelfth Andean Presidential Council Act of Lima
- The European Union (EU) began life as the
European Coal and Steel
Community in 1951 (Treaty of Paris ) and went on to
become the European Economic Community (EEC) in 1957
(Treaty of Rome ) (when it became known
in Britain and Ireland as "the Common Market"). The abolition of
internal tariff barriers was achieved in 1968. In subsequent years
little was done to move from this basic customs union to a full
single market. The Single European Act was signed in 1986
to establish a Single European Market by 1993, by removing the
barriers to free movement of capital, labour, goods and services
(at least in principle, if not always observed in practice).
Further information on the European Union single market can be
found here.
- WTO WT/COMTD/N/11
- Russia, Kazakhstan, Belarus plan on common economic
space
- EAC Member States sign Protocol on Common
Market
- WTO WT/REG238/M/1
- Gulf states form common market
, Iceland
and Liechtenstein
.
and Belarus
- 2 April
1996
(ECOWAS)
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