common market

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.^{[citation needed]}

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.^{[citation needed]}

List of single markets

• Andean Community (CAN) - 31 December 2005^[1]
• Caribbean Community single market (CARICOM)
• Central American Common Market (CACM)
• Economic and Monetary Community of Central Africa (CEMAC)
• European Economic Area (EEA) between the European Union,^[2] Norway, Iceland and Liechtenstein.
• Union State of Russia and Belarus - 2 April 1996
• West African Economic and Monetary Union (WAEMU) - 10 January 1994^[3]

Proposed

• Eurasian Economic Community (EAEC) - 1 January 2010^[4]
• Southern African Development Community (SADC) - 2012
• Southern Common Market (Mercosur) - 2015^[5]
• ASEAN Economic Community (AEC) - 2015
• African Economic Community (AEC) - 2023
• Gulf Cooperation Council (GCC)^[6]
• North American Union (NAU)
• Economic Community of West African States (ECOWAS)
• Economic Community of Central African States (ECCAS)
• South Asia Free Trade Agreement (SAFTA)

References