common market

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Related to the Common Market: European Common Market

Common market

An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services.

Common Market

1. A market with the free movement of goods, services, labor, and capital between two or more places. For example, even though Texas and Oklahoma are different places with different governments and regulations, the two have a common market because workers do not need permission to move between them, and one may transfer money between them without incurring any tariffs or fees. See also: Free trade.

2. An informal term for the European Economic Community.

Common Market

common market

see TRADE INTEGRATION.

common market

a form of TRADE INTEGRATION between a number of countries in which members eliminate all trade barriers (TARIFFS, etc.) amongst themselves on goods and services and establish a uniform set of barriers against trade with the rest of the world, in particular, a common external tariff (see CUSTOMS UNION). In addition, a common market provides for the free movement of labour and capital across national boundaries. The aim of a common market is to secure the benefits of international SPECIALIZATION, thereby improving members’ real living standards.

The short- and medium-term impact of the formation of a common market is mainly felt through an increase in trade between member countries. TRADE CREATION is typically associated with a reallocation of resources within the market favouring least-cost supply locations and a reduction in prices resulting from the elimination of tariffs and lower production costs. (See GAINS FROM TRADE.)

In addition, a common market can be expected to promote longer-term (dynamic) changes conducive to economic efficiency through:

  1. COMPETITION. The removal of tariffs, etc., can be expected to widen the area of effective competition; high-cost producers are eliminated, while efficient and progressive suppliers are able to exploit new market opportunities;
  2. ECONOMIES OF SCALE. A larger ‘home’ market enables firms to take advantage of economies of large-scale production and distribution, thereby lowering supply costs and enhancing COMPARATIVE ADVANTAGE;
  3. TECHNOLOGICAL PROGRESSIVENESS. Wider market opportunities and exposure to greater competition can be expected to encourage firms to invest and innovate new techniques and products;
  4. INVESTMENT and ECONOMIC GROWTH.

Finally, the virtuous circle of rising income per head, growing trade, increased productive efficiency and investment may be expected to combine to produce higher growth rates and real standards of living.

The EUROPEAN UNION is one example of a common market. See ANDEAN PACT.

References in periodicals archive ?
Europe has to change get rid of the plutocrats in Brussels and revert to the origins of The Common Market.
BEIRUT: A trade agreement between Lebanon and Mercosur, also known as the common market of South America, is to be signed next month in Argentina, Ambassador Ricardo Larriera said Monday.
She said that the delegation was briefed on the support of the Common Market for Eastern and Southern Africa (COMESA) for the elections in the member states of the organization.
They've never got over the fact that Edward Heath's Tory 1970 election manifesto promised that he would only take Britain into the Common Market "with the full-hearted consent of the British people".
For his part, KCCI Board member Usama Al-Nesif said the common market would help GCC states avoid the negative impacts of the sharp international upheavals.
If Mr Murray casts his mind back to the debate and vote which as he says approved joining the Common Market I don't recall anything being said about standing guarantor for 28 or is it 29 other countries, some of which, if my geography teacher was right all those years ago, are in north Africa not Europe.
WHEN Harold Wilson and Ted Heath in the sixties were determined to take us into the Common Market (EU), and eventually did, I wrote opposing this move.
The meeting agreed on a preliminary study highlighting different projects to support the common market, in addition to creating a media plan and holding workshops to increase awareness among the public and the government, private and education sectors on its benefits and importance.
Participants agreed on preparing a preliminary study highlighting different projects to support the common market, in addition to creating a media plan and holding workshops to increase awareness among the public and the government, private and education sectors on its benefits and importance.
According to EAC Secretary General Juma Mwapachu, eliminating the work permit requirement for professionals is the starting point for realizing the full benefits of free movement within the common market.
For instance, back in 1961 I could see that Heath was a liar when he claimed that the Common Market was just a trading agreement.
The seminar is also aimed at identifying the opinions of the business community in Bahrain on the common market and taking their suggestions on the elimination and obstacles that could face its implementation process.