Single market

Integration phases

A common market allows for the free movement of capital and services but large amounts of trade barriers remain. It eliminates all quotas and tariffs duties on imported goods from trade in goods within it. However non-tariff barriers to trade remain, such as differences between the Member States' rules on product safety, packaging requirements and national administrative procedures. These prevent manufacturers from marketing the same goods in all member states. The objective of a common market is most often economic convergence and the creation of an integrated single market. It is sometimes considered as the first stage of a single market. The European Economic Community was the first large-scale example of a common market.

A single market allows for people, goods, services and capital to move around a union as freely as they do within a single country – instead of being obstructed by national borders and barriers as they were in the past. Citizens can study, live, shop, work and retire in any member state. Consumers enjoy a vast array of products from all member states and businesses have unrestricted access to more consumers. A single market is commonly described as "frontier-free". However, several barriers remain such as differences in national tax systems, differences in parts of the services sector and different requirements for e-commerce. In addition separate national markets still exist for financial services, energy and transport. Laws concerning the recognition of professional qualifications also may not be fully harmonized. The Eurasian Economic Union, the Gulf Cooperation Council, CARICOM and the European Union are current examples of single markets, although the GCC's single market has been described as "malfunctioning" in 2014. The European Union is the only economic union whose objective is "completing the single market".

A completed, unified market usually refers to the complete removal of barriers and integration of the remaining national markets. Complete economic integration can be seen within many countries, whether in a single unitary state with a single set of economic rules, or among the members of a strong national federation. For example, the sovereign states of the United States do to some degree have different local economic regulations (e.g. licensing requirements for professionals, rules and pricing for utilities and insurance, consumer safety laws, environmental laws, minimum wage) and taxes, but are subordinate to the federal government on any matter of interstate commerce the national government chooses to assert itself. Movement of people and goods among the states is unrestricted and without tariffs.

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 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 expecting profitability to increase as a result. This is true especially for companies selling goods and services easily distributed all around the countries of single market.

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 and their quality. What is more, businesses in competition will innovate to create new products; another benefit for consumers.

Single market play significant role in increasing prosperity of nations involved in this area. For example, single market helps European Union to achieve annual growth of GDP with 2.2% p.a. between 1992 and 2006, rise in employment and job creation.

Transition to a single market can have a 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.

National participation into single market opens political debates, about skills loss through worker migration from less developed countries, and wage suppression in countries to which they migrate.

List of common markets

Every economic union and economic and monetary union includes a common market.

• Flag of the European Union.svg European Single Market (European Economic Area – Switzerland)
• Flag of the Central American Integration System.svg Central American Common Market (CACM)
• Flag of the Eurasian Economic Union.svg Single Economic Space of the Eurasian Economic Union (overlapping with the Common Economic Space of the Commonwealth of Independent States)
• Mercosur Southern Common Market (Mercosur)

Partly launched

• Common Economic Space of the Commonwealth of Independent States (overlapping with the Single Economic Space of the Eurasian Economic Union)

Proposed

• ASEAN Economic Community (AEC) – established, but common market integration target is 2025
• East African Community East African Community (EAC)
• Flag of the African Union.svg African Economic Community (AEC)
• CARICOM CARICOM Single Market and Economy (CSME) – Originally envisioned to be complete by 2008, it has since been delayed and is now envisioned to have free movement of people between willing member states by 2021.
• Gulf Cooperation Council Gulf Cooperation Council (GCC) – Not yet a common market, though integration is continuing
• Bandera-ALADI.jpg Latin American Integration Association (ALADI)
• Commonwealth free trade area – proposed by politicians in Australia, Canada, New Zealand and the United Kingdom but never implemented
• Flag of the Organization of American States.svg Free Trade Area of the Americas – proposed trade bloc at the Summit of the Americas intended to be implemented across the Western Hemisphere (excluding Cuba) by 2005

Footnotes

References

References

1. "Trade: Chapter 110-2: Economic Integration: Overview".
2. "Common Market".
3. "Historical overview". European Commission.
4. "One market without borders". European Commission.
5. (14 February 2014). "GCC Single Market Failure: Problems And Solutions". Middle East Petroleum and Economic Publications (Cyprus) Ltd.
6. Usman, Adamu Kyuka. (2017). "Theory and Practice of International Economic Law". Malthouse Press.
7. Initial [[free trade area. FTA]] enforced 1 January 1973 [http://docsonline.wto.org/DDFDocuments/t/G/L/360.doc WT/REG94/R/B/1] {{webarchive. link. (27 March 2009)
8. "The ASEAN Economic Community: what you need to know". World Economic Forum.
9. "FACTBOX-East African common market begins – Member states will have to make several changes to their national laws to allow full implementation of the common market in areas such as immigration, labour and customs".