Question

Which of the following features are required to be there for an economically-integrated block to be called as ‘Common Market’?

Group of answer choices

A common external trade policy.

Free movements of the factors of production.

No barriers to trade between member countries.

All of these features

Answer 1

A common market is the most significant step towards full economic integration. The idea of a common market grows from the possibilities presented by the adoption of a common external tariff,. As trade flows increase and factor inputs imported into the integrating economies begin to circulate freely, production chains crossing the intra-regional national boundaries begin to form. This trade arrangement is aimed at providing improved economic benefits to all the members of the common market.

The most famous example of a common market is the European Common Market, which aims to provide the free movement of goods, capital, services and labor within the European Union.

​​​​​Features required to be Defined as a Common Market

To be defined as a Common Market, the following conditions must be satisfied by an economically integrated block:

1. Tariffs, quotas, and all barriers regarding importing and exporting goods and services among members of the common market are eliminated.

2. Common trade restrictions as trade on other countries are adopted by all members of the common market.

3. Production factors such as labor and capital are able to move freely without restrictions among member countries.

​​​​​​If one of the features is not satisfied, the resulting market is not a common market. For example, if production factors such as labor and capital are not able to move freely without restrictions among member countries, then the arrangement would instead be defined as a customer union.