Two key characteristics of a common market are the removal of trade barriers between member countries and the allowance for the free movement of labour, capital, and services among them.
Understanding a Common Market
A Common Market represents a significant level of economic integration among participating countries. As defined, "A Common Market is an agreement between two or more countries removing all trade barriers between themselves, establishing common tariff and non-tariff barriers for importers, and also allowing for the free movement of labour, capital and services between themselves." This structure goes beyond a simple free trade area or customs union by enabling greater economic interaction and opportunity across member nations.
Key Characteristics Derived from the Definition
Based directly on the provided definition, here are the fundamental characteristics of a common market:
1. Removal of Internal Trade Barriers
A defining feature is the commitment by member countries to remove all trade barriers between themselves. This includes tariffs, quotas, and other restrictions that could hinder the free flow of goods and services among the participating nations. The goal is to create a single market within the common market area.
2. Free Movement of Factors of Production
Another crucial characteristic is the provision for the free movement of labour, capital and services between themselves. This allows individuals to work, businesses to invest, and service providers to operate across the borders of member states without significant restrictions.
Additional Characteristic: Common External Barriers
While the question asks for two characteristics, the definition also clearly outlines a third important feature: establishing common tariff and non-tariff barriers for importers. This means member countries agree on a unified external trade policy towards countries outside the common market.
Here's a summary of the characteristics directly from the definition:
- Internal: Removal of all trade barriers between member countries.
- Internal: Free movement of labour, capital, and services between member countries.
- External: Establishment of common tariff and non-tariff barriers for importers from outside the market.
This integrated approach aims to boost economic efficiency, competition, and growth within the member countries.
