Group formed by countries
within a geographical area to promote duty free trade and free movement of
labor and capital among its members. European community (as a legal entity
within the framework of European Union) is the best known example. Common
markets impose common external tariff (CET) on imports from non-member
countries.
It has 3 basic features. (i) Abolish all barriers
among them.(ii) Adopt uniform commercial policy jointly.(iii) They allow free
movement of human resources, technology and capital among the member countries.
Thus, restrictions on immigration, emigration, and cross-border investments are
abolished. When factors of production are freely mobile, then capital, labour
and technology may be employed in their most productive uses. Thus Common
Market is superior to Customs Union. The best example is the European Union,
which
achieved the status of a common market in the 1990s as
a result of a 35- year struggle to end barriers to the free movement of labour,
capital and technology.