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common market

  One of the forms and stages of formal integration between separate national economic geographies. All restrictions on the movement of goods, labour, capital and enterprise should be removed within a common market which is, therefore, a product of negative integration. But a common market also involves positive integration in the creation of a common trade policy towards third countries — usually in the form of a common external tariff — and the harmonization of other trading regulations over exports as well as imports. The most ambitious attempt to create a common market remains that of the European Union (EU) which set the Single European Market in place between its twelve member states at the end of December 1992. Other examples include the less well-developed central American, east African, Andean and Caribbean common markets.

As a stage in the process of international economic integration, common markets involve the further development of more loosely integrated free trade areas (for example, the North American Free Trade Agreement — NAFTA) and customs unions (for example Benelux). It may lead on to the creation of closer forms of integration such as monetary union (e.g. European Economic and Monetary Union — EMU) and full economic (fiscal, monetary, policy) union which involve substantial elements of positive as well as negative integration.

Alternative forms of integration include trade preference associations (e.g. the Association of south east Asian nations — ASEAN) in which a full free trade regime between partners may form simply one element of integration between them. This is intended to enable the more limited participation of those countries which would otherwise be encumbered by severe problems of uneven development if exposed in their entirety to the rigours of free trade in all commodities and on the terms prevailing between more highly-developed members.

The logics behind the creation of a common market include:

{img src=show_image.php?name=2022.gif } the release of static (e.g. increased trade) and dynamic (e.g. economies of scale) gains and multiplier effects (see multipliers) from the geographical extension of the operation of nationally-unencumbered markets; and {img src=show_image.php?name=2022.gif } the extension over a wider geographical area of market-based forces and disciplines on economic action operating through the principle of comparative advantage so generating increased levels of trade and competition.The consequences of common markets also include:

{img src=show_image.php?name=2022.gif } the loss of local (national) economic sovereignty; {img src=show_image.php?name=2022.gif } the exposure of geographical diversity to such competition; and {img src=show_image.php?name=2022.gif } the intensification of geographicallyuneven development.In general terms, then, common markets — like other forms of economic integration — promote the disembedding of economic geographies through their exposure to geographically-extended and market-based processes of evaluation. They represent a shift upwards from the nation-state in the level of governance and so present issues of local and national sovereignty. The formation of economic and monetary union (EMU) in Europe in 1999 — a form of integration going well beyond that of a common market — poses this question in especially insistent terms. When placed alongside the decentralization of government and governance from central to regional and local bodies, this represents a highly significant shift in the political economic geography of power. Urban and regional localities are likely to become increasingly engaged in competitive relations within the context of a geographically-widened framework of economic evaluation founded on the neo-liberal prescriptions of a powerful central bank. (RL)

Suggested Reading Knox, P. and Agnew, J. 1994: The geography of the world economy. London: Edward Arnold; New York: Routledge, Chapman and Hall, 2nd edn, ch. 12. Lee, R. 1990: Making Europe: towards a geography of European integration. In M. Chisholm and D.M. Smith, eds, Shared space: divided space. London and New York: Unwin Hyman, 235-59. Williams A.M. 1996: The European Community: contradictions of integration, 2nd edn. Oxford and New York: Blackwell Publishers.



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