Common Market:

A common market signifies an important step towards significant economic integration. Apart from containing the provisions of a customs union, a common market (CM) removes all barriers to the mobility of people, capital and other resources within the area in question, as well as eliminating non tariff barriers to trade, such as the regulatory treatment of product standards. Establishing a common market typically requires significant policy harmonization in a number of areas. Free movement of labor, for example, necessitates agreement on worker qualifications and certifications. A common market is also typically associated whether by design or consequence with a broad convergence of fiscal and monetary policies due to the increased economic interdependence within the region and the effect that one member country's policies can have on other member countries. This necessarily places more severe limitations on member countries' ability to pursue independent economic policies. The principal advantage of establishing a common market is the expected gains in economic efficiency. With unlimited mobility, labor and capital can more easily respond to economic signals within the common market, resulting in a more efficient allocation of resources. Common markets represent the first step of deep economic integration by enabling the free flow of goods, services, financial capital and workers. In addition to the customs union's common external tariff, members of a common market must also harmonize labor and capital regulations. The heightened economic interdependence requires increased member cooperation in decision-making and in policy implementation. Further regional integration offers the possibility of moving toward an economic union. This next step involves bringing harmonized fiscal, monetary, and labor market policies to the common market. For example in the case of the European Common Market, the single market with the "four freedoms" - the free movement of goods, services, persons and capital - forms the core of the European Common Market.