The Common Market of the European Union

Introduction

A common market is a stage of a single market mostly evident in the European economy. There are different words that are used to mean the same as a common market and they include the European Community, European Union and European Economic Community among others. A common market can therefore be defined as an international organization belonging to European countries or nations that came into existence after World War II. There was a reason behind the formation of the common market by the European nations. Some nations in Europe had a different understanding of the purpose of establishing a common market. They further thought that a common market was formed on the basis of expanding the European economy which in our case is false. The common market is an implication of the European Union whose objective was to cut down or bring into the end of trade barriers thus increasing cooperation among the involved members. The meaning here is that not all countries in Europe united, there are those who failed to take part in the Union the fact which made them be excluded from the common market activities. The core objective of this essay is to explore the concept of a common market of the European Union based on its origin or formation as well as its operations. The study will also highlight the major shareholders of the European common market. Shareholders in the essay stand for the members of the European Union that led to the establishment of a common market or single market in Europe (Lee 92).

Discussion

As mentioned within the context of the study, a common market is a stage of a single market. In Europe, a single market refers to the establishment of one trade union by different countries with an aim of cleaning up all sorts of indifferences that might be experienced among them. From an economic point of view, it is quite clear that many nations fall into conflict hence ending up putting trade barriers among them. Such trade barriers are therefore considered inappropriate because they hinder different countries to interact in trade thus resulting in gradual growth in their economies. The history of a common market of the European Union states that the international organization (a common market) was formed after World war 11. The establishment happened in 1958 when six European nations united and formed a common market which in other words is referred to as European Economic Community (Kiekebeld 64). These six European countries include Belgium, France, Luxembourg, Italy, The Netherland and West Germany. Through trade barriers that resulted from World war 11, these nations came to the realization that the only means through which they could prosper or improve their economies is by uniting in order to clear or eliminate all the trade barriers that exist among them. They ought to erase or get rid of all internal tariffs by establishing external tariffs that are common among them (Doole and Lowe 45).

A common market came to be because of the treaty of Rome that calls for European countries to merge and establish a market common to them. The fundamental aim of the treaty was to merge all the nation’s markets to build a single market that would play a key role in promoting the development of economic activities, enhancing balanced and continuous economic expansions as well as promoting close relationships among the European countries. A common market according to the treaty of Rome is an integration process for European nations that led to the establishment of a single market. However, it is clearly stated that at the end of the integration process, an internal market was formed that enhanced the liberation of goods and other products. By the start of 1968, the economic union (a common market) had experienced tremendous progress leading to the abolishment of all internal tariffs. However, after seeing the success of the common market, the nations surrounding the economic union community acted as rivals thus forming their own customs union known as the European Free Trade association popularly known as the outer seven. This union was established in 1959 more probably after the instigation of the British. The members of the outer Seven include Portugal, Austria, Denmark, Britain, Norway, Sweden and Switzerland. Unlike, the common market the Outer seven communities remained loosely though it could claim of having witnessed some levels of success. European Union came to be from the integration of a common market, the outer Seven and other countries of Europe (Beha, 39).

Origin of a Common Market

Before and during both the cold and World war 11 most of the European nations were divided from each other meaning that there were no common ties holding them together. Based on the division trade barriers were more pronounced a fact that resulted to poor economic growth among the European nations. It is quite interesting to note that the formation of a common market was not entirely attributed to the economic unification as many people may think. This was different from the common market leaders’ point of view whose intention was to bring about political unification among the member states (Flatters and Lipsey 93). The idea of establishing the common market was achieved during the Cold war whereby the leaders came to discover that many little nations of Europe were threatened by the United States and Russia that were considered superpowers. It is from this point that the leaders of the common market felt insecure hence deciding to establish an international organization (common market) that would safeguard the rights of the little nations of Europe. Both Russia and the United States were known for their restriction upon the little European countries. Some of these restrictions included trade barriers whereby the little European nations were not allowed to either export or import goods or raw materials from other nations without permission from the two big superpowers. The other restriction was the internal tariffs that were enacted by Russia and the United States to hinder the little European nations from getting access to cheaper imports, an action that worsen economic growth among them (little European countries). The reason behind political unification was to secure long-lasting peace among the European countries in either Superpowers or little nations. From a political point of view, it is quite clear that the political system in each nation is the determinant factor of the country’s economic growth meaning that if the system is poor or unstable there will be a slow rate of economic growth while when the political system is stable high rates in economic growth are experienced. The implication is that country’s economy and political systems are interlinked meaning that they go hand in hand (Balling, Lierman and Mullinex 73).

Benefits of a common market

A common market which led to European Union has a lot of benefits. First and not foremost it led to trade liberation that advocated for free movement of goods and production factors among the member countries. In addition to this allocation of production, factors become more efficient hence increasing productivity leading to rampant growth in the economy. Another benefit is that a common market led to a more competitive market eradicating any aspect of monopolies that are found in many markets. Through this competitive market, new goods and products have been manufactured by member countries hence uplifting peoples’ living standards. The competitive market is beneficial to the customers or consumers in that it led to the introduction of cheaper products as well as increasing consumers’ basket of products for their choices (Lee 27).

Conclusion

A common market as discussed within the context of the study is an international organization formed by different countries of Europe (European countries). It is a stage of a single market that calls for the merging of different European countries which later led to the development of internal markets. The common market which is also known as European Economic Community came into existence after World war 11 with the objective of eliminating all the internal tariffs or trade barriers giving rise to trade liberation among the member countries. Outer seven is another customs union formed in 1967 after the common market. The two customs unions and others united and formed the European Union that operates today in Europe. A common market has many benefits that include the free movement of products and people. It also led to a more competitive market that led to the eradication of monopolistic markets in Europe. Based on this, new and cheaper products were introduced to different nations that benefited consumers. To sum up, a common market came to be through the political unification of European countries in 1958 and has played a critical role in European economies.

Works Cited

Balling, Morten, Lierman, Frank and Mullinex, Alex. Financial markets in Central and Eastern Europe: stability and efficiency perspectives. New York: Routledge, 2004.

Behar, Jaime. Cooperation and competition in a common market: studies on the formation of MERCOSUR. Washington: Springer, 2000.

Doole, Isobel and Lowe, Robin. International Marketing Strategy: Contemporary Readings. Maryland: Cengage Learning EMEA, 1997.

Flatters, Frank and Lipsey, Richard. Common ground for the Canadian common market. London: IRPP, 1983.

Kiekebeld, Ben. Harmful tax competition in the European Union: Code of conduct, countermeasures and EU law. New Jersey: Kluwer, 2004.

Lee Reuben. What is an exchange? The automation, management, and regulation of financial markets. New York: Oxford University, 2000.