International Trade and Finance: A North American Perspective

By Khosrow Fatemi | Go to book overview
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21
THE NORTH AMERICAN COMMON MARKET: AN IDEA WHOSE TIME HAS COME?

RAFAEL A. LECUONA


THE COMMON MARKET-- THEORETICAL CONSIDERATIONS

The term "common market" derives from the notion that there is a highly integrated market of labor, goods, and capital common to a number of political units. Ideally, there are no restrictions among the participating units on the movement of the economic factors indicated. Furthermore, there is an outside trade barrier, which in effect protects the trade advantages enjoyed by market members.

Ideally, the common market is established to release the powerful sources of productive capacity generated by the free movement of people, goods, and capital previously immobilized by fictitious barriers. The large, highly productive, and single market created in the United States by the political union of previously independent and separated states is cited as an example of what a common market can do.

Of course, the implicit assumption that a supranational institution with binding powers over the member states is needed in the establishment of a common market is not warranted. This would be true only if the contracting parties wish to go beyond the notion of a common market, in order to establish a politically and economically integrated nation.

In this chapter, such an integrated politico-economic society or union is not contemplated or even considered. Actually, what is being suggested is the formation, within a to-be-determined number of years, of an economic union in which the relatively free movement of goods, capital, and people can take place. Such a common market would have to be based, obviously, on the best interests of the parties involved, in this case, Canada, the United States, and Mexico.

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