Noodle Bowl Agreements

The extension of free trade agreements between the various countries known as the “pasta shell effect” has a negative impact on trade. But the fundamental theory of games shows that they could rather be beneficial. In this way, many countries are using bilateral and multilateral free trade agreements to promote free trade and globalization more quickly and flexibly. Indeed, free trade agreements require only the approval of a limited number of like-minded countries, contrary to the general agreement of all WTO members that are necessary to conclude a round of negotiations. Such agreements also allow countries to address broader issues, such as bilateral investment, labour immigration and rules. As a result, the number of free trade agreements and negotiations that came into force has exploded since the mid-1990s, from 100 agreements in 1990 to more than 400 in 2008. [2] But from the year 2000, the attention of Asian governments has focused on bilateral free trade agreements. These bilateral agreements were negotiated more easily than multilateral agreements and were seen as a “quick and simple” way to open new export markets. The Asia-Pacific region has rapidly become the epicenter of a global step towards bilateral trade, with the number of free trade agreements in the region rising to 40 in 2014. The Spaghetti Bowl effect is an interesting phenomenon in the trade economy, where the growing number of free trade agreements between countries is slowing trade relations between them. This term (spaghetti bowl) makes the analogy between the tangle of spaghetti in a bowl with the entanglement of various free trade agreements in a region. The phenomenon of spaghetti shell was first discussed in 1995 by Jagdish Bhagwati. In free trade agreements, members agree on a lower domestic duty to apply among themselves, while each member can, at the same time, collect its own external tariff on imports from third countries.

It thus introduces the concept of “country of origin” of the product marketed; it is used to distinguish products from one country from another in this highly globalized world, where products often pass through many countries in the production process. In addition, there are rules in international trade known as “rules of origin” (ROO) that define the criteria for determining the country of origin. The problem is that each free trade agreement has its own roo, and if the number of free trade agreements increases and becomes entangled, including the ROO.