Asian Noodle Bowl

Free trade agreements (FTAs) are increasingly viewed as the major vehicle of trade policy and diplomacy in the Asia and Pacific region. In Asia, the number of FTAs seems set to increase in the next decade as East Asia plays a catch-up game with other regions.

Researchers have pointed out that the trend toward FTAs in East Asia is associated with economic benefits, such as wider market access, greater market opportunities, upgrading of technology and productivity, and the spread of efficient production practices.

Others suggest, however, that the formation of a large number of bilateral FTAs could pose challenges including discrimination against outsiders, trade and foreign direct investment diversion, and, above all, Asian "noodle bowls." Asian "noodle bowls" are trading arrangements characterized by complex and overlapping tariffs, standards, and rules of origin that can raise administrative and business costs. According to these experts, this can be a particular problem for small- and medium-sized enterprises with limited capacity to deal with these issues. This is part of the reason for considering consolidation of Asian noodle bowls into a single, region-wide FTA.

The Asian Noodle Bowl Conference, held on 17–18 July 2008, consisted of two parts. Part I was a half-day conference on the impact of FTAs on business activity and assessment of current FTAs in East Asia. The panel consisted of experts from Australia, India, Indonesia, Japan, People's Republic of China, and Singapore, in addition to two representatives from the private sector. Part II was a one-and-a-half-day technical workshop to discuss in greater detail country-level FTA strategies, issues related to the formation of an East Asian FTA, and an enterprise survey on FTA impacts on business activity.

Country experts appear to have different views on whether there is a need to form an East Asian FTA. One view, for instance, is that the Association of Southeast Asian Nations (ASEAN) is still in the process of building its economic community and, once it accomplishes this task, ASEAN will have gained the confidence to advance the integration process. Preliminary findings of the enterprise survey include that more firms indicated positive impacts of FTAs than those that indicated negative impacts, and that small- and medium-sized enterprises tend not to use FTAs, whereas large firms do tend to use FTAs.