The Asian “Noodle Bowl”: Is It Serious for Business?

A lively debate is taking place over the impact of free trade agreements (FTAs) on East Asia's business between those who view the agreements as a harmful Asian "noodle bowl"—i.e., overlapping regional trade agreements—of trade deals and others who see net beneficial effects in terms of regional liberalization and a building block to multilateral liberalization. A lack of enterprise-level data has made it difficult to resolve the debate. Providing new evidence from surveys of 609 East Asian firms (in Japan, Singapore, Republic of Korea, Thailand, and Philippines), this paper seeks to address the critical question of whether the Asian noodle bowl of multiple overlapping FTAs is harmful to business activity, particularly for small- and medium-sized enterprises (SMEs). The surveys suggest that the Asian noodle bowl does not seem to have severely harmed the region’s business activity to date. Use of FTA preferences is higher than expected from previous studies (22% of responding firms). Furthermore, only 27% of responding firms said that multiple rules of origin significantly added to business cost. However, as more currently under negotiation FTAs take effect and the complexity of the Asian noodle bowl increases, the business impact is likely to intensify. Implementation of key policies and closer public-private sector cooperation can help mitigate negative effects and facilitate a more SME-inclusive business response to FTAs. Suggestions include: encouraging most favored nation (MFN) liberalization, rationalization of rules of origin, upgrading origin administration, increased awareness of FTA provisions, improving business participation in FTA consultations, and SME support.

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Comment(s)

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1. manuel a cardenas
   (posted 20 April 2009 / 10:52:18 PM)
   
   Chile maybe is a unique country because it has suscribe the greater quantity of agreements of free commerce. The net effect is that it has develop faster in the latin american region.
   The problem with the small business is not with the agreements signed, the problem is the lack of opportune information given with the tools that the information technology can give. The governments have to construct the adequate tools in order that the small business can get the adequate information for their needs and benefit with agreements as the big business does.