Endnotes

¹Bhagwati (1995) contains an early reference to the "spaghetti bowl" problem in the context of extending the North American Free Trade Agreement into new countries, starting with Chile and extending APEC into an FTA. Bhagwati (2008) provides a conceptual update and discusses the phenomenon in East Asia. For various perspectives on the Asian noodle bowl, see Baldwin (2006), Dent (2006), Manchin and Pelkmans-Balaoing (2007), Tumbarello (2007), Plummer (2007), ADB (2008b), and Petri (2008).

²In mid-January 2009, East Asia had 109 FTAs at various stages (37 FTAs in effect, 7 signed but not in effect, 37 under negotiation, and 28 proposed); the Asia and Pacific region as a whole had about 210 FTAs at various stages (78 FTAs in effect, 27 signed but not in effect, 58 FTAs under negotiation, and 47 FTAs proposed).

³Japan's EPA partners are Singapore, Mexico, Malaysia, Chile, Thailand, Brunei Darussalam, Indonesia, and Philippines. For an illuminating comparison of the FTA strategies of leading East Asian economies see Hufbauer and Schott (2009).

⁴More complete explanations can be found in Feridhanusetyawan (2005), Kawai (2005, 2007), and ADB (2008). Kawai and Wignaraja (2008, 2009) explores characteristics and economic effects of East Asian FTAs.

⁵As Bhagwati (2008: 63) observed, "the phrase (Asian noodle bowl) was introduced by President Haruhiko Kuroda of the Asian Development Bank in July 2006 in a speech delivered to the Jeju Summer Forum in South Korea."

⁶As the survey of this literature by Panagariya (2000: 328) concluded: "There is now general agreement among free trade economists that the best solution to this problem is to speed up MFN liberalization. Once external tariffs drop to zero, tariff preferences and the spaghetti bowl created by them will automatically disappear."

⁷UNCTAD-JETRO (2008) examined tariff elimination and reductions in 15 bilateral and plurilateral South-South Asian FTAs and concluded that, with a few exceptions (e.g., the Korea-Chile FTA and the India-Sri Lanka FTA), such FTAs are not homogeneous in terms of both tariff lines coverage and preferential margins.

⁸See Hiratsuka, Isono, and Sato (2008) on Japan; Chia (2008) on Singapore; Wignaraja et al. (2008) on Thailand; Cheong and Cho (2009) on Korea; and Wignaraja, Lazaro, and de Guzman (2009) on the Philippines.

⁹In Thailand, for instance, a list of exporting firms that belong to electronics, automotive, and garments was taken from the Ministry of Labor. Firms were then randomly selected from each sector taking into account firm sizes and ownership structure.

¹⁰The surveys were conducted in the following periods: Japan (July 2007 to May 2008); Singapore (July to October 2007); Korea (July to August 2008); Thailand (April to August 2007); and Philippines (March to November 2008).

¹¹See World Bank (2007) and UNCTAD-JETRO (2008). Furthermore, one of the few firm-level studies for Japan indicated an FTA utilization rate of only 13% for 2006 (JETRO 2007).

¹²The 135 FTA users consist of 51 automotive firms, 42 electronics firms, 18 textiles and garments firms, 8 food firms, 7 chemicals and pharmaceutical firms, and 7 metals and machinery firms. As a percentage of the sectoral totals, users are: automotives (34%), chemicals and pharmaceuticals (26%), food (19%), electronics (18%), textiles and garments (17%), and metals and machinery (14%).

¹³Philippine firms rely extensively on customs brokers and forwarders for their export documentation requirements and therefore have not informed themselves of the details of FTA provisions. With increased FTA activity and more competition in export markets, Firms in the Philippines may need to increase their awareness levels in order to come in line with neighbors.

¹⁴Previous studies were somewhat limited in coverage of impediments to using AFTA. World Bank (2007), for instance, argues that low use of AFTA preferences is due to a host of ROO issues (e.g., difficulty in satisfying the required value-added requirement, difficulty in proving that the required value-added has been satisfied, and high administrative costs of complying with the ROOs) as well as low margins of preference.

¹⁵The ITA provides for participants to completely eliminate duties on information technology products covered by the agreement.

¹⁶This is related to the relatively few respondents and the questionnaire design, which offered only three reasons for non-use (small margins of preference, delays and administrative costs, and confidentiality of information). Meanwhile, Takahashi and Urata (2008) suggested that non-use of Japan's FTAs is linked to small trade volumes with FTA trading partners and lack of information on FTAs. Contrary to expectations, few firms answered that complicated application procedures for ROOs are an obstacle.

¹⁷The available evidence indicates growing use of AFTA since the late 1990s. As Richard Baldwin noted, "… the extremely low utilization rate in AFTA. In the late 1990s, the overall utilization rate was under three per cent. By 2002, the rate was 11 per cent for Thailand and four per cent for Malaysia" (Baldwin 2006: 1491). Our survey seems to indicate notable use of ASEAN agreements in 2007–2008. Of 202 firms that use or plan to use FTA preferences in Japan, Singapore, Thailand, and Philippines, 61 firms were actually using AFTA and 20 firms were actually using the ASEAN-PRC FTA. Cheong and Cho (2009) also indicated notable use of the ASEAN-Korea FTA.

¹⁸See Cheong and Cho (2009) and Wignaraja et al. (2008) for details.

¹⁹There is also evidence of inter-sectoral variations in the cross-country survey. As a percentage of sectoral totals, firms that complained of ROOs are: electronics (31%); automotives (28%); textiles and garments (22%); food (16%); metals, machinery, and sundries (6%); and chemicals and pharmaceuticals (4%).

²⁰This exercise draws on a growing body of empirical research on the determinants of firm-level export performance in developing countries. This literature finds that exporting firms are larger, have higher foreign equity, and are more innovative than non-exporters. For a survey, see Wignaraja (2008).

²¹Interestingly, the Korean survey also indicated that around 44% of respondents preferred less restrictive ROOs.

²²See Lall (2001) and Wignaraja (2003) for a discussion of institutions for industrial technology development in East Asian countries.

²³The value of FTAs with WTO-plus elements does exist even if MFN tariffs are reduced significantly.

²⁴Extended cumulation allows cumulation of all value contents of originating goods used indirectly within ASEAN+3 that would otherwise enter the duty into an ASEAN+3 country. As it relates to specified products (i.e., various apparel and agricultural goods) an arrangement similar to extended cumulation already exists, for example, in Japan's bilateral EPAs with Malaysia and Thailand, that permit use of inputs from other ASEAN partners. For an application of extended cumulation in the Americas, see Cornejo and Harris (2007).

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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.