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Noodle Bowl: Regional trade Agreements in Asia

There are around 40 free trade agreements (FTAs) involving Asian countries and another 70 are under negotiation. Normally, FTAs are expected to increase trade and to some extent investment between the signatories to the treaties. Can this be the case in Asia, when the numerous agreements seem to overlap with each other like the noodles in a bowl of soup which is ubiquitous across so much of the continent?

New research from the IMF suggests that agreements in general do not appear to have boosted trade between members at the expense of non-members. That is, although there is a tendency to imagine that an FTA would only benefit signatories who directly profit from reduced tariffs and non-tariff barriers, it appears that everybody benefits because countries adopt the MFN standard. MFN – most favoured nation – is the basis of the World Trade Organisation (and its predecessor) and says that any benefits offered by one country to another must then be offered to all other countries. Hence, there are no longer favourites in trade. Consequently, countries who make trade agreements are constantly raising their standards for free trade to the mutual benefit of everyone who deals with them.
The policy implication that the IMF draws from this is that countries with restrictive trade regimes should be constantly endeavouring to reduce their trade barriers while also striving to live up to multilateral trade agreement requirements. On the other hand, this is the IMF’s policy implication from nearly every item of research that it conducts.

Existing multilateral trade agreements involving the ASEAN region are the ASEAN Free Trade Area (AFTA), ASEAN-China FTA, ASEAN-Japan, ASEAN-Korea, as well as Asia-Pacific agreements to which ASEAN members may be signatories. Bilateral agreements involving ASEAN states include: Australia-Singapore, Australia-Thailand, China-Thailand, India-Singapore, India-Thailand, Japan-Malaysia, Japan-Singapore, Korea-Singapore, Laos-Thailand, Laos-USA, Malaysia-Pakistan, New Zealand-Singapore, New Zealand-Thailand, Singapore-EFTA (European Free Trade Area), Singapore-Jordan, Singapore-Panama, Singapore-USA, Thailand-Bahrain and Vietnam-USA.

For more details, see Patrizia Tumbarello’s “Unraveling Asia’s ‘Noodle Bowl’ of Trade Pacts” in IMF Survey, Vol.38, No.10 (June 18th, 2007), pp.150-1.
The most recent version of the IMF Survey is available online at:

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