Straightening the Spaghetti Bowl

There are numerous reasons of economics, trade policy, and international relations why global/multilateral trade rules may be preferable to bilateral or plurilateral trade rules. As Jagdish Bhagwati points out, the proliferation of free trade agreements (FTAs), regional trade agreements (RTAs), and preferential trade agreements (which encompasses all of them) has created a “spaghetti bowl.” In part, this is because none of those agreements (even “template” agreements signed by a large economy with numerous small economies) line up perfectly with each other. These dissimilarities seem inevitable, as each agreement represents a different set of negotiating priorities, at a different point in time, by different negotiators (it is human nature to be unable to resist tinkering with a previous negotiator's text!). As a result, these agreements create different tariff levels among different countries with different rules of origin, different phase-in periods, different marking rules, and so on. Not to mention different systems of investment protection, intellectual property protection, labor and human rights and environment provisions, and so on. Each of these differences may all have understandable bases, and even laudable ones, but the result is a system of such complexity that perhaps as much as 50 percent of all trade supposedly “freed” by these agreements ignores the benefits in favor of the certainty of MFN – usually WTO – tariffs.