Spaghetti bowl effect
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
The spaghetti bowl effect is the tangle created when a country has many overlapping FTAs, each with its own rules of origin and tariff cut schedules. Rules of origin are the tests that decide which country a product "comes from". Exporters must check a different rulebook for each partner, so compliance costs rise. The term comes from Jagdish Bhagwati.
Example
An Indian exporter may sell to ASEAN, Japan, the UAE and Australia under four different FTAs, each with its own origin tests and paperwork. This complexity is one reason Indian exporters use FTA preferences for only about a quarter of eligible exports.
Related concepts
- Stages of economic integration
- Preferential trade agreement
- Free trade agreement
- Customs union
- Common market
- Economic union
- Monetary union
- Trading bloc
- Regional economic groupings
- Regionalism