andreahernandeztec

[andreahernandeztec]

Image taken from: UNCTAD. (2006). Investment Provisions in Economic Integration Agreements. 23 de octubre del 2020. Available online: http://unctad.org/en/docs/iteiit200510_en.pdf 

Images taken from: Alan Fairlie Reinoso. (2006). Regionalismo y Multilateralismo: Algunas Implicancias para América Latina. 23 de octubre del 2020, de CEPAL Sitio web: https://www.redge.org.pe/sites/default/files/A%20Fairlie_Multilateralismo%20y%20Regionalismo_0_0_0.pdf

[andreahernandeztec]

Spaghetti Bowl Effect

Introduction

International Trading has been one of the many factors which has contributed to the acceleration of the globalization process that we are living nowadays. Countries have used the Free Trade Agreements, Preferential Trade Agreements and Regional Trade Agreements as shortcuts or ways to improve their free trading between them and become more globalized. Because of the many agreements that nowadays exist this has become a huge problem creating what Jagdish Bhagwati defined as Spaghetti Bowl Effect.

For the last 10 years the Free Trade Agreements were and still are the most popular ones. According to de World Trade Organization there are over 550 FTA’s that have been created this last decade. In this article I will discuss and find a solution for the Spaghetti Bowl Effect.

Discussion

First we have to understand what is the Spaghetti Bowl Effect. According to the authors of the RossCongress Blog “If lines on a map were to represent every regional agreement between countries, each with own rules, tariffs and institutional structure, the map would look like a spaghetti bowl. The growing number of free trade agreements, which oust WTO multilateral negotiations as an alternative way to globalization, is called the spaghetti bowl effect.” (Alexey Nechaev, Sergey Khoroshaev, Vitality Milke, 2019).

This is how the agreements look like around the world:

Picture 1

Image taken from: UNCTAD. (2006). Investment Provisions in Economic Integration Agreements. 23 de octubre del 2020. Available online: http://unctad.org/en/docs/iteiit200510_en.pdf 

Too many agreements cause confusion specially for the companies that rely on importing or exporting their products. Today we face too many rules and this make it difficult to understand trading. Sometimes there are many unnecessary agreements and some others lead to discrimination. The problem is that this agreements are growing and will grow even more over the time, creating chaos and facilitating discrimination between countries in a legal way.

For example here we can see the agreements between Asia and America, which ones are alredy under discussion and how it will look like in the future:

Picture 2, 3 and 4

Images taken from: Alan Fairlie Reinoso. (2006). Regionalismo y Multilateralismo: Algunas Implicancias para América Latina. 23 de octubre del 2020, de CEPAL Sitio web: https://www.redge.org.pe/sites/default/files/A%20Fairlie_Multilateralismo%20y%20Regionalismo_0_0_0.pdf

As you can see the Spaghetti Bowl Effect will only grow and get worse. Because of the COVID-19 everything is changing in a fast way, specially trading. This specific situation that we are living is leading us to think better and faster ways to innovate and evolve what we have known and been practicing for years. Now is the time to think in a better solution which can lead us to the future of international trading, its time for Customs Union to take place.

Solution

My solution is focused in helping the under developed and developing countries in a way that the developed countries can guide them through out the process and that everybody can benefit from it. I think that this is the time to help between each other and learn from it, it’s the time to evolve and look into the future.

The solution that I am proposing to solve this problem is to erase all the actual free trades that exist and to create a new way in which we can implement customs unions all around the world.

We can divide the world in 3 different trading blocks so we can create and implement 3 different customs unions. I choose to divide it in this way so that it can be beneficial to everyone involved. I tried to mix a developed and powerful country with a developing or under developing country so that they can support each other and grow. Another important reason for doing this is to avoid discrimination, so that it can´t take place in the less developed countries and they can be supported and learn from the most developed ones.

The blocks would be like this:

1 CUSTOMS UNION

·      America (North, central and south)

·      Antarctica

2 CUSTOMS UNION

·      Europe

·      Africa

3 CUSTOMS UNION

·      Asia

·      Oceania

I choose customs union because in that way we can eradicate discrimination and have free trade between the countries of that block and a common external tariff. In that way trading between the 3 regions can be easier, faster and fair to everyone. Also we can easily eliminate barriers and reduce customs duty, which by the way the 3 blocks are organized it can be beneficial.

Each block will focus and specialize in what they do the best or the natural resources that they have so that they can explode their potential and the fair competition can take place all over the world.

The best example that we can look at it’s the European Union, despite their differences between each countries they unite and now they are one of the most powerful unions. The countries that were under developed or developing are growing every day faster and developing more, the ones that are developed are also growing and everybody is receiving benefits from this union. The EU is the perfect example of “union is the force”.

Conclusion

I’m a strong believer that if you help the less fortunate you are helping yourself and also by helping others the world can be a better place. This is the time for unity and to help between countries, the world is going through a hard time and its changing faster than expected, the only way to survive this world crisis is by helping each other and adapting to the new reality.

We cant survive as we did before and its time to think in the future, we have to accept that globalization is happening faster than we know and that if we don’t adapt and face it we will be affected and left behind. Every country needs each other even if we don’t see it, trading will always be a part of our history and human culture because trading tells us that we are different, we have different cultures and resources and we have to recognize our countries or regions for the resources that defines us.

Total Words: 1008

Bibliography

Alan Fairlie Reinoso. (2006). Regionalismo y Multilateralismo: Algunas Implicancias para América Latina. 23 de octubre del 2020, de CEPAL Sitio web: https://www.redge.org.pe/sites/default/files/A%20Fairlie_Multilateralismo%20y%20Regionalismo_0_0_0.pdf

UNCTAD. (2006). Investment Provisions in Economic Integration Agreements. 23 de octubre del 2020. Available online: http://unctad.org/en/docs/iteiit200510_en.pdf

World Economy Encyclopedia, 2011, Customs unions. Website. Available at: see website.. (Monday, April 22, 2013). Customs Union. 23 de octubre del 2020, de OECD Sitio web: https://stats.oecd.org/glossary/detail.asp?ID=3130

Alexey Nechaev, Sergey Khoroshaev,Vitality Milke. (12 September 2019). Spaghetti bowl effect. 23 de octubre del 2020, de RosCongress Sitio web: https://roscongress.org/en/blog/effekt-miski-spagetti/