What Can We Learn from Failed Economic Negotiations?: Lessons from BITs and PTAs

• In Event: Trade Agreements, Negotiations, and Institutional Design (Pre-Recorded)

Abstract

How often do attempts to negotiate bilateral investment treaties (BITs) or preferential trade agreements (PTAs) fail? What explains this failure, and what do policymakers take away from these negotiation efforts? This article constructs an original dataset of all BIT and PTA negotiation attempts initiated by the United States and Canada between 1954 and 2020. We find that negotiation failure happens often: in both countries, 33% of initiated BIT negotiations fail, and 50% of initiated PTA negotiations fail; moreover, these failures almost exclusively occur during the negotiations period. Using process tracing and survival analysis, we show that the primary determinants of failure include the scope of negotiations and electoral turnover in at least one of the negotiating states. In an era of conflictual diplomatic relations, this article highlights the importance of failed negotiations in the study of international political economy.

Authors

• Lauren C. Konken, Princeton University

• Haillie Na-Kyung Lee, Seoul National University