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

• In Event: International Collaboration and Foreign Investment

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 failed BIT and PTA negotiations by the United States, Canada and the European Union. Using process tracing and regression 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. Importantly, we find that most states view PTAs as more ambitious than BITs, and where neither can be formed states have increasingly defaulted to Trade and Investment Framework Agreements (TIFAs), which amount to declarative efforts to maintain regular negotiations over economic affairs but do not often result in further economic agreements. In an era of conflictual diplomatic relations, this article highlights the importance of failed negotiations, and the importance of evaluating bargaining failure in the context of international economic policy.

Authors

• Lauren C. Konken, Princeton University

• Haillie Na-Kyung Lee, Seoul National University

• Shea Marie Minter, Georgetown University