Why breakup?: looking into unsuccessful free trade agreement negotiations

In this first attempt to systematically analyze both successful and unsuccessful free trade agreement (FTA) negotiations, we differentiate between country pairs that initiated negotiations but did not reach conclusion from pairs that did not initiate negotiations, though previous studies treat the two groups equally as “absence of FTA”. By comparing successful and unsuccessful negotiations, certain factors associated that may affect the negotiation outcomes are revealed. We examined three factors associated with negotiations: (i)the existence of a diplomatic mission in negotiating partners; (ii) reciprocity of tariff cutunder free trade agreements; and (iii) the number of negotiations conducted in parallel byone country. While our sample size is small - only 25 free trade agreement negotiationswere conducted by Singapore (17 successful and 8 unsuccessful cases) - the following canbe asserted based on comparison between the two groups. First, when negotiating partieshave diplomatic missions in the partner country, they are more likely to conclude free tradeagreement negotiations between the two. Second, when the level of “most favored nation(MFN)” rates between negotiating parties are similar, they are more likely to conclude FTAnegotiations between the two. Finally, when one country conducts multiple parallel freetrade agreement negotiations, the (less important) early-comer negotiating partners may becrowded by a new, more important negotiating partner.