Concessions in Free Trade Agreement Negotiations: An Examination of Turkey-Chile and Turkey-Egypt FTAs

Abstract

When are nondemocracies more (or less) likely to make concessions in trade negotiations? The literature on negotiations suggests that nondemocracies are less cooperative than democratic regimes in signing trade agreements. However, some nondemocracies deviate from this expected behaviour. I evaluate the impact of regime type on concessions in free trade agreement (FTA) negotiations. I extend Putnam’s two-level games theory and argue that states’ win-set size in negotiations affects the concessions they make. Nondemocracies have wider win-sets than democracies because they have a less complex institutional structure with fewer checks and balances. Among nondemocracies, there is also significant variation in domestic institutional characteristics, specifically in the number of veto players. I propose that concessions are likely to vary systematically based on these institutional differences. I test my argument through two case studies, the Turkey-Chile FTA and the Turkey-Egypt FTA. I introduce a new measurement for concessions using tariff-related and non-tariff concessions. In particular, my measurement of non-tariff concessions is based on the parties’ previous trade policy practices, while the tariff-related concessions are assessed using the expected negotiation outcomes of the export-oriented and import-competing groups. I find that nondemocracies are more likely to make tariff-related and non-tariff concessions with democracies than other nondemocracies. I present additional evidence from the negotiation rounds and two interviews with former chief negotiators of Turkey and Chile to complement these results.