University of Arkansas, Fayetteville ScholarWorks@UARK Theses and Dissertations 5-2012 A Comparative Analysis of Free Trade Between the U.S. and the EU : A Case Study of the U.S./Chile FTA and the EU/Chile FTA Misti Dawn Sharp University of Arkansas, Fayetteville Follow this and additional works at: http://scholarworks.uark.edu/etd Part of the Agricultural Economics Commons, and the International Relations Commons Recommended Citation Sharp, Misti Dawn, "A Comparative Analysis of Free Trade Between the U.S. and the EU : A Case Study of the U.S./Chile FTA and the EU/Chile FTA" (2012). Theses and Dissertations. 284. http://scholarworks.uark.edu/etd/284 This Thesis is brought to you for free and open access by ScholarWorks@UARK. It has been accepted for inclusion in Theses and Dissertations by an authorized administrator of ScholarWorks@UARK. For more information, please contact [email protected], [email protected]. A COMPARATIVE ANALYSIS OF FREE TRADE BETWEEN THE U.S. AND THE EU: A CASE STUDY OF THE U.S./CHILE FTA AND THE EU/CHILE FTA A COMPARATIVE ANALYSIS OF FREE TRADE BETWEEN THE U.S. AND THE EU: A CASE STUDY OF THE U.S./CHILE FTA AND THE EU/CHILE FTA A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science in Agricultural Economics By Misti Dawn Sharp University of Arkansas Bachelor of Science in Agricultural, Food and Life Sciences in Agricultural Business, 2008 May 2012 University of Arkansas ABSTRACT Unlike many studies that assess the impacts of free trade agreements (FTAs), this thesis is a study of the negotiated outcomes in FTAs between the United States (U.S.) and Chile, and the European Union (EU) and Chile. Existing negotiation literature pertains to multilateral trade talks, dispute settlements or bilateral one good trade agreements. Studies regarding the negotiation process and other factors influencing outcomes in comprehensive FTAs are rare. In order to address this gap in the literature, this thesis is an analysis of how and why the FTA between Chile and the U.S. differs from the FTA between Chile and the EU, in particular with regards to sensitive agricultural goods. As the two agreements were negotiated and implemented within similar time frames, and thus a similar political and economic environment within Chile, it is possible to use the theory-testing method of difference case study approach. This framework helps to test the validity of one leading theory of economic negotiations posited by Odell. Moreover, any shortcomings in the applicability of Odell’s theory to these specific negotiations can be ascertained using this methodology. Odell’s theory postulates that negotiated outcomes are a result of market conditions, domestic politics, and negotiator beliefs and strategies. In addition to causality in FTA negotiations, the case study will ascertain how the U.S. and the EU differed in their approaches to negotiating free trade. Conclusions drawn from this study include that there are varying degrees of sensitivity in agriculture which result in special and specific negotiated outcomes. Furthermore, the U.S. and the EU differ in their approaches to free trade which inevitably affects negotiated outcomes. Overall, Odell’s theory is a competent basis for understanding these FTA negotiated outcomes. Additional theoretical understanding of the impact of the institutional considerations in the negotiation process and existing domestic policies could however add to the comprehensiveness of this theory. This thesis is approved for recommendation to the Graduate Council. Thesis Director: ________________________________________ Dr. Eric Wailes Thesis Committee: ________________________________________ Dr. Eric Wailes ________________________________________ Dr. Dieter Kirschke ________________________________________ Dr. Alvaro Durand-Morat THESIS DUPLICATION RELEASE I hereby authorize the University of Arkansas Libraries to duplicate this thesis when needed for research and/or scholarship. Agreed ________________________________________ Misti Dawn Sharp Refused ________________________________________ Misti Dawn Sharp ACKNOWLEDGMENTS This thesis would not have been possible without the direction, patience and resources provided by Dr. Eric Wailes. Also important to the completion of this thesis was the advice and assistance provided by Dr. Alvaro Durand-Morat. Along with Dr. Dieter Kirschke at Humboldt University, these three professors and researchers were able to give me the knowledge and enthusiasm to complete this thesis although any failings are entirely my own. Without the participation of the interviewees, this thesis would not have been possible. Although I will not mention them all by name, I thoroughly enjoyed speaking to negotiators and other negotiation participants in Chile, the United States and the European Union. Without their assistance, this thesis would have been greatly lacking as they were able to teach me more than any book or article ever could. Special thanks must also be extended to my husband, Chris Sharp, who was always patient and understanding throughout my travels and long hours working on this research project. DISCLAIMER The contents of this thesis were developed under grant P116J080034 from the U.S. Department of Education and NRI Competitive Grant 0212467 from the U.S. Department of Agriculture, “U.S. Agricultural Trade Negotiations and Outcomes” under the USDA National Research Initiative Grant. However, the contents do not necessarily represent the policy of the U.S. Department of Education nor the U.S. Department of Agriculture and you should not assume endorsement by the U.S. Federal Government. TABLE OF CONTENTS CHAPTER 1: INTRODUCTION ................................................................................................... 1 1.1 Purpose .................................................................................................................................. 1 1.2 Objectives .............................................................................................................................. 1 1.3 Rationale for this Research ................................................................................................... 3 1.3.1 Rationale for the Qualitative Case Study ....................................................................... 3 1.3.2 Rationale for Focusing on Agriculture ........................................................................... 4 1.4 Thesis Organization............................................................................................................... 5 CHAPTER 2: METHODOLOGY .................................................................................................. 8 2.1 Qualitative versus Quantitative Research Methods .............................................................. 8 2.2 Methods used in diplomacy literature ................................................................................... 9 2.3 Case Study Methods ............................................................................................................ 12 2.4 The Case Study at Hand ...................................................................................................... 14 CHAPTER 3: LEADING THEORIES AND FRAMEWORKS IN ECONOMIC NEGOTIATIONS ......................................................................................................................... 18 3.1 Brief Introduction to Negotiation Theory ........................................................................... 18 3.1.1 Basic Axioms in the Theoretical Framework ............................................................... 19 3.1.2 A Brief Assessment of Existing Theories ..................................................................... 21 3.2 Theoretical Tools in ENT .................................................................................................... 24 3.2.1 The Possibility Frontier ................................................................................................ 24 3.2.2 Negotiation Process Model ........................................................................................... 27 3.2.3 Best Alternative To a Negotiated Agreement (BATNA) ............................................. 27 3.2.4 Strategies and Tactics in Negotiations .......................................................................... 28 3.3 Odell’s Theory in More Detail ............................................................................................ 30 3.4 Theory Conclusions............................................................................................................. 33 CHAPTER 4: CASE STUDIES OF THE U.S./CHILE AND EU/CHILE FTAS ........................ 34 4.1 The Descriptive Case Study ................................................................................................ 34 4.1.1 Sections in FTAs .......................................................................................................... 34 4.1.2 Market Liberalization Results ...................................................................................... 39 4.1.3 TRQ Comparison .......................................................................................................... 42 4.2 Relative Assessment of the FTAs ....................................................................................... 46 4.3 Introduction to the Selected Product Case Studies.............................................................. 51 4.3.1 The Dependent Variable: Negotiated