In this first attempt to systematically analyze why countries (not) sign FTAs, we differentiate between country pairs that initiated negotiations but did not reach conclusion from pairs that did not initiate negotiations. By comparing successful and unsuccessful negotiations, we can have a better understanding why countries decided (not) to pursue FTAs. In explaining the outcome of FTA negotiations, the paper sheds light onto negotiation resources from three perspectives: resource allocation, resource diversion and resource requirement. By conducting a systematic comparison of 25 FTA negotiations conducted by Singapore, the study finds that FTA negotiation tends to be unsuccessful when (1) negotiating parties do not have diplomatic missions in the partner country (resource allocation); (2) negotiating parties conduct multiple FTA negotiations in parallel (resource diversion); and (3) negotiation becomes complicated due to the significant difference in MFN tariff between the two parties (resource requirement).
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In the case of conflict resolution negotiations or mediations, there are urgent problems to be settled, which implies that conflict resolution negotiations sometimes (or often) fail (Kleiboer 1996).
This study assumes all launched negotiations are negotiations with “qualified” partners in terms of economic determinants. However, there is a possibility that countries launch negotiations with “unqualified” partners in terms of economic determinants of FTA due to other motivations (e.g., diplomatic) without success; in this case economic determinants affect the outcome of the negotiations, rather than the launch of the negotiations. Such a scenario is unlikely because there are usually feasibility studies emphasizing economic impacts, but such a possibility cannot be ruled out. To rigorously test this would require a quantitative model to identify the determinants of the launch of negotiations, including diplomatic motivations. If there is a noneconomic factor that positively affects the launch of negotiations, but negatively affects the conclusion of negotiations, say, diplomatic motivations, we can say negotiation with an unqualified partner in terms of economic determinants is launched.
The former are called “own-FTA interdependence,” which is the effect of the quantity of FTAs signed by a potential FTA partner with other countries; the latter is “cross-FTA interdependence,” the effect of the quantity of FTAs between other country pairs.
Nevertheless, there are cases of unsuccessful negotiations for partial scope agreements, such as those between India and Egypt. See Table 1.
One exception is TPSEP (among Singapore, Brunei, New Zealand and Chile), which is regarded as a bilateral agreement between Singapore and Chile. This is because, from the Singaporean perspective, TPSEP essentially involved negotiating only with Chile, because Singapore already had an FTA with New Zealand and Brunei.
For example, it is difficult to establish an agreement that Iceland failed negotiations when negotiations for FTA between Thailand and EFTA (which includes Iceland) become unsuccessful.
When negotiations for FTA between Thailand and EFTA become unsuccessful, we could argue that this is partly because of Thailand’s negotiation position.
This study uses the data available as of February 2018.
A Trade Representative in Taipei is regarded as a Singaporean “embassy” in Taipei.
Switzerland, Norway, Iceland and Liechtenstein.
As discussed in Sect. 4.1, multi-party FTA negotiation that absorbed those “unsuccessful” bilateral negotiations eventually became successful.
Singapore also approached Chile (ibid.), while, ultimately, a bilateral FTA with Chile was not pursued.
Because of unavailability, data in 2002, 2003 and 2005 is used for Ukraine, Pakistan and the United Arab Emirates (UAE).
The data in the World Tariff Profile does not show bilateral basis. It reflects the MFN simple average tariff from the world (not Singapore). Because tariffs of the EU and Taipei are generally low, the use of a non-bilateral average may suffice.
In the case of the EFTA, a simple average of the MFN simple average for Switzerland and Norway is used. In the case of the GCC, a simple average for Saudi Arabia and the UAE is used.
Mexico (high tariff group) is recorded as unsuccessful in Model 1, but as successful in Model 2. Canada and Bahrain (low tariff group) are recorded as unsuccessful in Model 1, but as successful in Model 2.
For the Japanese Mission, see: https://www.geneve-mission.emb-japan.go.jp/itpr_en/about.html/. For the Singaporean Mission, see: https://www.mfa.gov.sg/geneva.
Ghosn (2010) suggests this is the case for conflict resolution mediation. Also see footnote 2 of this paper.
Singapore’s FTA negotiations with Japan began in 2000, and resulted in an FTA in 2002. Singapore approached a cautious Japan in October 1999. (Munakata 2001, 20).Singapore’s negotiations with Australia were launched in 2000 and the FTA was signed in 2003.
P5 was discussed at the margin of the APEC Summit in September 1999, though it did not reach any conclusion (Dent 2006, 46).
At the 1999 APEC Summit held in Auckland (September 1999), Singapore and New Zealand agreed to pursue a bilateral FTA, partly because the P5 FTA, which was also discussed alongside the Summit, turned out to be difficult to achieve in the short run. The Singapore–New Zealand FTA was signed in November 2000.
Singapore also approached Chile (ibid.), but this bilateral FTA with was ultimately not pursued.
During the Indian Prime Minister Vajpayee’s visit to Singapore in April 2002, the formation of study groups was agreed upon.
At almost the same time, during the visit of the Malaysian Prime Minister to Pakistan (February 15-18, 2005), the two countries agreed to negotiate an FTA (the first meeting was held in April 2005).
It is difficult to locate information regarding these negotiations.
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Appendix 1: List of unsuccessful negotiations of Singapore Footnote 19
The US unofficially floated the idea of a “Pacific 5 FTA” or “P5” in November 1997 (Munakata 2001, 13). At the margin of the APEC Summit in November 1998, the P5 FTA was discussed among the five countries present. However, the likelihood of successfully concluding P5 had diminished by the middle of 1998.Footnote 20 In June 1999, New Zealand proposed an FTA with Singapore.Footnote 21 New Zealand was an APEC chair in 1999, and intended to promote the new WTO negotiations and APEC Bogor goal (Munakata 2001, 18). After being approached by New Zealand in June 1999, Singapore decided to actively pursue FTAs with various partners, which led to its involvement in a large number of both successful and unsuccessful FTA negotiations.
At the APEC Summit in September 1999, Singapore proposed FTA negotiations to Mexico, Chile and KoreaFootnote 22 (Munakata 2001, 18); Mexico agreed. The first round of negotiations between Singapore and Mexico started in July 2000 (Dent 2006, 265). After four rounds, the two countries adopted the Joint Declaration on November 13, 2000. In the following month, Vicente Fox assumed Mexico’s presidency, which may have had some impact on Mexico’s FTA policy. However, it should be noted that bilateral negotiations continued even under this new administration. After the adoption of the Joint Declaration, six more rounds of negotiations were held by the end of 2003 (Low 2003). However, no negotiations have been held since then. By 2005, the Singaporean government was of the view that negotiations were no longer active (Spring Singapore 2005).
In the following month, a new president, Vicente Fox assumed presidential office, which may have some impact on Mexico’s FTA policy. The fifth and sixth rounds of negotiations were held in July and September 2003, respectively. However, no negotiations held since the sixth rounds in late 2003. At least by 2005, the Singapore government was of the view that the negotiating was no longer active (Spring Singapore 2005).
Singapore also approached Canada and proposed an FTA.Footnote 23 On June 5, 2000, the two parties released an announcement stating that the two countries would begin exploring the possibility of negotiating an FTA.Footnote 24 On October 21, 2001, on the margins of the meeting of the Asia–Pacific Economic Cooperation (APEC) economic leaders in China, Singapore and Canada announced the official launch of negotiations toward a bilateral free trade agreement. Formal negotiations commenced in January 2002. Six rounds of negotiations were held by October 2003, but the negotiations stagnated thereafter. At the APEC ministerial in 2006, the two parties agreed to resume negotiations, and a seventh round was held in late February 2007.Footnote 25 After this meeting, Canada issued a press release stating that it was not yet prepared to conclude this FTA. Another round of negotiations was held in 2007, but no further progress has been made since.Footnote 26 Negotiations have been on hold by mutual agreement since November 2009.Footnote 27
The Prime Minister of Bahrain visited Singapore in October 2003, and the leaders of the two countries agreed to pursue an FTA (Feng 2004, 211). Primary discussion on this FTA was held when Singaporean Prime Minister Goh visited Bahrain on February 17, 2004.
Singapore also approached India in 2000. When Prime Minister Goh visited Delhi in January 2000, the two parties agreed to set up a task force on bilateral economic cooperation, including a study on a possible FTA. The progress of the study was slow, but Indian officials appreciated that an economic partnership agreement that covers not only goods but also services would be more beneficial. At an April 2002 meeting between the two countries’ leaders, India accepted Singapore’s position that a Singapore–India FTA would be useful, although India proposed a Comprehensive Economic Cooperation Agreement (CECA) covering services to be studied by the task force. India seemingly valued the tie with Singapore as a stepping stone toward India–ASEAN cooperation. The launch of the Singapore–India FTA negotiations followed the signing of the Declaration of Intent on April 8, 2003, witnessed by Goh Chok Tong (Singapore Prime Minister) and Shri Atal Bihari Vajpayee (Indian Prime Minister) in which a joint study group report on economic cooperation was presented.Footnote 28 The Singapore–India CECA was signed on June 29, 2005, after 13 rounds of negotiations.
Singapore–Sri Lanka (unsuccessful)
Singapore and Sri Lanka agreed to launch FTA negotiations on August 29, 2003, soon after the signing of the Declaration of Interest between India and Singapore. The inaugural discussions, concerning the Comprehensive Economic Partnership Agreement, were held on October 20, 2003, in Colombo; this negotiation has not yet been concluded.
The first meeting of the joint study group between Singapore and Pakistan was held at Islamabad in February 2005.Footnote 29 At this stage, the parties had already agreed to negotiate an FTA at their next meeting. The first round of negotiations between Singapore and Pakistan was actually held from August 24 through 26, 2005. By June 2006, four rounds of negotiations had been held. However, since then, no further negotiations have occurred, despite Pakistan’s efforts in June 2011 to resume them.
The Singaporean Prime Minister visited Egypt on February 11, 2004, and he and Egyptian leaders agreed to launch FTA negotiations at this time (Low 2008, 51; Feng 2004, 211). The two countries signed a Declaration of Intent regarding this FTA on November 14, 2006. In March 2010, two Egyptian ministers visited Singapore and reviewed the progress of negotiation with the Senior Minister of Singapore. The Singaporean government secured the budget to negotiate this FTA for FY 2010 (April 2010–March 2011)Footnote 30; in contrast, Singapore’s FY 2011 budget does not include costs associated with negotiating an FTA with Egypt.Footnote 31
Moroccan King Mohammed VI was in Singapore on April 29, 2005. The statement issued during his visit mentions the commencement of FTA negotiations. Negotiations were launched in 2007 (Low 2008, 57); however, it appears that negotiations encountered problems soon after this.Footnote 32
On May 8, 2008, Singapore and Ukraine launched FTA negotiations. Material from Singapore’s Trade Policy Review prepared by the WTO Secretariat in 2008 mentions that Singapore was negotiating an FTA with Ukraine (WT/TPR/S/202). Singapore’s budget for FY 2008 (April 2008–March 2009) and FY 2009 (April 2009–March 2010) includes the Singapore–Ukraine FTA, but the FY 2010 budget does not.
Appendix 2: Table of diplomatic missions of/in Singapore
Permanent Mission (Geneva)
Permanent Mission (Brussels)
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Hamanaka, S. Why breakup? Looking into unsuccessful free trade agreement negotiations. Int Polit 57, 634–662 (2020). https://doi.org/10.1057/s41311-019-00195-7
- Unsuccessful negotiations
- Determinants of FTAs