Industry Interests Flip Their Support for FTAs During Different Stages of Negotiation

This study analyzes the political economy of free trade agreements (FTAs) in China, Japan, and South Korea between 1998-2016. Using a novel approach that breaks down FTA formation into four distinct stages—initiation, negotiation, ratification, entry into force—the research reveals striking variations in industry influence on trade policy decisions.

In the initiation stage (Stage I), when countries begin discussions by forming joint study groups, industry interest groups have a positive impact on pushing for agreements. This effect diminishes as negotiations move forward and becomes significantly negative during the ratification stage (Stage IV).

The findings challenge conventional understanding of FTA formation dynamics across East Asian economies.

Data & Methods:

• Analysis spans 1998-2016 period
• Focus on China, Japan, South Korea FTA cases
• Disaggregate FTA process into four distinct stages

Key Findings:

• Industry influence positive in Stage I discussions
• Negative impact during ratification (Stage IV)
• Political institutions significant only early in the process

This research demonstrates that sectoral politics powerfully shape trade agreements throughout their lifecycle, with industries showing clear preference for early-stage participation while resisting ratification. The results highlight how understanding industry dynamics can improve our explanation of FTA formation patterns across different stages.