Three-Level Game Theory and the Strategy of Eu-Korea Fta Negotiation

AbstractIn order to analyze the EU's FTA strategies, this paper introduces a theory of three-level games, putting a two-level games theory in practice. Since Putnam suggested the theory of two-level games, many analysts have tried to apply it to international negotiations at the bilateral level. Putnam decomposes the international negotiation process into two stages. As authors apply this theory to a regional integration area such as the EU, the Community has rights to the Common Commercial Policy. In view of these, this article puts forward a number of hypothetical propositions. A theory of three-level games analytically breaks down the international negotiation process into three stages; international level, regional level and national level.First, at the regional level, the Community takes a high standard of product and process regulation. Second, certain industries in each of the member states, forecasting comparative disadvantage, directly put pressure on the national level (level III) or the regional level (level II). Third, though each of the member states faces pockets of strong domestic pressure to protect certain industries, it is impossible to refuse to negotiate with other states at the international level. Also, the member states cannot establish any strategy such as package negotiation or negotiation between different issues. Forth, in particular, the EU carries its point to insist on KORUS parity in the case of Korea-EU FTA, to widen Korea's win-sets.In conclusion, the regional community with Common Commercial Policy, improves the standard of the multilateral agreement.Key words: Two-level games theory, Theory of three-level games, European Union (EU), Korea-EU FTA, Common Commercial PolicyINTRODUCTIONIn the past, FTA negotiations have been regarded as the commercial policy of nations with low tariffs or highly liberalized markets. Nevertheless, large economic blocs such as the US and the EU have recently been striving to establish first-comer status in the market and to expand their influences by competitively concluding FTAs. As of 15 January 2012, some 511 notifications of RTAs (counting goods and services separately) had been received by the GATT/WTO; of these, 319 were in force.3When considering facets such as the comprehensiveness and openness of concluding FTAs and the contents of the negotiations, FTAs are often categorized into FTAs, FTAs, and developing country-style FTAs. In US-style FTAs, the degree of comprehensiveness, including the implementation period and scale of tariff liberalization, is high. In particular, the neo-liberalist disposition of US-style FTAs, which demand thorough liberalization, deregulation, and resolute standardization, is distinct and it has been pointed out that they tend to be harsh negotiations for their trading partners. In comparison, the existing assertion is that EU-style FTAs have traditionally considered reciprocity for its trading partner and negotiations are flexible by case.However, there is a need to rethink this assertion through an overall examination of the EU's unique character and its recent foreign trade strategy. The EU has based its common commercial policy on the concepts of regionalism and multilateralism. That is, it is true that the importance of FTAs had been placed relatively low in its foreign trade strategy. The primary function of the FTAs the EU had concluded has been either as a temporary measure for European nations preparing for application as a Member State4 or to give preferential treatment to nations with which it has historically had strong relations.5 Therefore, relative consideration has taken precedence among reasons for concluding FTAs with specific trading partners, and if an analysis is to be done on the EU's general strategy for FTAs, focus must be placed on its FTAs with Mexico, Chile, and Korea or FTAs currently in negotiation.This paper has selected the EU-Korea FTA in order to analyze the EU's FTA negotiation strategy. …