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This article explains how the institutional context of international negotiations influences their outcomes. I argue that issue linkage counteracts domestic obstacles to liberalization by broadening the negotiation stakes. Institutions bolster the credibility of the linkage to make it more effective. I test the argument in the agricultural sector, which has been among the most difficult sectors for governments to liberalize. Statistical analysis of U.S. negotiations with Japan and the EU from 1970 to 1999 indicates that an institutionalized linkage between agricultural and industrial issues encourages agricultural liberalization in both Japan and Europe. Through case studies of key negotiations, I first examine why countries choose to link issues, then show how the linkage changes interest group mobilization and shifts the policy process to promote liberalization.
Why do some international economic negotiations bring major policy changes while others end in deadlock? The difference between success and failure in these negotiations often amounts to billions of dollars and the seeds of economic disorder or cooperation. A successful negotiation can establish rules that open markets and promote coordination of policies. For example, the Bretton Woods conference of 1944 established the framework for postwar economic cooperation that promoted greater interdependence. Fifty years later, the Uruguay Round Agreement reduced agricultural and industrial trade barriers and expanded trade rules to regulate services and investment. On the other hand, failed negotiations often leave both sides worse off as relations between participants deteriorate. One such setback was the World Economic Conference of 1933, which ended without agreement and was followed by retaliatory trade protectionism and competitive currency devaluations. Failures on a smaller scale can also have significant consequences. For example, inability to reach agreement on wheat support policies in the Tokyo Round led to a subsidy war between the United States and Europe during the 1980s that drained their budgets and undercut the sales of developing country farmers. While the consequences of a negotiation may be far-reaching, the source of successful negotiation strategies lies in the details of the institutions that shape the negotiation process.
To explain negotiation outcomes, one must look closer at how the agenda, rules, and procedures of a negotiation influence state choices. Power and interests alone fail to account for the variation across negotiations. Strong states sometimes are unable...