With similar economic, political, and legal roots, the EU and US appear likely allies in an ever-more globalized world. Emerging economies have recently forged their way into global markets, assuming market space previously occupied by EU and US. To tap into the growth of these markets, both trade powers have resorted to preferential trade agreements as an attempt to secure preferential market access. With a strong reliance on the same export goods, they are, at the same time, each others most likely rivals in the race for market space. As a result, the list of countries with which the EU and US have signed PTAs is remarkably similar, and recently, instances occur where both sides of the Atlantic negotiate individually with the same third party at the same time. This prompts the question: Does the US (EU) take the European (American) position into account when negotiating over trade preferences with a third country?
In contrast to existing literature which focuses on the initiation of PTA-negotiations, we are more interested in the negotiated outcomes. Is ‘economic rivalry’ a significant factor and if so in which ways? Does the EU (US) deviate from his own template PTA if the partner-country already has a PTA in place? By answering these questions, we can gain new insights into the underlying motivations of going bilateral. Are offensive PTA’s used to obtain an edge over their transatlantic rival in specific sectors and are defensive trade agreements merely about levelling the playing field?
Building on notions of relative gains and drawing from the literature on PTA-proliferation, we will evaluate third party effects on bilateral negotiations by using tariff implementation schedules included in preferential trade agreements; using these schedules, we can construct a quantitative measure that identifies the impact, if any, the US has on the EU’s negotiated tariff schedules with Chile and South Korea (and vice versa). The resulting findings will be substantiated by interviews conducted over the last year.
