The outcomes of trade conflicts and negotiations between the United States and South Korea, 1980--2000

What determines the outcome of a bilateral trade conflict between a weaker country and a stronger country, and how can a weaker country gain despite the unequal relationship? The central argument is that the outcomes are shaped by comparative advantage, the objective of the country that initiates the negotiation or conflict, and the negotiation process they follow. For our purposes the objective means either opening a foreign market or increasing the level of protection in the home market. The negotiation process refers to strategies and tactics used by governments.; This study concentrates on conflicts and negotiations between the Republic of Korea and the United States between 1980 and 2000. Two empirical methods are used. A data set representing all bilateral trade conflicts and negotiations between the two countries during this period is constructed and analyzed. Case studies of two of these negotiations allow more thorough observation of the negotiation process.; This study makes several original contributions to the literature. First, it supplies new quantitative and qualitative evidence about the phenomena. Second, given the assumptions and methods used, this evidence shows that when a government initiates a conflict or negotiation to protect the home market, the outcome is more favorable to the country whose industry has a comparative disadvantage. Third, in this data set comparative advantage does not seem to affect the outcome of a negotiation designed to open a foreign market. Fourth, the study provides evidence that the negotiation process decisively affects the outcomes. In the statistical analysis of the universe of cases, when the US government used legal authority that signifies a threat to penalize Korea if it does not concede, the US gained more than when it used this offensive value-claiming strategy. The case studies add that US tactics influenced the credibility of its threats. Korea reduced its losses in both cases by using defensive value-claiming tactics---such as delaying concessions until the last moment-and, in semiconductors, by using value-creating strategy---such as proposing an agreement that would satisfy competing US producers and asking US importing industries to voice a preference for compromise.