Digital Trade Negotiation in Korea-China-Japan FTA: Minimax Strategy in the Process of Making Consensus

Abstract

Purpose – The purpose of this paper is to apply the minimax procedures of the negotiation model to digital trade negotiation in the KCJ FTA to predict possible negotiation outcomes, as well as sensitive issues, for each country. Design/Methodology/Approach – Based on the negotiation model of the minimax procedures, this paper first derives top preferences for each country in negotiating the KCJ FTA. It then conducts a sectional analysis of issues and derives possible negotiation outcomes in terms of both majority voting (MV) outcomes and minimax outcomes (FBn). It finally predicts sensitive issues in the voting process and outcome rankings for each section of issues. Findings – For the first section of issues, the minimax outcome will prevail, while the MV outcome will be the first in ranking for the last section of issues. In terms of sensitivity during the negotiation process for voting, China is predicted to be the most reluctant to agree on binding rules on non-discrimination. As Japan is not as sensitive as the other two countries in each issue of digital trade agreement, both Korea and China are predicted to be the most hesitative in agreeing on binding rules on source code. Research Implications – Under the minimax procedures, negotiation positions as well as the dynamics of the voting process for each issue can be systematically predicted ex ante. The negotiation outcomes derived from the model can be viewed as win-win that would not produce any left-out countries, since each country minimizes the deviation from the initial top preference to the agreed deal.