Tradeoffs in Negotiations Creating a win-win outcome Ahmed F. Ghoneim Cairo University Email address: aghoneim@gmx.de

Determine your objective(s) Trade Economic Political Institutional Others

Identify your position before starting negotiations What is the status of trade and economic situation at home? (indicators as exports % of GDP, rate of growth of exports, etc.) What is the legislative status of services industries (are laws outdated, is inefficiency of services increasing transaction costs?) To what extent is your political regime stable (is democracy well established, are human rights respected) (this is important in deep integration)

Identify potential gains from concluding such agreement Are trade prospects likely to improve? How and which products, and why? Are there are other economic gains (increased inflow of foreign direct investment, increased aid flows, etc) Are there political gains (using the agreement as gateway for other forums, using the agreement as an anchor for reforms) Are there legislative gains (introducing some changes in laws that were difficult to include or faced resistance by some lobbies)

Elements that need to be considered Trade Interests Economic Impact Legislative Issues Domestic Politics Foreign Relations Public Opinion

Tradeoffs in negotiations There are a lot of tradeoffs that can be within the same sector or between different sectors (example: your country might gain a market access for an important product while losing domestic market share for another imported product, or you might gain on the trade front but lose on the legislative front)

You need to identify your priorities What is the main aim of negotiating such agreement (probably that is clear and comes from the political leadership)? However, you need to minimize costs and maximize benefits when reaching the ultimate objective

Costs are not always costs and benefits are not always benefits Costs and benefits differ depending on the point of view of the stakeholder, and on time, etc. Examples: trade liberalization might kill some industries in the short run but might result in birth of new competitive industries. It might destroy lobbies and increase efficiency but might lead to unemployment and loss of tariff revenue.

Examples of tradeoffs in Regional Trade Agreement Political gain versus trade loss Trade gain versus loss of national sovereignty Trade gain versus unemployment Legislative burden versus better market access Legislative burden versus better efficiency Increased investments versus regulatory burden Suppressing domestic lobbies versus loss of national sovereignty Short run costs versus possible long term gains in trade

Evaluating the gains and losses There is no method that can identify the exact gains and losses from concluding a trade agreement Research helps, but make sure the assumptions reflect reality Evaluation should be an overall evaluation depending on your ultimate objective and not on an issue per se Avoid being captured in details, however remember that devil is in details

Tips for better negotiations Let the national interest be your driving force Avoid personal influences on negotiations Make sure you are capable as a country to handle the agreement Always check the safeguard provisions and assistance provided Sell your position domestically

Tips for negotiations Always have more than one option ready Gradualism might help in certain cases Ask for the moon, you will probably get less (which is what you want) but don’t start by asking for the less Always have a wide vision, and not a narrow mercantilist vision

Playing it “Politics” Balancing Commercial Interests at home and abroad Addressing the Policy Issues at home and abroad Building Political Coalitions at home and abroad Solving Institutional Problems at home and abroad Seeking Public Support at home and abroad

During Negotiations, take care of the following: Have well command of information Pay attention to cultural issues (it affects the mood and pace of negotiations) Be credible Start by points of agreement and then move to difficult issues Depend on experts in each field you are negotiating (make sure you consult more than one with different background)

Remember the following Theory ended up that in Regional Trade Agreements “anything can happen”, which implies that there is no guarantee for anything. In other words, Regional Trade Agreements are rather an opportunity for expansion of gains but they cause losses as well. Your role should be identifying an alternative combinations of measures to solve the trade problem, while preserving legitimate objectives in other policy areas (what policy laws, rules, or institutional arrangements do we accept as given, and which should we consider challenging?)

Thank you