Trade Negotiating Concepts & Good Practices Trade Negotiating Concepts & Good Practices Geza Feketekuty

Core Ideas l Stakeholders –Groups inside and outside of government who may be affected by the outcome of a negotiation, –in particular groups that have some means to influence decisions on the negotiations l Interest Based Negotiations –Negotiations that focus on the interests of a country, in particular their principal stakeholders l Comprehensive Analytical Framework –Developing a Comprehensive Understanding of all factors influencing all participants

Steps in Preparing a Negotiation l Analysis of the Issues l Dialogue with Domestic & Foreign Stakeholders l Framing the Issue l Establishing Negotiating Objectives l Establishing a Negotiating Strategy l Charting the key stakeholders on both sides with their interests, priorities, concerns

Analysis of the Issues l Commercial Issues –How Will Firms & Industries be Affected?) l Policy Issues –E.g., Health, Environment, Economic Growth, Sectoral Targets, Consumer Welfare l Legal Issues –Regulations, Laws, Trade Rules l Political Issues –Who Can Influence National Decisions l Institutional Issues –Who Can Make What Decisions

Exploration of Stakeholder Interests (Domestic Politics) l Whose Interests are Affected by the Outcome? l What are their Motivations & Interests? l How Much Influence do They Have on the Outcome? l How will they Influence the Outcome? l How will the Decision be Made?

Consultation with Domestic Stakeholders l Can yield critical information on commercial, policy and legal issues at home and abroad l Serves to identify their interests and to manage their involvement in the domestic political process related to trade negotiating decisions l Offers insights into the interests and views of their counterparts abroad, and informal communication channels with their counterparts abroad

Why Consult Foreign Stakeholders l Provides information on views of players in foreign decision-making process l Provides opportunities to help shape the views and role of foreign stakeholders with similar interests l Provides broader insights into possible win- win solutions

Framing the Issue l Correctly Framing the Issue Can Facilitate Domestic and Foreign Support l In Framing the Negotiating Issue We Need to Consider –The Trade Problem –The Government Measures or Actions that Create the Trade Problem –The Legitimate Objectives of Government Served by the Measure/Action at Issue –The Interests of the Coalition Partners –Constraints on Feasible Outcomes

Negotiating Strategies l Mercantilist Strategy –Aimed at Maximizing Exports, Minimizing Imports l Regulatory Reform Strategy –Aimed at Regulatory Reform Objectives –Aimed at Growth through Increased Competition l Political Strategy –Deflect Pressure on Politically Sensitive Policies –Take Advantage of Foreign Pressure on Politically difficult but desirable policy reforms l Principle-Based Strategy –Promote Adherence or Acceptance of crucial principle –Avoid Setting new Precedents

Elements of Alternative Strategies l Inclusive vs. Targeted Approach to Domestic Stakeholders l Defensive vs. Proactive Relationship to other Negotiators –Passive Strategy Designed to Minimize Home Country Commitments vs. Active Strategy Designed to Obtain Foreign Commitments –Use of red herrings or arguments about principles to deflect foreign pressure for concessions l Lone Ranger Focused vs. Coalition Builder –Playing Hard to Get vs. influencing the Course of the Negotiations and Shaping the Consensus –Narrow Focus on Key National Priorities vs. Effort to Build Grand Bargain. l Pragmatic Political Bargaining vs. Principle Based Advocacy –Using National Negotiating Leverage to Advance Key Objectives vs. Building Legitimacy)

Building Support l Coalition building is the key to Negotiations –Out of Minorities Majorities are Built l Coalitions have to be built around common interests l For Rule-Making Negotiations support of Epistemic Community is important l International coalitions of private stakeholders can be an important asset l For regulatory issues, support also has to be built among regulators, who have their independent channels of communications with each other

Interest-Based vs. Competitive Negotiations l Positions vs. Interests l Personalities vs. Group Interests l Zero-Sum vs. Positive Sum Approaches l Hiding vs. Sharing Information l Judgmental vs. Pragmatic Advocacy

Elements of Interest-Based Negotiations l Establishment of Personal Rapport l Exploration of Common Ground l Identification of the Interests of Parties l Analysis of Issues, Constraints and Options l Communication of BATNA “Best Alternative To a Negotiated Agreement” l Use of Objective Criteria for Legitimacy

Development of Options l Record all Options Presented by Other Side and their Rationale l Do not Ignore any option presented, but Rank Order & Analyze them l Explore Potential Amendments or Combinations of Options & Alternatives l Seek to Identify Other Means by Which –They Can Satisfy Your Interests, Or –You Can Satisfy their Interests

Use of Objective Criteria L egitimacy and Authority to a negotiating position can come from objective criteria developed by third parties, including- l Legal & Administrative Precedents l Industry practices and standards l Scientific Studies l Expert Testimony

Use of Active Listening Technique By Reframing What the other side has said in a negotiating session, you l cam signal that you have heard and understood their point of view. l give the other side an opportunity to clarify and correct your understanding l provide the basis for follow-up questions that can lead to an exploration of options

How To Build Negotiating Momentum l Build success by establishing areas of common ground, even on procedural issues l Pick the easier issues first and continue to build common ground l Record areas of agreement in writing as you you make progress l Periodically review progress by going over areas of agreement and outstanding issues.

Interest-Based Negotiations l Negotiating Positions are seen as a starting point for a dialogue over mutual interests l Each side seeks an outcome that can be presented as a gain for both sides l Foreign Negotiator is see as an agent for a group interest, and as a partner in the search for an outcome that can be sold to at home and abroad l Sharing information about interests and constraints is treated as the means for identifying mutually attractive outcomes l Each negotiating position is treated as a statement of a country’s interest, not a statement of who is right and who is wrong l Negotiating sessions are treated as creative challenges for identifying elements of a viable agreement

Competitive Negotiations l Focus is on bargaining over the difference between negotiating positions, with each side seeking an outcome closer to its position, which is viewed as gain for the home team and loss for foreign team l Negotiations become personalized, with the foreign negotiating position treated as the morally inferior, misguided view of the foreign negotiator l Hiding information about one’s real interests and problems is seen as a source of strength, while leakage of information to the other side is seen as a source of weakness. l Each negotiating session is a competitive contest and test of strength between the negotiators

Shortcomings of Positional, Personality Based Negotiations l Constrains Mutually Advantageous Outcomes l Makes Negotiations More Stressful and Less Personally Satisfying l Risks Rejection by Home Constituencies l Could Prejudice, Constrain Future Options

Negotiating Success Depends on l Economic Power of Coalition l Commonly Shared Ideas of Legitimacy l Utility of Agreement to Business l Sound and Comprehensive Analysis l Identifying Reasons Why Other Party Can Gain from Negotiating Proposal l Creativity in Identifying Win/Win Solutions l Achievement of Mutually Beneficial Outcomes