Instructional Modules #17 | Instructional
Module Index |
INTERNATIONAL TRADE NEGOTIATIONS
& Geza Feketekuty
II. The Role and Development of Negotiations in Commercial Diplomacy
III. An Overview of Trade Negotiations
IV. Elements of Interest-based negotiations
V. Identification of Problems and Opportunities
VI. What Are the Negotiating Goals and Objectives?
VII. Expanding Prospects For A Negotiated Solution
VIII. Research, Planning, And Pre-Negotiation Negotiations.
IX. Skills To Employ At The Negotiating Table
X. Drafting Durable Agreements
Introduction and Purpose
Negotiations lie at the heart of international diplomacy. Parties (governments, businesses, and nongovernmental organizations) employ the art and science of negotiation to protect and advance their organizational and constituent interests. The skillful use of negotiation can advance a party’s interests and help to avoid a less attractive alternative, e.g., trade wars, litigation, or protracted dispute settlement procedures under the WTO.
An effective negotiation process can lead
to positive outcomes that can result in the promotion of important international
objectives including economic development, business interests, environmental
protection, labor rights, and political stability, all of which can
minimize the adverse impacts of poverty that can lead to violence and
Even for students and practitioners who may not aspire to the role of negotiator in the heavy stakes arenas of international negotiation, most professionals negotiate frequently in the performance of their jobs. Whether negotiating for a raise, a vacation, or a promotion with a supervisor or negotiating with peers and subordinates over work assignments, deadlines, or workplace conflicts, we all negotiate all the time. No training manual can guarantee success in any particular negotiating setting, but everyone can improve their negotiating skills to increase the probability of successful outcomes.
A first step in approaching the improvement
of your own negotiating technique is to develop an awareness or mindfulness
of when you are engaged in a negotiation of small or large consequence.
Many people undercut their own self-interest by not paying attention to
their own role and participation in day to day negotiating scenarios.
on the subject matter of a negotiation, different skills must be employed
and options exercised to achieve agreement between or among parties.
International negotiations in the broad context of trade relations
may include negotiations over prices, tariffs, and sales or qualitative
negotiations over broad principles related to the environmental, labor,
health & safety, or other impacts of trade related agreements.
purpose of this manual is to provide the reader and practitioner with
the following analytical and practical skills:
of specific skills in the following areas:
manual includes various examples and simulations designed to assist the
student and practitioner in how to adapt the theory of principled negotiation
to effective practice and success in the negotiation process.
the focus of this manual revolves around trade-related negotiations in
the international arena, the applications of these analytical and skills
sets may assist those engaged
in a multitude of different negotiation scenarios.
is the strong belief of the authors that practice is at the core of an
effective negotiation technique.
We believe that the use of simulation exercises can be of great
benefit to the student of international negotiation.
As in the practice of any discipline in politics, art, or sports,
the most successful players are those who have learned from repetition
of methodical practice. One
can gain only a certain level of understanding by acquiring a theoretical
knowledge of any discipline. The
true practitioner perfects his/her skill and expertise through the repetitive
drilling that gives meaning to the axiom that “practice makes perfect”.
share this manual with all interested students and practitioners with
the confidence that through the development and practice of the art and
science of interest-based negotiations, the world can be made a better,
healthier, and safer place to live.
welcome your comments and feedback, stories of your successes and failures
alike. By developing a repository of information we expect that this manual
will benefit from revisions, refinements, and the collective inputs of
those in the growing community of international negotiators.
Before exploring the other elements of interest-based
negotiations, it is essential to describe the range of negotiations that
occur in the international and trade arenas.
There are profound differences in the subject
matter negotiated in international trade and investment in the character
of the negotiations, as well as in the level and formality of various
levels of negotiations. These differences have important implications
for the optimal choice of negotiating strategies.
Most international transactions that involve
trade and investment are negotiated between private parties: between buyer
and seller, importer and exporter, employer and employee, contractor and
subcontractor. The negotiation
of international commercial transactions
is the substance of international business, and is
best covered in business management textbooks. They are not covered
This manual addresses the negotiation of
policy measures that affect international trade and investment.
The negotiation of trade-related policy issues primarily centers
on the reconciliation of trade-based economic objectives and broader public
policy objectives such as health, safety, and the social welfare of disadvantaged
groups in society. These different
interests of society are reconciled through a complex negotiating process
that takes place within and between domestic stakeholder groups such as
businesses, unions, civic groups and government agencies, and ultimately
between national governments.
The special character of commercial diplomacy is that it encompasses
both private stakeholders and governments, that it addresses both private
commercial interests and public policy interests, and that the outcome
is arbitrated through both economic markets and political markets.
Negotiations in commercial diplomacy cover business issues, policy
issues, broad economic issues and political issues, as well as legal issues.
Negotiations in commercial diplomacy potentially
involve a wide range of stakeholders – the groups who represent the commercial
interests, policy interests, political interests, economic interests,
legal interests and institutional/bureaucratic interests affected by trade
and investment policy decisions.
Each of these groups seeks to influence the policy outcome through
negotiations. The most visible
negotiations carried out in the trade policy arena are the negotiations
carried out between governments, either bilaterally or multilaterally.
Such government to government negotiations, however, are preceded
by intense negotiations within the individual countries on the country’s
negotiating position. These
internal negotiations often start within the individual firms, industry
associations, government agencies, legislative committees, and non-governmental
organizations that have a stake, and are followed by the negotiation and
formation of policy oriented coalitions
among stakeholders for the purpose of influencing the policy outcome.
The negotiations to form these coalitions can cross national borders,
and involve business leaders, academics, politicians, bureaucrats, and
leaders of civil society from many different countries.
Coalitions that cross national borders seek to influence the respective
governments in parallel. Private
stakeholders, whether acting on their own or as representatives of a coalition,
negotiate with the various government agencies and politicians involved
in the decision making process and ultimately these government agencies
and politicians negotiate with each other to arrive at a negotiating position
for their country. Often these
internal negotiations are much tougher and take a lot more time than the
more visible government to government negotiations.
Each of the stakeholder groups involved in
the trade policy advocacy, decision-making and negotiating process brings
their own motivations and interests to bear on the negotiations.
As we shall explore more fully later, these interests and motivations
are the key to a structured approach to negotiations that has the highest
prospects for a satisfactory outcome.
The interests and motivations that influence the positions of many
stakeholders in the private sector are fairly straightforward, and not
too difficult to analyze. The
interests and motivations of governments are often much more difficult
to identify because governments represent all the various interests of
society. Nevertheless, there
is a great deal of consistency across governments with respect to the
principal interests represented by government agencies and departments
responsible for particular areas of government policy.
The successful negotiator will prepare himself or herself by carefully
analyzing the interests and political influence of each of the principal
Most negotiations in commercial diplomacy
are over the impact of specific policy measures on particular products
or industries. The negotiation
of such trade or investment related policy issues typically starts as
a negotiation between an affected enterprise or industry and the government
responsible for the targeted policy measure. If the issue is
not resolved at that level, the home government of the affected
enterprise or industry may step into the dispute by initiating government
to government negotiations. These
kinds of negotiations usually go through a number of different phases
that call for different negotiating attitudes and tactics.
The first contact is usually best approached
as an informal information gathering effort. After all, the enterprise
managers may be ill informed about the specific regulations or laws at
issue, or the administrative guidelines followed by the responsible officials.
Conversely, the officials involved may be ill informed about the
production methods or business practices covered by the regulations.
Once the facts have been clarified, and a
policy issue has been identified, the negotiation should move into a problem-solving
phase. A problem-solving approach,
which suspends value judgments about who is right or wrong, encourages
flexibility by the negotiating partners, maximizing the chances that an
amicable resolution can be found that simultaneously preserves the policy
objectives of the government and the commercial objectives of the enterprises
involved in the negotiation. The
best tactics to use in this type of a “win-win negotiation” will be explored
later. Of course, some policy
issues raised by exporters or investors are without merit, while other
policy actions taken by governments are not very defensible.
In these situations, sometimes the best resolution is a graceful
withdrawal before issues of face and prestige make such a withdrawal difficult.
If efforts to resolve the issue through a
problem solving approach fail, the negotiations may move into a third,
more formal stage of negotiation, during which the negotiators may increase
the political and legal pressure on the other side.
There is an increased risk at this stage that the negotiation may
turn into a zero sum game type of negotiation, in which one side or the
other has to lose in order to secure a resolution of the issue.
As we shall see later, zero sum type of negotiations are more difficult
to conclude, and a successful negotiator will keep emphasizing the potential
for a win-win outcome.
A negotiation that remains deadlocked may
be referred to a dispute settlement process.
Many trade and investment agreements identify a process for settling
disputes that cannot be resolved through negotiations.
Some forms of dispute settlement, such as arbitration and mediation,
are a structured and assisted form of negotiation.
While most day-to-day negotiations between
governments on international commercial issues focus on specific commercial
problems created by specific policy measures, the negotiations that get
the most attention are comprehensive government to government negotiations
that cover a wide range of products and policy issues.
Examples are bilateral free trade negotiations aimed at removing
most barriers to trade and investment between countries, or the multilateral
rounds of trade negotiations carried out under the auspices of the world
trade negotiations. These
negotiations typically address both the reduction and elimination of a
wide range of trade barriers and the negotiation of trade rules.
These negotiations by their very character have to be approached
as win-win negotiations, because no deal is possible without each party
agreeing that the proposed agreement is in its interest.
Rules-based negotiations, in particular, have to start from the
identification of common interests that might be advanced through the
adoption of the rule
Another type of negotiation in commercial
diplomacy is one in which one government seeks to eliminate, or at a minimum
to moderate, a restrictive trade policy action by another government.
On its face, this kind of negotiation is set up as a zero sum game
type of negotiation, and it takes extraordinary skill to convert it into
a win-win negotiation. Assuming
that the proposed measure has some degree of merit in light of the economic
circumstances faced by the country involved, the trick is to show that
negotiations can lead to a more balanced consideration of the interests
of all parties involved.
Another type of negotiation might be one
between a stakeholder left out of an agreement and the parties to a negotiated
agreement. The aggrieved stakeholder
could be a country adversely affected by a bilateral agreement between
two other countries, or a non-governmental organization that believes
its policy interests have not been adequately considered by the government
and business representatives that worked out the deal.
Commercial diplomats representing parties not invited to the negotiating
table need to consider what tactics might get them invited to the table.
Ultimately, this means, that they need to consider how they might
identify and mobilize potential allies with the necessary political influence.
Each of these various types of negotiations
call for a different negotiating style, and different negotiating skills.
Negotiations aimed at defining common interests – whether that
involves the negotiation of a coalition, the negotiation of a common course
of action or the negotiation of common principles or rules, requires a
soft sales approach that emphasizes common interests and engenders
a great deal of mutual trust among negotiators on the genuine commitment
of the negotiating partners to the advocated goals.
Negotiations over tariffs and quotas requires a more hard-nosed
approach that demonstrates to all stakeholders that the negotiated outcome
was the best that could be achieved under the circumstances.
Problem solving negotiations fall somewhere in between. Each side
to the negotiations must defend its interests, but also has to be able
to demonstrate that both sides can gain from both the policy and the commercial
aspects of an agreement.
Understanding the nature of the parties and
the subject matter of the negotiation is critical to the process of planning
and preparation for a formal negotiation session.
Terminology and descriptions of the various
types of parties and form of negotiation follow:
negotiations – between governments the government of
negotiations – between governments the government of
negotiations – within and among one government, usually between
government agencies, political parties, or with constituent groups.
– between businesses, companies, corporations. This may include business
negotiations related to contracts, sales agreements, investments, joint
ventures, etc. Or, may involve negotiations within a business or trade
negotiations – Within the business organization,
company or corporation.
Examples: management –labor negotiations, human resources, inter-departmental,
union negotiations, etc.
Organizations (NGOs)-business associations, trade associations,
environmental, labor, human rights, development, etc.)
Intra-group (within the NGO )
Differences in Players, Resources,
Styles, and Motivations
With each identified type of negotiation
and potential interest group involvement there will emerge different negotiating
styles, techniques, and cultures.
It stands to reason that groups of like-function
(government to government) will employ more similar negotiating styles
and protocols than groups that cross functional, experiential, and interest-based
lines of demarcation.
As groups cross from negotiations with familiar
counterparts to dissimilar counterparts, the cadence of the negotiating
dance will more likely be dissonant. In other words, people feel more
comfortable negotiating with counterparts performing a similar role and
dealing with like subject matter than with those representing different
subject, professional, and cultural differences.
It is one thing to acknowledge the differences
inherent in a cross-over in negotiating with a group of different interest
and professional focus—it is quite another to adapt one’s negotiating
style and technique to accommodate or at least function with negotiators
of diverse interest groups.
As discussed, supra, a diplomatic culture
exists among officials representing various governments.
While language, background, and cultural differences may exist,
the diplomatic culture plays upon common experience, educational training,
and acceptance of protocols developed over decades so that negotiators
can work with one another in an atmosphere that is predictable and based
upon certain accepted norms, routines, and behaviors.
subject of a trade dispute may not change, the parties to negotiations
may vary from governmental representatives meeting with each other one
day and those same representatives meeting with a cast of business or
NGO representatives the next.
While the differences should not be ignored, they can perhaps be
minimized by planning and charting the divergent interests, histories,
goals, and objectives.