Tab 08 - Part I - 05 - Trade Negotiations - Strategies and ... · Trade Negotiating Process • Negotiating Concessions (request/offer) – Goods (tariff and non-tariff barriers)

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Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)

Trade Negotiations: Principles, Framework, Strategies and Tactics

Prepared by Wenguo CaiSenior Trade Expert, TPSA

The Conference Board of Canada

Jakarta, Indonesia

September 9-10, 2015

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Presentation Outline

• What is Negotiation? What to Negotiate? Who Negotiates and for Whom?

• Trade Negotiations: Principles, Process and Framework

• Trade Negotiations: Strategies and Tactics

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What to Negotiate on Trade:

• Individual Trade Issue: Tariff, non-tariff barriers, services, trade remedies, trade related issues, trade dispute settlement

• Comprehensive Trade negotiations: WTO, PTA, FTA, Customs Union, Economic Union

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What to Negotiate:

Problem/Opportunity Identification

Key Question:

– Is there a problem or an opportunity

that can not be resolved or realized

only on the basis of domestic action

and that may be amenable through

inter-governmental negotiations?

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What to Negotiate:

Problem/Opportunity Identification

• Problem: Countries are protective as regards international trade

• Opportunity: Liberalization of barriers to trade and investment can boost economic growth and can facilitate poverty alleviation.

• Problem/opportunity exists

• The problem cannot be resolved and the opportunity cannot be realized only through domestic actions.

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Who Negotiates and for Whom:

Interest Identification

• Unlike business negotiations, trade negotiations are conducted by governments, but for businesses

• Interest identification: Key Question

– Who are to benefit and who are to lose?

• Stakeholders:

– Business

– Consumers

– Civil society

– Labour union

– Ethnic groups

– Environmental group

– Human right group

– etc

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Preparation for Trade Negotiations

• Preparation of opening positions

• Problem identification

• Interest identification

• Inter-departmental consultation/coordination

• Public-private consultations

• Political consultations

• Formulation of negotiating strategies and positions

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Political Consultation: Building Strong

Domestic Support

• Assessment of Political Basis for Trade Negotiations

• Strong Political Commitments to Trade Negotiations by Top Decision Makers

• To Be Convinced about the Benefits of Trade Negotiations

• To Be Sure about the Political Risks

• Identification of Beneficiaries/Losers for Each Component of Trade Negotiations

• Establishment of Institutional Mechanism to Facilitate Consultations Among All Affected Groups

– Purpose: Building Support and Preventing Surprises

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Establishment of the Negotiating

Machinery

• Appointment of Chief Negotiator (Head of Delegation)

• Appointment of Negotiating Team Members

• Inter-Agency Negotiating Team

– Ministry of Trade

– Ministry of Foreign Affairs

– Line Ministries (Agriculture, Industry, Services)

– Other Relevant Government Agencies

– Others (Parliamentarians, Experts, Advisors)

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Further Consultations for Developing

Negotiating Agenda

• Issue Identification

• Analysis

• Consultations with Domestic Interests

• Consultation with Counterparts

• Prepare a Negotiating Agenda

Research:

Empirical and

Policy

Dialogue with

Stakeholders and

Advocacy

�Macroeconomic

�Regulatory

�Foreign Policy/ national

security

�Relevant laws, rules

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II. Trade Negotiations: Principles, Process & Framework

• Revisiting General Negotiating Principles and Requirements

• Summarizing Trade Negotiating Process

• Highlighting Negotiating Framework and Ground Rules

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General Principles and Requirements

• Non-Discrimination Principle– Most-Favored-Nation

– National Treatment

• Market Economy Principle

• Transparency Requirement

• Reciprocity vs. S&D Treatment for LDCs

• Single Undertaking

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Trade Negotiating Process

• Negotiating Concessions (request/offer)

– Goods (tariff and non-tariff barriers)

– Services (market access and NT)

• Negotiating Trade Rules (subsidies, antidumping, S&D, sectoral issues)

• Negotiating Accession to the WTO

• Negotiating a Communiqué

• Participating in Dispute Settlement

• Participating in TPRM

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Negotiating Framework and Ground Rules

• The first step in a trade negotiation is to set up its framework.

• This entails agreement on what to be negotiated (mandate/goals) and how it is to be negotiated (modalities).

– Agreeing on what is to be negotiated (e.g. Doha Development Agenda)

– Agreeing on the ground rules (how the negotiation is to be organized; how long it will last, and who will participate)

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Working for Negotiating Results

• Shaping the Negotiating Framework

– Defining the scope, content and approach of the negotiation

– Agreeing on the mandate (the goals) and the modalities (how the negotiations are to be conducted).

• Reducing/Narrowing Differences

– Tabling position papers

– Combining position papers into a common negotiating documents

– Concentrating on reducing differences

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III. Trade Negotiations: Strategies and Tactics

• What Issue(s) to be Negotiated

• Different Outcomes Possible

• Negotiating Parties Differ on What Outcomes Should Be.

• One or More Parties Insist that Other Issues be Included or Excluded in the Negotiations.

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Some Starting Points to Defining the Negotiating Strategy

• Identify the sectors or subsectors where the country has a strong comparative advantage: those are the priorities, where main national negotiating goals have to be set.

• Focus on markets which offer growth prospects for exporters, and determine if a better market access could be achieved with bilateral, sub-regional, or multilateral negotiations.

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Some Starting Points to Defining the Negotiating Strategy

• Identify the barriers for domestic exports in those markets: are they determined by government measures?

• What are the domestic sectors or subsectors that could be included in the offer list as concessions in exchange of the negotiating goals?

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Trade Negotiations:

Strategies and Tactics

• Establish Priorities

• Assess Value of Trade-Offs

• Manage the Negotiating Process

Non-Agreement Alternatives

• Consequences of Inability to Achieve Agreement

• Estimate for Other Parties

• Changing Non-agreement Alternatives

• Improve Value of Own/decrease Other Parties

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Trade Negotiations: Strategies and Tactics

• Ranking Issues: Relative Importance

– Less Important/More Important

– Estimated Weight (0 – 1)

• For Each Issue

– Maximum Outcome – Opening Position

– Reservation Outcome – Bottom Line

– Alternative Outcomes for Each Issue

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• Broke/mediate a compromise (if your position falls in between other parties)

• Coalition Building– Leadership (benefits and costs)

– Free Rider (but give up control)

– Divide and conquer

– Defection

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• Competitive Strategy: Convince the Other Party to Concede– Arguments to encourage concessions

– Firm commitments to demands

– Refuse to reveal/share information

– Delay or misinterpret

– Reject others’ demands

– Withhold concessions

– Refuse to exchange offers

– Threaten walkout or retaliation

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• Persuasion

– Develop arguments to persuade other to modify its positions

– Firmly commit to your positions (but leave an escape route)

– Deny legitimacy of other’s demands

– Withhold/delay concessions

• Mislead

– Refuse to state/reveal positions on issues

– Misrepresent (but use language carefully to preserve integrity)

– Exaggerate the importance of small differences

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• Cooperative Strategy: Identify Possible Outcomes to Satisfy Both– Problem solving

– Signal desire for an agreement

– Exchange information about your needs and priorities

– Brainstorm options

– Jointly assess the needs and priorities of the two parties

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• Cooperative Strategy: Identify Possible Outcomes to Satisfy Both– Problem solving

– Signal desire for an agreement

– Exchange information about needs and priorities

– Brainstorm options

– Jointly assess the needs and priorities of the two parties

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• Reciprocation– If other adopts a cooperative strategy in response to

your competitive tactics, then you should respond by shifting to a cooperative strategy, but only for as long as the other party remains cooperative.

• Concession Making– After delaying, concessions could be make first on the

least important items.

– Concessions should be made at a pace that matches the concession rate of the other party, according to the needs and priorities identified earlier.

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• Link with other concessions

– Use concessions in other negotiations to extract concessions here

• Avoid stalemate

– Improve your own utility and diminish that of other party

– Find new solutions to satisfy the interests of others as well as yours

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• Avoid the following tactics

– Threats – warnings are better

– Broken promises – always honor your commitments

– Adversarial stance/confrontation

– Anger/belligerence

– Lack of respect/professionalism

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Thank you for your attention

For more information, contact:

[email protected]

Documents

Tab 08 - Part I - 05 - Trade Negotiations - Strategies and ... · Trade Negotiating Process • Negotiating Concessions (request/offer) – Goods (tariff and non-tariff barriers)