This week’s business news has been dominated by the NAFTA negotiations, which look more and more like they’re going nowhere. And having picked up a few things along the way during many difficult (and sometimes acrimonious) negotiations throughout my career, I can’t help but wonder how many of the generally accepted principles of negotiation (usually referred to as good faith negotiation) are being honoured by the participants.
The first principle of a good-faith negotiation is to be fully prepared. Proper preparation includes determining what effective cards you hold and, as accurately as possible, anticipating the other side’s positions. This must have been particularly difficult, and maybe even impossible, in the NAFTA context because of the two people with the final say in the matter. On the US side there’s the completely unpredictable and unprincipled Donald Trump. On the Canadian side is Prime Minister Justin Trudeau, who has proven to be naive beyond comprehension when it comes to international affairs, and particularly so in matters of trade.
Good-faith negotiators gain an understanding of the other side’s needs and work on how at least some of them can be met or ameliorated; bad-faith negotiators simply hold out for absolutely everything. And “everything” seems to be the goal of both sides in this dispute; a goal which is simply not achievable.
In a good-faith negotiation it’s more important to determine what is right than who is right, and the negotiators focus on resolutions rather than trying to defeat or embarrass each other. Trying to achieve a complete win or inflict a total loss provides no room for compromise, and it’s compromises that lead to a deal. Good-faith negotiators respect each other, and when serious disagreements arise they exert genuine efforts to understand legitimate differences and keep moving toward solutions; the principle being that it’s impossible to antagonize and persuade at the same time. But antagonism is rife in this negotiation and respect for the other side appears to be missing in action.
Good-faith negotiations always begin by listing the points of agreement, but here the opening positions were characterized by points of disagreement. The blame for this can probably be laid at Trump’s feet, but the Canadian negotiators haven’t managed to cope with this American tactic.
In any negotiation the precise needs of both sides are seldom identical, so it should be possible for both sides to come out ahead. The best solution to any conflict is one that helps both sides to, in some way, claim a “win.” In this negotiation the opposite seems to be the case.
Just as you wouldn’t let an opponent deal every hand in a card game, you shouldn’t let the other side continually set the tone of a negotiation; but the US is publicly doing exactly that while the Canadian team seems reluctant to push back, at least publicly.
To the extent possible, only one issue should be negotiated at a time. It’s fine, even desirable, to list all the issues, but best to deal with each item in isolation. Otherwise, there will be so much linkage of points that opportunities for compromise may be missed, unnecessarily prolonging the process and possibly thwarting an agreement. And, as already mentioned, compromise is what a negotiation is all about; otherwise it’s just a fight, not a negotiation. Both sides here have everything so linked that they’re shackled by a chain of abject mistrust. And then President Trump exacerbated the situation by linking his Canadian tariff exemption on aluminum and steel to the NAFTA negotiations.
If one side introduces a deal-breaker early in the negotiation, which the US did with their automobile-content demands, the other side has to counter in a significant way, ideally with a deal-breaker of its own. But if Trudeau thinks that feminism and gender equality, which he raised again on Thursday, are in the same league as automobile manufacturing when it comes to international trade, he’s even more naive than I thought. And Trump’s aforementioned steel and aluminum tariff provocation proves that he’s even more unpredictable and unprincipled than I thought.
There is precious little good-faith negotiating going on here. Perhaps none.