In a series of guest blogs for PolicyDepartment, negotiation expert and MD of BrassTacks Negotiation Training Gareth Roberts reveals the top 3 banana skins for Brexit negotiators. In Part 1, he explores the true nature of negotiating power and what it means for each side.
I earn a living helping some of the world’s best-known companies transform their executives from people pleasers into effective negotiators.
Experience has taught me to use Brexit case studies sparingly as an educational tool. Time after time, I have been struck by the emotions evoked by this topic – emotions are rarely helpful to a negotiator – and the extent to which people hold certainties about the power, motivations and capabilities of those involved in trade negotiations between the UK and EU.
Any analysis or comment on this topic needs to be undertaken with a generous helping of humility, acknowledging the considerable unknowns that exist even for those intimately engaged in the process, let alone those of us observing from a distance.
On that theme of humility, I would stress that my professional life is usually conducted a million miles from the Westminster bubble and I certainly have no pretensions as a political analyst.
I do however know a thing or two about negotiation, having spent my working life living and breathing the “crunchy” conversations that most people instinctively avoid.
It is through this professional lens that I offer you a view of the will they/won’t they soap opera that is about to play out as the UK and EU attempt to thrash out a trade deal in time for Christmas, highlighting the potential banana skins to avoid, the negotiation tools in play and advising how each side might best approach the weeks ahead.
Banana Skin 1: Power does not always get you a good deal
How do you measure the power that you have in a negotiation? Professional negotiators tend to use a technique called BATNA, an acronym that stands for Best Alternative To A Negotiated Agreement.
In other words, if you are unable to do a deal with your negotiating partner, how desirable is the resulting scenario?
Given this directly proportional relationship between BATNA and negotiating power, negotiators will often work to “build their BATNA” by taking actions to improve the desirability of their alternate scenario.
The BATNA-building environment is unique when it comes to Brexit because unlike most negotiations, neither side is long on options when it comes to doing this covertly.
Indeed, the perceived success of the UK in developing non-EU trade agreements – the conditions of which will be contingent on where the UK trading relationship with the EU ultimately lands – is the subject of constant public scrutiny and will be a dynamic factor impacting the perceived negotiating leverage of both sides.
From a UK perspective, preparing for a no-deal scenario is not only common sense, but also serves to power up the UK negotiating position by publicly signalling to EU negotiators how the UK’s BATNA would look.
The irony for the UK’s non-EU trading partners is that by agreeing comprehensive trade deals in principle now, they arguably make it less likely that such deals ever reach fruition, as this activity supports the UK’s efforts to drive a more advantageous deal with the EU… which is in turn likely to demand UK concessions on non-EU trade.
On the other hand, by failing to engage in the UK’s no-deal planning now, non-EU players risk delaying the opportunity to secure better access to a market of 67 million people in the event of no UK-EU agreement.
Consider that conundrum from the perspective of New Zealand and try not to get a headache!
The EU’s suite of BATNA scenarios is more straightforward, given that their relationship with the rest of the world is not changing.
The EU is however faced with an interesting dilemma of its own. There will be a strong temptation to diminish UK negotiating power by undermining UK attempts to strike deals with other countries (interestingly, Japanese officials publicly signalled that they were unwilling to give the UK a better deal than the EU when it came to cheese imports) but to what extent is this possible without souring the EU-UK relationship to the point where a mutually advantageous deal is lost to acrimony?
Other voices within the EU may well ask: do we really care? We are 450 million people negotiating a trade deal with 67 million people – we can survive without a UK trade agreement and should negotiate accordingly!
Therein lies the issue with perceived power in a negotiation: it gives you the option of behaving in a more assertive, demanding way, but it does not guarantee that your negotiating partner will acquiesce to these behaviours.
I have experienced many negotiations where both sides have been intoxicated by their perceived power, pushed the other side’s emotional buttons and subsequently been far less willing to lose face by trading concessions to reach a deal.
This is a recipe for losing win-win agreements that should have been achieved.
It is true to say that neither the UK nor the EU will collapse on WTO terms and you need only pick up a copy of the Daily Express or New European to get a sense of the most rose-tinted BATNA for both parties.
The key point here is that negotiating power is subjective and merely presents the option to exhibit more assertive, demanding behaviours.
It does not however guarantee a good deal and both sides should carefully examine the role of power as defined by BATNA in their negotiating strategies.
Don't miss Part 2, where Gareth explores the role of the 'ticking clock' in negotiations and what this means for Brexit negotiators.
Learn more about negotiation by visiting the BrassTacks website.