A Practical Guide to to Negotiations

Introduction
International trade negotiations in services like other trade negotiations are pursued on the proposition that the removal of barriers to trade can expand economic opportunities and improve economic efficiency, and thus increase economic growth. As is the case with respect of other trade negotiations, trade negotiations in services are based on requests for cuts in foreign trade barriers that hamper exports in exchange for offers to cut domestic trade barriers that restrict imports. While cuts in a country's own trade barriers are as likely to benefit the home economy as the cuts made by other countries, such cuts are viewed as costs in political terms because they are likely to have an adverse effect on the domestic industries that will face increased imports.

While trade negotiators in services thus follow the usual mercantilist logic of trade negotiations in general, it can blind countries to the significant economic benefits that can flow from domestic regulatory reforms in services negotiated in the context of a trade agreement. The economic benefit that can flow from the liberalization of business services are likely to be particularly significant because business services constitute an increasing proportion of the cost of producing many manufactured goods and other services, and a reduction of these costs ill therefore significantly enhance the productivity of national producers. The mercantilist logic underlying trade negotiations in general can thus serve as a trap in the case of services, which countries should seek to avoid.

Barriers to trade negotiations in services are generally embedded in domestic regulations. Since services are invisible, governments cannot directly control trade in services at the point they cross the border. Instead, they seek to control trade in services through the regulation of the consumption of services by domestic residents or the production of services by locally established foreign suppliers. In addition, governments can seek to regulate the entry of foreigners who have the intention of producing a service, and the exit of nationals who have the intention of consuming services abroad. The focus of trade negotiations in services is thus not on tariffs and quotas, as is the case for trade negotiations in goods, but on domestic regulations that limit the consumption or production of foreign services, or the movement of services producers or consumers across the border.

Domestic regulations can restrain foreign imports either by discriminating against foreign suppliers or by restricting both foreign and domestic suppliers more than is necessary to accomplish the desired domestic regulatory objective. Trade negotiations in services cover both types of regulatory restraints. Negotiations aimed at the elimination of discriminatory provisions are called negotiations on national treatment, since national treatment requires the nondiscriminatory application of rules and regulations to both foreign and domestic suppliers. Negotiations aimed at the reduction or elimination of regulations that place quantitative constraints on both domestic and foreign producers on a nondiscriminatory basis are called market access negotiations. This is somewhat peculiar terminology in a traditional trade context, since it makes sense only if one views the targeted provisions as restricting access to the domestic market by any enterprise, foreign or domestic. The effect of liberalizing such market access barriers, of course, is to increase potential competition by both domestic and foreign enterprises.

The General Agreement on Trade in Services (GATS) provides a set of ground rules for the negotiations on trade in services. The GATS establishes a broad definition of trade that encompasses not only the cross-border sale of services, but also the sale of services by locally established foreign enterprises, the sale of services by individual services providers who have gained temporary entry into the country for the express purpose of producing a service locally, and the purchase of services abroad by residents. The GATS refers to these four methods of engaging in trade in services as the four modes of supply - cross border movement of the service, local establishment by foreign enterprises producing services, foreign consumption, and temporary entry by services providers. The provisions of the GATS apply to all regulations that impact on trade under the four modes. In addition to establishing some general rules that apply to all regulations that impede trade in services, the GATS provides for the negotiation of national commitments on the application of national treatment and market access disciplines to specific services, by mode of supply.

Since trade negotiations in services revolve around domestic regulations, trade negotiators in services have to work closely with the domestic ministries and departments responsible for developing and administering the regulations involved. Trade negotiations in services thus tend to be much more complex than trade negotiations in goods focused on tariffs and quotas. Since trade ministries or departments usually have direct responsibility for setting and administering tariffs and quotas, they can implement negotiated reductions without the cooperation of other ministries. In contrast, hey cannot directly implement any negotiated changes in services regulations.

The ministries or departments responsible for the regulations covered by trade negotiations have a natural tendency to resist the liberalization of regulations within their responsibility through trade negotiations, not only because they are likely to face political pressure from domestic industries that benefit from restraints on competition, but also because they will view the negotiations as interference in their bureaucratic turf. Consultations and negotiations with domestic regulatory agencies is thus an important part of negotiating trade agreements in services. Trade negotiators will need to mobilize analytical studies showing the economic benefits of liberalizing the regulations, and seek political support from industries that will benefit from a reduction in input costs, the expansion of export opportunities, or the removal of restraints on domestic competition.

Negotiators focusing on trade in services lack the kind of detailed quantitative data available to support negotiations on trade in goods. You cannot see a service crossing the border. Governments are therefore not able to measure the flow of services across the border in the same way that they can measure the flow of individual goods across the border. Instead, governments have to compile data on trade in services by periodically asking exporters and importers of services to fill out questionnaires. Since filling out the forms is relatively costly for market participants, only a limited number of exporters and importers are surveyed, and the published data are based on projections based on these sample surveys. Data on trade in services consequently lack the kind of accuracy and detail available for trade in goods. Data is generally available only for broad industry categories and for relatively long time intervals. The shortcomings of the trade data is compounded by the difficulty of making a quantitative assessment of the degree of protection provided by regulatory measures. Negotiators in services thus lack the kind of detailed data that would enable them to estimate the impact of negotiated reductions in particular barriers on exports and imports of specific services.

Since detailed data on services trade is generally lacking, and the protective effect of restrictive regulatory measures is difficult to assess, trade negotiators in services must dependent on qualitative assessments provided by potential exporters or importers of the services involved. This makes consultations with the affected industries particularly important with respect to negotiations on trade in services.

The Scope of Negotiations in Services
Negotiations on trade in services in the WTO focus on specific commitments by individual national governments and on rules that apply to all member countries. Countries negotiate specific national commitments bilaterally, with each country negotiating with every other member of the WTO. Since every country must extend the commitment made to any one country to all other countries that belong to the WTO, however, each country will seek to "sell" the same commitment to as many other member countries as possible. In contrast, WTO member countries negotiate rules multilaterally, i.e. collectively. The negotiating dynamics are quite different in the two cases. The bilateral negotiation of specific national commitments takes the form of a bilateral bargaining process based on requests and offers, while the negotiation of rules involves an effort to build consensus among member countries on broad principles. We will explore the practical implications of these differences below.

The negotiation of specific commitments is organized on the basis of individual services, by mode of supply. Commitments fall under three categories - national treatment, market access and other commitments. Commitments entered into the national schedule can cover either a specific service, or all services within a sector or sub-sector. Countries may also enter horizontal commitments on broad regulations that apply to all services. A schematic outline of a typical national schedule is found in Figure 1.

The negotiation of rules under the GATS focuses on the elaboration of existing Articles of the GATS agreement, or potentially the addition of new articles. Some rules apply to all regulations that affect trade in services, regardless whether a country has made a specific commitment on that service. Other rules apply to all regulations that affect trade within sectors in which a country has made commitments. Still other rules apply only to regulations that affect trade in specific services covered by national commitments.

Sectoral negotiations constitute a third category of negotiations that encompass both the negotiation of rules and national commitments that apply to a particular sector. The General Agreement on Basic Telecommunications, for example, includes both a template for national commitments on the liberalization of particular segments of the public telecommunications market, and a Reference Paper that sets out guidelines for the regulation of competition in the provision of competitive telecommunication services.

Identifying and Organizing Stakeholders
The first step in preparing for international negotiations on trade in services is to identify and organize the domestic stakeholders. Stakeholders are groups in society, both inside and outside he government, who will be affected by the negotiations and therefore have a stake in the negotiating outcome. A stakeholder will be impacted positively, negatively, or not at all, depending on how the issues discussed at the negotiating table relate to their interests.

By their very nature, international negotiations involve people of different national, ethnic, racial, religious, and cultural backgrounds. These people, in turn, represent governments, businesses, NGOs, and other entities that have a stake or interest in the outcome of the negotiations. While the individual people involved in the negotiation process bring their own backgrounds, personalities, training, ambitions, and self-interests to the table, their mission is to serve as representatives of r organizations, bureaucracies, or enterprises to whom they are accountable.

Involving domestic stakeholders in the preparation of negotiation is consistent with principles of good governance, since those most directly affected by the negotiations will have the best information on how various negotiating outcomes will affect trade and the achievement of regulatory objectives. Involving stakeholders is also required for practical political considerations. Those most affected by a governmental action will have a strong motivation to use the political process to ensure that the country's negotiating position reflects their interests.

Starting the preparation of negotiations with the identification and organization of stake holders makes sense because stake holders are likely to be in a position to contribute, and in some cases help collect, basic information about the competitive strengths and weaknesses of national service industries, the problems exporters face in penetrating foreign markets, and the regulatory issues that are likely to arise in the course of the negotiations.

Asking domestic stakeholders to participate in the preparation of the negotiations also makes them feel as full participants in the process, making them loyal supporters of the negotiations as long as they can rationalize it as being consistent with their basic interests. At the very least, stakeholders included in the process will achieve a full understanding of the issues and the rationale for the negotiations, give the negotiators credit for including them in the preparatory process and for factoring their interests into the development of national positions. In return they are more likely to accept the final outcome, even if their interests are not fully satisfied.

We identified two categories of domestic stakeholders in the introduction - the various government ministries and departments responsible for administering the regulations likely to be covered by the negotiations, and the enterprises producing the services likely to be covered by the prospective negotiations. The stakeholders in the government can include not only officials in the central government, but also officials at a sub-central level, e.g. states, provinces, etc., where responsibility for the regulation of services is exercised at a sub central level. Stakeholders from the services industries include both the various industry associations in services and the major enterprises producing services. Other stakeholders can include labor unions representing services workers, non-governmental organizations with a focus on services, and consumer groups.

Having identified the major stakeholder groups, the negotiator has to decide who should be consulted either individually or as a group, who should be invited to participate in meetings organized to discuss the negotiations, and who should be invited to join various consultative bodies established to support the negotiations. The consultation process should be built around three concentric circles. The innermost circle should consist of the stakeholders within the central government, i.e., the key ministries and departments responsible for regulations covered by the negotiations. Each such ministry, department or agency should be asked to designate an individual who will participate in an inter-ministerial or inter-agency group responsible for the negotiations. In some countries such a group is given decision-making power; in other governments the group can give formal advice to the trade negotiator, but does not have the power to make decisions.

Where sub-central governments have a key role in regulating services, the trade negotiators may also have to establish a separate forum for consulting officials from sub-central governments, though such consultations will inevitably occur on a less frequent basis since the representatives involved may have to travel some distance to participate in meetings.

The second concentric circle is made up of representatives of key private stakeholder groups who are invited to participate in various advisory bodies. These advisory bodies can give negotiators direct feedback on proposed negotiating positions and serve as a vehicle for building consensus with the most influential private stakeholders. Such advisory bodies can also serve as sources of information on trade opportunities and problems, industry practices, and the most vexing barriers to an expansion of trade.

It is neither practical nor necessary to include representatives of every enterprise, industry association, union, non-governmental organization or sub-central government in the consultation process. Optimally, negotiators should involve the most influential and interested individuals from these groups, who will be respected by their peers by virtue of their reputation, who can influence the domestic political debate by virtue of their political clout, and who will spend the time to become informed by virtue of their interest in the negotiating outcome. Such individuals will often be found in the largest enterprises or most widely representative organizations, but not always. Since the objective of the negotiations is to expand trade, special care should be taken to include representatives of the most competitive industries who have a keen interest in expanding their exports. Ultimately, negotiators will have to count on their vocal support in building domestic political support in favor of the negotiations. It is also wise to include some vocal opponents to take some of the edge off their opposition.

The identification of the most relevant domestic stakeholder groups and of the most influential individuals in such groups is best accomplished by talking to academic and industry experts in the field and to journalists who cover services industries. By getting in touch with recommended individuals, trade officials can get a fair idea of the organization's potential interest, and the contribution individuals at various levels in the organization could make to a consultative process. Ideally, an organization included in the consultative process would have interested individuals at both the top and middle levels of the organization, and staff experts who can brief them and support their effective participation in meetings. Private advisory groups should be large enough to include representatives of the most important nongovernmental stakeholder groups.

The third concentric tier is made up of all interested stakeholders, who may be invited to participate in briefings or conferences covering the negotiations. Individuals participating in such briefings and conferences will have an opportunity to become educated on the issues covered by the negotiations, but will have only limited opportunity to provide direct in-depth feedback on negotiating positions.

Beyond these three concentric circles, negotiators will have to devise the means for informing the public at large on the evolution of negotiations. Since the press and the media have the widest reach, a core element of such a communication strategy is to brief the press on a regular basis through press releases, interviews and press briefings. Negotiators can also publish reports or white papers on negotiating issues, and establish a website with up to date information on the progress of the negotiations.

In practice, negotiators ideally would follow the following sequence of steps in identifying and organizing stakeholders:

Assembling Information on National Interests and Issues
The next task of the services negotiators is to assemble and compile background information on the country's exports and imports of services, competitive strengths and weaknesses of domestic services industries, foreign regulatory barriers that inhibit national exports of services to other markets, and regulatory issues that might arise in the context of negotiations. Stakeholders can provide crucial help in the collection of such information.

As noted previously, official statistics on trade in services are likely to lack sufficient detail to provide information on trade in specific services, much less a consistent time series. Available data are likely to be aggregated on a sectoral level, e.g. fee-based banking services, professional services, maritime transport services, etc. To supplement the official statistics, negotiators should ask major exporters and sectoral industry associations to provide additional data that can provide insights at a products level. Asking stakeholders to supplement official data is particularly important for the newer information-based services and various professional services, services that are often too new or too dispersed to be included in official statistics. This is particularly important because these services are often the ones that have the greatest potential for export growth if the right policies are pursued. In fact, the export potential in these services often hinges on domestic regulatory reforms in areas as such as telecommunications, air transportation, and financial services that might be included in a country's offer.

Initial information on the country's competitive strengths and weaknesses is provided by the trade data. Sectors that export are likely to be relatively competitive, while sectors with large imparts are likely to be competitively weak. Trade data, however, do not tell the full story. A sector in which a country has a potential competitive strength may not show many exports because foreign trade barriers or domestic regulatory constraints inhibit such trade, or simply because the industry has not explored export opportunities. Additional insights into competitive strengths can come from economic studies carried out by academic experts, assessments provided by industry experts, and a review of the export performance of other countries at a similar stage of economic development and similar economic circumstances.

Information about foreign trade barriers is best provided by industry. The necessary canvassing of the industry can be done either by the trade negotiators themselves, by consultant hired for the task, or by a general industry association. Insights into trade barriers can also be found in the surveys done by third countries, particularly third countries with large staffs.

The best sources of information about regulatory issues are the other government stakeholders responsible or areas of the negotiations and international organizations that have carried out regulatory studies, including the WTO, UNCTAD, the OECD, and sectoral bodies such as the International Telecommunications Union and the Bank for International Settlements, and international professional bodies in areas such as architecture and accounting.

Assembling Information on Foreign Interests and Issues
A negotiation requires at least two parties. In order to negotiate successfully, we have to understand the interests and problems of those we are negotiating with almost as well as we do our own interests and problems. Once we understand our own country's competitive strengths and weaknesses in services, our domestic stakeholders and their interests, and the foreign trade barriers that hamper our exports, we have to collect information about the countries with whom we will be negotiating. We need to understand the strengths and weaknesses of their services industries, their stakeholders and their interests, what difficulties the foreign government is likely to face in meeting our requests, and what they are likely to ask us to do. Information about what they may ask us to do in turn will enable us to identify the domestic regulatory issues we may have to face.

Understanding the foreign stakeholders and their interests in important because it will tell us something about the likely foreign reaction to our requests and the requests they are likely to make of us, even if we can gain no direct information on the thinking and evolving position of the foreign government. While it may not be possible to know precisely how the stakeholder interests will be reflected in the country's final negotiating position, it can give us some general ideas. Moreover, down the road, understanding the interests of the stakeholders who stand behind the government's position will enable us to enlist the support of the stakeholders with similar or converging interests, give us an idea where the other government can be pushed, and ultimately provide insights into possible win-win solutions to the negotiations.

Analyzing the Data
In order to be useful, the collected information has to be organized in a coherent manner and analyzed.

Developing Requests under the Request/Offer Procedure
Under the procedures currently in effect for the services negotiations under the Doha Round of Multilateral Trade Negotiations in the WTO, the negotiation of specific national commitments will proceed on the basis of a request/offer procedure. Under this procedure, the negotiations are initiated through the submission of requests by each WTO member to all trading partners it considers important with respect to actual or potential services exports. Once the initial set of requests are made, the negotiating committee will schedule an opportunity for bilateral consultations, during which the countries that have received requests are given the opportunity to ask clarifying questions. Subsequently, all countries that have received requests are expected to make offers to each country that submitted a request. The initial exchange of requests and offers is followed by subsequent rounds of requests and offers, and ultimately bilateral negotiations

Requests can take the form of a request for national treatment and the elimination of all market access barriers in particular services or sectors, by mode of supply, or they can target specific regulatory provisions considered particularly restrictive by the country's exporters. By keeping its initial request general, the requesting country might obtain more information about what the responding country considers a reasonable request. Based on the feedback provided by the importing country through its bilateral consultations on the requests and the subsequent offer, the requesting country can more precisely target the requested regulatory changes in the second or subsequent exchanges of requests and offers.

Ideally requests should follow the format followed by the national schedules. Figure 1 provides a schematic outline of a national schedule.

An interesting tactical question is whether negotiators should cover all sectors, modes of supply and horizontal measures in which they have an interest in their request. Negotiators may wish to leave some areas of interest out of their request if they are confident that other countries with more leverage will be pressing the country involved to liberalize that particular service, mode of supply or horizontal measure. Under the Most Favored Nation provision of the GATS, WTO members have to treat all other members alike. By focusing its request on services, modes of supply or horizontal measures that are unlikely to be covered by other countries with negotiating clout, smaller or less developed countries may be able to focus their limited negotiating leverage more effectively. Of course, there is a risk in leaving out areas of high priority for the country submitting the request, because the other countries that include the desired measures in their own requests may end up assigning a low priority to that area in the course of the negotiations. It is therefore best to include services, modes of supply, and horizontal measures in which the country has a high interest in its requests, even if it knows other countries will be making similar requests.

A favored defensive tactic employed by countries that are reluctant to undertake major regulatory reforms in the course of the negotiations is to request regulatory changes that its trading partners will find difficult to meet, even if the requesting country does not have a real interest in the requested change. They believe this will enable them to deflect requests with the argument that their requests are not being met either. Of course, this tactic can boomerang if other countries decide to make offers in these difficult areas. This tactic may result in psychic gains during negotiating sessions for the country deciding to play this game, but it is likely to be seen by other what it is, namely a diversionary tactic. It is best to focus requests on areas of real interest. If a service of real export interest to a developing country such as construction causes political difficulty to a developed country, it is quite reasonable and practical to include it in the request list.

Alternatively, a developing country with a limited ability to liberalize its services industry may be reluctant to make too many requests of its own, for fear that it will come under excessive pressure to liberalize in areas where that will be difficult or impossible. On the other hand the process of submitting requests in areas of real interest to its exporting industries may generate enthusiastic political support from its exporting industries, thus expanding the limits of what may be politically feasible in liberalizing domestic measures. If, as is likely, other countries press for the liberalization of these same measures, the lack of negotiating leverage will not be the real issue anyway. It is best, therefore, for countries to construct a request list that reflects their true export interests. It best serves to signal the country's true economic interests to the other negotiators, thus maximizing the possibility of an optimal negotiating outcome.

Formulating Negotiating Proposals on Rules and Sectoral Agreements.
In addition to the negotiation of specific national commitments, the Doha negotiations in services will focus on rules and possible sectoral agreements. The negotiation of rules and sectoral agreements are generally preceded by a review of the issues by participating countries, and decisions on analytical studies the Secretariat may be asked to undertake. Upon completion of the analytical phase of the Negotiating Committee's work, member countries are likely to be asked to submit negotiating proposals, which are then reviewed in subsequent meetings of the Committee. At some point the Secretariat may be asked to compile all negotiating proposals that were submitted into an integrated analytical paper that describes and compares all the proposals on the basis of a common analytical framework.

Any country can submit a negotiating proposal at any time during the negotiating process. The timing of negotiating proposals needs to be based on various tactical considerations. The optimal time to submit a proposal will depend on what a country hopes to accomplish with its proposal. For example, a country may choose to submit a proposal early during the negotiating process, even before countries are ready to consider proposals, in order to make a point concerning the feasibility of developing a rule that meets certain requirements under discussion. Such a proposal may help to derail skeptics who are trying o block the negotiations from developing in a certain direction. In tabling such a proposal, however, a country would need to consider that too much detail might scare off countries that have not yet reached a point where they are willing to contemplate certain types of rules or sectoral agreements. At a later stage in the process, when member countries have been invited to submit proposals, a country may choose to make a proposal that narrowly focuses on one aspect of the rule that best captures its particular interest or regulatory perspective, or the country may choose to submit a proposal that reflects a broad group interest, including its own. At a later stage in the negotiations, a country may choose to submit a proposal that bridges earlier proposals made by different countries, in the expectation that the proposal could serve as a viable compromise solution.

Negotiating proposals can b submitted by individual countries, or by a coalition of countries acting together. If the coalition is wide enough and representative of a cross-section of countries, it can have considerable influence on the negotiating process. On the other hand, strategically crafted proposals by individual countries could turn out to be just as influential. Countries that are proactive in submitting negotiating proposals and in crafting group proposals can achieve considerable influence in the negotiating process, even if they are relatively small countries. The key to exercising influence is to master the technical details of the issue, to develop an in depth understanding of the needs and views of member countries, and to surface proposals that can serve as the basis for consensus.

A negotiating proposal should contain not only proposed language for a rule of agreement, but also the rationale underlying the proposal. The proposal should start out by placing the proposal in the context of the negotiations. This should be followed by an analytical section that lays out the issues that need to be addressed in the rule or agreement, by a description of the proposed text, and a final section laying out the rationale for the rule and why the proposal is the right solution for the problems posed.

Building Supportive Coalitions at Home and Abroad
Trade negotiations are a process of progressively building consensus among an increasing number of stakeholder groups with diverse interests. Building coalitions among like-minded groups at home and abroad in support of particular negotiating proposals and agreements is a critical aspect of that process.

Once potential coalition partners have been identified, then it is important to reach out to and discuss the pending negotiations. A coalition partner may support efforts to prepare negotiations in some or all of the following ways:

Equally important is contacting stakeholders with conflicting interests. Can they be approached and "neutralized"? E.g., Can you offer information, trade-offs, or other assurances that will minimize or eliminate their adverse influence on the negotiation process?

Some mistakenly view negotiations as a discrete event. Negotiations should instead be viewed as an interlocking chain of events that start with the formation of coalitions to explore negotiating ideas. The formation of supportive coalitions and the development of negotiating proposals should be treated as an interactive process. In order to succeed, a negotiating proposal has to receive the support of a coalition of groups that can ultimately prevail. Building a coalition and negotiating a common position among the members of the coalition is thus a steppingstone towards the negotiation of a successful outcome. Negotiating supportive coalitions at home is thus a key stepping stone to the development of the country's initial negotiating position. Negotiating supportive coalitions abroad is a key stepping stone towards the negotiation of an international agreement.

Formally, the development of a negotiating position in the home country and the negotiation of an international agreement are two sequential phases of the negotiation process. In reality, a successful outcome to negotiations is enhanced through international coalition building while a national position is still being developed. Such an overlapping process allows negotiators to factor the interests of likely international coalition partners into the process of developing an initial negotiating position.

Coalition partners at home can include key officials from other government departments or agencies, key executives from corporations or trade associations, experts from academia or think tanks, and key legislators and their staffs. International coalition partners can include officials from other governments, executives from foreign corporations and trade associations, and foreign academic experts. The negotiation of the General Agreement for Trade in Services was supported by a loose international coalition of officials, businessmen and academic experts who met periodically to map a joint strategy for advancing the negotiations, and who organized conferences and other events around the world to expand the consensus. This coalition was crucial in building up negotiating momentum and sustaining the negotiating process once the negotiations developed their own momentum. Negotiators should also identify members of the press who develop an interest in the negotiations and become educated on the issues, and can be counted on to write informative, in-depth articles on the rationale for the negotiations.

Negotiators may establish different coalitions for different purposes. Thus a coalition within the government at home may be a critical to the development of an interagency consensus, while a coalition of like-minded countries in the WTO may be equally critical to building support among WTO negotiators. International coalition building is particularly critical to smaller countries, which can gain influence only through coalitions that include powerful countries. During the Uruguay Round, many smaller developing economies were able to exert considerable influence on the course of the agriculture negotiations through the Cairns group of countries, named after the Australian city where they first met. The negotiation of the GATS during the Uruguay Round was significantly enhanced through the coordinated efforts of a group of small and big countries called the friends of services.

Selling the Negotiating Proposals
Once negotiators have developed a negotiating proposal, they must persuade stakeholders at home and abroad on the merits of the proposal. In part this is done through meetings with stakeholders and conferences. The first step, however, is to write a white paper to explain the proposal. The paper should have a brief summary which briefly covers the what, where, when and why; a background section which outlines the issues that give rise to the proposal; a full description of the proposal; and a section that describes what will be gained as a result of the proposal. This paper can serve as a handout at meetings with stakeholders and at conferences.

Other means of building a broad consensus at home and abroad include press releases, press briefings and op ed articles, either targeted at the general public media or specialized publications serving particular services industries. Negotiators might also make public speeches to stakeholder groups, testify at legislative hearings and post the white paper and other materials on the trade ministry's web site. Internationally, bilateral consultations with foreign negotiators are the most common method of broadening support among negotiators. Negotiators also have the option of distributing the written text of oral interventions made at meetings of the negotiating group.

Summarizing the basic thrust of proposals contained in requests and offers under the request/offer procedure is a major challenge since the requests and offers contain long lists of proposed changes in a broad and diverse range of regulatory measures. Nevertheless it is important to find a way to characterize the nature of the requests and offers in order to build support among stakeholders. Negotiators may wish to summarize the industries targeted through the requests and offers, and what domestic and foreign exporters will be able to do once the regulatory changes are implemented. Negotiators may also wish to describe what is not contained in the requests and offers to reassure stakeholders in import-sensitive sectors.

Drafting the Negotiating Instructions
As mentioned earlier, negotiations are a process that begins with the discussion of the issues with stakeholders at home and abroad. While these discussions are not what we normally consider as a negotiation, for all practical purposes they are a part of the negotiations. The discussions with stakeholders at home constitute a negotiation of a formal negotiating position that will receive formal approval from the home government and enjoy the support of a commanding coalition of stakeholders in the home country. The discussion with stakeholders abroad constitute a preliminary negotiation of the terminology, concepts and principles that will form a framework for the negotiations, and help assure that the negotiations are based on effective communication between the negotiators, and a mutual understanding of the issues being negotiated. They help assure that both sides understand what is meant by the terminology employed in the course of the negotiations, and that there are some shared reference points to guide the negotiations. These pre-negotiation discussions also give the negotiators an opportunity to fine tune their negotiating proposals to increase their acceptability to selected stakeholders abroad, thus assuring that the ideas advanced during the negotiations will find advocates within the foreign stakeholder community who will help influence the development of a mutually advantageous negotiating outcome.

In pursuing these discussions with domestic and foreign stakeholders, negotiators are usually acting under general guidance they have received from their superiors on the negotiating issues. Since no formal commitments are being made on behalf of the government involved during these discussions, they usually take place without formal negotiating instructions. Once the negotiations move from informal discussions to formal negotiations, however, negotiators become bound by negotiating instructions that receive all the necessary approvals from their home government. Most governments have a legally established procedure for approving such instructions that normally require not only the approval of superiors within the Trade Ministry (or Foreign Ministry), but also by other key departments and ministries within the government.

The negotiating instructions should set out the country's opening position for the negotiations, and spell out the flexibility that can be exercised by the negotiators. As a general rule, negotiators should be given some degree of flexibility in exploring possible negotiating outcomes, but only limited degree of flexibility to agree on an outcome that substantially differs from the negotiating position outlined in the instructions. After all, the instructions, and the negotiating proposals on which they are based, reflect carefully crafted compromises among stakeholder at home inside and outside of the government, and these stakeholders should be given an opportunity to participate in the evolution of the country's negotiating position. Besides, it is normally advantageous to allow some time for reflection on new negotiating outcomes, because it is usually difficult, if not impossible, to think through all the ramifications and implications of new compromise proposals. Of course, as the negotiations move to a final conclusion, the negotiators have to be given a well-defined range of outcomes that they are authorized to accept. Even then, it is common for negotiators to seek and obtain final instructions from their superiors before finally concluding an agreement.

Pursuing Negotiations through the Request/Offer Process
As indicated previously, the negotiation of specific national commitments is initiated through the tabling of requests, and subsequent bilateral consultations with the countries that have received the requests. These bilateral consultations offer the country making the requests an opportunity to explain the rationale for the requests, and they offer the country receiving the requests an opportunity to ask follow-up questions that will help clarify the nature of the request, and help fill in missing details.

The exchange of requests is followed at a subsequent stage by an exchange of offers. The initial offers should signal to negotiating partners the services and the modes of supply where the importing country believes that it may be able to liberalize restrictive provisions, and the services and modes of supply where the importing country will have great difficulty in meeting the requests, either because the domestic industry is not ready for international competition or because domestic policy reasons will make it difficult to change the targeted regulations. Similarly, the importing country may want to signal which horizontal regulations it may be willing to reform, and which are likely to be very difficult to change. A willingness to negotiate can be signaled by including some kind of offer with respect to the service and mode of supply, and the horizontal measure. Difficulty in meeting a request can be signaled by excluding the service, mode of supply or horizontal measure from the offer. Offers can include proposed commitments not included in the request if there is a reason to believe that the requesting country may benefit from the offer. They may have deliberately left the commitment out of the request in the belief that other countries with more leverage will be making a request in that area.

The exchange of offers is followed by another round of bilateral consultations, during which negotiators seek to clarify the nature of the various offers and the reason why the offer did not address other liberalization measures included in the first round of requests. These consultations provide the basis for the preparation of a second round of requests, which should provide the negotiators an opportunity to become more precise in their requests, and to abandon requests that are considered a low priority, or requests that are clearly not achievable. In turn, the second round of offers should provide an opportunity for the other side to respond to the updated requests.

The second round of requests and offers may be followed by further exchanges of requests, and each round of requests and offers is followed by further bilateral consolidations. At some point in this process, the members of the negotiating committee will ask the Secretariat to compile a consolidated list of offers, which then becomes the basis for the final round or rounds of negotiations.

The Negotiations on Rules
Multilateral negotiations of rules usually go through several phases. In the first phase, the issue identification stage, one country typically identifies an issue or problem, which it believes needs to be addressed through the formulation of a rule, or some other form of common action. In order to persuade other governments to embark on an analysis of the issue that could lead to the negotiation of a rule, proponents have to demonstrate that the identified problem or issue is more than a one time or rare event, that it potentially a problem for every (or most) countries, that it is a serious than a trivial problem for member countries, that the nature of the problem and the potential remedy is fairly consistent over time and across countries, and that the problem can be solved through a negotiated rule or agreement. If the problem is rare, member countries will be reluctant to spend the time to analyze and negotiate the issue and to restrict their future freedom of action. If it is only a problem for one or some countries, but not for a majority of countries, it will be difficult to get an agreement to study the issue, much less to negotiate binding commitments. If the nature of the problem and the appropriate remedy changes from event to event, opponents will argue that while there may be a problem, rule making is not the answer.

In the second phase, the analysis phase, the negotiators analyze the nature of the problem and the potential remedies. This phase of the negotiation is designed to create a clear understanding of the problem and how it may be addressed. In the WTO an issue at this stage of the process will be entrusted to a study group. Members will study historical occurrences of the problem, identify patterns, examine analogies to similar problems that have been addressed through negotiated agreements, and evaluate principles that could serve as the basis for rule making. If member countries are persuaded by this work that the problem is serious, that it is consistent over time, that it is widespread among member countries, that it can be remedied through some form of agreement, then discussions will move toward the search for a negotiating framework to address the issue.

In the third phase, the pre-negotiation phase, member countries hammer out the terms and mandate for the negotiations. In the WTO the issue at this stage is often entrusted to a working group or a committee that has a formal standing within the organization. The work of the group is to define the problem to be addressed, to identify the nature of the solution to be pursued through negotiations, the specific elements of the issue to be addressed, the components of a negotiated solution, and a timetable and venue for the negotiations.

In the fourth phase, the negotiating phase, member countries negotiate the actual provisions that will be added to the trade agreement. Such negotiations usually start with a consideration of negotiating proposals tabled by member countries. Where there are many such proposals, the Secretariat may be asked to compile the proposals into an integrated document, and to provide members with an analysis of the various proposals. A discussion of these proposals can lead to a second tier of proposals, which incorporate comments made by members during the review of the initial proposals, or which seek to bridge the gap between competing proposals.

Organizing the Negotiating Team
A governmental delegation will most often consist of a "head of delegation" who serves as the lead negotiator, experts on various issues, and representatives of various departments and ministries. The head of delegation should organize the team well ahead of the start of negotiations, giving each team member a clear set of responsibilities. This will not only assure that every team member feels like a full participant who will take responsibility for the outcome, but it will also lighten the load on the lead negotiator and assure better preparation of the negotiating issues.

It is of critical importance in negotiations for a team to reflect a unified position at all times. Nothing will undermine a negotiating team's credibility more than an aura of disunity, disagreement, or other forms of dissension. If disunity or disagreement is observed a counterpart negotiator, that negotiator will move to exploit those differences or will simply be confused by the team's inability to present a unified and coherent proposal or response.

Pre-negotiating the Negotiations
Every negotiation actually begins before the negotiators sit down at the negotiating table. Through phone calls, email messages and other communications the negotiating parties need to discuss and decide on the following:

Negotiators can also use the pre-negotiation period to learn as much as possible about the expectations of their counterparts. By exchanging information about expectations, the participants can avoid being caught by surprise when the formal sessions are convened.

The Preliminary Steps of the Dance.
Before launching into the negotiation proper-the substantive issues that have brought the parties to the table-the negotiators will want to go through a basic check list to insure a productive negotiating session.

Opening Statements
An opening statement is an important "first intervention" in a formal negotiation, working group, or conference setting. The opening statement provides parties with an opportunity to identify key issues and interests as well as to articulate parameters for potential agreements. This is not a process where a party "reveals a bottom line", but rather an opportunity to stress the importance of the outcome to the interests of the party and to establish early in the proceeding exactly what the party making the opening statement has been directed to pursue by his/her nation or other organizational hierarchy.

After a few negotiating sessions, participants can grow weary of the repetitive enumeration of each side's views and positions on the issue. Nevertheless, a country's position, no matter how often it is repeated, remains one of the anchor points in a negotiation and it is important to be clear about the starting point for each negotiating session. Repetition of the country's position also provides an opportunity to ask whether any aspect of the position has changed since the last session. Miscommunication and false assumptions can easily set a negotiation back, so it is important always to be very clear about the two positions that frame the negotiation. Patience is a key characteristic of a good negotiator, and a certain amount of repetition is the price you pay for being a negotiator.

Exploring the Positions and Interests of the Parties.
The opening statements provide a platform for a subsequent exchange of clarifying questions on the respective positions and the underlying interests of the parties. A good way to start the process is for the head of each delegation to summarize the position of the other side and to seek confirmation that they understood the position of the other side correctly. This provides each side the opportunity to clarify and elaborate on their initial statement of the position, and to ask clarifying questions of the other side.

As discussed earlier, negotiating positions need to be distinguished from interests. The negotiating position, which is what a negotiator is instructed to ask for at any particular phase of the negotiation, is dictated not only by the organization's interests, but by the negotiating strategies and tactics of the parties. Interests underlie positions. Interests are the commercial interests, policy objectives, bureaucratic imperatives, or legal requirements that a negotiator must satisfy in a negotiation in order to obtain the approval of the home constituencies. Interests are at the vary core of what drives parties in a negotiation.

In trade negotiations, it can be safely assumed that all parties at the table seek to advance their economic interests. But there may be a multitude of other important interests that compel the parties to take the positions they do. The ranking and prioritization of interests will differ between parties. It is in the recognition of these different priorities in the interest that the skilled negotiator can offer creative options (solutions) that maximize prospects for a negotiated agreement.

The interests of stakeholders is determined by the impact of the targeted policy measure on the commercial interests of competing enterprises and workers, the policy objectives served by the targeted policy measure, the broader economic impact of the measure, and institutional and bureaucratic interests. It is also shaped by the domestic and international legal provisions that apply to the measure. A stake holder's perceived interests may or may not coincide with that stakeholder's real interests, depending on the availability and accuracy of their information. A successful commercial diplomat therefore analyzes the issues not only to better understand the issues at stake, but also potentially to educate other stakeholders on their real interests, where that reinforces the analyst's own objectives.

Framing the Issues
A complete understanding of the issues, and of the perceived and real interests of stakeholders forms an essential basis for framing the issue for negotiation. In the course of preparing for negotiations, a commercial diplomat may find it necessary or desirable to redefine the negotiating issue periodically as more information sheds new light on he issue. For example, as negotiators learns more about the policy issue underlying a targeted measure, they may find that their understanding of the problem was faulty and that the more accurate information calls for a different approach to the problem. Alternatively, the negotiator may conclude the issue needs to be redefined to reach out to better address the needs of new potential allies or to provide a closer legal fit.

Creating Multiple Solutions to Satisfy Interests
One of the key elements to effective negotiations is the development of multiple options or solutions to satisfy party interests. The best negotiators distinguish themselves by their ability to create and generate multiple options in both the planning stage and at the negotiating table. This is the area of interest-based negotiation where a negotiator's creativity and capacity to think beyond a single solution is paramount. The shortcoming of many positional negotiators is that they become fixated on single solutions or positions that blind them to other possibilities. Such singular thinking can lead to stalemate and impasse in the negotiation process.

A. Active Listening
Active listening is one of the most important skills to be developed as a negotiator. It sounds like common sense, but many negotiators do not make good listeners. The most confident negotiators, however, use the art of active listening to enhance their understanding of their counterparts' interests.

Active listening is more than just listening. Active listening includes the act of communicating to counterparts that you have heard what they said. By communicating understanding the negotiator is not accepting or acquiescing to the counterparts' proposal.
By actively restating what the speaker has said, you communicate that you have indeed heard what was said.

B. Asking Questions - Information is Power
Combined with the skill of active listening is the skill of asking. This may sound like a basic tenet of negotiations at any level, but many inexperienced negotiators use every opportunity to advance their proposals, their options, and their ultimatums at the table. By failing to use the negotiation setting as an opportunity to learn, a negotiator will remain uneducated about counterpart interests.

Asking for information or clarification conveys interest and a willingness to understand the other party's interests.

Patience in the negotiating process can give a negotiator the upper hand in terms of command of information, finding out what is really important to counterparts, and determining areas where trade-offs or compromise might be appropriate.

C. Use of Silence
One of the more powerful skills to be employed in the negotiation process is the tactical and timely use of silence. In many cultures, protracted silence creates a socially uncomfortable atmosphere. People will offer words and verbiage to fill the silence. Counterparts may offer further information, concessions, or compromises simply to fill the vacuum.

D. Use of Objective Criteria
Objective criteria represent a set of independent or external standards that are introduced to support the legitimacy or fairness of a party's proposed option or solution. Objective criteria can be viewed as factual information drawn from any number of sources. The introduction of objective criteria at the negotiating table is a form of submitting evidence in support of an argument or proposal. The goal is to persuade the other parties that a proposal is reasonable and consistent with findings of independent, neutral experts.

Objective criteria can also be understood as the introduction of fair standards. By relying on a non-party to the negotiations who in the normal course of business produces scientific or market studies, the parties can agree on the standards or norms that will serve as guideposts in the negotiation process.

A party may be skeptical that a certain proposal is fair. Objective outside criteria in support of a proposal it will convey legitimacy that counterparts can use to persuade their constituencies or superiors.

E. Taking Breaks from the Negotiating Table -"Going to the Balcony"
Getting away from the table can be one of the most important and underutilized tools to increase negotiating power. Negotiators, even when representing large organizations, often make commitments or concessions without having fully discussed them with teammates or superiors. "Going to the balcony" is a terminology intended to mean the physical act of leaving the negotiating area by going out on the balcony, or going to a balcony where one might still observe the proceedings but from a more distant perspective. Taking a break allows parties to achieve a number of important negotiating objectives, including:

F. Organizing Brainstorming Sessions
An organized brain storming session can serve a number of functions. First, it gets team members comfortable working with each other and empowers all team members to be contributors to the process.

In working with teammates or counterparts, there are some useful techniques that can be employed to elicit reactions, ideas, and counter-proposals. An error commonly made is for parties to advance a proposal as an ultimatum or as a non-negotiable, singular solution. By inviting a teammate or counterpart to evaluate a proposed option, the negotiator gives the counterpart the power of choice. They have the power to accept or reject the proposal. When a negotiating partner summarily rejects a proposal, ask them to offer a counterproposal, to offer a modification of the proposed option that would make it acceptable.

By employing this tactic, a negotiator can engage team members or counterparts constructively in the formulation of options for consideration, comment, and acceptance or refinement. A useful technique for eliciting a team mate or counterparts input is to ask, "What if we did x, or what if we agreed to do y?" By posing the option in the form of a question, the counterpart's opinion is sought and their counter-proposal or modification may lead to a viable option or proposal. Often, a minor modification that preserves the essence of your proposed option may work to gain the acceptance of a counterpart.

G. Practicing Role Reversal
Role reversal can be an invaluable tool in achieving a better understanding of the negotiations. Practice Role reversal. Have members of your own team play the role of counterparts. Insist that they assume the role by speaking in the first person. Ask them directly what are their concerns, goals & objectives, interests…. What would work for them and why?

H. Introducing a Written or Single Text Document
The "dance" of negotiation can involve protracted dialogue and discussion that may seem unproductive as parties restate positions and appear to offer nothing to advance the process. In most productive negotiation sessions, the parties will eventually reduce areas of agreement or consensus to writing. Once parties begin working on text there is often a qualitative change in the course of the negotiations. Parties begin working together to craft appropriate and acceptable text. To be effective, a written or single text proposal need not be long or address a long list of issues. It is useful to use text that has been agreed to as building blocks.

A negotiator can actually expedite this productive stage of negotiations by introducing a written or single text document. By offering text that describes a prior agreement or suggests a potential resolution, the parties will begin discussing terms in response to a written text. When a draft proposal or agreement is presented to counterparts, it should be with the intent of inviting their feedback. There may be proposed changes that are minor and which make the document read better. These are obviously welcome changes and give your counterparts a hand in the crafting of the document. They see their words in the document and are more likely to support and sign an agreement that has their input and "fingerprint". Some proposed changes might be fundamental and go to the very substance of the negotiations. Even if the proposed change is unacceptable, it can be used as a platform for exploring other variants and options that may satisfy all parties.

It is useful to obtain signatures or initials of the parties on individual text documents and proposals that are agreed to indicate support. This can be done with the assurance that no final agreement will be signed if not acceptable to the party, but the act of signing or initialing the interim agreements or building blocks is to establish a "culture of agreement" and signing documents together.

I. Drafting Durable Agreements
The following outline provides the key elements that should be contained in an enforceable agreement.

J. Cross-cultural Dynamics, Gender, and Language
International negotiations necessarily involve cross-cultural interactions that may affect the flow of a negotiation and the understanding of various parties to process, proposals, and agreements.

In the field of international trade law and practice, a diplomatic culture has developed which has served to minimize some of the barriers that cross-cultural dynamics may pose in business or other non-governmental negotiations. Diplomatic culture can be described as the universal culture of professional diplomats who often speak in a common language (English, French, Spanish) even if that language is not the diplomat's native language. Diplomats often maintain common habits associated with international diplomacy including western dress, common educational backgrounds, and familiarity with procedures and protocols associated with international law or rule-making.

But, even those who present themselves as part of this diplomatic culture may maintain strong cultural identification and habits with their native culture. Culture is manifest in many ways including orientation to time, decision-making process, formality of negotiation process, formality of decisions (oral agreement vs. written contract.), importance of age, language, preferences and attitudes toward food, music, sports, body language, etc.

Combined with cross-cultural issues that may affect the negotiation process is the difference in the role of men and women in various cultures. Gender dynamics may be of little importance or of profound significance depending upon the culture.

Language and the choice of language used in international negotiations is also an important variant in the potential success or failure of a negotiation process. Today, the diplomatic culture increasingly relies on English as the common language for inter-governmental negotiations. This may, of course, vary if all participants are South European, Latin American or from a Francophone country or the former Soviet Union. The important lesson to be learned with respect to language as a variant in international negotiations is that people possess varying degrees of fluency. If a person is not negotiating in their native language, the potential for misunderstanding increases.

Negotiators often are confused or misunderstand the intent of a counterpart negotiator even when negotiating in a shared common language. When negotiating with a party or parties who do not share a common language, the potential for misunderstanding increases. Even with skilled, professional interpreters, a literally accurate interpretation may not convey the intent or nuance of the speaker.

How can a negotiator be sure that his/her words are being understood as they are intended? Speaking slowly, rephrasing what the counterpart negotiator has said in the negotiator's own words, reviewing written text, and use of interpreters (oral) and translators (written) represent non-exclusive options to minimize error or misunderstanding.

K. Dealing With Dirty Tricks and Ultimatums
Most serious negotiators bring a level of sophistication and professionalism to the negotiating table, but there are always circumstances where a desperate or aggressive negotiator will employ dirty tricks, ultimatums, or intimidation.

The key to dealing with unprincipled negotiators is to recognize and identify the tactics being used. By being mindful of the types of tactics that are sometimes used, you can evaluate the impact that such tactics are having on the negotiation process and utilize one of the following techniques:

1. Identify and focus on the tactic. Explain to the counterpart that you do not appreciate intimidation, abusive language, or ultimatums. You can also convey that you remain fully prepared to continue in a good faith negotiation but will not accept conduct that is disrespectful or designed to intimidate. In many instances, identification of the perceived tactic will result in a denial by the counterpart, but often you will realize a change in behavior as well. By clearly articulating what you perceive to be unacceptable behavior changes the atmosphere of the negotiation and registers that you will not succumb to such tactics.

2. Utilize counter-tactics to counteract the behavior. In the face of an ultimatum (a "take-it-or leave-it" offer), you can request a break to review the offer. Return to the table to draw the party back into the negotiation by asking them how they arrived at that final offer. Use questions to draw the counterpart back into the game of a give and take negotiation.

3. Make contact with the counterpart's superior. In the most egregious case of disrespectful, demeaning, or insulting attacks by a counterpart, indicate that you will not participate in a negotiation where such behavior is manifest. A party can refuse to continue in a negotiation where such tactics are employed and contact the offending official's superiors to request that the offending personality be replaced at the negotiating table before you will continue in the process.

4. Demand respect for your team. By treating counterparts with a modicum of respect you can appropriately demand that respect be reciprocated.

Often, the tactics described above reflect the conduct of a highly emotional, defensive, and inexperienced negotiator. While such tactics may have worked in some instances, you need to make it clear that such conduct is unacceptable in the present negotiation.

L. Listening to and Recording all Proposed Options
In both brainstorming sessions with teammates and with counterparts, it is important to record all proposed options. The use of charts or posted paper is an effective means as it will preserve the proposal for ongoing review and comment and create a record of the session.

Without agreeing or acquiescing to a proposed option that has been generated by a teammate or counterpart, you can gain valuable information and expose potential weaknesses by asking the contributor, "How did you arrive at that solution or proposal? What is it based upon? Is there a factual, scientific, or other objective basis for your proposed option?"

If the presenter can offer further evidence or criteria in support of their proposal (or if you can in response to a similar question) the information shared may be useful in winning support from constituents or superiors who may be skeptical. The further information or lack thereof can fortify or reduce the value of a proposed option.

M. Building a Reputation
At the end of the day, a negotiator will be evaluated as fair or untrustworthy. If you gain a reputation as being unfair or unprincipled, this reputation will follow you and will be difficult to overcome. There is a difference between appearing tough but principled, and being unscrupulous and unprincipled. You build your reputation as a negotiator in large measure by your ability to follow-through and implement commitments made during negotiations.

As discussed earlier, building rapport and a good working relationship with counterparts will generate long-term benefit. Remember, that you are dealing with people who have their own professional aspirations, honor, and pride. Often, the key ingredient in building a strong working relationship is to build a friendship away from the negotiating table. Sharing meals, gifts, and providing hospitality to negotiating partners who have journeyed to your city will translate into more productive work at the negotiating table. Your ability to reach out to the people at the table, regardless of the severity of conflict between principals, demonstrates a maturity and confidence that will win respect and help the parties to navigate the difficult terrain of the negotiation.

N. Creating a Win-Win Mentality
Bilateral negotiations aimed at the mutual reduction of trade barriers take place in an overall win-win framework, but they inevitably involve gains for some domestic stakeholders such as exporters or domestic consumers of imported products, and losses for other stakeholders such as domestic producers of competitive products in each country. Negotiators on both sides are expected to maximize the gains and to minimize the losses for their side. While economists would argue that both sides gain, whatever the impact on winners and losers in each country, the political economic reality is that losers are often in a position to block outcomes that do not take into account their interests. While winners can always trump losers where the potential gains a large enough, it is useful in a democratic society to persuade losers that the outcome is just. This usually means accommodating them in some way, while persuading them that a successful negotiating outcome is in the interests of the country as a whole. A good negotiator is able to gain their support through a combination of offers and threats - an offer to make less of a cut in the trade barrier than might be possible if they acquiesce and a threat to ignore their interests if they chose to oppose the agreement actively.

Negotiations over the mutual reduction of trade barriers thus always involve hard bargaining, both at home and internationally. In light of the stakes for winners and losers, they inevitable take on a zero-sum mentality. Negotiators in such situation must always remind themselves that the desired outcome is a win-win solution for the country as a whole, consistent with an acceptable distribution of gains and losses among stakeholders. The challenge of the negotiator is to achieve such an outcome for both sides, since both sides have to be satisfied with the outcome. The role of the negotiator is to let the other side know what is required to achieve a successful outcome, both in terms of the expected gains for exporters and what would constitute unacceptable losses for import competing industries. Equipped with information about each side's needs, the two negotiators then have the task of identifying an outcome that will maximize the potential increase in trade, while meeting the domestic political requirements of each side.

The most important requirements for a successful outcome in such negotiations are a detailed analysis of the interests of stakeholders in both countries, and comprehensive consultations with affected stakeholders on desired and achievable results. Good information about stakeholder interests in the other country will strengthen a negotiators hand in negotiations with counterparts, and provide the raw material for developing win-win solutions. Consultations with stakeholders will earn the negotiator the support of stakeholders when the negotiated agreement is tested politically at home.

Exercise #1 - Simulation of Request/Offer Negotiations
This simulation is designed to give students an opportunity to apply the negotiating skills covered in this module, and the knowledge of substantive issues covered in earlier modules. The simulation covers the negotiation of market access and national treatment commitments through the request/offer procedure provided under the WTO General Agreement on Trade in Services. (GATS). The nature and structure of national commitments on national treatment and market access are covered briefly on pages xxx of this module, and more extensively in some of the other modules, and are not repeated here.

Part I provides background information on three hypothetical countries, and a number of public and private stakeholders who are assumed to have a legitimate role in the development of each country's negotiating position. Part II lays out the three phases of the simulated negotiations, and three activities under each phase. Part III contains a set of confidential negotiating instructions. Instructors should distribute these instructions to the individuals representing the various stakeholder groups.

South Land - Developing Country
Underdeveloped financial services industry. Bureaucratic culture, with highly interventionist regulation of services. Excellent university system with more graduates than can find jobs in their chosen area of specialization. . All foreign investments have to be approved by Finance Ministry and Ministry responsible for services sector, e.g. telecommunications, and few licenses are granted foreign investors cannot own more than 40%. Exchange controls limit outward tourism. Laws limit work permits for foreigners,

Government Ministries
Trade Ministry
Telecom Ministry
Finance Ministry

Private Stakeholders and Publicly Owned Enterprises
Information and Professional Services companies
Public Telecom Monopoly
Local Financial Services Industry
Union Federation

Southwest Land - Developing Country
Popular tourism destination. Locally owned financial institutions are globally competitive. Laws permit entry by foreign financial institutions on case-by-case basis. Public service union concerned about privatization of education and other social services. Privatized Telecom Company, with large market share, and telecom rates 40% above American rates. Foreign investment in telecom requires licenses, which are difficult to obtain. Some foreign companies have been given licenses to establish limited Mobil phone networks. Good educational system, but insufficient capacity at university level. Emerging information technology companies growing fast. Popular, low budget location for production of TV films and commercials. Partial regulatory reforms have simplified regulation of services, but regulation remains more cumbersome than in many other countries. Highly competitive shipping industry.

Government Stakeholders
Trade Ministry
Finance Ministry
Ministry of Commerce, Tourism and Transportation

Private Stakeholders
Services Industry Federation
Public Service Union
Telecom Company

North Land - Developed Economy
Highly developed services economy, with world competitive financial services, telecom, and professional services industries. Excellent private university system and private hospitals. Strict immigration controls. Extensive foreign investment in all services industries. High wages in all industries. Restrictions on foreign investment in domestic transportation.

Private Stakeholders
Services Industry Association
Shipping Industry
Union Federation
National Association of Universities

Depending on the amount of time available, a simulation of the request/offer negotiations can encompass any combination of the three following elements, each of which covers one of three phases in negotiations carried out under the request/offer procedure. Each of the three phases of the negotiation should be expected to take at least a half day, with perhaps another half day spent in initial briefings and preparations.

1. Development of Requests
(a) In preparation for the negotiation of market access and national treatment commitments in services under the request/offer offer procedure in the WTO, trade ministry representatives should consult with private sector representatives, and other government ministries on preparation of national request. Each country should prepare such a list for each of its trading partners, and seek approval of most, if not all, stakeholders.

(b) Trade Ministry should hold bilateral consultations with each trading partner on requests to explore rationale for requests. (This step can be skipped if time is limited.

(c) While government representatives are consulting or negotiating with trading partners, private stakeholders should meet with their counterparts from other countries to discuss issues, and obtain additional information that can be shared with their government negotiators.

2. Development of Offers
a) On basis of requests received from other countries and consultations with private and public stakeholders, trade ministry should compile an initial offer for each trading partner. Trade Ministry must obtain approval of most stakeholders.

b) Each country should hold bilateral consultations with each trading partner. National delegations should include all government ministries, and should be headed by Trade Ministry. For scheduling purposes, each ministry should have at least two people, so they can hold simultaneous consultations with both trading partners.

c) While government representatives are consulting or negotiating with trading partners, private stakeholders should meet with their counterparts from other countries to discuss issues, and obtain additional information that can be shared with their government negotiators.

3. Final Negotiations
a) Trade Ministry should develop and obtain approval of final negotiating instructions by most, if not all, stakeholders.

b) Country representatives can schedule as many negotiating sessions as necessary, or as many negotiating sessions as can be scheduled during the time available. Delegations can seek approval of a change in negotiating instructions from their stakeholders.

c) While government representatives are consulting or negotiating with trading partners, private stakeholders should meet with their counterparts from other countries to discuss issues, and obtain additional information that can be shared with their government negotiators.

South Land Trade Ministry
You will represent the South Land Trade Ministry in consultations with other ministries on the development of South Land's positions in the services negotiations with other countries. You will also head South Land's negotiating team in negotiations with other countries.

You objective should be to advance South Land's overall commercial interest in a manner that achieves substantial consensus among stakeholders with a substantial interest in the outcome of the negotiations.

South Land Telecom Ministry
You will represent the South Land Telecom Ministry in consultations with the Trade Ministry on the development of South Land's policies in the services negotiations with other countries. You will also participate as a member of South Land's negotiating team, headed by the Trade Ministry.

In representing the Telecom industry in such discussions, you should ensure that our Ministry's authority to approve licenses for foreign investors and to regulate the provision of telecommunication services in South Land is not jeopardized. You should also ensure that the entry of foreign telecom companies does not threaten the commercial viability of our own telecom industry. While we agree that the international competitiveness of many of our Information Technology related services industries is enhanced by the quality and cost of business telecommunication services, we do not believe that unlimited competition, which can lead to large losses in the industry, is in the best interest of the country.

South Land Finance Ministry
You will represent the South Land Finance Ministry in consultations with the Trade Ministry on the development of South Land's policies in the services negotiations with other countries. You will also participate as a member of South Land's negotiating team, headed by the Trade Ministry.

In representing the Finance Ministry in such discussions, you should ensure that our Ministry's authority to regulate the provision of financial services in South Land is not constrained. You should also ensure that the entry of foreign companies does not threaten the commercial viability of our own providers of financial services. You should also ensure that our ability to control foreign exchange expenditures by our tourists while our foreign exchange reserves are low is not eliminated.

South Land Public Telecom Company
You will represent the South Land Public Telecom Company in consultations with the Trade Ministry on the development of South Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the Telecom Company in such discussions, you should ensure that we do not face ruinous competition from new foreign competitors, or that over-investment leads to excess capacity and a collapse of telecom rates. At the same time, you should take advantage of opportunities provided by the negotiations to remove some of the constraints on our managerial flexibility on decisions regarding investments, pricing of our services, and employment.

South Land Information and Professional Services companies
You will represent the South Land Information and Professional Services companies in consultations with the Trade Ministry on the development of South Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the South Land Information and Professional Services companies in such discussions, you should ensure that the services negotiations lead to a liberalization of the restrictive domestic regulations in telecommunications, which now constitutes a major barrier to our ability to export our services competitively. You should also assure that we obtain commitments from other countries liberalizing access for temporary assignments by our people, either for training purposes or for meetings with clients.

South Land Financial Services Industry
You will represent the South Land Financial Services Industry in consultations with the Trade Ministry on the development of South Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the South Land Financial Services Industry in such discussions, you should ensure that the services negotiations do not lead to the elimination of current regulations that limit entry by foreign financial services companies and avoid ruinous competition in our industry. At the same time you should try to use the negotiations to reduce the excessive regulatory burden that now limits our flexibility to innovate and manage our businesses efficiently, and which raises our cost of doing business.

South Land Union Federation
You will represent the South Land Union Federation in consultations with the Trade Ministry on the development of South Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the South Land Union Federation in such discussions, you should ensure that the services negotiations do not lead to commitments that would undermine our public services, undermine our jobs with the national telecom company, and threaten the jobs of our union members. You should also assure that efforts to obtain commitments from other countries to liberalize access for temporary overseas assignments do not lead to a commitment by our country to allow workers from neighboring countries to undercut our wages.

Southwest Land Trade Ministry
You will represent the Southwest Land Trade Ministry in consultations with other ministries on the development of Southwest Land's positions in the services negotiations with other countries. You will also head Southwest Land's negotiating team in negotiations with other countries.

You objective should be to advance Southwest Land's overall commercial interest in a manner that achieves substantial consensus among stakeholders with a substantial interest in the outcome of the negotiations.

Southwest Land Finance Ministry
You will represent the Southwest Land Finance Ministry in consultations with the Trade Ministry on the development of Southwest Land's policies in the services negotiations with other countries. You will also participate as a member of Southwest Land's negotiating team, headed by the Trade Ministry.

In representing the Finance Ministry in such discussions, you should ensure that our Ministry's authority to regulate the provision of financial services in South Land is not constrained, and that foreign financial services companies establish themselves as branches fully subject to our prudential requirements. At the same time, you should obtain increased access market access and full national treatment for our banks and insurance companies in foreign markets.

Southwest Land Ministry of Commerce, Tourism and Transportation
You will represent the Southwest Land Ministry of Commerce, Tourism and Transportation in consultations with the Trade Ministry on the development of Southwest Land's policies in the services negotiations with other countries. You will also participate as a member of Southwest Land's negotiating team, headed by the Trade Ministry.

In representing the Southwest Land Ministry of Commerce, Tourism and Transportation in such discussions, you should ensure that our shipping, tourism, information and professional services obtain improved market access to foreign markets, and that the interests of our private stakeholders are fully satisfied.

Southwest Land Services Industry Federation
You will represent the Southwest Land Services Industry Federation in consultations with the Trade Ministry on the development of Southwest Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the Southwest Land Services Industry Federation in such discussions, you should ensure that the services negotiations lead to

Public Service Union
You will represent the Southwest Land Public Services Union in consultations with the Trade Ministry on the development of Southwest Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the Southwest Land Public Services Union in such discussions, you should ensure that the services negotiations do not lead to commitments that would undermine our public education and health systems, and threaten the jobs of our union members. You should also assure that efforts to obtain commitments from other countries to liberalize access for temporary overseas assignments do not lead to a commitment by our own country to allow workers from neighboring countries to undercut our wages.

Privatized Telecom Company
You will represent the Southwest Land Telecom Company in consultations with the Trade Ministry on the development of Southwest Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the Southwest Land Telecom Company in such discussions, you should ensure that we do not face ruinous competition from new foreign competitors, or that over-investment leads to excess capacity and a collapse of telecom rates. At the same time, you should take advantage of opportunities provided by the negotiations to remove some of the excessively burdensome regulations in our country...

North Land Trade Ministry
You will represent the North Land Trade Ministry in consultations with other ministries on the development of North Land's positions in the services negotiations with other countries. You will also head North Land's negotiating team in negotiations with other countries.

You objective should be to advance North Land's overall commercial interest in a manner that achieves substantial consensus among stakeholders with a substantial interest in the outcome of the negotiations.

North Land Ministry of Commerce
You will represent the North Land Ministry of Commerce in consultations with the Trade Ministry on the development of North Land's policies in the services negotiations with other countries. You will also participate as a member of North Land's negotiating team, headed by the Trade Ministry.

In representing the North Land Ministry of Commerce in such discussions, you should ensure that our services industries obtain improved market access to foreign markets, and that the interests of our private stakeholders are fully satisfied.

North Land Labor Ministry
You will represent the North Land Labor Ministry in consultations with the Trade Ministry on the development of North Land's policies in the services negotiations with other countries. You will also participate as a member of North Land's negotiating team, headed by the Trade Ministry.

In representing the North Land Labor Ministry, you should ensure that our country doers not make commitments granting unlimited access to foreign workers.

North Land Services Industry Association
You will represent the North Land Services Industry Association in consultations with the Trade Ministry on the development of North Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the North Land Services Industry Association in such discussions, you should ensure that the services negotiations lead to a liberalization of the restrictive domestic regulations in services, and that we gain full national treatment and improved market access for our services industries. You should also ensure that we obtain commitments from other countries that will enable us to staff of our locally established facilities with managers and technical experts from North Land.

North Land Union Federation
You will represent the North Land Union Federation in consultations with the Trade Ministry on the development of North Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the North Land Union Federation in such discussions, you should ensure that the services negotiations do not lead to commitments that would undermine our public education and health systems, and threaten the jobs of our union members. You should also assure that efforts to obtain commitments from other countries to liberalize access for temporary overseas assignments do not lead to a commitment by our own country to allow workers from neighboring countries to undercut our wages.

Northland Shipping Industry Federation
You will represent the Northland Shipping Industry Federation in consultations with the Trade Ministry on the development of North Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the Northland Union Federation in such discussions, you should seek to keep shipping services out of the negotiations. In any case you should ensure that the services negotiations do not lead to commitments that would undermine our industry. In particular, you should protect our cabotage legislation, which reserves shipping between domestic ports to ships owned by Northland citizens.

Northland National Association of Universities
You will represent the Northland National Association of Universities in consultations with the Trade Ministry on the development of North Land's policies in the services negotiations with other countries. You will also have an opportunity to discuss issues of common concern with interested stakeholders in other countries.

In representing the Northland National Association of Universities in such discussions, you should ensure that the services negotiations lead to a liberalization of the restrictive domestic regulations in educational services, and that we gain full national treatment and improved market access for our universities in establishing private universities abroad. You should also ensure that we obtain commitments from other countries that will enable us to staff such universities with educators from North Land. You should make clear that our association is not challenging the validity of publicly financed universities or public education, but that we believe that private universities can play an important role in expanding access to university education, adding greater choice, and setting new benchmarks for quality education.

[1] Further insights into the application of the analytical and consensus-building techniques covered in this module to negotiations in services in several publications that have covered the development of the international consensus in support of the General Agreement on Trade in Services. See, for example,

[2] Much of the material in this section is taken from a manual published by The Institute for Trade & Commercial Diplomacy, Inc. on its website www.commercialdiplomacy.org. The manual jointly coauthored by Bill Monning and Geza Feketekuty, is entitled . The manual built on ideas developed by Roger Fischer of the Harvard Negotiating Project in books such as Getting to Yes,

[3] Other useful exercises are found on the website of The Institute for Trade & Commercial Diplomacy, Inc., www.commercialdiplomacy.org, including a simulation of a request/offer negotiation among four hypothetical countries at different stages of economic development.