Brexit – Lessons on how (not) to negotiate
I regularly review online feeds including articles issued by the Harvard Business Review. Some of them are not particularly relevant to me but others especially are and just before the end of the year I read, with great interest, an article under the subject above.
It is clear to everyone who followed the Brexit process that there are significant lessons that can be learned. Harvard Business Review (HBR) makes some pertinent points about the process which, as they describe, has been a mixed bag in terms of the principles on the negotiations that should be adopted.
Whilst it is not possible to gauge the actual dynamics that take place behind closed doors, some observations can still be ascertained regarding certain negotiation techniques that have either been used well, or not, as the case may be.
HBR’s article lists out six highlights and lowlights regarding the conclusion of the trade talks and process.
1. Build strong relationships ahead of any negotiation
“Flash back four years ago, and you’ll remember David Cameron shuttling between European capitals trying to renegotiate the terms for Britain’s continued EU membership, which he would take to the British public in a referendum. While Cameron still backs what he achieved, it was clear to many that it wasn’t enough, particularly on the issue of free movement.
Where did it go wrong? First, the UK government should have formed durable alliances in Europe much earlier; this kind of advance relationship building is one key to successful negotiations. Second, the EU failed to put itself in the UK’s shoes (another negotiation principle). Had they been even somewhat flexible over freedom of movement, they might have been able to keep one of Europe’s largest and most important countries within the EU family.”
2. Pay close attention to the negotiation process
“In negotiations, it’s nearly impossible to overestimate the importance of controlling the process. The EU did just that in the first stage of the negotiation, the UK’s negotiated withdrawal from the EU. By insisting that the issues important to the EU — the Northern Irish backstop, the rights of EU and UK citizens, and the UK’s financial liabilities — be agreed upon before discussions about the future relationship were even entertained, they gained an important victory in phase one.
As a result, the UK has had less leverage in phase two (negotiating the future relationship). At the later stage in the negotiations, the UK could really have done with having an issue, such as future financial commitments to use as leverage.”
3. Remember the stakeholders who aren’t at the table
“In negotiations, communicating with those who aren’t at the table is every bit as important as communicating with those who are. Again, the picture here is mixed. EU lead negotiator Michel Barnier has been diligent about providing updates on the status of the negotiations to member countries, European ambassadors, and the European Parliament. The same can’t be said in the UK, where many industry groups have been kept in the dark.
Many will remember two years ago when, in response to business concerns over a no-deal Brexit, our then-foreign secretary, now prime minister, said “F*** business.” Relationships with important stakeholders haven’t improved a great deal since. Of course, the biggest stakeholder on the UK side is the British public. Had the UK held honest conversation with the population about the difficult trade-offs which would need to be made in the negotiation process? The answer is no. Because they’ve never levelled with the public about contentious issues, it was even more difficult to get buy-in for the deal and for concessions that needed to be made.”
4. Avoid self-imposed deadlines
“Whilst setting deadlines can help to focus minds and inject a sense of momentum into negotiations. Often, they result in ill-thought-out, sub-optimal deals. That was the case with the Withdrawal Agreement, where the UK signed on to a deal that they had to start unravelling just a few months later, and may well be the case with the (future) trade relationship.”
5. Behave like a trusted partner – or pay the price
“Negotiations, particularly complex negotiations, are built on a bedrock of trust and respect and an understanding that once deals are agreed and signed, there’s no going back unless both sides decide to renegotiate.
So the UK government’s decision to draw up legislation – the Internal Market Bill – that purported to override the Northern Ireland element of the Withdrawal Agreement and also breaks international law was not a good moment.
The EU became more demanding about the governance and enforcement mechanisms of the trade deal, in order to ensure that the UK sticks to its word next time around.”
6. Don’t let external pressure get in the way of pragmatic solutions
“The fisheries industry contributes only 0.1% to the UK economy and a similarly low figure across Europe. Compare this to services (over 75%) and manufacturing and production (21%) in the UK. Yet the fishing issue led to the trade deal nearly collapsing.
While the right to control one’s own waters has strong symbolic importance and is an issue of supreme importance for many Tory MPs, the really great negotiators tend to put pragmatism before politics and look at the negotiation holistically.”
There are still many more months of negotiations with the EU to go. In particular, the current trade deal does not seem to have covered any arrangements regarding services and financial services that will involve the City to a large if not material extent. We can only hope that some form of mutually beneficial arrangements will be negotiated.
Read the full article on the HBR website.
Source: Harvard Business Review is a general management magazine published by Harvard Business Publishing, a wholly owned subsidiary of Harvard University. Subscription to HBR is possible through their website.