The Context of International Negotiations

© 2020 Jay Gary Finkelstein

 Elements of International Negotiation
 Legal

 Political

– Government goals/perspectives

– Favorable taxes; other assistance

– Perceptions: multiple interested parties

 Social

– Impacts on people/environment
– Elements of fairness v. exploitation
 Economic

– Profit and competition

– Sharing of benefits/advantages
– Living agreements
• Joint ventures (future joint effort)
• Mergers and acquisitions (acquired but still present)
• Long term supplies/extractive inputs
 Lessons
 Study past agreements/experiences of
other investors and countries

– Have those agreements been

successful

– Have the countries benefited?

– Where have they suffered?

– What has investor conceded to other

countries

– Have they been a good investor? Has

the country been a good partner?

 Learn from past experiences/mistakes –

both yours and others – what lessons can
be derived to guide new negotiations?
 Lessons (cont.)
 What has been customary in the past does not have to
dictate the future

 “This is the way it has always been done” does not

dictate how it should be done now

 Prior experience does not need to limit current

creativity

 Must weigh costs and benefits – in both directions

 Realities of the Real World
The Cost of Doing Business

 The French oil company, Total, has entered

agreements with oil producing countries by which, in
addition to producing oil, it has agreed to additional
in-country projects, such as building high schools in
Angola.

Source: The Wall Street Journal. July 1, 2008. >

 Not Only in Developing countries
 DC Metro System, Request for Proposals
to build / supply new subway cars
 Value = $1Billion
 Requests that bidders commit to spend
approx. 8% of contract value in the local
(DC-area) economy by using locally-
supplied materials, labor, services, and
subcontractors.
 Source: Washington Post, Express, April 22, 2019; “DC Metro Asks Rail
Bidders to Spend Money Locally “
 NOT ONLY GOVERNMENT ENTITIES

 Apple requires
companies in its supply
chain to commit to
substantial use of
renewable energy.
 Source: Washington Post, April 11, 2019: “Apple takes step toward curbing
climate-warming emissions from its supply chain”
 Setting the Stage -
MESSAGING
 Iranian officials made overtures about diplomatic discussions
with US

 Following week, Iran test-launches medium- and long-range

missiles

 A standard diplomatic strategy: Demonstrate strength prior

to negotiations

 Message: Willing to talk, but do not misperceive them as a

weak party

Source: Washington Post, July 11, 2008

 MESSAGING VIA ACTIONS

 China organizes military exercises near

Taiwan prior to visit by US politicians who
may consider greater recognition.
 Message: “You are being watched;
proceed with caution!”

 Source: Quartz Daily Brief, April 18, 2018: “China begins naval drills in the
Taiwan Strait”
 April 1, 2013

 North Korean diplomat states that

nuclear arm will not be traded even for
billions of dollars

 Source: Washington Post/Associated Press, April 1, 2013:

“N. Korea calls nuclear arms ‘nation’s Life”
 June 16, 2013

 North Korea propose high-level talks with the

United States to "ease tensions in the Korean
Peninsula.“

 Suggested topics include: Nuclear matters!

CNN,
http://www.cnn.com/2013/06/16/world/asia/north-korea-us-talks/index.html
?hpt=hp_t2
; article by K.J. Kwon and Greg Botelho, June 16, 2013
 September 30, 2017

 Trump administration acknowledges direct

communications with the government of North
Korea over nuclear test issues.

 Backchannel

Source: New York Times: “U.S. in Direct Communication With North

Korea”
https://www.nytimes.com/2017/09/30/world/asia/us-north-korea-tillerson.
html?_r=0
 January 1, 2018

Kim Jong Un gives conciliatory New Year’s speech

In an effort to suggest unity and reduced tensions,

proposes discussions over sending a team to the
Winter Olympics in South Korea.

MESSAGING: Making an effort and showing

willingness to talk – Stop the threats!

Source: Washington Post, January 1, 2018: “North Korean leader says he

has ‘nuclear button’ but won’t use it unless Threatened”
 March 6, 2018

North Korea proposes talks with the US

that could include limitations on
nuclear program.

 Source: Washington Post, March 6, 2018: “North

Korea offers talks with United States on curbing
nuclear program”
 April 17, 2018

 CIA Director Mike Pompeo travels on a secret visit

to North Korea to lay foundation for summit with
Trump.

 More Backchannel!

 Source: Washington Post, April 17, 2018: “CIA Director Pompeo met
with North Korean leader Kim Jong Un over Easter weekend”
 April 18, 2019

 North Korea demands that US remove Secretary

of State Mike Pompeo from nuclear
negotiations.

 Wants a negotiator who is “more mature”

and more likely to make progress in
communicating with them.

Source: Associated PRess, April 18, 2019: “North Korea says it tested new
weapon, wants Pompeo out of talks”
https://www.apnews.com/2ff1e53cfc9d42a7821c7f4e6a740642?utm_source=newslet
ter&utm_medium=email&utm_campaign=newsletter_axiosam&stream=top
 Conclusions

 To negotiate, it is essential to understand the entire

context of the transaction

 This information may be derived from sources other

than your client

 You must be informed to be effective!