Looking to the Future: Conflict Avoidance and Resolution in NAFTA’s Agricultural Trade Linda M. Young Trade Research Center Montana State University–Bozeman

Purpose of Talk Delineate elements of conflict resolution Outline current dispute processes –conflict avoidance –conflict management –dispute resolution Evaluate current dispute mechanisms –in terms of model processes Make a few suggestions- this research is preliminary

Positional Bargaining Involves alternative solutions to an issue that meet the need of one party Negotiators present their initial solutions Series of incremental concessions Arrive at a compromise Assumes: –fixed sum resources-one more the other less –relationships not a high priority

Positional Bargaining Disadvantages: –shortchanges exploration of alternatives –leads to adversarial relationships Advantages: –does not require trust –useful in division of fixed sum resources

Positional Bargaining KEY Acceptable Negotiating Range = Acceptable Options for Party A Acceptable Options for Party B Party A’s Bottom Line Party B’s Bottom Line Party B’s Target Party A’s Target

Interest Based Bargaining Focuses on satisfying as many needs as possible Explores disputants interests underlying positions Resources not regarded fixed (when possible) Cooperative problem-solving approach May uncover divergent values-may take time May produce outcomes with unexpected benefits Strengthens relationships

Triangle of Satisfaction Substantive Procedural Psychological Procedural Psychological

Triangle of Satisfaction Substantive –access to markets –trade rules, import levels –economic conditions Procedural: mechanics of dispute resolution –appropriate structure, agreement on the process? –settlement congruent with existing obligations? Psychological –disputants included; fair process –address issues of stereotype and bias

Dispute Avoidance Needs to happen: –Correct identification of interests Actually occurring: –Regulatory harmonization

Identification of Interests Competitive interests –“one party swims, the other sinks” Cooperative interests: linked goals, interdependence –“everyone sinks or swims together” Cooperative but separate

Cooperative Interests :Beef Industries Assumes free trade-that is what there is! Increase in demand –domestic and export –caveat Decrease in transactions costs for cattle over the border –transportation costs –efficient plant utilization –increased competition in some locations

Beef Industry Interests (con’t) Cooperative but separate –i.e.: meat inspection and food safety regulations must be addressed by national governments Competitive –demand linked to quality attributes determined by location

Obstacles to Interdependence Market as synonymous with the nationstate Deeply rooted historical concept Trade barriers isolated the market –some policy imposed –others natural trade barriers Nationstate basis of trade law and agreements No longer true-for a variety of reasons

New Industry Groups! Industry groups on the basis of cooperative interests Suggests a trinational group National commodity groups-competitive and separate interests It’s a hard road-groups perceptions change slowly

Dispute Avoidance NAFTA committees –Standard Related Measures –Working Group on Pesticides Industry-led –Northwest Pilot Project Fruit and Vegetable DRC –address discrepancies in commercial dispute resolution Regulatory harmonization

What is being achieved? Substantive: change the basis of identity –removes issues –regulations spanning 3 countries –facilitates trade –increased commercial ties Psychological –committee work stress on going relationships –opportunity to become educated about other’s interests –create on going ties –address issues of stereotypes and bias

What is being achieved? (con’t) Procedural –some cases - participants design process –some cases - consultative –work within existing obligations

Dispute Resolution: USITC/ITA USITC/ITA processes –strive to be predictable, rule based and fair –consistent over time and industries Substantive: –fail to separate positions/interests (sometimes) misattributed conflict –address dumping and subsidization; but –unhelpful in investigating or solving other issues might be poor economic conditions

Dispute Resolution (con’t) Psychological –process may be captured –often not fair - ie: dumping definition –does not address issues of stereotypes –likely to harm relationships; halt other progress Procedural –structure only sometimes appropriate –not designed by stakeholders Government consultations as another mechanism

Dispute Avoidance accurate identification of interests recognition of interdependence – in many cases joint industry government processes

Dispute Management fragmentation of issue into small pieces –addresses small pieces recognize areas of agreement acknowledgement of multitude of principles address data problems –jointly designing processes for data collection –clarify areas of disagreement –identify criteria for assessment creation of spheres of influence

Resolution of Disputes have a number of processes –different purposes- different process use integrative interest based approaches first –involve stakeholders whenever possible regular use of government consultations or mediation first