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Harvard Business Review: Lessons from Brexit on how not to negotiate

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As we come to the end of three and half years of often tortuous negotiations over the terms of the UK’s departure from the European Union and the future relationship, hindsight offers some lessons from the ordeal.

On some days we saw positive signals from both camps, but on others there appeared to be near-insurmountable obstacles.

What is clear now, however, is that the whole process has been a mixed bag, if it’s analyzed using the principles of negotiations we teach in our executive programs at Oxford. Here are six highlights and lowlights of the negotiations and what they mean now, as the negotiations reach their conclusion.

1. BUILD STRONG RELATIONSHIPS AHEAD OF TIME. DURING NEGOTIATIONS, UNDERSTAND WHAT YOUR COUNTERPART CARES ABOUT.

Flash back four years, and you’ll remember Prime Minister 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. The last-minute shuttle diplomacy proved to be too little, too late. Second, the EU failed to put itself in the UK’s shoes (another negotiation principle). Had it been even somewhat flexible over freedom of movement, it might have been able to keep one of Europe’s largest and most important countries within the EU family.

2. PAY CLOSE ATTENTION TO PROCESS.

In negotiations, it’s important to control 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, it gained an important victory in phase one.

As a result of that early EU success, the UK has had less leverage in phase two (negotiating the future relationship). At this late stage in the negotiations, the UK could really do with having an issue like 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 as important as communicating with those who are. An array of parties have a stake in these negotiations: individual European countries, parliamentarians on both the UK and EU sides, industry groups and the general public on both sides of the channel.

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 industry groups have been kept in the dark.

The biggest stakeholder on the U.K. side is the British public. Has the UK had an honest conversation with the population about the difficult trade-offs that will need to be made in the negotiation? No. Therefore it will be all the more difficult to get buy-in for the deal and for concessions that need to be made.

4. AVOID SELF-IMPOSED DEADLINES.

Setting deadlines can help focus minds and inject a sense of momentum into negotiations. But more often than not, they result in ill-thought-out, suboptimal deals. That was the case with the Withdrawal Agreement, where the U.K. signed on to a deal that it had to start unravelling just a few months later. And it’s likely to be the case with the future trade relationship, which has ridiculously tight deadlines. Already, it’s likely that the European Parliament will have to convene between Christmas and New Year’s if there is a deal to be ratified.

5. BEHAVE LIKE A TRUSTED PARTNER — OR PAY THE PRICE.

Negotiations are built on a bedrock of trust and respect and an understanding that once deals are 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 overrides the Northern Ireland element of the Withdrawal Agreement and also breaks international law was a not a good moment (though it may not be terminal).

The EU is now being more demanding about the governance and enforcement mechanisms of a future trade deal, to ensure that the UK keeps its word next time. At this writing, it looks as if discussions over the legal structures surrounding a future trade deal have gone backward. The Internal Market Bill contributed to this deterioration.

6. DON’T LET POLITICAL PRESSURE GET IN THE WAY OF PRAGMATIC SOLUTIONS.

The fisheries industry currently contributes only 0.1 per cent to the UK economy and a similarly low figure across Europe. Compare this with services (over 75 per cent) and manufacturing and production (21 per cent) in the UK. Yet it’s quite possible that a future trade deal could collapse over fisheries. 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.

IT’S TIME TO BE CREATIVE

I’d say we are likely to have a bare-bones trade deal at the end of the year, with many months of future negotiations to come. After the year that Prime Minister Boris Johnson has had, and the worst economic crisis in 300 years, can he really afford a no-deal outcome — which, while unpalatable to the EU, is even more unappealing to the UK? (The EU market is eight times the size of the UK)

To reach agreement, both sides need to take the initiative. Negotiation impasses can sometimes be broken by heads of state or other senior people outside the negotiating teams. We are already seeing this in telephone conversations between Johnson and Ursula von der Leyen, president of the European Commission. It’s not too late to learn from the mistakes of the past, but time is running out.

– Harvard Business Review

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