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September 03, 2019

Negotiators Can’t (Appear to Be) Afraid of No Deal

Imagine if the teachers’ union started negotiations with your school board saying: “a strike is unthinkable.” That would be a signal to the board that they could impose any terms they wanted without worrying about the teachers’ reaction. Same thing would be true in reverse. A board could walk all over a union which vowed not to strike (unless there is an arbitration clause).

When we were in London recently, Prime Minister Boris Johnson was being excoriated for saying that, if necessary, there would be a no-deal Brexit. If he said that the UK would stay in the EU and UK failed to agreed to a deal, he would be giving the EU complete control of the negotiation. Immediately after becoming PM, he set the civil service to work preparing for a no-deal breakup. Doesn’t means he wants no deal, but he must convince Europe that he is ready to leave that way if necessary in order for there to be any chance that the EU will agree to a deal acceptable to him. It doesn’t hurt his negotiating position if Europe suspects he really wants an excuse to break away with no deal.

President Trump is in the same position in negotiations with China. Sure, a trade war and escalating tariffs are bad for everyone. But, since the status quo in trade favors China, they have no inducement to negotiate unless they believe we are willing to take our share of the mutual pain of tariffs. A demonstration probably was necessary. Could it all end badly? Sure, but a negotiator can’t afford to be afraid of no deal. Trump says we’d be better off with high mutual tariffs than the current imbalance of trade and theft of intellectual property by China. Whether he’s right or wrong or means it or not, he must act as if he believes that to get a good deal.

In this case China has more to lose than we do because they sell more to us than we do to them. Still, Chinese President Xi is taking pains not to appear to be afraid of no deal either. Note that both heads of state are being careful not to demean the other. That’s a good sign that each thinks a deal is possible and doesn’t want to sabotage it.

When Ronald Reagan and Mikhail Gorbachev were about to negotiate the Intermediate Range Nuclear Weapons Treaty, Vermont Governor Dick Snelling, for whom I then worked as Transportation Secretary, had some advice for Reagan. Since Reagan wasn’t asking Snelling for advice, he gave it to me instead: “when negotiating, it’s a good idea to let your opponent think you’re a little crazy.” Particularly important when failed negotiation can lead to something as unthinkable as nuclear war. Only a crazy person wouldn’t fear that outcome.

It’s hard to feel sorry for Donald Trump or Boris Johnson personally, but negotiating when you’re not leader for life has its disadvantages. No matter how convincing a tough guy you are, your opponents will be tempted to wait you out if they think they’ll get a better deal from your successor. Trump’s would-be Democrat opponents have plenty to criticize him for without signaling that they might declare unilateral disarmament with respect to tariffs if elected. That’s why we used to say “politics ends at the water’s edge.”

Both Johnson and Trump do understand that they can’t be afraid of no deal.

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