The triggering of Article 50 by Theresa May represents not the start of the Brexit negotiations, but the end of the first, preparatory phase. There are many deep complexities to be addressed going forward, not the least of which is that this is a potentially value-destroying trade and political negotiation of enormous technical complexity and breadth. Though a wide range of settlement possibilities exist, there are considerable risks of reaching no agreement or a significantly sub-optimal one. The challenges in devising suitable negotiation strategies include their multi-level, multi-lateral nature, amplified by there being multiple separate negotiations with distinct process rules. Beyond these lie the substantial linkage effects across a broad array of dimensions from reputations and relationships, to symbolism and precedents, and on to future EU budget negotiations and a possible Scottish independence referendum.
The first phase of the negotiation has not increased the grounds for optimism. Understanding why can give insights into dimensions that need particular care and attention over the next 18 months.
While all negotiations have significant substantive and analytical dimensions, the nature of communication and emotions remain highly pertinent, no more so where the negotiations have considerable political and even existential implications. The framing of the first phase of the Brexit negotiations has been wanting in these respects. Indeed, the UK approach has been narrow and at times myopic. Initiating a negotiation without preparation, with negligible understanding of the complex dimensions, and with simultaneously unclear and contradictory objectives is inevitably problematic. This sets the stage for flaws in the UK’s approach.
The internal UK contest to influence the strategic goals and preferences for the negotiation following the referendum result in June 2016 has led to much exaggerated and simplistic analysis and rhetoric. This has been combined with an over-optimism bias as well as self-serving evaluations, not least in the extent to which the substantive advantages of a trade deal would dominate the EU27 decision making. Yet the many public pronouncements from key political figures such as Boris Johnson, David Davis and Liam Fox are not confined to domestic consumption, but have communication and emotional consequences within the EU27. This is closely related to the criticality of understanding the perspective of the other party, which has been largely absent from the UK’s positioning. Both dimensions need much more careful management.
Considerable attention has been paid to the balance of power by both the UK and the EU27. Control over critical resources and process undoubtedly matter. However, the nature of power, which is fundamentally about being able to move an outcome in a desired direction, is more subtle than has been understood. This is particularly so as the situation changes from a two-party negotiation to a multi-party, multi-level one. In this context, power does not relate only to the dynamics between the UK and the EU27. It also relates to the internal, multi-level negotiations. Overall, power becomes the ability to manage the multiple dimensions towards a successful conclusion. It is thus entirely possible for one or both parties to constrain their own freedom of action such that the feasible settlement zone shrinks. The drawing of strong ‘red lines’ (such as over the role of the ECJ) and commitments to core constituencies as to what will be achieved and accepted can, therefore, leave both principal parties finding that they have too little power. Achieving good outcomes in negotiations is seldom achieved with ‘absolutes.’ The art of managing internal expectations will have to move to the forefront, including over issues that have been largely ignored, such as budget liabilities.
In seeking to increase bargaining leverage, the UK has declined to take unilateral action with regards EU citizens’ rights, seeing them as ‘bargaining chips,’ while indicating the use of security, defence and terrorism capabilities to the same end. The dominant analytical method in negotiations advocates maximising the trade-offs among issues according to relative preferences to optimise outcomes, while following the guidance that ‘nothing is agreed until everything is agreed.’ While having much merit, such interest-based bargaining it is not without its limits. This is so where such an approach undermines stated objectives to build a new partnership, is questioned from a moral rights or legitimacy perspective, and is perceived as a hard-bargaining approach which heightens the risk of eliciting reciprocal actions. The Brexit negotiations encompass a vast array of issues and interests from financial services to fisheries and so on, each of which contains many issues and interests. The art is identifying where interest-based bargaining can be legitimately and successfully applied.
The tense relationship between the UK and the EU27 has amplified the tendency to adopt power-based approaches, not least with the EU27 placing a moratorium on negotiations prior to the formal triggering of Article 50. Doing so has successfully maintained cohesion among the 27, as well as control over the process which thus sustains the power advantages inherent in the design of Article 50. Ramping up power-based negotiations tactics, including the UK issuing implicit threats of adopting a ‘Singapore’ economic model, do nothing to lead to a well designed process that maximises the chances of a successful outcome for any party. The questionable credibility of such threats do not, however, prevent them from increasing the complexity of the forthcoming negotiations as steps are taken to further protect interests which would be of less significance in a relationship based upon partnership.
If the Article 50 and subsequent FTA negotiations are to be successful they will require some critical shifts in approach by both the UK and the EU27. Thus far, power-based positional approaches have dominated and combined with a narrowly focused understanding of mutual interests. To be successful, negotiators will need to manage internal expectations carefully and adopt a clear understanding of the perspective of the other side. Even more critically, they will have to consider creative options that will be of mutual benefit. The absence of these steps does not mean that there will be no agreement. The challenge, however, is how to reach an agreement of high quality recognising the core political constraints on both sides. The design of the process will only increase this challenge.
Owen Darbishire is the Rhodes Trust Associate Professor in Management Studies (Organisational Behaviour and Industrial Relations) at Saïd Business School, University of Oxford.
This post is part of the ‘Brexit Negotiations Series’, a series of posts based on contributions at the ‘Negotiating Brexit’ conference that took place in Oxford on 17 March 2017.