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TRADE NEGOTIATIONS: THE ROLE OF PRIVATE STAKEHOLDERS

08 September 2020

By César Guerra Guerrero
Partner & Director of Trade Policy at Euraffex

The number of Free Trade Agreements (FTAs) have surged in the last years. It is clear that applied tariff levels and the number of comprehensive trade agreements of a country determine its readiness to constructively engage in ambitious trade treaties. For example, it is relatively easy to strike deals with Singapore or Chile, but it is completely different with Mercosur. In my view, a successful conclusion of a process depends on the political will and the real room for manoeuvre to accommodate each other’s interests.

Container Cargo ship in the ocean with Birds flying in blue sky, Freight Transportation.

Most of the time, governments must make important and difficult decisions to bridge gaps, especially in the final stages of negotiations. Trade negotiators have the ability to present results in a way that shows the benefits and minimises concessions to justify their decisions, so that FTAs will always prove positive in countries, or blocks of countries, that are so lined up with the free trade agenda. However, this is not exempted from partisan backfire that would normally use political arguments to prevent moving forward on the trade agenda. As long as negotiators prove that sensitivities were protected by using alternative treatments and specific non-trade concerns were addressed somehow, countries would be inclined to make hard calls to close a deal.

In the meantime, the private sector- whether on the offensive or the defensive side- is faced with uncertainty. It is difficult to know how their products are going to be treated if they are part of the final package that would solve the most difficult issues to clench a deal. The reading and identification of true red lines is crucial for governments. Stakeholders play an important role to influence this vision. Using the example of the EU-UK trade negotiations, is the level playing field a true red line for the European Union or is it just the access to British fishing waters? What are the potential trade-offs all parties can live with? The answer is communication and creativity. The private sector must be part of the solution and governments should be open for feedback as it is in their best interests. The successful outcome for business sectors and individual companies often depends on the engagement with trade negotiators and making the case with sound arguments, whilst providing reasonable alternatives to the ideal outcome.