IN dealing with this situation, a negotiator must bear in mind that the world is made up of sovereign states, independent borders, varied cultures, and different legal and political systems.
At last count, there were 193 of those systems, not to mention many national subdivisions, like Quebec, Hong Kong and Northern Ireland, each with its own distinct sets of laws and government agencies.
These are actually another set of major barriers in negotiation, particularly in a global context, in many forms and shapes. Jeswald W. Salacuse’s lectures at Harvard and MIT are quite instructive to cope with this confusing array of foreign governments, laws and cultures.
Like cultures, each of the world’s legal and political systems is distinct and complex, which can become sources of difficulty and disputes. The US government, for instance, does not make policy the way the Chinese government does. The laws and court procedures of India are different from UK, even though India was part of the British Empire for many years.
And a Philippine negotiator cannot assume that some laws in the US may work the same way here at home, although most of Philippine laws and edicts are patterned after the US, the country’s colonizer for a long time.
It is important, therefore, to understand the position of
the
government of the country concerned before negotiating a deal because few
countries, even the most stoutly capitalistic, are as open to business
transactions by foreigners as in the US and the Philippines.
Sources of difficulty
1. The international environment itself is unstable; business dealing is particularly susceptible to sudden changes, such as currency devaluations, coups, wars and radical shifts in governments and government policies.
2. Mechanisms for enforcing agreements are often less sure or more costly in the international arena than in the domestic setting. If the other side does not have effective access to the courts to enforce a contract or to seize assets, a party to a burdensome contract may feel it has little to lose in rejecting a contract or demanding renegotiation with an expressed or implied threat of outright repudiation.
3. Foreign governments and government corporations are often important participants in international business dealings. They often reserve to themselves the right to repudiate burdensome contracts on grounds of protecting national sovereignty and public welfare.
4. Finally, the world’s diverse cultures and legal systems attach differing degrees of binding force to a signed contract and recognize varying causes to justify avoidance of onerous obligations. For example, an American company in a transaction with a Japanese firm may view their signed contract as the essence of the deal and the source of rules governing their relationship in its entirety.
The Japanese, however, see the deals as a partnership that is subject to reasonable changes over time, a partnership in which one party ought not to take unfair advantage of purely fortuitous events like radical and unexpected movements in exchange rates or the price of raw materials.
Two types of disputes
These sources of difficulty may turn into disputes. So having ample knowledge in resolving disputes is always an advantage to a negotiator.
Lawrence Susskind and Jeffrey Cruickshank in their lecture series on the Program on Negotiation at Harvard, MIT, and Tuffs universities, classified disputes in two categories: Distributional and Constitutional; they differ markedly on antecedents and definitions.
Distributional disputes focus on fund allocations, taxation, setting of standards and policies, use of lands and water, fuel rate increases, family feuds, lopsided business contracts and labor-management disagreements.
Constitutional disputes hinge primarily on interpretations by the courts of constitutionally guaranteed rights: due process of law, religion, death penalty, freedom of expression, the right to property and a change of government.
According to Susskind, regardless of which interest groups are objecting though, they do so in the hope of affecting the distribution of gains and losses.
Neither side disputes the government’s coercive and sometimes arbitrary power to set policies.
Affected corporations usually object when higher tax rates
translate into lower corporate profits. When lower standards promise greater
profits while threatening to endanger public health and safety, this can
trigger strikes and other protest action from consumer advocacy organizations
or public
interest groups.
And when distributional and constitutional disputes tangled, opponents of proposed development projects may contend that a rezoning proposal exceeds constitutional limits. Likewise, business interests may challenge the administration of a safety or environmental regulation on the process grounds.
If, as is often the case, the government’s power to set policy or allocate resources is ultimately reaffirmed, the protagonists may well shift the battle to another arena in which the question is no longer whether government action is permissible, but when, where and how it will be handled.
In other words, once the constitutional question is settled, the distributional dispute can begin in earnest. This is where negotiation and other consensual approaches must be employed.
The author is an alumnus of the Harvard Program on Negotiation. He can be reached at e-mail cecilio.arillo@gmail.com.