Looking to the Future: Conflict Avoidance and Resolution in NAFTA’s Agricultural Trade

Linda M. Young

Trade Research Center

Montana State University–Bozeman

Purpose of Talk

• Delineate elements of conflict resolution• Outline current dispute processes

– conflict avoidance

– conflict management

– dispute resolution

• Evaluate current dispute mechanisms – in terms of model processes

• Make a few suggestions- this research is preliminary

Positional Bargaining

• Involves alternative solutions to an issue that meet the need of one party

• Negotiators present their initial solutions• Series of incremental concessions• Arrive at a compromise• Assumes:

– fixed sum resources-one more the other less

– relationships not a high priority

Positional Bargaining

• Disadvantages:– shortchanges exploration of alternatives

– leads to adversarial relationships

• Advantages:– does not require trust

– useful in division of fixed sum resources

Positional Bargaining

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Interest Based Bargaining

• Focuses on satisfying as many needs as possible• Explores disputants interests underlying positions• Resources not regarded fixed (when possible)

• Cooperative problem-solving approach• May uncover divergent values-may take time• May produce outcomes with unexpected benefits• Strengthens relationships

Triangle of Satisfaction

• Substantive• Procedural• Psychological

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PsychologicalInterests

Substantive

Triangle of Satisfaction• Substantive

– access to markets

– trade rules, import levels

– economic conditions

• Procedural: mechanics of dispute resolution– appropriate structure, agreement on the process?

– settlement congruent with existing obligations?

• Psychological – disputants included; fair process

– address issues of stereotype and bias

Dispute Avoidance

• Needs to happen:– Correct identification of interests

• Actually occurring:– Regulatory harmonization

Identification of Interests

• Competitive interests– “one party swims, the other sinks”

• Cooperative interests: linked goals, interdependence– “everyone sinks or swims together”

• Cooperative but separate

Cooperative Interests :Beef Industries

• Assumes free trade-that is what there is!• Increase in demand

– domestic and export

– caveat

• Decrease in transactions costs for cattle over the border– transportation costs

– efficient plant utilization

– increased competition in some locations

Beef Industry Interests (con’t)

• Cooperative but separate– i.e.: meat inspection and food safety regulations

• must be addressed by national governments

• Competitive– demand linked to quality attributes determined by

location

Obstacles to Interdependence

• Market as synonymous with the nationstate• Deeply rooted historical concept• Trade barriers isolated the market

– some policy imposed

– others natural trade barriers

• Nationstate basis of trade law and agreements• No longer true-for a variety of reasons

New Industry Groups!

• Industry groups on the basis of cooperative interests

• Suggests a trinational group• National commodity groups-competitive and

separate interests• It’s a hard road-groups perceptions change slowly

Dispute Avoidance

• NAFTA committees– Standard Related Measures

– Working Group on Pesticides

• Industry-led– Northwest Pilot Project

• Fruit and Vegetable DRC– address discrepancies in commercial dispute resolution

Regulatory harmonization

What is being achieved?

• Substantive: change the basis of identity– removes issues– regulations spanning 3 countries– facilitates trade– increased commercial ties

• Psychological– committee work stress on going relationships– opportunity to become educated about other’s interests– create on going ties– address issues of stereotypes and bias

What is being achieved? (con’t)

• Procedural– some cases - participants design process

– some cases - consultative

– work within existing obligations

Dispute Resolution: USITC/ITA

• USITC/ITA processes– strive to be predictable, rule based and fair

– consistent over time and industries

• Substantive:– fail to separate positions/interests (sometimes)

• misattributed conflict

– address dumping and subsidization; but

– unhelpful in investigating or solving other issues

• might be poor economic conditions

Dispute Resolution (con’t)• Psychological

– process may be captured

– often not fair - ie: dumping definition

– does not address issues of stereotypes

– likely to harm relationships; halt other progress

• Procedural– structure only sometimes appropriate

– not designed by stakeholders

• Government consultations as another mechanism

Dispute Avoidance

• accurate identification of interests• recognition of interdependence

– in many cases

• joint industry government processes

Dispute Management

• fragmentation of issue into small pieces– addresses small pieces

• recognize areas of agreement• acknowledgement of multitude of principles• address data problems

– jointly designing processes for data collection– clarify areas of disagreement– identify criteria for assessment

• creation of spheres of influence

Resolution of Disputes

• have a number of processes – different purposes- different process

• use integrative interest based approaches first– involve stakeholders whenever possible

• regular use of government consultations or mediation first