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Talking Trade blog

Negotiating secrecy

Published 12 January 2015

When you go to buy a house, you would never show up at the door bearing your income tax returns, pay slips and bank account balance information that you just hand over to the other party. To do so would give a major advantage to the seller of the house. It would allow the other side to decide whether your offer is a lowball one or genuinely fair offer, given your particular financial circumstances.

Trade talks are even more complex types of negotiations in which both sides benefit from the flexibility to make--and trade--offers and counteroffers.  Both sides need to be able to explore a range of outcomes that could satisfy the demands of each.  The two parties are not simply trying to arrive at a single point (the price of the house) or resolve a narrow range of issues (the price of the house plus the date of the handover or the price plus date plus the inclusion of a coveted light fixture in the dining room). 

Advanced trade negotiations include 20-30 different chapters covering a huge range of issues and topics.  The final agreement is a package of elements designed to give everyone some areas of “gain” and minimize prospects for loss.  Issues have to be addressed in their own right as well as balanced across different topics.

This is what has always made it difficult for trade negotiators to publicly release texts of ongoing deals.  Doing so too soon is the equivalent of handing over tax returns for a house buying expedition.  It removes flexibility and makes it difficult, or even impossible, for negotiators to move off their original offers.  To put offers out publicly in a trade deal can make it impossible for either side to respond, since the interested public will know precisely what was “bargained away” and have a poor appreciation for what might have been gained elsewhere. 

Of course, there is a long distance between releasing zero information and handing over the keys to the bank vault.  Officials can, and should, provide news about ongoing trade talks.  But the balance is tricky, as too much information or key details revealed in the wrong place or at the incorrect time can make it impossible to creatively arrive at a complex, satisfactory outcome for all parties.

This is what makes the European Union’s decision to release information in the ongoing Trans-Atlantic Trade and Investment Partnership (TTIP) so surprising.  The European Commission did not just decide to provide helpful, plain spoken overviews of their broad objectives in different chapters.  Instead, they have opted to release the actual, legal proposals that they presumably have offered up to their American counterparts.

Cecilia Malmstrom, the EU Trade Commissioner, told Christian Oliver of the Financial Times, “It is important that everyone can see and understand what we are proposing in TTIP and—just as importantly—what we are not.”

But look at how quickly this noble sentiment runs into practical problems on the ground.  To take just one example from my literal first look at a random piece of text: the proposal on sanitary and phytosanitary measures says in Article 17.1, “The Parties recognize that animals are sentient beings.”  The rest of the article is about exchanging information and experiences on aligning standards for breeding, holding, handling, transporting, and slaughtering animals. 

This statement, released this early in the context of talks, creates problems both ways.  If the agreement provisions in Article 17 are to be legally binding, many farmers and others involved in animal husbandry and associated fields will be extremely concerned about what sort of acts might bring them into violation of this provision.  On the other hand, if it is not legally binding but merely advisory in the end, many other groups will be rightfully upset that if animals are sentient beings, then violations of their humane treatment will not be found to be legally unacceptable. 

In short, releasing texts can create significant problems since it hems in negotiators and can make it impossible for them to maneuver.  In a large scale agreement, managing coalitions of support can already be a major problem.  If information is presented too soon, and particularly before it has been put together in a package with other elements, it may be impossible to create a zone of agreement at all.

{Another post later this week will take up the issues of interest group mobilization in the face of such information as well as the growing levels of expressed outrage at a lack of transparency in key trade agreements.}

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Dr. Elms is Head of Trade Policy at the Hinrich Foundation in Singapore. Prior to joining the Foundation, she was the Executive Director and Founder of the Asian Trade Centre (ATC). She was also President of the Asia Business Trade Association (ABTA) and the Board Director of the Asian Trade Centre Foundation (ATCF).

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