How Bargaining Alters Outcomes: Bilateral Trade Negotiations And Bargaining Strategies

Abstract

This article considers bargaining strategies used by government negotiators in the context of bilateral trade disputes. I argue that trade officials reach the most durable agreements by using an integrative, or value creating, strategy and avoiding the use of threats. By contrast, a highly distributive, value claiming strategy coupled with loud public threats is unlikely to result in a durable agreement and frequently leads to deadlocked negotiations. The irony, however, is that American officials use the latter approach more frequently in bilateral trade disputes, rather than the former. These strategies are usually chosen unconsciously in response to perceptions of losses that drive negotiators to select risky approaches to resolve disputes. By examining bargaining strategies in the U.S. disputes between Japan and South Korea over automobiles and auto parts in the 1990s, I demonstrate shifts in negotiation strategies. These shifts in approach closely track the outcomes in these two, deeply contentious disputes. After protracted and contentious negotiations with Japan, the final outcome represented a defeat of the Americans’ most important goals. A less confrontational strategy with Korea ultimately resulted in greater market opening.