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Why losing a trade vote in Congress may strengthen America’s bargaining position

Publication Type: 
Other Writing
Publication Date: 
June 12, 2015

The House has just voted down an item of legislation that was critical to Obama’s hopes to get authority to negotiate TPP, a trade deal with countries in the Pacific region. It’s nearly certain that Congress will return to this legislation in the coming weeks or months. Nonetheless, some people believe that this cripples America’s ability to bargain hard with its allies. For example, Timothy Lee at Vox argues that the vote will “weaken the president’s bargaining position overseas as he wraps up negotiation over the TPP” because:

The leaders of other TPP countries such as Japan, Australia, and Chile will have to make politically costly concessions in order to conclude the TPP negotiations. They’re only going to be willing to do that if they think there’s a good chance the deal will actually be ratified.

Lee may be right, but there’s a body of work making just the opposite argument, stretching back to the Nobel Prize winning game theorist Thomas Schelling who conjectured that weakness back home may translate into negotiating strength abroad.

What is the Schelling conjecture?

Back in 1960, Thomas Schelling argued that U.S. negotiators would be best able to bargain with other countries when they were weak rather than strong. As he describes it:

when the United States Government negotiates with other governments on, say, the uses to which foreign assistance will be put, or tariff reduction … [i]f the executive branch is free to negotiate the best arrangement it can, it may be unable to make any position stick and may end by conceding controversial points because its partners know, or believe obstinately, that the United States would rather concede than terminate the negotiations. But, if the executive branch negotiates under legislative authority, with its position constrained by law… then the executive branch has a firm position that is visible to its negotiating partners.

Princeton political scientist Helen Milner has dubbed this claim the “Schelling conjecture.” It has given rise to a significant research literature in international relations, which looks at the complicated two level relationship between domestic politics and international negotiators. The logic is pretty straightforward. If the U.S. negotiator is ‘strong’ — that is, the negotiator has a lot of authority to do what is necessary to reach a deal — then other governments will be more likely to press for concessions, because they know that the U.S. negotiator can grant these concessions and may prefer to make concessions than to have the talks collapse. However, if they know that they are dealing with a weak negotiator, who doesn’t have the ability to make big concessions, they may be more prepared to accept U.S. demands. When this logic applies, it makes sense for the United States to ‘tie the hands’ of its negotiators in order to extract the strongest concessions possible. Schelling argues that the U.S. system — where the presidency is bound by the wishes of Congress — strengthens the hand of U.S. negotiators, exactly to the extent that it makes them weaker. Because the negotiators have to do what Congress has told them to do, they have little freedom to make concessions to foreign negotiators.

Read the full piece at The Washington Post