Deal breakers and the TPP

Published: Oct 19 , 2015
Author: Hunter Shannonhouse

The Trans-Pacific Partnership has been agreed upon after eight years of negotiations. Australian Trade Minister Andrew Robb and his people must have been on their game. Their preparation must have been clear, at least on some of the variables, to bring about such a favourable outcome for Australia and in particular the pharmaceutical industry.

Mike Froman, the US Trade Representative is a formidable negotiator who has admirable credentials and speaks with authority. Froman was told by powerful people in U.S. business and politics that he should, one way or another, force Australia to agree with the U.S. demands on the pharmaceutical patenting period of 12 years. But his authority, compelling manner and persuasion were not enough. Why?

Andrew Robb was prepared to “kill the deal” if the Americans didn’t back down on this issue and agree to a 5-8 year patent period. He knew without question how far he was willing to go.  So Robb was able to present a firm position on this issue, with the very important, and confidence-building, backing of his key stakeholders.  In addition, Robb and his team understood the need behind the U.S. proposal and some of the other variables at play. That gave him the option of playing a more sophisticated game than just “yes or no”.

Both Robb and Forman had to contend with significant domestic political pressures in negotiating this deal. Robb had to be seen as not backing down and had the pressure of knowing that the Senate would not allow a deal which impacted the Pharmaceutical Benefits Scheme. Froman had a number of domestic pressures, notably the end of Obama's term and the upcoming presidential elections which put time pressure on the U.S. delegation.  Judging the relative power and pressures is essential, but if you lack clarity or conviction on your “deal breakers" you will feel even more pressure. Being able to gauge the pressure on the other party allows you to make informed proposals.

Robb traded on other variables, no doubt mixed with a bit of persuasion, to protect the Australia’s position on pharmaceuticals and secured a deal which has the support of the prime minister and, at least for now, the opposition leader – this is no small feat.

For more of the TPP:

http://www.smh.com.au/federal-politics/political-news/medicines-wont-be-more-expensive-under-transpacific-partnership-malcolm-turnbull-20151006-gk250m.html

http://www.smh.com.au/business/the-economy/tpp-deal-pacific-countries-agree-to-historic-trade-pact-20151005-gk1vq2.html

 

Hunter Shannonhouse


SHARE

rsz_hunter_432_2018.jpg

About the author:

Hunter Shannonhouse
As a consultant to senior business leaders in Australia and the United States for over 20 years, Hunter has extensive experience in coaching executives, managers and their teams through negotiations and significant change management processes, creating for clients additional revenue or savings in the $millions.

Read more about Hunter Shannonhouse

More posts by Hunter Shannonhouse

Latest Blog:

Negotiating Lessons from the Banking Royal Commission

The Australian Banking Royal Commission has been quite embarrassing with cover-ups, poor conduct and unethical treatment of customers. But it does bring to light key lessons for negotiators. These lessons are particularly true for those who are perceived to hold the balance of power. In other words, if you are negotiating with someone who is seen to have very little power - there is a high chance your actions will come under public scrutiny at some point. It is highly unlikely the banking industry will be the only one to come under scrutiny. All you need to do to come to this conclusion is read the paper to see similar accusations in industries like retail/grocery buying, leasing, franchising, etc.

Latest Tweet:

Scotwork Australia
210/410 Elizabeth Street
Surry Hills
2010
Australia
02 9211 3999
info.au@scotwork.com
Follow us
cpd.png
voty2016_sign_gold.png