Box 1: An example of BATNA in international trade negotiations

Jonathan Crystal, in his article^[12], proposes various explanations behind the emergence of a WTO sectoral agreement on telecommunications and financial services following the conclusion of the Uruguay Round. He suggests that the combination of a credible threat by the US (walking out of the negotiations) and the linkage made between services negotiations and foreign direct investment (FDI) led weaker parties that had an interest in benefiting from FDI to change their negotiating positions towards more flexibility. It is the threat (or credible BATNA for the US) that pushed the developing countries to change their original position since they had no particular interest in market access because their telecommunication and financial services lacked competitiveness at that time.

Source: Crystal, 2003

William Zartman and others have also created the concept of ТripenessУ, the time at which a dispute is ready or "ripe" for settlement[13]. When parties have similar ideas about what kind of BATNAs are on the table, the negotiation is then ripe for agreement. Having congruent BATNA images means that the various parties have similar views of how a dispute will turn out if they do not agree. In this situation, it is often more sensible for them to negotiate an agreement without continuing the disputing process. The reason the parties settle is that they have come to understand the strength of each other.

On the other hand, negotiating parties may hold "divergent images" about the BATNAs that exist, which can lead to a stalemate. For example, each of the parties may think they have the strongest case or that they can impose their views. If every countryХs BATNA suggests to the negotiators that they can pursue the negotiation and get the Тlargest slice of the pieУ, the likely result is a persistent conflict. And if the BATNAs are about of an equal strength, the parties end up in a stalemate. If the conflict is costly enough, eventually the parties may come to realize that their BATNAs were not as good as they thought they were. Then the dispute will again be "ripe" for negotiation. Disputants can negotiate for months or even years to finally develop an agreement that they think is acceptable to all.

At the beginning of multilateral trade negotiations, such as the WTO ones, most negotiators have a vague perception of their BATNA or bottom line on many issues, especially when confronted to around 150 other parties and 10-15 highly technical issues simultaneously, as in the case of the Doha Round agenda. In this context, most countries lack the expertise to sort out the implications of all this complexity by themselves. The problem is even more critical for DCs and LDCs, due to the lack of relevant analytical capabilities.

However, despite all limitations related to differences in power distribution among negotiating parties, making efforts to know one's own and opponent's BATNAs is critical to successful negotiation. In addition to knowing your BATNA, you should also consider the alternatives available to the other parties. Sometimes they may be overly optimistic about what their options are. The more you can learn about their options, the better prepared you will be for negotiation. You will be able to develop a more realistic view of what the outcomes may be and what offers are reasonable. Revealing your own BATNA to your adversaries is not recommended, because it will give your adversaries a chance to test its resistance and it could well weaken your negotiating position.

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