"European Community Enlargement and the United States"
Read the case materials. Come to class prepared to discuss and debate answers to the following questions:
Background and Issues
- What causes trade disputes between governments? Could this one have been prevented from arising in the first place? If so, how?
- What are the issues at the heart of this case?
- What were the true interests or goals of the two parties?
- Put yourself in the position of the European negotiating team in December 1986: Your negotiations with the United States over Spanish accession remain stalemated. The US has pledged to retaliate if we have not satisfied them by 31 December. Should we take any further action now?
- Put yourself in the position of an advisor to the chief US negotiator, working in the office of the US Trade Representative in December 1986. Your negotiations with the EC over Spanish accession remain stalemated. We have pledged to retaliate if they have not made reasonable concessions by 31 December. If we do, they will probably counter-retaliate. Should we take any further action now?
Generalizing from the Case
- In what ways is bargaining with the EC different from bargaining with a nation-state, and how is it similar? What special problems does an EC negotiator have to deal with? To what extent are the lessons peculiar to dealing with the EC, and which would transfer to dealing with nation-states elsewhere, such as Japan, Canada, or Mexico?
- To what extent do the lessons generalize to other issues such as exchange rates, debt, or alliance burden sharing?
- Does this case prove the proposition that a credible threat to retaliate will yield greater concessions? Are threats a good thing? Can we generalize?
- Often we read that security concerns, including common external threats, constrain economic bargaining among allies. Do they really? Would this episode have unfolded differently had the parties not also been military allies?