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Last Updated: Monday, 19 December 2005, 12:35 GMT
What makes the trade negotiators tick?

By Evan Davis
BBC economics editor

European Union trade commissioner Peter Mandelson
Negotiators have worked for six days to eke out an agreement

Haggling is a fascinating process to watch in action, but how does it end?

You can have a good deal, where the parties arrive at a mutually beneficial arrangement.

You can also have a good walkout, where there's no mutually beneficial deal to be done, so no point in talking.

But negotiations can also go wrong.

Game of bluff?

There are lost opportunities, where there is a mutually beneficial arrangement to be found, but the parties just don't arrive at it - usually because they're so busy bluffing and posturing and playing hard-to-get that the deal is missed.

After six days of complicated talks at the World Trade Organization ministerial conference in Hong Kong, which category are we in?

It's taken a long time to achieve little, even though everybody at the talks said they were committed to success.

Is it that the negotiators don't want to deal, that the price is too high?

Or is it that there is a good deal but they're bluffing, and maybe are happy to move a bit over the next few months?

The answer is probably a bit of both.

Brave concession

There is some bluff. Negotiators play hard to get, leaving everything to the last day.

A anti-globalisation protester in Hong Kong
Not everyone in Hong Kong thinks free trade is a good thing

The Europeans made a brave last-minute concession on export subsidies, but why didn't they make it five days earlier? We could have spent more time Christmas shopping.

But it's not all bluff and posturing. The negotiators have a real difficulty with deals now.

We've had decades of trade liberalisation - the average tariff on imported manufactured goods between two industrial countries is about 2% now, far lower than it used to be.

But what's left are the barriers to trade and the tariffs on the difficult bits like agriculture, where the sensitivities are more extreme.

Be it bluff or real resistance to removing trade barriers, the negotiators might, though, have everything in their mindset wrong.

They've been quoting a study in recent days from the World Bank, suggesting there are huge gains to be made from a trade deal.

Cheaper food

Yet, the study also suggests a lot of the gain is not a gain from negotiating a deal - they're just gains we can enjoy ourselves from our own actions.

For example, if the very study European Union trade commissioner Peter Mandelson has been quoting is right, there's a pretty good reason to import more food without negotiation at all, it would just mean cheaper food.

Why is he negotiating, as though buying cheap food is a sacrifice we'll bear only if the other side makes a similar one?

The economic assumptions of the studies quoted are questionable.

There may be good reasons to limit trade, but no-one in Hong Kong has been giving any.

They've all been saying they believe in it. Unless, or course, they're bluffing.

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