Britain’s European Negotiations Fall Short of Initial Hopes – Why?

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“So Peter, how did that big negotiation with our most strategic supplier go”?

Very well, Lizzie, very well.

“I’ve got your original objectives here. Gain agreement to an immediate 10% price reduction across the board. So did they agree that?

Well, not exactly. But they have agreed that in 2020 they will promise not to increase their prices by more than a very reasonable amount, at least no more than inflation anyway. Plus 2%.

“OK, then how about the quality issues? We wanted new service and quality standards, backed up with cash credits when they failed to meet them”.

Yes, well that is very good news. They have agreed in principle to this idea. It’ll be discussed at their next Board meeting, and they are confident that by 2017 they can come back to us with some proposals on that issue.

“Right. Not exactly an immediate benefit, is it”?

No, but I think the principle is important. And talking of principles, we’ve gained a very important one. We have agreed that we won’t be signing up to “ever closer union” with them as a supplier.

“But did we ever intend to do that?”

Well … not exactly. But now it’s agreed.

“OK, now this was an important one. We’ve been working under a set of terms and conditions that they wrote. You were very clear that we wanted them to switch onto our standard Ts and Cs. Did you have any success here”?

Yes, very much. We can introduce any new contractual conditions that we want to. Then they have to sign up to them of course.

“But doesn’t that mean they can just veto any changes to the current contract”?

Well, if you put it like that, I suppose so. But they wouldn’t do that, would they?

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Whatever your views on the future of the UK in Europe, it seems to me that the concessions gained by David Cameron announced at the weekend are almost laughably trivial compared to the grand intent at the start of this process. We had objectives around reforming the whole way the EU works, the cost of funding it; restricting immigration to the UK from EU countries; repealing the human rights convention and giving British courts primacy in their decisions.

And what have we got? A small restriction on child benefits to some countries in 2020. (By the way, my wife who was watching the early discussion on TV got the impression we were stopping those payments, which we are not. We’re going to see and hear a lot of misinformation from both sides in the coming weeks!)

What else – well, we have this agreement that we are exempt from ever closer union – well that could never have happened if we didn’t agree anyway, surely?

Why is the end result so meagre compared to the initial hopes? There were a number of issues working against Cameron – not all of them his fault by any means. However, making it so clear that he personally never wanted Britain to leave the EU certainly weakened his position, as it showed that his own personal BATNA was weak.

Then, the difficulty of gaining any significant change in a negotiation situation involving 28 participants will be well understood by any procurement person who has had to balance even 4 or 5 different views in such situations. And the stance of the other countries also comes into play – whilst many no doubt don’t want Britain to leave, most are probably not that bothered when it comes down to it! So they were never likely to concede the sort of changes that the initial rhetoric suggested might be possible.

So now we wait for the referendum -- and take a look at our article here on our Public Spend Matters Europe site for some initial thoughts about whether procurement regulations would change much if the UK was to leave.

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