Could technology be the key to the world’s most important trade deal negotiations?
In the distant past, individuals used to trade between all kinds of capital, services and goods that were of value. However, in this day and age, trade negotiations take on a rather different and more specific characterisation. Trade deal negotiations are now more associated with the international exchange of goods and services between two or more countries, where the agreements and terms of each deal is facilitated and enforced by a recognised trade body.
These trade negotiations are complex, which means that they are often recognised as the most intricate level of negotiation an individual can be involved in. International trade deal negotiations in an ideal world should be rather straight-forward. The participating countries should agree on the terms of the trade deal, the addition/removal of restrictions or tariffs, and what mechanisms to put in place to enforce these set agreements are honoured.
However, the theory hardly ever matches up with the reality and practicality of these trade negotiations. Modern-day negotiations are lengthy and intricate. This is simply because modern economies are governed by complex and bureaucratic rules and regulations. Trade deals are often riddled with clauses and red tapes, and it doesn’t help that they are also at the mercy of the egos and national interests of the lead negotiators involved. So how exactly can we achieve some form of nirvana when it comes to trade deals at this level, especially when it involves major powerhouses like the U.S and U.K?
A negotiation process like no other
For a long time now, technological innovations have revolutionised nearly every aspect of our lives, and as we venture further into the fourth industrial revolution, their powers and benefits are becoming more evident. From interactive Zoom conference calls to automated delivery robots, technology has made our lives easier. But what if we extended this to more serious matters such as global trade negotiations?
The US and UK are two of the most powerful and influential economies in the world today, and given the UK has recently exited the EU, its government will be looking to strike a number of fresh trade deals to keep its economy afloat.
The UK government recently initiated trade talks with the US in an effort to expand their international trade. This could potentially be the perfect time to capitalise on the power of technology and incorporate it into the negotiations process. If anything, this isn’t too far-fetched from the diplomatic talks that the leaders of both nations have already been hosting on video conferencing tools. Advancements in technology now means that trade negotiation representatives can leverage the power of Artificial Intelligence (AI) negotiation platforms to do all the heavy lifting and help facilitate a mutually beneficial deal, without any hassle or misinterpretations.
That’s not to say that the AI program will completely replace the trade negotiators but rather provide as much support and automation as possible. This could actually be to the extent that the negotiation representatives can pass on the bulk of the job to the AI computer and focus on other activities that require more critical thinking and skill in the process. Think of this as a self-driving vehicle that still requires human guidance and intervention when needed. Human negotiators will still have the last say on any deal.
The augmented negotiation process
Generally, when a person is engaged in a negotiation, they focus on a few different things such as numbers, stock prices and payment terms in contracts, and they cannot do dynamic pricing or several multi-tiered negotiations in real-time. Therefore, the more complex and varied the negotiation process is the more difficult it will be for humans. This is where AI can come in to make the process a lot less complex and do most of the work in the negotiation. People also suffer from biases, and inherently have zero-sum thinking. In contrast to this, an AI and machine learning powered negotiation tool can find valuable trade-off combinations between unlimited negotiation items, maximising value for both sides. It can also handle 10,000 simultaneous negotiations whilst doing complex tasks like dynamic pricing across all negotiations. The AI tool essentially has no biases and can conduct multiple negotiations without losing time.
However, in this scenario, given that both countries want the upper hand and the better deal, either of one or both the UK and US negotiators can actually configure the AI tool to display a level of bias that works in their favour. But more generally, the AI tool is unbiased by default as it will be designed to produce win-win outcomes for both sides.
Trade deal negotiations generally take a long time to reach a level where both parties are happy with their ends of the deal. They are incredibly detailed which adds to the complexity of it all. The more details that need to be covered, the more individuals that are needed to assess and advise on each of the terms. This further adds to the time frame for completion. The benefits of utilising an AI negotiation tool with respect to this is that it can achieve better and faster results than human negotiators and can deliver greater value for both sides. Currently, 80% of deals are not Pareto optimal, meaning that one party cannot get a better deal without negatively impacting the other. The AI platform can increase the value for both parties substantially, making it as equal as possible. Some negotiations are too important to leave for just humans to solve, and international trade deals is a good example of this. It is simply too difficult for humans to reach Pareto Optimal with their emotions, political agenda, communication, and limited timeframes.
The potential for AI to augment the negotiations process for humans is huge and this is a strong example of how we can use AI to further strengthen not only the economic output of our industries but also whole countries. At the end of the day, humans are still expected to have the final say on all business decisions, but AI can be an important ally in augmenting what we do best and taking it to the next level.