Customs Management and Leadership. 4th Edition MODULE 5 Techniques of negotiation in the customs environment.
Customs Management and Leadership. 4th Edition
Module 5
Author of the course: Inter-American Development Bank (IDB) (www.iadb.org), through its Integration and
Trade Sector (INT). Course Coordinator: Inter-American Development Bank (IDB) (www.iadb.org), through its Integration and Trade Sector, Institute for the Integration of Latin America and the Caribbean (www.iadb.org/en/INTAL), the Institute of Inter-American Economic and Social Development (INDES) (www.indes.org), the World Customs Organization (WCO) (www.wcoomd.org) and the General Secretariat of the Central American Integration System (SG-SICA) (http://www.sica.int/). Author of the Module: Margarita Libby, Senior Specialist on Trade Facilitation, Strategy and Negotiation, Consultant For IADB, WB, USAID, UE, SIECA, OEA, actual Trade Facilitation and SIECA components Leader for the Central American, Panama and DR Project for USAID. Pedagogical Coordination and editing: The American Institute for Economic and Social Development (INDES) (www.indes.org), in collaboration with Fundación Centro de Educación a Distancia para el Desarrollo Económico y Tecnológico (www.ceddet.org)
4th Edition 2016
This document cannot be reproduced, in whole or in part, by any electronic or mechanical means, including photocopy or any recording process. Its information cannot be stored or recovered by any systems whatsoever without the due written authorization from the IDB. Any request for partial or total reproduction must be informed to: BIDINDES@iadb.org These materials have been revised in light of the ministerial decisions taken in the framework of the 9th World Trade Organization Ministerial Conference held in Bali, Indonesia, in December 2013. The adjustments were made in order to reflect a higher alignment between the course topics and the priorities identified in Bali’s Ministerial Declaration and decisions, where all IDB members participated. Bali Ministerial Declaration and decisions
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Table of Contents
Table of Contents ....................................................................... 3 Index of figures .......................................................................... 6 Index of tables ........................................................................... 6 Glossary .................................................................................... 8 Presentation ............................................................................ 10 Aim of the module .................................................................... 12 Learning-oriented questions ....................................................... 13 Unit I. Definition, nature and characteristics of conflict and its cycle. .............................................................................................. 14 Learning Objectives ............................................................... 14 I.1. Power ............................................................................. 15 I.2. How do you translate this aspect of leader and power in the customs field? ....................................................................... 19 I.3. History of Alternative Conflict Resolution Mechanisms........... 22 I. 4. Conflict .......................................................................... 27 I.4.1. Causes of conflict ....................................................... 28 I.4.2. Types of conflict ......................................................... 28 I. 4.3. The Conflict Cycle ...................................................... 29 I.4.4. How does this apply in the customs environment? .......... 32 I.4.5. And what can Negotiation do for a conflict? ................... 33 I.4.6. What is the difference between a Problem and a conflict? 33 I.4.7. How can a conflict be tackled? ..................................... 34 I.4.8. Outline by managing a conflict ..................................... 35 I.4.9. How does this apply at the level of customs? ................. 38 3
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Unit Summary .......................................................................... 39 Unit II. Definition of Negotiation, styles, elements and objectives ... 40 Learning Objectives ............................................................... 40 II.1. Concept of Negotiation .................................................... 41 II.2. Characteristics of a good negotiator .................................. 42 II.3. Evolution in the focuses of negotiation .............................. 42 II.4. Types of Negotiation ....................................................... 44 II.4.1. Integrative Negotiation .............................................. 44 II.4.2. Distributive Negotiation ............................................. 45 II.5. What are the variables found in any type of negotiation process? ............................................................................... 45 II.6. Styles of negotiation and negotiator styles ......................... 46 II.7. Types of Negotiator......................................................... 47 II.8. Elements of the Negotiation ............................................. 48 II.8.1. BATNA ..................................................................... 49 II.8.2. Interests – Positions .................................................. 50 II.8.3. Options .................................................................... 51 II.8.4. Legitimacy ............................................................... 52 II.8.5. Relation ................................................................... 52 II.8.6. Communication ......................................................... 53 II.8.7. Commitment ............................................................ 53 II.9. Objectives of the negotiation ............................................ 54 Unit Summary .......................................................................... 54 Unit III. Preparation and techniques of negotiation ....................... 55 Learning Objectives ............................................................... 55 III.1. Preparation for the Negotiation ....................................... 56 4
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III.1.1. How does a negotiator prepare? ................................ 56 III.1.2. Psychotechnical Focus, the principles.......................... 57 III.1.3. What do I do during the negotiation? ......................... 58 III.1.4. Strategies and tactics ............................................... 60 III.1.5. Tactics recommended in negotiation. .......................... 61 Unit Summary .......................................................................... 67 Complementary Material............................................................ 68 Bibliography .......................................................................... 109
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Index of figures
•
Figure No. 1.1. Some themes that conciliation centers address
•
Figure No. 1.2. Types of differences that cause conflict
•
Figure No. 1.3. The cycle of conflict
•
Figure No. 1.4. The cycle of conflict
•
Figure No. 1.5. Conflict Cycle
•
Figure No. 1.6. Action checklist for managing a conflict
•
Figure No. 2.1. Characteristics of a good negotiator
•
Figure No. 2.2. Negotiator’s interests scenario in the 70s
•
Figure No. 2.3. Categories of Negotiation
•
Figure No. 2.4. Types of Negotiator
•
Figure No. 2.5. Elements of Negotiation
•
Figure No. 2.6. Steps to analyse BATNA
•
Figure No. 3.1. List of demands to prepare a negotiation
•
Figure No. 3.2. Principles for negotiating
•
Figure No. 3.3. Actions during the negotiation
•
Figure No. 3.4. Potential Negotiation impediments
Index of tables
•
Table No. 1.1. Types of conflicts
•
Table No. 1.2. Kind and description of Common conflicts
•
Table No. 2.1. Styles of negotiation 6
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•
Table No. 2.2. Chart of Alternatives
•
Table No. 2.3. Chart of interest
•
Table No. 2.4. Chart of strategy
•
Table No. 3. 1. Table to chart your information for negotiating
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Glossary
Agreement: Is the culmination of a negotiation and should always represent the interests of the parties involved. BATNA: Best Alternative to a Negotiated Agreement. Conflict: Collision between two or more persons resulting from an opposed perception of the same problem. Creativity: Is the constant and opportune possibility of seeking options for resolving a conflict. Efficacious listening: Consists of listening to ideas, perceiving body and verbal language, comprehending the other and his necessities. To listen is to offer silence to another and give him total attention. Interests: The true reasons for which value is created, they support positions. Legitimization: Is the possibility of the parties to sign an agreement, this is basic for the criteria to be objective, realizable and sustainable over time. Negotiation: Process of communication, through which the parties jointly seek a mutually satisfactory solution. Options: Refer to the possibilities that both parties propose to resolve the conflict. Perception: Is the capacity to recognize in the counterparty its interests, its emotions. Persuasion:
Is
NOT
ordering,
but
convincing
with
valid
arguments that are not completely unbalanced for the other party that our proposal is more adjusted to mutual convenience.
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Position: Is what is expressed, is desired, is a claim of value. Restating: To go back to give form to what was considered the origin of conflict and continue creating alternatives, for example by brainstorming. ZOPA: Zone of Possible Agreement.
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Presentation
"Peace is not a piece of paper, but a way of dealing with conflict when it arises." Roger Fisher
Module 5, Negotiation Techniques in the customs scope, explains the nature of the conflict and how it can become an agent of change, if it is elaborated assertively and placed into a context, not as a negative manifestation but as a need to express an insufficiency of form, one that is sometimes chaotic, and which a good negotiator is capable of conciliating. It is in these two apparently contrary concepts, “conflict” and “negotiation”, that we are going to navigate throughout this module, in order to understand its origin, its evolution, and how in the last years several experts have created methodologies that are reinvented and improved every day when they are applied in different scenarios. Human beings have evolved in our way of communicating and, therefore, of solving our
differences in many different ways.
Classically, the spirit of competition comes from ego. It leads us to a winner and a loser. The truth is that when, in matters of business, there is a single winner, both end up losing. Why is that? Because it is not in all of life's scenarios that the loser accepts that situation. Sometimes, the frustration of being "defeated" tends to cause a denial of the agreement, and an adverse reaction, and thus, even the "winner's" environment is affected, as well as his alleged victory.
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Negotiation techniques have also walked hand in hand, in their vertiginous popularity, with the mechanisms of Alternative Dispute Resolution in which the promotion of respectful, mindful dialogue, balanced by a third party that facilitates communication, establishes agreements that integrate the needs of the conflicting parties which, according to statistics, are not very often resorted to due to disagreement of any of the parties with the results. It is said that there is a proportional relation between culture and the use dialogue. In Japan, for example, they say that there are more florists than lawyers, precisely because the tendency is to seek face to face conversation with the other party instead of refusing to hold a dialogue and to have someone else do it for us. The key is not only asking what or why, but listening carefully to the answer and to analyze it free of strong emotions or subjectivity. Limit yourself to words and to their meaning, putting them inside the context of the situation and establishing a bond between reasoning, the fact, and its effects. It is clear that the customs field may have more than one story of long and short disputes in which all parties have been legally, economically, and emotionally worn out. Does that sound familiar? We will also learn different self-analysis techniques, useful for finding in us the negotiator that we naturally have in us. First Unit. Definition, nature, and characteristics of the dispute and its cycle. We will understand power and its relation with conflict. We will learn the difference between a conflict and a problem. We will describe the cycle of the conflict and we will know why negotiation can be a healthy alternative to neutralize or diminish that conflict.
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Second
Unit.
Definition
Module 5
of
negotiation,
style,
elements,
and
objectives; we will study what the negotiation is and the different negotiator types and styles, as well as how to characterize them. We will also try to identify which of the two negotiator types our personality matches. We will understand certain techniques, and how it is possible to use one or the other style according to the situation. Also, we will learn how to establish what the goals of a negotiation are. Third Unit. Negotiation, preparation and techniques. We will learn how to identify the origin of the problem, how to prepare a negotiation, and how to prepare ourselves as negotiators. We will also know the different strategies and tactics for establishing the positions and interests of our counterpart. The contents of this module will probably be very familiar for you because we are born negotiating. You certainly have had to face similar situations in your life and, even though every negotiation is unique, you will be able to remember that most of the times you have chosen to hold a constructive, receptive, and conciliating dialogue.
Aim of the module
Understand the main concepts and techniques of negotiation to be used in the field of customs administration.
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Learning-oriented questions
At the end of the course students should be able to respond to a few key questions: •
How can the origin of the problem be identified?
•
What are the interests and positions between the parties and how do we identify them?
•
How do we prepare ourselves for negotiation?
•
What are the different negotiation techniques?
•
What are the possible results of a negotiation and its consequences
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Unit I. Definition, nature and characteristics of conflict and its cycle.
Learning Objectives
•
Defining the concept of power, how this concept has changed through time, and how it applies in the customs environment.
•
Understanding the Conflict, its nature, and how, from an assertive proposal, if it arises, it can become an opportunity for change.
•
Defining the evolution of the Alternative Dispute Resolution Mechanisms and how the countries have implemented this guaranty, and its impact on society as a legally accepted tool.
•
Understand the concept of conflict.
This chapter begins with an analysis of the concept of ¨Power¨ in human relationships, which is basic to understand how to manage conflict. The nature and characteristics of conflict and its cycle will be studied.
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I.1. Power
Some
individuals
instinctive
by
described
others,
power
probably
as
with
rational the
phenomena,
ulterior
motive
as of
understanding its function in order to control or prevent its effects in the interaction of social structures. According to diverse authors, power coexists in human groups. For J. Redorta (2004), power is a manifestation of narcissism, disease or survival. The author has classified the concept that approaches power to force to get to Leadership. Power occupies the curious position of existing from the viewpoint of the one affected by it or the one wielding it. That is, power is so evident that it is perceived not only by the one who exercises it but also by the one who receives it. This has distinct origins but the result is the same, some lead and others are led, some rule and others are ruled. Russell (1938) merges the concept of power with interaction, understanding interaction not only as something that exists but also as something that may be absent. Then, one who exercises power can be there and have power or, not being there, can still have the other submit. Absence is a passive interaction: imagine the stress provoked by the uncertainty of not knowing the opinion of a person who has power concerning a proposal of yours as opposed to one of his; it is probable that silence would provoke you to surrender because you would think that silence implies a negative or a counter proposal perhaps not in your favor.
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e.g. If person A is negotiating the purchase of an automobile with person B and person A desperately wants to sell it and wants 10 thousand dollars and person B knows of the necessity, he can utilize that as strategy and tell A: well‌let me think about it, what I have available right now is 9 thousand dollars. Perhaps I could get the money‌but even so, I have to think about whether I want it at that price. I will call you. Let me have some three days, more or less. Person A now has 3-day expectation period. Person B knows that A is desperate. He takes advantage of that and does not call. Person A, with stress and urgency, calls on day 4 and tells B that it is all right to give him the 9 thousand and they close the deal.
In summary, not acting, keeping your silence or pausing, if administered with care, often results in the other finally ceding his position to what the negotiator who keeps his silence wants to achieve. It would be impossible to think that power is not located at all levels of human relationships. Power tends to limit decisions and certainly it is very clear that in certain groups some people prefer not to be the one who decides, either as a strategy or simply because adopting specific roles within a coexistence scheme establishes power by the delegation of labor, recognizing the one who makes decisions as its leader.
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In other groups, however, the division of power tends to be fragmented by reason of knowledge. In spite of separation, there exists a tendency for an individual member of a group to legitimize the decisions of those whom the rest of the group perceives to be empowered by its leader. This is fundamental when you think about the users of customs. Power must be formally or informally recognized to the one who exercises it. One of the basic elements of power is that the group recognizes its leader. It could be correct to say that power granted by hierarchy or legitimization, if not recognized by the group, will have no effect at all on the group. We conceive the foregoing as a relationship that could be win-win for the one because he wants power established, and for the other because he gets to exercise it. Talking about balance and power may make all the foregoing comments seem absurd. We are going to understand the game of the balance of power as an action based on a concept defined in the literature on the subject in an academic or utopian manner, as it is in the ideals of the institutions that seek harmony in the various relationships that must be managed among people, groups, countries etc. The credibility of the source that exercises that “power� has a determinative weight in attaining what he desires. Factors of communication, verbal, body language etc. have to match the source’s speech, however, and the recipient must have the capacity to receive it, all in a manner adequate to guide the one being persuaded towards the desired decision or behavior.
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In negotiation, as opposed to the dynamics of conflict, it is essential to feel the power between the parties balanced. Ably using words and sometimes proofs or examples, the parties attempt to convince each other that their proposal is the more advantageous and attempt to influence each other. This should be understood as a process of balanced negotiation because there also exists the tendency to consider negotiation as a process in which one of the parties is afflicted and the other has the power to coerce him (a debt, for example) so he must “negotiate� how to satisfy the obligation. Sigmund Freud proposes that the social system must be continuous, that the human groups immersed in the system must have its structure, roles, and common objectives established, must have similar values and interact and compete with other groups. Isolation, then, is not perceived as healthy for social beings. For Thelen, the development of a human system or group will depend in a large percentage of cases on its leader, whom we must define as reliable, with values representative of the group, who listens and provokes change when necessary in order to protect the collective welfare; but who knows his limits in exercising his power and can justify his acts, because only when the group identifies itself with him is it capable of placing its destiny in his hands.
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Putting the decisions of a group in the hands of a leader depends on each member of the group feeling that he is represented and believing that what the leader says is right. It is a question of credibility. In negotiations each one takes his role within a group; but someone has to lead. That person must be listen to each individual’s ideas in the group, justify whether they should be introduced into the negotiation or not and make himself felt as the voice of all, not just speaking for himself. Two distinct and enormous responsibilities derive from that. The leader is responsible for accepting the honorable representation and the followers are responsible for submitting themselves with absolute confidence to being well represented. The style of the leader can be diverse; but must unequivocally have the capacity to convince and only thus does he obtain rational obedience.
I.2. How do you translate this aspect of leader and power in the customs field?
In
2005
the
World
Customs
Organization
published
its
Safe
Framework. Among other subjects on how to safeguard world trade, Safe Framework recommended that the countries include practical commercial facilitation applications that would not eliminate controls but make them more selective on the basis of risk criteria, that is, participants in the world trade chain should be qualified in accordance with their reliability.
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To that end, it proposed two Pillars: the first, “Customs-Business,” in which Customs opens robust communication and collaboration with import-export businesses and those service organization that deal directly with customs, such as transportation companies with their manifests, consolidators, bonded warehouses, customs agents, etc. This sort of collaboration evolves from auditing what these actors do, comparing that with the stipulated good practices model and legal procedures and, finally, they are granted low risk qualification in exchange for their transparency. Low risk qualification gives them in exchange fewer checks and more rapid processing at the time of interacting with the customs. The second Pillar, “Customs-Customs” is characterized by the exchange of information with the customs organizations of trading partners and bordering countries. In this manner, controls are shared, procedures are recognized and that again points to a study of the customs tax behavior of subjects who deal with both customs, in addition to cooperation on themes of mutual professional interest. If we compare this with this idea of power in relations within organizations
and
leadership
styles,
its
development
and
the
attainment of objectives based on the exercise of that power, understanding all modern public or private organizations included in the processes of globalization, the idea of importer, transporter or exporter being submitted to controls in exchange for facilitation in customs processing, has its justification in a cooperation scheme. In today’s world, obtaining country growth objectives even if country interests are distinct in each one of them is, as we have said, a goal of customs. While control and adequate collections are basic, so also are levels of service and impact on country performance indicators in their areas.
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The customs in the “Customs-Business” Pillar exercises its power to have access to the behavior and performance parameters of the businesses, which recognize the power of customs and submit to it in exchange for the benefits they obtain. Finally, both are winners in terms of image, dispatch times and shorter processing with facilitation. The businessman will obtain greater profitability and that is one of the more visible goals; but customs will also obtain a better country qualification, which will have an impact on the indicator of efficiency and in the foreign investment that is captured. This effect of controlling, submitting to control and having mutual wins produces an important balance between the two parties and provides common satisfaction. Power is exercised by processes of technology, for example, automatic fines for an error in the customs declaration or the opening of a labor procedure against customs personnel for the incorrect use of a computer tool. Another example of how technology can help administer power is shown in the fact that in today’s world there are a series of variables in the trade that cannot be easily modified because they are shaped by specific legislation (electronic invoice, electronic bills of lading, electronic certificates of origin, etc.). Different countries have adopted this idea of paperless transactions. For example, Guatemala uses the electronic invoice. We are not talking of digitizing the image, but rather of an encrypted file with which all the countries of Central America are familiar in their customs declaration. SIGA, SARAH; TICA SAQBE, SIDUNEA, all customs agents, public and private, utilize them.
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The dilemma of power when computerization occurs and there is a possible review in the public customs system is double: on the one hand, it is necessary for the data transmitted by the actors who have been empowered to do so to be stable at the time it is transmitted but it is necessary also for procedures to be fluid in spite of control. On the other hand, customs reserves the right to review all the operation carried out for a period of time, not only by its personnel but also by actors outside customs who take part in the operation. This last is the clearest manifestation of the scope of power that nevertheless is still subject to prescription, generating the necessary balance so as not to leave the actor, who can be reviewed for indeterminate periods of time, helpless.
To know more: For your own use, establish a list of customs standards in your country, along with its respective hierarchy.
I.3. History of Alternative Conflict Resolution Mechanisms
Conflict coexists with humanity and has no negative connotation. Our own body responds naturally to threat alerts, releases adrenalin, suspends stomach activity and expands arteries, bronchial tubes and pupils. Our subconscious makes us immediately react to threat. In some cases, so violently that death is produced by the sudden reaction.
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Managing a conflict in our daily lives, however, is not something we learn as an academic subject, neither was it a course option in our childhood. Negotiation is certainly foreign to our educational system and from that we can then suppose a series of situations that are going to be occurring throughout our life, in our environment, that sometimes result in things happening that we experience without knowing how to deal with them. What normally happens is that, when these situations arise within the scope a family quarrel or a neighborhood dispute and talk breaks down
between
the
parties
without
a
decision
on
patrimonial
consequences or essential interests, it is usually left to a third party, a judge, to decide who is right or wrong in favor of one of the parties. This mechanism of not confronting and letting a third party intervene seems to have given a partial result because if one of the two does not accept what that third party says that generates a new conflict and that could successively generate others, interminably substituting and adding reasons for not coming to an agreement.
Source: Word Image Photo
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As we know, these traditional forms have not obtained very durable results over time and for that reason many countries establish the requirement or possibility for parties in conflict to have recourse to use other methods as Alternative Conflict Resolution. Negotiation, conciliation or mediation are means to facilitate a good end for those parties. These schemes of collaboration have given great results. In Japan, for example, the evolution of Alternative Conflict Resolution is very much utilized. In China there are popular conciliation committees. In the Middle East, indigenous communities and Africa, the influence of the elderly in the resolution of conflicts is evident in councils of the elderly. The term “peaceful settlement of international disputes” was coined in The Hague in 1899. After the Second World War, with the creation of the United Nations Organization, the peaceful settlement of controversies was incorporated as an obligation of member countries. The Interamerican Convention on Human Rights also establishes a mechanism named “amicable solution of controversies.” In the West, however, it seems that the evolution of such alternative mechanisms to litigation in the courts was not very popular until 1980. Since that time, as a consequence of the Dispute Resolution Act promulgated by former United States President, Jimmy Carter, their use has generalized. Specialized Dispute Resolution Centers have grown with these mechanisms. The principal promoters, managers and trainers come from the Harvard University School of Law.
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But, what is the purpose of Alternative Conflict Resolution Mechanisms? The purpose of these centers is to search for justice within a context of non violence. And what is the thematic scope of these centers? Although the diversity is very broad, in general, some such as those shown in the following graphic can be cited: Figure No. 1.1. Some themes that conciliation centers address
Labor
Consumer
Civil
Commerce
Agrarian
Architecture
Criminal
Family
Engineering
Source: Author
In many countries the Ministry of Justice legitimizes these Dispute Resolution Centers so that all the centers, and their counselors, must be attributed to the Ministry. In today’s world, this mechanism is coming to be a great ally of the countries’
courts
of
justice,
precisely
because
establishing
an
alternative mechanism where the parties can come to a balanced agreement before the beginning of a process presided over by a judge issuing a verdict results in saving in the judicial system. This agreement can be carried out means of arbitration, mediation and reconciliation 1.
1
Mediation is less formal than reconciliation, although often its concept is equivalent in some books. Some authors define a mediator as giving options, while the conciliator investigates and issues a formal document at the end.
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In many countries all contracts are obliged to contain a controversies resolution clause that refers to the legislation or to a particular Dispute Resolution Center.
This is an example of such clauses. It is found at the Commercial Arbitration and Mediation Center for the Americas of Mexico (CAMCA): “The parties agree that they will make the effort necessary to effect the resolution of any controversy or complaint that derives from or is related to the present contract, so long as the aforesaid controversy cannot be resolved by means of direct discussions between the parties, through mediation administered by the Commercial Arbitration and Mediation Center for the Americas of Mexico, under its rules, before recurring to arbitration, litigation or some other procedure for the resolution of controversies. The requirement to present notification of the complaint with respect to the controversy submitted to mediation will be suspended until the conclusion of the mediation process.” Lacking a clause in the contract for the solution of future conflicts, the parties can also submit an existing controversy to mediation under CAMCA rules by means of the use of following agreement: “By this means, the undersigned parties agree to submit the following controversy, conflict or complaint (cite briefly) for solution through mediation administered under the rules of the Commercial Arbitration and Mediation Center for the Americas of Mexico. The requirement to present notification of the complaint with respect to the controversy submitted to mediation will be suspended until the conclusion of the mediation process.”
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To know more: Investigate
whether
your
country
has
Alternative
Conflict
Resolution legislation. If it has, who legitimizes the conciliation centers?
I. 4. Conflict
There are many definitions for the word conflict, such as Wilmot’s definition as “a fight expressed between at least two independent parties that perceive incompatible objectives.” However, in all the definitions, we cannot find one that gives a positive or negative connotation to conflict, because conflict is no such thing. In principle, conflict is somewhat beneficial because it generate the creation of options and negotiation. In spite of the satanization of conflict as a synonym of odium, betrayal, ire, etc., these are simply the emotional perceptions of individuals. Violence occurs only as consequence of conflict that is not resolved by means of negotiation, dialog or negotiation attempted without preparation. Conflict is normal and healthy as well if it is approached in an objective manner. Conflict arises when there are differences in communication, beliefs, expectations, ideas, opinions, interests and customs, etc.
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The last four are the origin of many conflicts in customs. For example, because of the application of discretion for corrections in the interpretation of a standard in a way that some interested group, in or out of customs, sees as affected by this decision.
I.4.1. Causes of conflict
We can group the causes of conflict in five categories: Figure No. 1.2. Types of differences that cause conflict
Information Interests Values Structures Relationships Source: Elaborated by author
I.4.2. Types of conflict
It is possible to typify conflicts, following some of the proposals of experts on conflict type themes. 28
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Table No. 1.1. Types of conflicts
Type
How to characterize it
Evident
All those involved recognize that tension exists.
Endemic
All those affected know that it exists but have incorporated it into their daily life.
Invisible
Is not seen and none of those affected can seek a solution. There are disagreements, but the origin of their lack of satisfaction is not understood.
Institutionalized When it permeates a social group or organization and exhausts an alternative way of resolution, it must
be
submitted
to
a
legal
or
formal
jurisdiction of some sort. Hidden
One in which the primary behavior seen is not the true origin of conflict. Source: Elaborated by author
I. 4.3. The Conflict Cycle
In the cycle of conflict the parties suffer an event, which generates tension that, in many cases, results in confrontation between the parties, after which a cycle of negotiation is established.
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Figure No. 1.3. The cycle of conflict
Event
Negotiation
Tension
Confrontation
Source: Elaborated by author
Event The event is not always well defined. Often what is visible is the result of an initial event after a specific time period. Therefore, when steps to resolve the conflict are taken an in depth investigation is necessary to typify the event, when it happened, what started it, etc. Tension The conflict is scaling up, the parties have decreased communications or communication is slanted, fortuitous and obligatory and of few words; both parties seem to be seeking help and give their version of the facts to others.
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Confrontation At this time communication is aggressive, individuals or groups are definite in their interpretation of the facts or standards and do not appear ready to listen or cede. They are not reasonable and they need to ventilate their frustration and do so. Negotiation At this time all the parties know they are not going anywhere. With their present attitude they are not getting any results and, finally, knowing the other side will not cede to all their demands or requirements, they agree that it is necessary to establish a way of communication other than the present stagnation. Here the parties know that they will not get everything they are looking for and are disposed to obtain some of their demands. How does a conflict about to evolve identify itself? It is basic for each negotiator to identify when a situation could evolve into a conflict and attempt to avoid escalation; in other words, for the situation to remain as a problem with quick, easy solutions and not a conflict that generates greater difficulties. There are some ways to determine when this is developing, as shown in the following graphic:
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Figure No. 1.4. The cycle of conflict
There is no communication An exchange of aggressive communications has begun
There are tensions Source: Elaborated by author
I.4.4. How does this apply in the customs environment?
In this sense, conflict can go from a disagreement on a tariff classification, application of a preference of origin, to a tariff increase of some type. In the annexes, you will find the case of the electronic customs stamp in Costa Rica as an example of an escalating conflict.
To know more: Can you identify a customs conflict in your country? Do you remember how it was resolved?
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I.4.5. And what can Negotiation do for a conflict?
Eliminating conflict
Reducing conflict
Conflict can be eliminated in some cases when it occurs in a certain type of finite situation, (a kidnapping rescue), but there are other cases in which the intensity of conflict is reduced, but does not disappear (Palestine/Israel).
I.4.6. What is the difference between a Problem and a conflict?
A problem is a situation that can interrupt our daily lives; but it can have a solution. There are no extremely personal sentiments involved. A problem is transformed into a conflict when no effective solution is found and the problem begins to involve beliefs, emotions, culture etc. The problem is the root of a conflict.
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I.4.7. How can a conflict be tackled?
Conflicts are tackled in various ways. The following table will define the more common and how they function: Table No. 1.2. Kind and description of common conflicts
Attack
How does it work?
By force, confrontation
Power is utilized to overcome the other, there is a discussion, one is intimidated, and others are called in to take a position in favor of one or the other. Can end in violence.
By compromise
Because of inability to dialog or technical incapacity to resolve the conflict it is ceded to a third party for resolution. There is a very large possibility that one of the parties will be dissatisfied.
(legal settlement) One party avoiding or ceding everything
What is thought is not expressed; dialog is not open; sometimes one side gives up. That provokes still greater tension because one of the parties may not know what the other party feels.
Cooperating
The intention to dialog exists because of good faith and recognition that conflict can generate an unnecessary emotional or economic cost. Here both parties have an adequate level of satisfaction.
(Direct) arrangement Integrating (conciliation)
In conciliation, a third party facilitates dialog; but as opposed to an enforced legal settlement, no personal criterion is issued; techniques are utilized only to encourage getting an arrangement. Here the parties are normally very satisfied. Source: Elaborated by author
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Some consequences of the foregoing: Figure No. 1.5. Conflict Cycle
Confrontation
Persuasion
Conciliation
Negotiation
Source: Elaborated by author
I.4.8. Outline by managing a conflict
Of course, each negotiator has creative freedom. But experts have suggested the following order of actions for the resolution of conflicts:
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Figure No. 1.6. Action checklist for managing a conflict
1
• Get all the information
2
• Define the conflict
3
• Get more information
4
• Define the problem
5
• Look for alternative solutions, evaluating and prioritizing them
6
• Choose a solution
7
• Implement the solution
8
• Monitor the results
Source: Elaborated by author
1. Get all the information Written, published or not, research verbally with people involved or sources of information on conflict, analyze it, do something similar to a chronological report for what was identified after the cycle. 2. Define the conflict This definition comes from determining the problem in itself, the root that originated it and not the apparent symptoms. Often the poor definition of a conflict is like a poorly diagnosed disease. The treatment won’t work because the origin of the problem was not adequately revealed.
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3. Get more information With this information you will verify whether your definition of the conflict is correct or not. 4. Define the problem Now, with all the information verified, finally define the central problem, as well as the actors who will have to be directly involved in any solution agreement that will eventually execute the actions agreed to. 5. Look for alternative solutions, evaluating and prioritizing them The alternatives you seek must be within the framework of the situation, realistic and possible to comply with; number them from 1 to 10 and at the side put your evaluation of exposures because it is irremediable that when you propose them, each party will ask, how does this alternative benefit me or affect me? 6. Choose a solution Of course, it may not be a single solution; but several interrelated solutions or a combination of various solutions in a creative exercise of the parties. 7. Implement the solution It is indispensable to agree to a period of time for getting the solution underway; all good agreements that resolve a conflict should have the commitment of the parties to execute the solution.
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8. Monitor the results As with all proposals, it may be that it needs an adjustment or a motivational push to make it work. The monitoring gives you the opportunity for exchange feedback with the parties. If all is going well, merely stimulate the advance; but call the parties together to avoid allowing slow advances to generate a new conflict for lack of compliance.
I.4.9. How does this apply at the level of customs?
We know that in customs, as in all public service, there exists a framework of legality to respect. In that sense, although conflict and problems are identified, there is a range of action in which an immediate solution can be negotiated and cases which require time, a short period (going to an immediate superior), longer (remitting the problem to a technical specialist) or long period of time (changing the draft of a law) to be able to resolve the conflict. For that reason, from a customs point of view, strictly attending to the principality of legality, it is not limiting to think of the possibility that my discretion allows me to take an action or make a decision that ends the conflict. Well now, if it is a case of a problem or a misunderstanding, it is possible that the solution is just around the corner utilizing only dialog. The student will confront this when he develops the case study to agree to a solution to conflict.
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Unit Summary
At the end of this unit, the student will know the concepts of power and how they relate to conflicts, their causes and dynamics, as well as the difference between a problem and a dispute and how, by understanding the cycle of the conflict, negotiation can contribute in the handling of a dispute.
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Unit II. Definition of Negotiation, styles, elements and objectives
Learning Objectives •
Define the concept of 'negotiating' and the different approaches it has had until now.
•
Understand what characteristics or styles can arise in a negotiator and the different roles he/she can take on
•
Understand what the elements of negotiation are, and their purpose
•
Define the styles, elements and objectives of negotiation.
In this chapter, with a very clear concept of conflict in mind, we are going to define the styles, elements and objectives of negotiation. We will have some exercises and we will participate in some cases, assuming specific roles in order to experience the effect of power in negotiation.
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II.1. Concept of Negotiation
What is negotiation? Negotiation is the process by which interested parties resolve conflicts, agree to lines of conduct, seek individual or collective advantage or attempt to obtain results that serve their mutual interests. A "correct" negotiation is produced when the negotiator can get all or the majority of the results his party desires without inducing the opposing party to permanently interrupt negotiations. Negotiation
is
a
process
that
should
create
value
between the parties. The parties have to feel in the end that they have participated in an intelligent and balanced process. What is more important for a negotiator: intuition, experience, training or being current? In reality it is a combination of all of the above. Some authors say that a negotiator is born and can be “polished� by training but as human beings we can all learn the techniques of listening and analysis in order to negotiate adequately; that is, discover how to react to others to get what we want. Remember: you cried to be fed; later you learned how to talk by listening.
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II.2. Characteristics of a good negotiator
A negotiator, born or trained, must present, develop or perfect certain characteristics that have been established as ideals by the experts. Additionally, the capacity to listen and read between lines of verbal and body language is an indispensable part of the observation that is mentioned. These are some characteristics that profile a good negotiator. Figure No. 2.1. Characteristics of a good negotiator
Likes to negotiate
Does NOT improvise
Enthusiastic
Meticulous
Great communicator
Firm, solid
Persuasive
Self-confident
Very observant
Agile
Sociable
Resolute
Respectful
Accepts risk
Honest
Patient
Professional
Creative Source: Elaborated by author
II.3. Evolution in the focuses of negotiation
In the 70s the negotiation focus was Zero-Sum negotiations in which the negotiator focused on Win-Lose. In Zero-Sum negotiation, one of the parties would get everything and the other would get none of what it wanted.
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As we have mentioned before, thanks to the authors Roger Fisher, William Ury and Bruce Patton of the Harvard Business School with their “Focus on Principles,” negotiation is Variable-Sum, where the parties think about a Win-Win result. That is, although no one gets everything he wants, what I get makes me feel satisfied and a winner.
To know more: Analyze and define which of the preceding characteristics you identify with and, second, which you feel you must develop, perfect or learn.
Figure No. 2.2. Negotiator’s interests scenario in the 70s
Win in spite of the other
Impose Power
Think only of your interests
Defeat the other
Source: Elaborated by author
Additionally,
the
so-called
Psychotechnical
Focus,
that
will
be
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II.4. Types of Negotiation
After the seventies decade, negotiation types are based on the two characteristics shown in the following drawing: Figure No. 2.3. Categories of Negotiation
Distributive Negotiation
Integrative Negotiation
Source: Elaborated by author
II.4.1. Integrative Negotiation
Its characteristic is that there are desires of mutual wins. That generates cooperation, which is what Win-Win implies: the interests are
different,
but
not
opposed.
There
is
flexibility
to
make
concessions and seek solutions of a creative type and a joint and individual win is anticipated.
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II.4.2. Distributive Negotiation
Its characteristic is little or no cooperation. The focus is based on winning, even to the detriment of the other’s interests: one wins and other loses. Interests are very much opposed; they are inflexible and there is no creative solution, which ends up frustrating one, the other or both.
II.5. What are the variables found in any type of negotiation process?
The variables that have to do with the human nature and its actual necessities, such as: •
Economics (how much does it cost me to arrive at an agreement).
•
Techniques (specialization).
•
Legal (if what is negotiated is commercial).
•
Scenario (conditions of the physical environment)
•
Human a. Values. b. Time management (how urgent is it for me to achieve agreement). c. Information management. d. Confidence
(be
worthy
of
confidence
but
don’t
be
confident). •
The Parties. a. Presence of all those involved.
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b. Recognition of the need to negotiate. c. Will to achieve an agreement. d. Necessity of not postponing it. e. Legitimacy
of
the
participants
in
the
negotiation
(authority to enter into agreements).
II.6. Styles of negotiation and negotiator styles
These styles are also very much related to each other, perhaps they look like the form that has been described in how to manage conflicts; but in matters of negotiation various authors coincide in this grouping of negotiation and negotiator styles: Table No. 2.1. Styles of negotiation
Style
How does it work?
Competency
This style is close to Zero-Sum negotiation, where what is important is winning. This style is probably utilized when the relationship between the parties is not sustainable or repeatable in the future; so there is more hardness in the dealing.
Avoidance
Both parties feel that negotiations are not worthwhile because the consequences of negotiating can result in greater problems; so the subject is left “to cool off.�
Collaboration
Both parties know that collaboration is needed; it is a question of mutual convenience and requires conserving the relationship for the future in order to multiply wins or achieve a stable relationship.
Adjustment
This is when one gives up because he knows that he will obtain the required results sooner or later as a consequence of the agreement. Source: Elaborated by author
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II.7. Types of Negotiator
It could be said that we can derive three types of Negotiator from the styles of negotiation; however, there are possibilities of changing or reconciling a style within the same negotiation and a negotiator is not bound by his style. Figure No. 2.4. Types of Negotiator
Hard • With a Short Term style, he does not give up and considers that he is going to look out for the interests he represents
Soft
Principled
• Based on collaboration, he believes in relationships and tries to conciliate all sides and sometimes he gives up
• He is not involved in the objective and he adapts in function of what he finds, he concentrates on interests and not on the positions, separating the people from the problem
Source: Elaborated by author
To know more: Can you locate which of the negotiator types pertains to you? Do you feel you could be a combination of them? Justify your responses
utilizing
examples
derived
from
your
professional
experience.
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II.8. Elements of the Negotiation
Taking
the
basic
Alternative
for
elements a
extracted
Negotiated
from
the
Agreement
Harvard (BATNA),
Best any
negotiator can identify these necessary elements in his preparation: Figure No. 2.5. Elements of Negotiation
1
• BATNA
2
• Interests – Positions
3
• Options
4
• Legitimacy Criteria
5
• Relation
6
• Communication
7
• Commitment Source: Elaborated by author
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II.8.1. BATNA
Also known as MAPAN, for its Spanish initials, BATNA is the Best Alternative for a Negotiated Agreement. The term was proposed by Fisher and Ury to define an alternative if the negotiator does not get an agreement under ideal terms. It is a parameter of comparison for what the counterparty is offering. BATNA is a carefully defined road map of his escape route if none of the options seem to be fruitful. What question does BATNA answer, then? •
IF THERE IS NO AGREEMENT: What alternatives do I have?
•
IF THERE IS AN AGREEMENT: What commitments do I acquire?
It is therefore necessary to identify the Zone of Possible Agreement (ZOPA) because that is the moment at which an immediate comparative cut is made with BATNA. To begin, a good option is a matrix that compares your alternatives and their alternatives and establishes what alternatives are the best for the outcome you seek. Its power in the negotiation focuses on the relationship between your BATNA and the other side’s BATNA: Table No. 2.2. Chart of Alternatives My alternatives, if there is no agreement
The other’s alternatives, if there is no agreement
My commitments, if there is an agreement
The other’s commitments, if there is an agreement
My BATNA
The other’s BATNA
Source: Author
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When you approach the ZOPA; that is, the Zone of Possible Agreement that tells you that what you are agreeing to is practically what you wanted, it is possible for the ZOPA to look like your BATNA or not. To establish what to do, consider the following: Figure No. 2.6. Steps to analyse BATNA
If what you are getting is better than your BATNA: Agree
If what you are getting is not better than your BATNA: Execute your BATNA If you cannot get your BATNA consider abandoning the negotiation
Source: Elaborated by author
II.8.2. Interests – Positions
Positions are the initial motivations; what we can see directly in the proposal. It is probable that at some point in the negotiation they become interests. Interests are the real motivations. They can be hidden, but there are techniques for knowing what they are. For example, paraphrasing a famous story:
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Two sisters, Luisa and Anna, are fighting for an orange. Their mother takes the orange, cuts it in half and gives each one her part. Anna eats the inside of her half of the orange, tosses the peeling in the trash and is still hungry. When Luisa gets the other half of the orange she throws the inside part of her half in the trash and saves the peeling to make marmalade. If the girls’ mother had asked them: What do you want it for? The result would have been that they would have peeled the orange. Luisa would have utilized the peel and Anna could have eaten the whole orange and both of them would have been satisfied.
II.8.3. Options
The options are the materialization of interests. It is therefore necessary to define various points over which agreement may be possible and be creative in ways to satisfy both interests. And how can options be generated? It is important to promote brainstorming, to be attentive to the fact that hidden in the differences is a goodly portion of what is what is being sought, making room for those ideas can be a strategy to resolve the problem.
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Table No. 2.3. Chart of interest
My interests
Brainstorm Options
Their interests
Source: Elaborated by author
II.8.4. Legitimacy
All agreements should give the parties the sensation not only that it has met their expectations, but that it is fair and will be complied with. These formalities are found at both the international and local level. From the Treaty of Versailles and the trade codes to the Alternative Conflict
Resolution
procedures,
etc.,
such
agreements
provide
examples of the formalities necessary for an agreement to contain all the elements to be considered complete in depth and form.
II.8.5. Relation
The parties must establish a framework for negotiating; with that framework they commit themselves to the process being framed in these elements or not:
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Table No. 2.4. Chart of Strategy
Positive Elements (Promote Them)
Negative Elements (Avoid Them)
Dialog
Emotions
Reasonableness
Impositions
Respect
Malice
Confidence
Coercion
Acceptance
Denial Source: Elaborated by author
II.8.6. Communication
Is important that communication be understood as a dialog with a recipient and a sender; that is, in the classic sense in which there is one who someone who talks and someone who listens, then responds and so on cyclically. This process should be carried out in negotiation with clear, concise, respectful messages, and considering cultural differences in the lexicon, leaving space for both parties so that their message can be transmitted without interruption and without pressure.
II.8.7. Commitment
Statements must be oral or written with a structure that allows establishing each party’s obligations and there should always be a way to verify compliance. It is necessary to draw up a draft and the parties to the negotiation should discuss the draft.
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II.9. Objectives of the negotiation
The result of a negotiation is to obtain the greatest benefit without damaging relations between the parties, allowing both to feel satisfied. Each negotiation is unique: Do NOT assume that they mean to say something, always ask what they are trying to
say, Do
NOT compare with other
situations or
negotiations.
Unit Summary
By the end of this unit the student will have known the definition and the types of negotiation, the variables found in the negotiation process, and how negotiators can analyze the styles and types, their own strengths and weaknesses. Likewise, the student will have all the elements of the formality necessary to conduct any negotiation.
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Unit III. Preparation and techniques of negotiation
Learning Objectives
•
Defining the importance of preparation before a negotiation as a means to obtain a better result
•
Learning different approaches to negotiate and understand that each one can be used according to the circumstance at hand
•
Knowing the different strategies and techniques to negotiate, including the order of the process and knowing the key moments for reorienting or understanding that a wrap-up is close.
•
Learn how to prepare oneself for a negotiation.
•
Define the strategy and our BATNA.
In this chapter we will learn how to prepare ourselves. It is said that 50% of a negotiation is resolved when we are prepared. We will have activities, a case in which we will make preparations, and we will define the strategy and learn how to define our BATNA.
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III.1. Preparation for the Negotiation
Nothing is more important than being able to prepare yourself. It is an arduous job and fraught with details, all possible options of which the negotiator must take into account, including the counterpart’s questions and how to respond to them. Preparing yourself with a balanced result is always a commitment to work. A prepared negotiator has 50% of his negotiation won
III.1.1. How does a negotiator prepare?
Figure No. 3.1. List of demands to prepare a negotiation
Has the conflict well defined. Determines if his negotiation is multiphase or uniphase. Has positions and interests defined. Knows his limits but does not broadcast them. Tries to verify the other's limits. Looks for hidden interests Knows what his concessions are. Prepares his BATNA. Knows the other party and prepares his tactics
Source: Elaborated by author
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1. In the Multiphase, it is not a case of one but of various interdependent negotiations, as when CAUCA is negotiated. These negotiations require time, so that the strategy for them should be careful. The consequence of one poorly negotiated phase can result in the rest unraveling. 2. When the negotiation is Uniphase, it is a case of one negotiation
from
beginning
to
end.
Once
finished
this
agreement will not form part of another negotiation process that depends on its result. It is possible to find yourself in a Uniphase negotiation with multiple parties, that is, many interested parties, without those parties necessarily being hidden or visible saboteurs, but actually interested in the negotiation. When the negotiator is preparing he must take all the parties into consideration. In the example in the annex we will see this situation.
III.1.2. Psychotechnical Focus, the principles
The Psychotechnical focus recommends not building a wall by negotiating from a position. A good negotiator does not take negotiations personally; for a professional negotiator it is a problem that can be resolved and he will always seek an integrative solution that can be sustained over time and which, in addition, is realized on the basis of objective and preferably quantifiable criteria. For that reason, the negotiator bases his actions on four principles:
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Figure No. 3.2. Principles for negotiating
Separate people from the problem Cocentrate on interests and not on positions Generate mutually satisfactory options Discuss on the basis of objective criteria
Source: Elaborated by author
The negotiation should try to be directed towards winwin. It is necessary to channel the energy of conflict toward producing alternatives, but remember that a possible result is no result, i.e., there is no agreement.
III.1.3. What do I do during the negotiation?
A series of actions have proven to be appropriate to implement during the negotiation. They are:
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Figure No. 3.3. Actions during the negotiation
Evaluate partial results
Prepare a corrective action plan if appropriate
Explore solutions
Open doors to new negotiations
Source: Elaborated by author
In spite of the fact that it has been said that you can be creative in the negotiation about what instruments to utilize, it is reiterated that it is important to chart yourself and to try to chart the other. The table presented below can also serve you as a guide:
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Table No. 3. 1. Table to chart your information for negotiating Add more squares with other elements and more actors.
Variables
My interests
Other’s
Strategy
interests Positions Interests Common themes Confusing themes Themes that clash Forms of Communication Blocks or obstacles Information lacking Source: Elaborated by author
III.1.4. Strategies and tactics
It is important to define these two interdependent Concepts, as we shall see below. From the Greek Stratos, exercise, and Agein, conductor, strategy signifies a conjunction of actions planned and carried out to accomplish a purpose. In the theory of games 2, a strategy analyzes the distinct variables that influence obtaining distinct results by means of cooperation.
2
In the theory of games, the strategy of a player is a complete plan of action for any situation that may occur; it determines completely the conduct of a player. The strategy of a player will determine the action that the player will take at any moment of the game, for any sequence of occurrences up to that point. A strategy profile is a conjunction of strategies for each player that completely specifies all the actions in a game. A strategy profile must include only one strategy for each player. Wikipedia.org
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The strategy attempts to define a proposal that adds value, which takes advantage of the capabilities of one but also the disadvantages of the other in order to obtain what is wanted. A tactic is a method that comes to define how to make a maneuver, being creative in the combination of my resources and strengths in order to have the best position in the negotiation. The strategy is the idea; tactics represent the execution of the idea. Strategy defines “What should I do.” Tactics define “How should I do it,” i.e.: going from the plan to the method.
III.1.5. Tactics recommended in negotiation.
A. FOR THE BEGINNING 1. Always be assertive. Try to have a positive tone, recognize the other’s capability and say that you expect the entire process will be carried out within the professional parameters that all the parties observe and quite openly, as a group effort. 2. The agenda. All negotiation should have an agenda, which is a list of themes to be treated and the order in which they will be treated by common agreement; go over it, adjust it if necessary, and be cooperative.
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3. The perception of the process. Encourage the other side to state what he expects from the process and how he imagines it. Try not to be the person who speaks first. Let the other reveal his negotiating style. If the counterparty does not open up, do not do so yourself. 4. Learn to listen. Effective listening during the entire process can reveal much more than any written proposal; the body language of the counterparty helps as well. Some advice: •
When the counterparty speaks, try to always have the front view and observe whether the counterparty does the same.
•
Don’t draw any quick conclusions. Listen, take notes and analyze
later.
Don’t
divide
your
attention.
Limit
your
attention to what the counterparty is saying. •
Try not to have negative or positive gestures. Just look and listen.
•
Wait for the other party to stop speaking before asking. Do not interrupt.
•
Once the counterparty ends, try to summarize what you understood and want to ask. “Look, if I understand you right, you propose...” Only after that do you ask questions. That is called summing up or paraphrasing what the other fellow says.
5. The place to negotiate. A place where all the parties can have tranquility and be able to concentrate is recommended, i.e., where you will not be distracted with noises, people passing by outside a window, a lot of things in the place, etc.
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B. Negotiation of the integrative, variable summary type. This type of negotiation proposes a collaboration model: in this case, the two or more parties are propositive and assertive, but remember, each side has its interests and will naturally try to obtain its greatest advantage. They will surely all have prepared their BATNA, because having done so; the parties have made their preparations and will sit down ready to negotiate. Some very much-utilized tactics are: 1. Wait for the other side to make a proposal. This will give you the possibility of understanding the other’s interest and position. 2. Reveal significant, but not complete information on your part. What is your reason for negotiating? What possibilities have you considered? What mutual benefits do you see in your proposal? 3. Look for the differences between your proposal and theirs. When you identify what the differences are, you can try to propose scenarios before offering some alternative for those differences not to block the agreement. 4. Don’t rush, don’t rush yourself and don’t let them rush you. Of course that doesn’t imply that you won’t try to put pressure on the other party, but don’t say yes if at first it appears that you could obtain something very similar to what you need very rapidly. It is possible that you will have the opportunity to go further and obtain more of your interests.
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C. What can clog a negotiation? There are many reasons to raise obstacles. But what is important is how you can change an obstacle into an inconvenience. Here are some reasons for obstacles to occur. Figure No. 3.4. Potential Negotiation impediments
•
Because of gender differences
•
Because of cultural differences
•
Because of an intransigent negotiator
•
Because of a lack of confidence
•
Because of a change in the negotiator
•
Because of sabotage by some of the parties Source: Elaborated by author
D. Techniques for a negotiation blocked for one of the aforementioned reasons As a result of gender or culture In this sense, prejudice or even religious or cultural matters make this an inconvenience and the parties must skirt around the problem. In order to resolve this, try to rechannel the problem and analyze the type of misunderstanding. In some cases, if the counterparty cannot negotiate for cultural reasons because one party is a woman (understand that even in today’s world there are countries where the one who should negotiate and has the power to negotiate is a man); the negotiation cannot be carried out. In that case, there are only two options, change the negotiator or stop negotiating and do not get an agreement.
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The same options present themselves when, without being a matter of culture or gender, one of the parties has a marked tendency toward machismo that impedes his objectivity. As a result of differences in body language. Body language can interfere with communication. In order to avoid this, analyze your counterparty’s body and verbal language, customs, etc. ahead of time. Don’t take it personally. There are cultures where the body language appears aggressive or exaggerated, including the volume of the voice. A louder or softer voice may confuse or invalidate the message for you, without that being the other’s intention. It is important in this early analysis in the negotiation to utilize tactics that are not offensive and do not generate anxieties. What is required is a strong self-control component in your perception to be able to carry out the negotiation without being distracted. Remember that the other party may feel the same about your body language. In order to avoid this, it is good in the introduction of the negotiation to clarify for the other what your manner of speaking, gesturing, voice volume, etc., is and indicate that it is only a manner of speaking and implies nothing in particular toward the other. Caused because of a lack of confidence or intransigency. Try to propose a brainstorming session and change your body language to nodding your head, using verbal language to say “yes,” “please,” “go on,” “that is interesting,” etc. Reinforce this so that the party feels comfortable again. No idea should be discarded or turned down flat. Go over the matter in general and afterwards start directing the conversation toward the principal theme. Talk about how compliance will be verified and say, “and I am disposed to:…” 65
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Caused by a change in the negotiator. It is not as unusual as it seems. It confuses the party that remains and it gives a sense of time lost. Don’t let that worry you. See it as an opportunity. But, in the most courteous manner possible, verify the authority of the person arriving to come to an agreement. As a result of a sabotage by either of the parties. It may be that when the party feels it is not reaching its BATNA, it can itself or by means of third parties try to sabotage the negotiation to put pressure on you. One manner of confronting this would be to indicate that you can abandon the negotiation if that is what this person is proposing. E. The final proposal. Always present a win-win. Do not speak of “cost” but of investment. Always talk positive. Remember that the proposal in its form and depth should be legitimate, proportional, equitable, satisfactory and, as has already been said, it must be doable and its compliance must be verifiable. The legal formalities (remember the table of task 1), in accordance with the framework of the negotiation are indispensable; especially in the customs field where the principle of legality must be respected. If there is no legal formality, then verify if the agreements are consistent with the legislation of the country or countries where it will be executed; the primary agreement between the parties cannot be violate certain types of standards. A possible “result” of a negotiation is that there is “no result” at all.
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Unit Summary
By the end of this unit the student will know the most effective techniques to prepare a negotiation, the modern principles and approaches, the tactics and strategies he/she can use, and how to self-prepare.
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Complementary Material
Annex 1: Reading for Task 1: Negotiation and other cultures
Basic differences between countries: Remember that those differences can also apply to each internal region of a country, as, in the majority of Latin American warm climate countries, when people in the ports speak they will have a higher volume than those of the interior zones and normally they prefer closer contact. Likewise, in the region’s historic development, being from the “capital” or from a mining or agricultural zone, affected manners, treatment, language and even gestures. How do I focus on cultural differences? Do NOT suppose: •
That the other party thinks the way you think.
•
That your counterpart has the same scale of values you have.
•
That the other side generally has behavior similar to yours.
Cultural Shock Negotiators suffer it when they suddenly lose control over the environment they enjoy in their country. Generally, there are three ways to confront that: •
Ignore it because business is business.
•
Recognize the differences, adapt to the visiting party.
•
If there are advantages in those differences, utilize them.
In
summary,
you
have
to
reduce
negative
impacts.
The
recommendations are numbered: 68
Customs Management and Leadership. 4th Edition
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1. Difficulty in taking advantage of common factors. It is necessary to establish common bases and among the greatest compatible factors is the possibility of reducing problems and differences. The goal in international negotiation is to keep the differences in relation to real elements of the negotiation. 2. Establishing confidence. Investigate whether the counterparty requires time to adapt, to know you, your culture, your opinion on other topics before being able to confide in you. 3. Clarification of Communication. Remember that although you know his language or he knows yours, idioms, slang, etc. are not learned with the grammar; that is, if you are going a negotiate in a language other than your own, try to use simple, basic idiomatic expressions. 4. Selection of language for the negotiation. It may be that there are terms that cannot be translated to another language. It is recommended that, although you speak another language, you get an interpreter in whom you have confidence and who knows what you are going to say; but you have to be careful that the translator who knows the subject does not become a negotiator, taking your place and inserting his opinion in place of yours.
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5. Distinct mental processes. Many times you translate the language yourself before making a decision and you prepare a response on the basis of the language or your mental structure and then express it. Sometimes, in some processes, people get bogged down in ideas or topics others find insignificant or easily overcome; sometimes they are stymied by cultural matters, education or the lack of a translatable word in their own language. 6. The problem of time. The perception of “mechanical time� It is necessary to know what importance is given time by the counterparty and by your own side for the purpose of evaluating, making adjustments or simply not feeling offended and not offending others. Those differences come from the cultural concept between the cultures. Also, the importance that is historically given to history or if, on the contrary the counterparty focuses on the present and future or a future. In some countries speaking of the future shows poor education because the future is (in the case of Muslims for example known only to Allah). 7. Correct behavior. Etiquette is of extreme importance but it depends on culture; the important thing is, if you don’t know what to do, look at what the counterparty is doing and do the same thing. Expect to be the second person to make a movement, not the first unless expressly asked to lead.
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8. Ethical and legal considerations. Each culture determines what is proper, improper, moral or immoral. There are those who have concerns about a gift for it not to be considered a bribe. The formalities for a written agreement can be varied. From mere negotiation as a base or the written form. It is also possible to write oral agreements. In some countries religion is summarily important at the time of determining whether the agreement violates some religious edict or other. 9. How to identify who makes decisions. It is important to know with whom you are negotiating and who has the power to negotiate. Sometimes the one who has the power is not present. In cases in which there is a person who appears to make the decision, if you direct yourself to that person you may possibly offend the decision maker’s advisors and if they have anything to do with the analysis of your proposals and later with implementing the agreement, their attitude could possibly cause the agreement to fail. 10. The intervention of a third party. Civil society, the unions, the press among others, determined that they exercise significant influence over the decisions. 11. Key measures for survival. •
Plan in advance to counter the shock of a new environment in order to negotiate; checking it out ahead of time will reduce the surprise effect.
•
Prepare to dedicate more time to attaining objectives; be flexible, take your time to learn the rules of the new situation. Don’t take anything for granted. 71
Customs Management and Leadership. 4th Edition
•
Employ
clarifying
behaviors
Module 5
much
more
than
before,
seek
information, summarize to see if you understood or if they understood, be sharper than in your own country. •
Dedicate more time to considering options before displaying disagreement behaviors to determine the supply of internal information and the interlocutor’s attitude. Link counterparty behavior to the cultural medium.
•
Channel the negotiation from bargaining toward a joint solution. Emphasize a strategy to encourage joint resolution of the problem.
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Annex 2: Case “The Markham Electronic Device Conflict”
INTRODUCTION The Government of Costa Rica established the obligatory nature of the use of the Markham Electronic device in September 2005. The Markham is a device managed via the GPS system (Global Positioning System) that, placed in the transportation unit, a Customs-controlled container, for example, allows Customs to know the location of that container and track it through the system. Transport units enter by ports or cross frontiers. When the importer decides not to pay the taxes at that moment, it becomes necessary for the merchandise in that unit to go through Internal Customs to be unloaded in a Customs Bonded Warehouse in or any other oversight zone under Customs control. When transit is realized, certain conditions must be met, including: the transfer must utilize only qualified trucks, that is, trucks that have been previously authorized, as well as transit routes designated for merchandise that has not paid taxes, in addition to which, transfer time, including driver rest periods, can last no longer than the specified time. A report of the Comptroller General of the Republic determined that Customs had lost control of the “traceability” of those movements and its arrivals, in addition to the enormous amount of thefts and plundering that occur during transit. This situation is not new in Latin America. There are various countries that have successfully applied selective control measures to such units and their trajectories, minimizing pilfering and the possibility of tax avoidance because it very much reduces the problem of transit, theoretically complying in time and manner, when the sender and recipient are in agreement.
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Markham
Electronic
is
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a
parallel
system
independent
of
the
implementation of TICA, which began as a pilot project primarily in the Customs of Caldera, where its results were very favorable. However, the first opposition arose from the ship owners, the transporters and the customs agents due to the cost it involved to use them, the amount varied between $40.00 and $75.00. The shipping, the transporters and agents insist to this day that the cost should be covered by the State. It is appropriate to emphasize that the Markham seal or strapping cost $15.00, before it was electronic, and it was distributed previously by the Association of Customs Agents. The Markham continued to be utilized selectively. The Markham Electronic has a price between 70 and 140 dollars, consists of a customs control apparatus that is placed on the containers to trace the trajectory of cargo through national territory by satellite. Some transporters are opposed to paying these costs; but others are against the measures because it reviews their cargos. 3 However, from its application in Caldera, it is basically used on 10% of the merchandise that enters through Caldera. It represents a demand of seven Marchamos a day 4. On January 25, 2006, the Government of Costa Rica determined that its use will be obligatory in the transportation of cargo that transits through national territory. Costa Rica is a bridge for merchandise coming from or in transit through Panama for the local market and for the market of Central American countries. 3
La Nación. “Companies surprised by suspension of electronic Markham.” March 2, 2007. La República. “Faced with opposition to device under present conditions: Providers of electronic Markham in tension affirm that uncertainty and low demand have eroded their finances.” 4
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On February 15, 2000, truck drivers rose in protest and, refusing to utilize the device, blocked access to the frontier between Costa Rica and Paso Canoas. The blockade affected all the cargo to and from Costa Rica and Central America. At that time, negotiations were underway between the Ministry of Finance (Customs) Costa Rica, the Government of Panama and SIECA, without results. The Chamber of Transporters of Panama sent a letter to the Government of Costa Rica, joining the transporters of Costa Rica and Nicaragua, who threatened to begin their own blockade. In the face of the pressure, the government of Costa Rica gave up, suspended the application of Electronic Markham temporarily; but the pressure over the elimination of the gadget was renewed, and on February 27 the transporters of Costa Rica and the shipping businesses blocked Peñas Blancas. On February 28 SIECA (Central American Secretariat of Economic Integration), issued a pronouncement with respect to the lack of legal support for the device in the Central American transit standards. On February 20 the Government of the Republic had decided to suspend the Electronic Markham that monitored the cargoes not originating in Central America that enter our country by land from the frontier at Paso Canoas (Panama-Costa Rica). That was before the weeklong
strike
by
Panamanian,
Nicaraguan
and
Costa
Rican
transporters. The businesses Cenoclap de América Altec, S.A., GPS Satélite, S.A. and Markham Electrónica, S.A. responsible for the application of the system, stated that this resolution was an attack on the optimization of the transportation resources and security of Costa Rica to oversee the cargoes that enter the country. 75
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The Central American Secretariat of Economic Integration (SIECA) issued a resolution that indicates that charging for the Markham is an obstacle to regional trade. JUSTIFICATION The Government has a necessity and commitment to regulate the merchandise that transits through national territory. The State has the legal power and the duty to control the cargoes that cross its frontiers. However, there exists a conflict of interests with the transporters and a jurisdictional dispute with the Central American Secretariat of Economic Integration (SIECA) over exercising this power. Contraband has been one of the principal sources of injustice, corruption and violence in the country. Seeking control as in this case, awakens opposition and the fear of clashing with big interests 5. The modernization of customs management requires on-line control that verifies the sending, reception, validation and payment of customs declarations as well as the confirmation of cargoes entering and leaving. The placement of a Markham in the trucks is to control contraband. This measure attempts to avoid the trucks detouring from their original route. However, the Government of Costa Rica surrendered in the face of hundreds of truck drivers from Panama and other Central American countries who, after 11 days of strikes on the frontier between Panama and Costa Rica, achieved the suspension of the Markham electronic device 6.
5
La Nación. Editorial: “A National tumor.” March 3, 2007. The Nación Economía: “Camineros cumplen 11 días de huelga contra sello de Costa Rica February 26, 2007. 6
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The cancelation of Markham electronic on the part of the Government of Costa Rica represents a true conflict of interests, centrifugal and centripetal
forces
that
interwove
power
relationships
between
different actors: the Ministry of Finance, General Directorate of Customs and Cargo control units, the Cargo Transportation Industry (Panamanian and Central American transporters), a sector tied to the entry
and
control
of
national
cargo
(Costa
Rican
importers,
Panamanian exporters, Panamanian and Costa Rican customs, the Unión
of
Chambers
(UCCAEP)
and
the
National
Chamber
of
Transporters. In that sense, let’s try to identify the forms of domination or instruments of power utilized to achieve the recall of the Markham electronic application, and to establish the pressure mechanisms employed in lieu of facts (frontier Costa Rica-Panama) and the local and regional instruments to revoke the Government decision, which has implications for the whole of society and its forms of organization. GENERAL OBJECTIVE •
Comprehend the forms and mechanisms of power that prevailed in the decision to cancel the Markham electronic on the part of the Ministry of Finance.
SPECIFIC OBJECTIVES •
Identify the actors and interests that intervened in the process of the cancelation of Markham electronic.
•
Know what underlying processes in the power conflict implicated in this confrontation oriented the intervention of the parties.
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DEVELOPMENT BACKGROUND The Markham electronic device has a legal foundation in Costa Rican legislation. It begins with the sovereignty that is the power of the people. Costa Rican democracy deposits the power in the hands of the deputies who are chosen by direct election to occupy seats in the Legislative Assembly to pass laws favoring the people they represent. This electronic instrument is related to the promulgation of the Manual of Customs Procedures by the General Directorate of Customs, which establishes it by means of resolution RES-GA-2032005, dated June 22 of the year two thousand five, a document of reference for the procedures of entry and exit for merchandise, vehicles and transportation units; Customs Transit; Tax Warehouse and definitive and temporary Imports. Likewise, the Ministry of Finance is in charge of our customs model and has the power of instituting the organization, processes, standards, information systems, modernization and computerization of the National Customs System in order to safeguard equitable treatment and consequent transparency, justice and security in its actions. Within this concept the TICA System Customs was implemented September 25, 2006 in the customs post at Paso Canoas and in the Golfito customs post, which took the opportunity to computerize registries of permanent inventories of the merchandise entered through these places.
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The Markham Electronic was born there under computerization legislation to control cargoes that transit national territory 7. The electronic Markham guarantees the control of cargoes. It has the following technological advantages: it permits locating and monitoring the units that transport merchandise by authorized routes using GPS technology; it permits the exchange (electronic reception and transmission) of messages to TICA in XML format with information on the exit, mobilization and arrival of transportation units to authorized locations; it has information storage capacity for the exchange of specific
information
with
the
TICA
and
identifies
the
mobile
transportation unit; in addition to having sensors that permit the sending of alarms for violation of the transportation unit (dismounting of doors, opening of doors or walls, etc.) and it has an energy source that permits controlling a transportation unit in accordance with the time periods defined in the standard 8. Below is a chronology of the facts of the appearance of the Markham Electronic device analyzed from the perspective of conflict, specifically the dynamic of the conflict interaction that attempted to limit the escalation and de-escalation in the particular case of the power relationship that appeared due to the approval of this customs control instrument.
7 Manual of Customs Procedures in resolution GA-672-2006, San José, at nine o’clock on the sixth day of September two thousand six. 8 Directorate of Customs. “Ventajes de Marchamo Electrónico [Advantages of Marchamo Electronics]”.
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CHRONOLOGY OF THE FACTS DATE
FACTS
DYNAMICS OF THE BEHAVIORAL
SOURCE
INTERACTION
July 2005
Implementation of Information Technology System for Customs Control (TICA) constitutes a plan for modernizing customs management by the intensive use of technology and the implementation of the best international practices for stopping contraband.
Escalation
La Nación. Editorial “National Tumor” Thursday, March 2.
July 26, 2005 and January 2006
Implementation of TICA in the Caldera and Central customs posts increased collections by 40 percent, which constitutes a collection surplus of US$200 million.
De-escalation
La Nación. Editorial “National Tumor” Thursday, March 2.
Sept. 2005
TICA establishes customs declarations by Internet, constitutes a US$600 charge to shipping businesses for three years. The shippers insist that this expense should be paid by the State; as pressure measure 4 appeals have been filed before Panel IV Court (two declared groundless, one rejected and one accepted for study). A report of the Comptroller General of the Republic stated that in 2005 17,000 containers that left a port did not arrive at their destination.
Escalation
Capital Financiero. “Gobierno ampliará TICA en todo el país a pesar de críticas [Government will extend TICA throughout the country, despite critics].”
January 25, 2006
The Markham Electronic device installed as part of TICA customs modernization project establishes first instance customs control measure in Paso Ancho, frontier with Panama.
Escalation smooth
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Customs Management and Leadership. 4th Edition
February 15, 2006
Strike begins over Markham Electronic. The regulation installed by the Director General of Customs, José Alberto Martínez Loría, clarifies that only merchandise in transit will be regulated and not cargoes with Costa Rica as final destination.
February 23, 2006
Customs and Cargo Transporters Chambers call on government of Costa Rica to suppress Markham Electronic. The Auxiliary Commission of Public Customs Functions denounced the charge of one hundred dollars tax by Costa Rican tax authorities as illegal.
February 25, 2006
Strike for two weeks on the frontier between Panama and Costa Rica by Panamanian, Nicaraguan and Costa Rican transporters. Truck drivers blocked the transportation of cargo across this frontier from last February 15 with 262 trucks from the Panamanian side and 400 trucks from the Costa Rican side.
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Escalation
La Prensa Libre, “Protests began yesterday in Paso Canoas and Peñas Blancas: Importers obliged to pay for Markham Electronic. February 16, 2006 Al Día: “Customs and Transporters Chambers protest Markham” February 23, 2006
Abrupt escalation
La Nación: “Truck drivers’ strike for 11 days against Costa Rican seal” Thursday February 25, 2006.
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March 2006
The representatives of the Central American Transport Federation before the Government of Nicaragua measure by means of a resolution by Rudy Gutiérrez, Nicaraguan Director of Customs to charge 20 percent of the value of cargo and US$12 for insurance on the merchandise that goes through the country in response to the implementation of Costa Rican Markham Electronic. This measure blocked the Costa Rican frontier. The reaction of José Ovando, Intendant of Customs of Guatemala and his counterpart in Honduras, was total rejection of the charge.
Abrupt escalation
El Nuevo Diario de Nicaragua: “Cargo Transport Paralyzed on frontiers” April 14
February 20
The Government of Costa Rica suspends the Markham charge until next April 3 to explain to the Panamanian transporters the scope of the measure, but the truck drivers continue the stoppage and do not lift the blockade, taking the question to the Central American Secretariat of Economic Integration (SIECA) to decide.
De-escalation
La Nación. “Businesses surprised by suspension of Markham Electronic”. Thursday March 2, 2006.
February 21
Conversations held with the Government of Panama because of truck drivers’ pressure. The Panamanian Ministry of Trade stated that the application of Markham violated regional trade agreements, caused loss to the transporters and did not respect the merchandise originating in the Colón Free Trade Zone and carried to Central America
De-escalation
La Nación. “Costa Rica and Panama have conversations on Markham Electronic”. Thursday March 21, 2006.
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February 24, 2006
The Vice Minister of Foreign Trade De-escalation Chargé of Panama, Miguel Ángel Clare and Daniel Delgado, Director of Customs of Panama, at the insistence of the National Chamber of Cargo Transportation (CANATRACA) took the case to SIECA and supported the Panamanian complaint that the device violated regional agreements
La Prensa Libre. “Blockade on the Panamanian frontier ended.” March 1
February 28
Dr. Haroldo Rodas M, Secretary General of SIECA, issues the resolution that the action of the Ministry of Finance and Directorate General of Customs on the placement of Markham Electronic, violated legal regional regulation and eroded the commitments that the Party States have assumed in such instruments.” The formal allegations presented by Central American transporters in regard to the creation, obligatory nature, responsibility, functioning and charge for the utilization of the Markham electronic customs seal that Costa Rica unilaterally put into effect in violation of community regulations were evaluated in their totality.
De-escalation
Central American Secretariat of Economic Integration (SIECA) Press Communiqué
March 2, 2006
The businesses Cenoclap de América Altec, S.A., GPS Satélite, S.A. and Markham Electrónico, S.A. were surprised by the suspension of Markham on the part of SIECA, which affirmed that this device is an obstacle to regional trade and if it were to be implemented it would have to be done by consensus and applied in all the Central American countries.
Escalation
La Nación. “Businesses surprised by suspension of Markham Electronic”. Thursday March 2, 2006.
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March 23 The National Chamber of Ship Builders and Steamship Agents questioned the effectiveness of the device due to the lack of a control office that could capture the signals and finally track the containers. The Chamber affirmed that the cost of Markham would go as high as 12 billion Colones and does not apply in other parts.
Smooth escalation
La República. “Ship owners against the Markham Electronic” March 23
July 3, 2006
Escalation
La República newspaper: “Markham Electronics fight will go to WTO” July 3, 2006
The Ministry of Finance did not discount appealing to the World Trade Organization (WTO) to validate the Markham electronic device as part of new customs regulations to stop evasion; the objective is to position the country as safe for the transit of merchandise.
DESCRIPTION OF CONFLICT The Government of Costa Rica establishes the obligatory nature of the use of the Markham Electronic in September of 2005; the Markham is a device managed via the GPS system (Global Positioning System) that, placed in the transportation unit, a Customs controlled container, for example, allows Customs to know the location of that container and track it through the system. The device is attached to the containers and its data show the velocity, the driver’s route and destination; this information can be consulted in real time; control can be exercised by the same means by various authorities such as Security, Traffic and Narcotics Control as well as by the private sector (including transporters, customs agents, importers and exporters); it can also offer better control over vehicles and their cargoes. 9
9
Periódico La República, “Lucha por el Marchamo electrónico iría a OMC”. 3 of julio of 2006.
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Transport units enter by ports or cross frontiers. When the importer decides not to pay the taxes at that moment it becomes necessary for the merchandise in that unit to pass through Internal Customs to be unloaded in a Customs Bonded Warehouse or any other oversight zone under Customs control. When transit is realized, certain conditions must be met, including: the transfer must utilize only qualified trucks, that is, trucks that have been previously authorized, as well as transit routes indicated for merchandise that has not paid taxes, in addition to which, transfer time, including driver rest periods, can be no more than a specified time limit. A report of the Comptroller General of the Republic determined that Customs had lost control of the “traceability� of those movements and its arrivals, in addition to the enormous amount of thefts and plundering that occurring during transit. This situation is not new in Latin America. There are various countries that have successfully applied selective control measures to such units and their trajectories, minimizing pilfering and the possibility of tax avoidance because it very much reduces the problem of transit, theoretically complying in time and manner, when the sender and recipient are in agreement. With
this
in
mind
and
parallel,
but
not
depending
on
the
implementation of the TICA system, it is implemented first in the Customs of Caldera. The first opposition arose from ship owners, transporters and customs agents due to the cost involved in using them, the amount varied
between
$40.00
and
$75.00.
The
ship
owners,
the
transporters and agents insist to this day that the cost should be covered by the state.
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Customs Management and Leadership. 4th Edition
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It is appropriate to emphasize that the Markham seal or strapping cost $15.00, before it was electronic, and it was distributed previously by the Association of Customs Agents. The Markham continued to be utilized selectively. On January 25, 2006, the Government of Costa Rica determined that its use will be obligatory in the transportation of cargo that transits national territory. The Markham Electrónico S. A. company has invested all the technology developed by the Sif América and EM Systems firms in order to implement the device in Costa Rica, but from the beginning of operations in September of 2005, to date only 520 electronic seals for containers have been sold, so that the results have not been profitable. The importer must pay US$40 for this device and charge the transporters 70 dollars between Paso Canoas and San José, and 100 dollars between Paso Canoas and Peñas Blancas 10. Costa Rica is a bridge for merchandise coming from or in transit through Panama for the local market and for the market of Central American countries. On February 15, 2000, protesting truck drivers, refusing to utilize the device, blocked access to the frontier between Costa Rica and Paso Canoas. The blockade affected all the cargo to and from Costa Rica and Central America. Negotiations were held between the Ministry of Finance (Customs) Costa Rica, the government of Panama and SIECA, without results. The Chamber of Transporters of Panama sent a letter to the Government of Costa Rica, joining the transporters of Costa Rica and Nicaragua, with a threat to begin its own blockade. 10
La Prensa Libre, “Protests began yesterday in Paso Canoas and Peñas Blancas: Importers obliged to pay Marchamo electrónico. February 16, 2006.
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The government of Costa Rica suspends the measure temporally but on February 27 the transporters of Costa Rica and the ship owners blockade Peñas Blancas. On February 28, SIECA (Central American Secretariat of Economic Integration) issued a pronouncement with respect to the lack of legal support for the device to be used in the Central American transit standards by only one of the countries and only allows that it could be used use after an approval by consensus. On February 28, at 4:30 p.m. the frontiers are opened to pass and Customs determines internally to suspend the use of the Markham. On March 3, the use of the electronic seal is suspended indefinitely by Resolution GA-151, at eight a.m. on March 3, 2006, published in the Diario Oficial La Gaceta No. 54 of March 16, 2006; the Director General of Customs resolves to suspend indefinitely the date for requiring the electronic seal for the transportation units destined to Costa Rica or in transit to other countries containing merchandise not originating in Central America entering through the Customs of Peñas Blancas and Paso Canoas, revoking resolution RES-GA-017-2006 of January twenty-five, 2006 and leaving without effect resolution GA119-2006 of February seventeen, 2006 11. But the Ministry of Finance does not discount an appeal to the World Trade Organization (WTO) to validate the Markham Electronic seal 12.
11 12
Diario Oficial La Gaceta. March 3, 2006 Periódico La República. “Lucha para el Marchamo electrónico iría a OMC”. July 3, 2006
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ANALYSIS OF CONFLICT A first analysis of the perceptions, positions, interests and necessities of the different actors is shown below: Actors
Perception
Positions
Interests
Necessities
Resources
of each one Customs of
The
Its use is
Eliminating
Cover
Resolutions
Costa Rica
Markham
obligatory
contraband
control voids
supported in
Electronic is
and
for lack of
Local
an effective
additionally
personnel
Legislation
control
it is not for
and
instrument
all cargo
collaboration
against
but only a
of
contraband
sample
authorities not empowered for the effect
Transporters
This is an
It is not
Not being
Rapid transit
The pressure
Panama
extra cost
put on and
subject to
and no
of
and we have
the cargo
control
delays or
interrupting
no reason to
does not
control
the passage
use this
enter. This
entering and
Markham
is an extra
leaving CR,
cost and is
Panama
someone’s business
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Customs Management and Leadership. 1st Edition
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Customs
This only
No
For the
Eliminating
Alliances with
agents
delays and
transporter
Markham
the controls
transporters
is not
should be
and TICA
by
and ship
effective,
obliged to
to be
supporting
owners
neither the
utilize it
eliminated
the free
against TICA
Markham
possibility
in general
nor TICA
of
serve for
contraband
anything Importers
This only
Make up
For the
Have its
Pressure
delays the
your mind.
cargo to
merchandise
Government
arrival of
I am not in
finally
on time
for losses, for
my cargo
favor or
arrive at its
without
not being
against, I
warehouses
damage or
able to
losses
import
only want my cargo SIECA
Markham
Issues
Protecting
Impose its
Resolution
involved
for third
resolution
the legality
regional
that is
third party
party
and rejects
of action
authority to
supported in
merchandise
the
help the
the
in transit is
measure
countries of
Legislation
not legal
adopted
CA 4
The
Make up
For the
Delver its
Pressure
situation is
your mind.
cargo to
merchandise
Government
delaying the
I am not in
finally
on time
for losses, for
exit of my
favor or
arrive at its
without
not being
cargo
against, I
warehouses
damage or
able to
losses
export and
Exporters
only want my cargo
because perishables were to be exported
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Multiple actors exerted their influence to satisfy their interests, as shown in Table 1. Each actor has clear objectives and wants to obtain the greatest advantage from its resources to attain them. Visibly, one can note that the biggest loser has been the Government of Costa Rica, who suppressed the Markham device under pressure originally from the transporters. They enlarged the scope of the conflict by the argument that an excessive payment of $100 on its cargoes threatened the permanence of their businesses on the market. This claim allowed other organizations and institutions to unite with the transporters who, with the aid of other governments and the SIECA, managed to declare the measure as illegal and abusive. Land transportation is the means par excellence for intra-regional trade activity and a price difference exists depending on the type of client, volume and average type of product $300 or $400 per container. These costs are transferred to the final consumer and are basically due to questions of security and do not cover the businesses. That first argument was easy to refute, but a frontal attack by the Government
of
Costa
Rica
was
never
observed
against
the
transporters, who did employ one, utilizing various instruments, and not being able to respond to open aggression in a relationship means ceding the initiative to the rival.
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These businesses’ profits are enormous, and applying a charge of US$100 per container as a measure of control to their merchandise is no threat to their finances. A 1999 study by the Latin American Center for Competiveness and Sustainable Development (LACCSD) of INCAE affirms that land transportation is the most economic modality for logistics. It determined that the tariffs of land fleets have surcharges between 60% and 130% with respect to charges in European countries for similar runs, but that trips take at least twice as long. Likewise, this industry generates annual income of US$3.8 billion 13. It is well-known that some actors in the conflict adopted a negative and hostile attitude toward the utilization of this satellite device because
they represented ulterior, illegal interests seeking to
continue controlling contraband activities. On the other hand, the conduct of the Government of Costa Rica reflects the attitude our society displays under situations of pressure, affecting
its
performance
and
function.
It
prefers
to
avoid
confrontation rather than assume the challenge of confrontation in order to avoid unknown implications, although the illegality and the illegal interests are known ahead of time. We must analyze this mentality in order to try to stir up a consciousness for examining the actors, and conduct a retrospective that determines the reasons for its reactions to avoid this measure that will undoubtedly benefit the improvement of the logistical process of cargo transportation in the region.
13
Actualidad Económica. “Centroamérica con una logística de Tercer Mundo [Central America with Third World logistics].”
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The application of the electronic device motivates the rejection behavior of the Panamanian and Costa Rican transporters, who seek to avoid controls on contraband merchandise mostly from the Colón Free Zone, the distribution center for merchandise for the majority of the countries of Latin America and Central America. “Finally, these big importers gave their support (to the electronic device) because of the fact that they had enormous problems with the loss of merchandise and at the same time they saw the opportunity to increase productivity and determine where the dead times were generated in their fleets in order to eliminate them,” said Ronald Garita, Legal consultant of Project TICA 14. The book, “Mediación y Solución de Conflictos [Mediation and Conflict Solution]” from the publisher Tecnos, page 39, cites Cycle of Conflict phases and it is curious to see that in this case, in spite of its multilateral nature, that sequence is maintained and applies: phase 1: Attitudes and Beliefs, the behavior models of bosses, managers, government coordination agents, etc; we develop in a culture permissive of corruption, contraband and tax evasion, phase 2: The conflict: the putting in practice of denial by the majority of actors who think and believe that their interests are going to be affected and begin to fight to show who has the most power and who has the capacity to exert pressure in such a way as to provoke the fall of the stone wall imposed and finally escalation or de-escalation of the forces and intensities of power,
14
Interview: Ronald Garita, TICA Project Consultant
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phase
3:
The
response:
as
Module 5
is
customary
because
of
our
idiosyncrasies, the actors respond in the same manner to any type of conflict, the transporters opt to keep the blockade in Paso Canos closed for more than 10 days, the Costa Rican Government to keep charging for the device in national territory, the businesses to providing the product and the service to exerting pressure to continue to apply the device. Supported by related articles in the General Law of Customs, the other actors also showed their responses before the beginning of the conflict when the Markham Electronic device was put in place, phase 4: The result: at this point the third party with the juridical capacity to dictate a resolution intervened. That was SIECA (Diario Oficial La Gaceta, Page 54 of March 16, 2006). “In conclusion, in the conditions provided, the measure Costa Rica adopted, which was applied to merchandise coming from third parties and to original merchandise when consolidated with merchandise from third parties, violated the regional juridical regulation and eroded the commitments that the Party States have assumed in such instruments.� That undoubtedly revealed the dominating power, generating impact, control and influence over the other actors merely by making a decision, provoking the creation of a cognitive bias that derives from the decision. Intervention was now imposed on a level above negotiation; negotiation options were obsolete. A decision was taken to which the government of Costa Rica owed obligatory respect. The results being unbalanced, the power relationship behaves in the same manner, leading to a zero sum negotiation (I lose – you win), although there did exist a moment for the Government of Costa Rica to apply a variable sum negotiation, negated by the
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Ministry of Finance’s failure to act at that time to create a consciousness in public opinion of the necessity for this device. Public support was so scarce that when the Government wanted to react the pressure and the counterparty’s threat was such that it made the less risky decision. The brake on the motivation of the Costa Rican State to disagree with the SIECA ruling was due to learned defenselessness, often produced by prior experiences that the more we try to change the course of action the more it maintains the same direction, efforts to change it being in vain. Contrary to the preceding explanation, the state by means of the National Customs Service has weighty reasons to think, believe, support and maintain that the Markham Electronic device can be advantageous. That is shown by reports from the comptroller General of the Republic that approximately 17,000 containers did not arrive at their destination during the past year after leaving some port. That statistic would have decreased if efficacious modern mechanisms that control the transit and transportation of merchandise had been utilized, considering the existence of a regulation dictated by the WTO approving the use of these devices. In this conflict, various concepts exist quite connected to the imbalance of power that help to define more clearly the nature of power and permit orienting third party (SIECA) interventions in the conflict. This third party has implications of a referee taking third party advantage, due to the fact that the majority of its members belong to countries that do not desire any type of destination control of its containers in order to profit from contraband situations.
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The motive of power in a process underlying conflict tends to become another conflict, the juridical hierarchy that supports SIECA is its shield to defend itself and justify the decision taken to suppress the use of Markham Electronic. On the other hand, the disobedience of the land transporters and the ship owners in objecting to paying for the device led to a blockade of more than 10 days and thousands of losses by the region’s exporters and importers. On the last day of the strike, in Paso Canoas, where the escalation of conflict led by the conduct of its actors, the lines on of both sides of the frontier passage amounted to more than 700 containers. This is the culminating point of the conflict escalation, and no group supports or remains at the maximum point; either the levels are lowered or extreme situations define the differences, so the Government of Costa Rica opted to give up. Lic. Garita is acquainted with the internal problems of SIECA and the institution’s opposition to better customs control mechanisms. “The small advance toward the beginnings of development of a Central American customs system is due to the fact that SIECA is an agency that looks toward the past and that it is the principal part of the problem, in addition to maintaining a traditional or ancient idiosyncrasy on the administration of customs, which is opposed to all customs modernization models.” Pressure provoked this regional agency to put aside the interests it represented and exercise legal pressure that obliged the Costa Rican government to eliminate the charge and utilization of this satellite control apparatus even though the superior instance of the WTO exists. The Government of Costa Rica did not exert the pressure and influence required to generate awareness for the application of Markham Electronic.
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CONCLUSIONS •
The conflict was negotiated with a zero sum (lose or win) solution, where imposition was the instrument of pressure applied between actors who had arrived at a dead point in the negotiation; the intervention of a third party was utilized to define the conflict.
•
The Government of Costa Rica did not undertake adequate management of the implementation of Markham Electronic because it applied a measure without previously negotiating with the region, which increased the scale of the conflict.
•
The Ministry of Finance did not know how to channel the reports of the importer and exporter sectors, which showed large problems in the security of their merchandise.
•
The transporters, although in theory constitute the weakest group, energized coalitions favorable to their interests by exerting force and influence.
•
The Ministry of Finance gave in to the pressure from SIECA without seeking alliances to generate alternatives to the definition of the conflict.
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JURIDICAL OPINION ON THE APPLICATION OF MARCHAMO ELECTRONIC ON THE PART OF THE GENERAL DIRECTORATE OF CUSTOMS OF COSTA RICA IN INTRAREGIONAL CUSTOMS TRANSIT
INTRODUCTION The General Directorate of Customs of Costa Rica, by Resolution RES GA-017-06, decided on the obligatory use of electronic seals, effective February 15, 2006, applicable to the transportation of cargo that operates through customs in Peñas Blancas and Paso Canoas. The application of that measure provoked the protests of the transporters and congestion in the Customs of Paso Canoas, the frontier of Costa Rica with Panama. That triggered a bilateral meeting of the authorities of Panama and Costa Rica, held on February 20, in which various agreements were reached, including the suspension of the measure until April 3, 2006 and a schedule of bilateral meetings between March 27 and 31, 2006. At the aforementioned meeting the juridical opinion of SIECA was asked with respect to the legitimacy of the measure under the pertinent articles of the Regulations of the International Land Transit Customs Regime, which rules this matter and to which Panama is a party. Also, by means of official document No. VICOMEX-No. 068-06 dated February 23, 2006, the Vice Minister chargé of Foreign Trade of Panama requested that SIECA make a technical juridical analysis in an effort to resolve this problem.
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SIECA, which has the responsibility of overseeing the correct application of the General Treaty on Central American Economic Integration at the regional level and all the other conventions written or that come to be written between the Contracting Parties with the object of Central American economic integration and execution of the decisions of the organs of the Economic Subsystem, in conformity with article XXIV of General Treaty on Central American Economic Integration and with article 28 of the Protocol of Tegucigalpa to the ODECA Charter, issued its decision in the following terms. MEASURE APPLIED BY COSTA RICA The General Directorate of Customs (GA) of Costa Rica, an agency of the Ministry of Finance, in resolution RES-GA-017-06, dated January 25, 2006, decided to require transporters who carry out operations in the Peñas Blancas and Paso Canoas Customs to utilize an electronic seal on one hundred per cent of the transportation units with the purpose of to transiting customs or transferring
merchandise
through
customs.
This
measure,
according to that Resolution, was applicable as of February 15, 2006. The same Resolution says: “In cases in which the totality of cargo transported in the same transportation unit corresponds to originating merchandise and therefore supported on a Central American Single Customs Form and a Declaration of International Transit (DTI) established in Central American Transit Regulations, the security device indicated in this resolution will not be required.”
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The Resolution of note has its juridical foundation in articles 130 bis and 130 ter of the Regulations of the General Law of Customs; as well as in the single transitory article of Executive Decree No. 32456-H of June 29, 2005, both national laws of Costa Rica. According to consideration II of the aforesaid Resolution, article 130 bis says that transportation units that are mobilized within national territory with merchandise under customs control must utilize electronic seals in order to guarantee the secure condition of the merchandise and comply with the regulatory standards of such mobilizations. Therefore, article 130 ter, makes the auxiliary of the public function customs (the transporter) responsible for the
installation
and
adequate
use
of
the
electronic
seal,
independent of the physical or juridical person who materially executes the mobilization. For its part, the single transitory paragraph of the Executive Decree mentioned above, says that the use of the electronic seal will be implemented gradually in conformity with provisions of general scope issued to the effect by the GA and published in the Diario Oficial. According to the Ministry of Finance of Costa Rica, the Markham is an electronic device that permits monitoring the direction taken by the containers, the route followed and the velocity with which they advance on digital maps; it attempts to avoid contraband and is a part of the TICA (Information Technology for Customs Control) system changes.
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REGIONAL JURIDICAL PROVISIONS Article XV of the General Treaty on Central American Economic Integration provides, in the first paragraph, that each one of the Party States shall maintain full freedom of transit through its territory for merchandise destined to any of the other Party States or proceeding from them, as well as for the vehicles that transport such merchandise. In those same terms, this principle is regulated by paragraph 2 of article 28 of the Protocol to the General Treaty of Economic Integration (Protocol of Guatemala) that states: “2. In consequence, the Party States shall maintain full freedom
of
transit
through
their
territories
for
the
merchandise destined to any of the other Party States or proceeding from them, as well as for the vehicles that transport such merchandise. ‌� The principle of free circulation of the merchandise includes two large components, on the one hand, for merchandise originating with the Party States or third parties, and on the other, for vehicles that transport or transfer that merchandise through the territory of the Party States. The Regulation of the International Customs Transit Regime approved by Resolution No. 65-2001 (COMRIEDRE), says in article 1 that its object is to facilitate, harmonize and simplify procedures utilized in international customs transit operations. With respect to the scope of application of that same article 2, it states that the transportation of merchandise in international customs transit through its territory shall be authorized:
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“a) from a customs of dispatch of a signatory country to a customs of destination of another signatory country; b) from a customs of dispatch of a signatory country with destination to a third non-signatory country in transit through one or more signatory countries other than the customs of dispatch� 15. The matter of customs seals is particularly developed in Chapter V, in Articles 15 to 18 of the Regulation of note, which, in the pertinent part provides the following: Article 15. Customs seals shall be acquired by the Customs Service of each signatory country or by institutions or persons authorized by them in conformity with the model approved by the superior customs authority of the signatory countries and its cost shall be covered by the interested party. Article 16. Customs seals attached in the Customs of dispatch of a signatory country shall be accepted by the rest of the signatory countries as if they were their own during the entire international customs transit. Article 17. Customs seals must have at least the following general characteristics: a) Be resistant and secure; b) Be capable of being installed rapidly and easily; 15
For the effects of this analysis, it is also appropriate to leave clearly established the definitions of the following Concepts: Customs of Dispatch is the customs of a signatory country that authorizes the beginning of an operation of international customs transit (article 4, letter a). Customs of Destination is the customs of a signatory country, where an operation of international customs transit ends or finalizes (article 4, letter b). Customs seal is the device that permits customs to effectively control the security of the merchandise (article 4, letter l). International Customs Transit is the customs regime under which merchandise is transported under customs control from a customs of dispatch to a customs of destination in one single operation, in the course of which it crosses one or more frontiers (article 4, letter m).
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c) Be capable of being controlled and identified easily; d) Be incapable of removal without being broken or having irregular manipulation applied without leaving signs or indications; and, e) Be incapable of being utilized more than one time. “Without prejudice to the provisions of the preceding paragraph, the National Customs Services will be able to authorize the utilization of seals provided with electronic security devices.� Likewise, in the same Resolution 65-2001 (COMRIEDRE), the Council of Ministers established a reciprocal, non-discriminatory treatment mechanism for the international customs service of land cargo transportation that includes full freedom of transit through their territories for the land cargo transportation of merchandise coming from or destined to any of the Member States. In addition, COMIECO in Resolution No. 81-2002 (COMIECOXVIII), reiterated the necessity of applying and respecting the Regulation of the International Customs Transit Regime in its totality, emphasizing that that Regulation occupies a place above national laws, above acts with the value of law, above the decrees and regulations of Executive Branch and above any others standards
or
administrative
provisions
subordinate
to
the
regulations of the countries that have signed it.
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ANALYSIS JURIDICAL The General Treaty and the Protocol of Guatemala are the principal juridical instruments guiding the process of economic integration, the result of the Party States’ integrationist policy, by means of which they assume commitments to each other on the subject that constrain compliance with it. The Protocol of Guatemala (article 1, letter d), says that the process of economic integration can be developed by means of complementary or derived instruments; and in conformity with the article 36, economic integration is encouraged and perfected by acts of the competent agencies; that is by administrative acts issued by the Council of Ministers, as the only regional agency competent to make decisions affecting the connection between the Party States. Within that framework of delegated competency, the Council of Ministers approved the Regulation of the International Customs Land Transit Regime, so that the Regime has evolved legitimately and consequently its application and compliance is obligatory for each and every one of the Party States 16.
16
This Regulation has a very atypical characteristic because it was approved by the Council of Ministers Responsible for the Economic Integration and Development Regional (COMRIEDRE) on the basis of Article 18 of the Protocol of Tegucigalpa, that created the Central American Integration System (SICA) of which Panama is a party. The commitments derived from this regional juridical instrument have the same effects for all the Member States.
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The Party States have created a regimen of international merchandise
overland
customs
transit
in
this
document
characterized by the facility conceded between them, harmonizing the
measures
and
requirements
and
simplifying
customs
procedures. Merchandise is admitted under this regime and can circulate through the customs territory of each of the Central American countries without being subjected to regular inspections and payment of the duties and taxes required at transit locations. It is worthwhile to add that the aforesaid preferential regimen is not limited to merchandise originating in the Regulation Party States, but is also applicable to merchandise originating in third countries. That means, according to article 2 of the Regulation, that merchandise originating in the Party States enjoys the benefit of said regimen, as does merchandise originating in third countries so long as its transit begins in a Party State, that is, no merchandise from third states is excluded because of its origin. However, the measure adopted by the General Directorate of Customs of Costa Rica applies to the merchandise of third parties and to merchandise that originates in Party States as well when that merchandise is consolidated with third party merchandise. The commitment contained in article 2 of the Regulation, being contained in an instrument derived from an economic integration process, has full value and juridical force, so that, on the one hand, the States cannot avoid its application; and, on the other, the other Parties have the right to insist on its due compliance.
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With respect to the obligatory force of the acts of the Council of Ministers and the position they occupy with respect to national laws, Resolution No. 81-2002, cited above, emphasizes that the Regulation is positioned above national laws, the acts with value of law, the decrees and regulations of the Executive Branch and any other standards or administrative provisions subordinate to the regulations of the countries that have signed it. In the case of Costa Rica there exists jurisprudence dictated by the Constitutional Panel of the Supreme Court of Justice that declares that Central American community law prevails over internal law. In the case of the unconstitutionality of Section 1015 paragraph a) of the Regulations of the Uniform Central American Customs Code, that Constitutional Panel said: “The Court establishes that RECAUCA is not a simple regulation, but that it is a case of a community standard that occupies a site within the sources of law higher than legal, since it derives from a normative body that conforms to article 7 of the Political Constitution it has a range superior to the law. The act of reception or incorporation to internal law does not afford that quality to the standard, but it should not be lost to sight that it is a case of community law standards and its range is supralegal. (…) It is clear, then, that the standard (…) has a range superior to internal law and therefore it does not fail to comply with the principle of legality…”
17
17
SIECA. Repertoire of Interpretation of Central American Economic Integration Law. Guatemala, Ediciones Superiores, 2005, Pages. 186-187.
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In regard to what properly refers to the obligatory use of the electronic seal, it is appropriate to state that article 16 of the Regulation, transcribed above, is outstanding for its clarity and weight, the commitment that a customs seal placed in the Customs of Dispatch must be accepted by the customs authorities of the other signatory countries as if they were their own 18 and that provision is not limited to the originating merchandise, but includes the merchandise of third parties, so long as it fulfills the conditions that the same Regulation establishes. The Government of Costa Rica, by means of Resolution RES GA 017-06, is not only unilaterally imposing a customs seal not provided for in the Regulation, but in addition to that, makes a case of omission of the seals that have been placed on the means of
transportation
by
other
countries,
that
serve
for
all
international declared customs transit in the DTI, which is a violation of the letter and spirit of article 16 of the respective Regulation. For an appropriate interpretation of the last paragraph of article 17 of Regulation, which would appear to contradict the purpose and objective of the Regulation, one should analyze it in congruence with article 16 and in the context of the Transit Regimen Regulation. Said paragraph says: “Without prejudice to the provisions of the previous paragraph, the National Customs Services may authorize the utilization of seals provided with electronic security devices.� 19.
18 19
The underlining is from SIECA. The underlining is from SIECA.
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The foregoing means that, in application of article 15 of the Regulation under analysis, the customs service of each country can approve among its model customs seal requirements one that is provided with an electronic security device, but those seals will be used only for transits that have a customs of dispatch of that same
country.
Otherwise
it
adds
another
requirement
to
international customs processing and violates article 16 of the Regulation. In light of the Regulation’s objectives, none of Regulation’s provisions are conceived to permit adopting measures that are an obstacle to facilitation or harmonization and make international customs transit of merchandise more difficult. If that were so, it would have to be null because it violates superior standards contained in the principal juridical instruments of economic integration and opposes the attainment of the purposes and objectives they seek. An appropriate interpretation of that paragraph of article 17 leads us to the conclusion that, with the object of improving or permitting effective and more certain control by customs, the customs
services
incorporating
can
improve
their
seals,
present
seals
technology to those devices, but in a harmonized
manner with the rest of the Party States and congruent with the commitments acquired, in such a way that each one of the countries can place its seals with electronic devices, which must also be accepted in the same manner as their own by the others, and
the
accounting,
the
monitoring
and
control
of
the
merchandise can be implemented by each and every one of the Party States.
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In the same manner, a Party State could incorporate additional control devices to those provided for in the Regulation, so long as they do not increase obligatory regulatory requirements and do not redound to increase the time and cost of the customs processing of merchandise transportation. In conclusion, in the conditions provided, the measure adopted by Costa Rica applied to merchandise coming from third parties and to originating merchandise when consolidated with merchandise from third parties violated the regional juridical regulation and eroded the commitments the Party States have assumed in such instruments. General Directorate of Juridical Affairs. Central America, February 28, 2005.
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