National Innovative Capacity: Charlene Barshefsky - Case Study Example

? Charlene Barshefsky Case Analysis Table of Contents Table of Contents 2 Question Executive Summary 3 Question 2 3 Question 3 4 Question 4 5 Question 5 6 Question 6 7 Question 7 7 Question 8 8 Reference List 10 Question 1- Executive Summary In this paper, the researcher will analyze the case study related to cross cultural negotiation challenge faced by Charlene Barshefsky while dealing with intellectual property rights (IPR) issue between USA and People’s Republic of China. This paper will detail the intellectual property rights (IPR) and other pertinent negotiations took place during mid-1990s between the USA and the People’s Republic of China. The researcher will take a conjectural view to summarize the key issues in the case and negotiation barrier faced by Charlene Barshefsky while dealing with the negotiation process. Using analytical framework to view the key issues and complexity of the case, the researcher will try to justify Charlene Barshefsky’s actions and suggest some alternate approaches to view the problem. This case is all about complexities regarding trade and cultural negotiation process hence the researcher will not try to give any subjective viewpoints which might spoil the purpose of the case. Recognizing multiple aspects of the case such as coalition building approach, bilateral dealings, “barriers” to agreement etc will be key features of the discussion. This piece of work will also try to understand the actions taken by respective authorities in the case in order to facilitate protection of intellectual property rights (IPR), improvement of IPR policy of People’s Republic of China and address human right issues. In the least part of this paper, the researcher will summarize the personal learning output from the case. Question 2 Research scholars such as Shapiro (2001) and O’Donoghue and Zweimuller (2004) have classified IPR as a pretty much sensitive issue when it comes to negotiating between countries. The case sheds light on International trade negotiations between China and USA in context to intellectual property rights (IPR) violation. According to the case, during mid 1990’s, USA accused China for its poor standard of IPR law which gave the opportunity to pirates to counterfeit and illegally copy entertainment and software products of USA. In 1993, USA representatives reported that Chinese pirates counterfeited USA entertainment products such as DVDs, movie CDs, software and exporting pirated CDs, DVDs to South Asian and North American countries. Such level of piracy and counterfeiting had negatively affected the trade relationship between USA and China and also decreased the market share of IPR products of USA. The case is presented from the perspective of Charlene Barshefsky who was then then-Deputy United States Trade Representative (USTR) and was responsible for handling the negotiation process. In the first part, the case discusses about the challenges and barrier of negotiation faced by Charlene Barshefsky while the second part of the case study, discusses about strategic intervention used by Charlene Barshefsky and her team members to deal with the situation. However, the case is more about trade agenda regarding cross cultural negotiation process and intellectual property right issue rather than description of tariff and non-tariff obstacles related to free trade. According to the case, key assignment for Charlene Barshefsky was to offer or formulate viable strategy for establishing new intellectual property rights agreement with Chinese government. The case also underlines alternatives such as initiating Section 301 which is a unilateral action and multilateral approaches such as working as joint force with other countries to improve the IPR standard in China. Question 3 Hulse and Sebenius (2003) pointed out that working as USTR was a challenge for Charlene Barshefsky which she had taken in positive manner. She had understood the fact that she could not get the support of USA government unless make the IPR violation in China as domestic issue of interest. While presenting the case study, Hulse and Sebenius (2001) gave importance on cross cultural aspect of negotiation process. Although there were four verticals of the proposed strategy by USTR such as, 1- creating domestic need for the negotiation, 2- involving White House and Congress, 3- creating U.S. allies and 4- coping up with cultural negotiation style of China but the researcher will only discuss about the fourth aspect. Barshefsky had taken a four phase mechanism to cope with the negotiation process in China and the four phase mechanism can be elaborated as; Formulated a prolonged, “educational” process in order to frame IPR regime as advantageous option for China. Another thing is that, Chinese bureaucrats prefer to negotiate for long duration of time in order to create room for flexibility hence prolonged educational process was in line with Chinese cultural context (Hulse and Sebenius, 2001). Communicating with Chinese bureaucrats in frequent manner in order to minimize the perceived intrusiveness and the process helped Charlene Barshefsky and her team to understand Chinese culture in better manner. Aggressively gathering information and creating diplomatic thrust for all the relevant provinces of China beyond its capital and communicating the benefits of IPR regime with the help of Chinese government (Hulse and Sebenius, 2001). Question 4 Sebenius (2000 & 2002) emphasized heavily on the value and sustainability of a negotiation process while Chinese research scholars such as Wei and Liu (2006) stressed on the fact that negotiating in China is subjected to both micro and macro environmental factors such as government policy, cultural orientation and legislative functions. In such context, the study has identified following barriers for USTR to reach an agreement regarding IPR negotiation with China. Barrier-1 (Chinese opposition) According to Hulse and Sebenius (2001), Chinese government was the most prominent barrier for IPR protection because Chinese government vehemently opposed USTR’s advice to change the IPR regime of the country. The government was not ready to hear any plea of USTR which made it difficult for Barshefsky to establish coalition with them. All the predecessors IPR agreement proved to be futile and inert due to non-cooperation and Chinese government hence there was high chance of failure for any future IPR negotiations. Barrier-2- (U.S. interests) According to the case, US diplomats give more importance to political issues like Chinese missile sales to other countries in contrast IPR violation in China, which was perceived by human rights group as “low-level commercial considerations” (Hulse and Sebenius, 2001). Negotiating with China regarding piracy of CDs and counterfeiting was viewed as waste of negotiating capital by different advocacy group in the country. Barrier- 3 – (USA Business Community) Although core industries like movie industry, recording division etc viewed IPR violation in China as serious issue and USTR should take stance while manufacturing sector of USA which was largely dependent on its Chinese supply viewed IPR violation for entertainment products as minor issue (Brownstein, 1997). According to majority of industry big players such as Ford, GM etc, creating rigid IPR negation regime with china would reduce their growth margin hence they opposed the lobbying for stronger IPR regime (Hulse and Sebenius, 2001). Question 5 Research scholars such as Shiva (2000) and Mushita and Thompson (2002) defined IPR as the artefact of industrialisation hence it can be surmised that improving IPR regime in China is linked with the industrial interest of USA. By mid-1995, USTR had convinced Chinese negotiator to sign deals after 8 month long negotiation process. The study will only focus on direct negotiation of Charlene Barshefsky with Chinese negotiators in order to frame IPR regime as the deepest concern for China. The USTR visited China many times and met with Chinese officials for long duration of time and communicated the fact that China would never realize its dream to become a technologically developed nation without creating a strong IPR protection regime. Barshefsky convinced Chinese scientists that without protecting its IPR for newly invented technology, the industrial frameworks of China would always have the risk of getting counterfeited. Such rationale had helped Barshefsky to convince Chinese negotiator that IPR protectionism is more important for China for its self development. Another thing is that, China long desired to become member country of World Trade Organization (WTO) and achieve the seal of MFN (Most favoured nation) as part of the membership. But, at that time China was disregarded from the membership of WTO due to its inconsistent foreign trade policy with respect to WTO principles. USTR took the urge of China to become a member country of WTO as the opportunity and lured Chinese negotiator to sign the IPR deal which would help them to achieve both MFN and WTO membership. In this way, USTR managed to convince Chinese negotiator to address main problems (Hulse and Sebenius, 2003). Question 6 Brandenburger and Nalebuff (1996) agreed with the fact coalition building plays vital role in those negotiation scenarios, where unilateral approach is not sufficient to direct the direction of the deal. According to the case study, piracy and counterfeiting in China had not only affected the interest of USA but also negatively affected the trade relationship between China and other counties such as Japan, UK and other European countries. Hence, it was an opportunity for USTR to form coalition with international community to lobby for strong IPR protection regime in China and reduce opposition from international community regarding threatened sanctions (Hulse and Sebenius, 2003). Historical evidences are showing that, predecessor IPR negation between China and USA failed miserably due to lack of strong initiatives from both the countries. In such context, coalition became the obvious choice for USTR to make the piracy and counterfeiting in China an international issue of concern and enhance the strength of the IPR negotiation scheme. In the initial stage, Hong Kong opposed the coalition based negotiation of USA because the country acted as the channel for export of pirated products from China and signing an IPR stance would negatively affected its market economy. USTR attracted Hong Kong to form coalition by making them understand the fact that re-exporting Chinese counterfeited goods would decrease their economic and technological competitiveness in long-term manner while taking stance against IPR violation in China would improve their international credential and economic competitiveness. Above mentioned examples are showing that how Barshefsky used different means to build coalition between USA and international community regarding IPR negotiation with China. Question 7 Eminent research scholars such as Eicher and Cecilia (2008) and Furman et al. (2002) pointed out that national competitiveness can be increased by ensuring the restoration of IPR. However, the case was all about cross cultural negotiation but outcomes of this negotiation are related to national competitiveness theory of Furman et al. (2002). Although both USTR and Chinese negotiator reached the agreement but it was challenge for both sides of negotiations to implement the recommended measures. The First Deal Throughout the negotiation period, USTR formulated a Chinese action plan as part of its “special enforcement period” for 6 months in order to implement all the recommended measures by Barshefsky. Throughout this period, USA and China consulted in regular interval regarding the reduction of piracy in different regions of China. The six month process was ended on August 31, 1995 and after the six months; USTR measured the improvement the piracy and counterfeiting situation in China. In the first deal, USTR emphasized on enforcement measures such as construction, destruction and prosecution while the stance had changed in the second deal (Hulse and Sebenius, 2003). The Second Deal In the second phase of the implementation (May, 1996), IIPA and USTR officials visited Beijing and found that Chinese enforcement measures were not up to the mark to reduce level of piracy and IPR violation in the country. In such context, USTR reinstated to initiate the section 301 measures as part of IPR abuses against China. Barshefsky and her team again started giving pressure on Chinese government to close the illegal factories located in Guangdong and prepared an extensive list of Chinese factories counterfeiting products. Question 8 To be precise, the case was an excellent example how cross cultural deal should take place and how negotiators can overcome trade and negotiation barriers. I have learnt specifically three things by going through the case and these three things can be summarized as; One has to understand the cultural orientation, political scenario, legal system and existing negotiation style of a particular country while planning to negotiate with the country regarding uni-lateral or bi-lateral trade or IPR negotiation with that country. In necessary situation, negotiator has to form coalition with international community in order to increase pressure on other countries or even take help of lobbying for protecting self interest. Implementing the necessary steps discussed in the deal as important as to establish the deal with opposing group of negotiator and in necessary cases, the negotiator should take proper actions to monitor the outcome of implemented recommendations. Reference List Brandenburger, A. M. and Nalebuff, B. J., 1996. Coopetition. New York, NY: Currency Doubleday. Brownstein, R., 1997. Master dealmaker faces test at home. [online] Available at: [Accessed 24 June 2013]. Eicher, T. and Cecilia, G. P., 2008. Endogenous strength of intellectual property rights: Implications for economic development and growth. European Economic Review, 52(2), pp. 237-58. Furman, J., Stern, S. and Porter, M. E., 2002. The determinants of national innovative capacity. Research Policy, 31(6), pp. 899-933. Hulse, R. and Sebenius, J. K., 2001. Charlene Barshefsky (A) and (B). [online] Available at: [Accessed 24 June 2013]. Hulse, R. and Sebenius, J. K., 2003. Sequencing, Acoustic Separation, and 3-D Negotiation of Complex Barriers: Charlene Barshefsky and IP Rights in China. [online] Available at: [Accessed 24 June 2013]. Mushita, T. A. and Thompson, C. B., 2002. Patenting biodiversity? Rejecting WTO/trips in Southern Africa. Global Environmental Politics, 2(1), p. 65. O’Donoghue, T. and Zweimuller, J., 2004. Patents in a model of endogenous growth. Journal of Economic Growth, 9(1), pp. 81-123. Sebenius, J. K., 2000. Deal making Essentials: Creating and Claiming Value for the Long Term. Boston, MA: Harvard Business School Publishing. Sebenius, J. K., 2002. International negotiation analysis. in V. Kremenyuk, editor. International Negotiation: Analysis, Approaches, Issues. 2nd ed. San Francisco, CA: Jossey-Bass, Ch. 14, pp. 229–252. Shapiro, C., 2001. Navigating the patent thicket: Cross licenses, patent pools and standard setting. Innovation Policy and the Economy, 1, pp. 119-50. Shiva, V., 2000. North south conflicts in intellectual property rights. Peace Review, (12.4), p. 501. Wei, Y. and Liu, X., 2006. Productivity spillovers from R&D, exports and FDI in China’s manufacturing sector. Journal of International Business Studies, 37(4), pp. 544-57. Read More