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The Negotiations of a Tax Agreement between Switzerland and Germany

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Misha Nagelmackers-Voinov

Conclusion

Texte intégral

  • 210 Peter B. Evans, Op. cit., p. 430.
  • 211 Peter B. Evans, Op. cit., p. 397.

1Negotiating a tax agreement between Switzerland and Germany has appeared to be neither a purely domestic nor a purely international matter and as a consequence, both “national and international affairs are somehow linked.”210 “International negotiations are not either simply about relations between nations. They are also about the distribution of cost and benefits among domestic groups as well as domestic opinion being divided on the best way of relating to their external environment. […] They are also a double-edged process in which every actor tries to take into account expected reactions on both the domestic and international levels.”211 Putnam’s metaphor of two-level logic fits the case of these Rubik negotiations and offers useful guidance to clarify and understand strategies or hypothetical tactics of the Swiss and German chief negotiators and their teams.

  • 212 Andrew Moracsik, Op. cit., p. 9.

2However reality as it appears in the negotiations of this tax agreement between Switzerland and Germany turned out to be much more complex than implied by Putnam’s two-level game metaphor. While it filled the gap by combining the impact of domestic and international factors on international bargaining, the question became no longer “whether to combine domestic and international explanations into a theory of ‘double-edged’ diplomacy, but rather how best to do so.”212

  • 213 Cédric Dupont, “Domestic politics and International Negotiations: Comparative Models of Strategic B (...)
  • 214 Andrew Moracsik, Op. cit., p. 14.

3There are a number of circumstances that can affect a win-set and Putnam’s metaphor has been enriched by a considerable amount of academic research using game theory. It is the interaction between the size of the domestic win-set and other explanatory factors – such as the type of actor, the importance of the agreement for constituents, the balance and distribution of power during the ratification and approval process, its timing as well as possible coalitions amongst constituents, the political game of negotiators and other actors, or their power of agenda-setting – that influence the domestic win-set and determine the success or failure of a negotiation. For instance, domestic constraints213 – actual, perceived or pretexting constraint as a bluff – can impact the outcome of a negotiation, depending on the type of actor at play – and the nature of the constraint. Likewise, “domestic constraints on policy-makers depend not only on group calculations of interests regarding costs and benefits, but on their political influence and incidence, particularly as “they are not free to conclude any international treaty”214 without some form of institutional approval.

  • 215 W.R. Clark, E. Duchesne & S. Meunier, “Domestic and International Asymmetries in United States–Euro (...)
  • 216 Ibid., p. 74.

4The definition of Clark, Duchesne and Meunier215 regarding structural determinants of bargaining power also offers an interesting addition to Putnam’s ground breaking two-level game metaphor. These determinants could mainly be of two kinds: market related and security related. “Structural power appears to be an inadequate predictor of outcome when it is not used in conjunction with other explanatory factors, such as the skills of the negotiators, the nature of the discussion, the possibility of cross-issue linkage (…) as well as domestic variables such as electoral cycles, changes in domestic coalitions and interest group pressure.”216

5Derived from game theory, the two-level game metaphor is a useful tool for strategic decision-making. However, critics have pointed out its abstraction and the fact that players are assumed to be fully rational. However, they are engaged in a strategic interaction between rational players that behave as individuals. Economists have also raised criticism regarding the ability of game theory to describe reality because its formalism is too restrictive to take into account the complexity of reality.

  • 217 Cédric Dupont, “Domestic politics and International Negotiations: Comparative Models of Strategic B (...)
  • 218 Ibid., p. 34.

6Game-theoretic tools used in bargaining models, build formal theoretical models of social interactions, simplifying real events.217 They constitute a powerful tool when translated mathematical terms, even if models running in a logical way can probably better describe (positive approach) than predict (normative approach). They can help determine the expected outcome for a given situation and can also be useful to analyze or investigate strategy dilemmas. “Negotiations between actors are represented by a set of rules and preferences which constitute the bargaining game, and the game is then solved for its equilibrium.218

  • 219 Robert D. Putnam, with Robert Leonardi & Raffaella Y. Nanetti, Making Democracy Work: Civic Traditi (...)
  • 220 Prof. Dr. Bernhard Ehrenzeller, Professor of Public Law, University of St. Gallen.

7The notion of two-level games à la Putnam relies on the dominance of States with the State negotiator being the pivotal actor in both games. Since the publication of his two-level game metaphor to international negotiation, Robert Putnam did argue that non-political organizations in civil society were vital219 as they build social capital, trust and shared values, which are transferred into the political sphere and help to hold society together. Citizens have become increasingly involved in policy setting, either through non-governmental organizations, pressure groups and civil society at large, increasing citizen demands on the government and closing the gap between political authorities and the public. As a result, foreign policy is becoming more and more an integral part of the domestic decision-making process. The tendency is “domestication of international policy.”220 In parallel, classical diplomacy – traditional structure involving State actors, bilateral process and narrow agenda – is disappearing, while almost all major domestic political agendas are becoming an issue of foreign politic.

  • 221 Joseph Schumpeter, Capitalism, Socialism and Democracy, New York: Harper and Row, 1956, chap. XXI.
  • 222 Jean-Jacques Rousseau, Du Contrat social, book III, chap. XV, 1762.
  • 223 Art. 141 al. A letter. D c. 3, Swiss Constitution.

8At the end of the 1950s, Joseph Schumpeter had argued that ordinary citizens should limit their participation in a democracy to electing its leaders.221 This contrasted with the view presented in the eighteenth century by Rousseau, for whom the health of a polity depended on active citizen involvement in all aspects of governance.222 There have always been heated arguments in Switzerland against an increase of popular rights in international affairs, through referendum. The risks mentioned were the impairment of the state, the paralyzing capacity of such referendum, potential attack to the reliability and credibility of the state as a negotiating partner, emotional rather than rational decision-making. Nevertheless, in February 2003, the People and the Swiss cantons approved a reform of popular rights. Since then, a referendum can be requested for all the treaties that “contain important provisions on rules of law or whose implementation requires the adoption of federal laws.”223

9Due to its tradition of semi direct democracy and its particular ratification process for international treaties, Swiss foreign policy appeared an interesting example of how closely linked diplomacy and domestic politics can be. Democratic legitimacy of the Swiss foreign policy is considered a reality most of the times, because of the early involvement of most political actors in the definition of negotiation mandates, as well the possibility of an optional or mandatory referendum or popular initiative for the Swiss population. However, as domestic and foreign policy mix through globalization and internationalization, the distinction between domestic and foreign policy erodes and to a certain extent, might become obsolete. Because of the increasing internationalization of domestic policy, the frontiers between what is strictly internal or external also impact the nature of nation-states and NGOs who fill the institutional gap between domestic and international levels. In this sense, the internationalization of public policy and domestic policy-making affects the traditional understanding of democratic rights.

Notes

210 Peter B. Evans, Op. cit., p. 430.

211 Peter B. Evans, Op. cit., p. 397.

212 Andrew Moracsik, Op. cit., p. 9.

213 Cédric Dupont, “Domestic politics and International Negotiations: Comparative Models of Strategic Behavior in Non-Crisis Negotiations,” 1994.

214 Andrew Moracsik, Op. cit., p. 14.

215 W.R. Clark, E. Duchesne & S. Meunier, “Domestic and International Asymmetries in United States–European Union Trade Negotiations,” International Negotiation 5(2000): p. 69–95.

216 Ibid., p. 74.

217 Cédric Dupont, “Domestic politics and International Negotiations: Comparative Models of Strategic Behavior in Non-Crisis Negotiations,” 1994, p. 27.

218 Ibid., p. 34.

219 Robert D. Putnam, with Robert Leonardi & Raffaella Y. Nanetti, Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press, 1994.

220 Prof. Dr. Bernhard Ehrenzeller, Professor of Public Law, University of St. Gallen.

221 Joseph Schumpeter, Capitalism, Socialism and Democracy, New York: Harper and Row, 1956, chap. XXI.

222 Jean-Jacques Rousseau, Du Contrat social, book III, chap. XV, 1762.

223 Art. 141 al. A letter. D c. 3, Swiss Constitution.

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