Now my head is starting to hurt...

Loser uses its power but has no attack cards and plays a negotiate card instead. Defense likewise has no attack cards and plays a negotiate card. The rules require that the players "deal." However, if no deal is reached, is the Loser's power of no effect (each side simply loses 3 ships to warp)?

You must apply the normal rules of a deal. The Loser’s power doesn’t affect deals.

Thought so; thanks again!