SKILLS ENHANCEMENT OF COMMERCIAL DIPLOMATS

Commercial Diplomacy is diplomacy with a commercial twist – diplomacy designed to influence foreign government policy and regulatory decisions that affect global trade and investment. In the past Commercial Diplomacy concerned itself largely with negotiations over tariffs and quotas on imports. In today’s more interdependent world, trade negotiations cover a much wider range of government regulations and actions that affect international commerce – including standards in areas such as health, safety, environment, and consumer protection; regulations covering services such as banking, telecommunications and accounting; competition policy and laws concerning bribery and corruption, agricultural support programs; and industrial subsidies.
Commercial Diplomacy encompasses the whole analysis, advocacy, and negotiating chain that leads to international agreements on these trade-related issues. In the highly interdependent world we live in today, the policy issues subject to trade negotiations are often very complex and touch on a myriad of domestic policy issues, legal provisions, institutional issues, and political interests. The first step in Commercial Diplomacy, therefore, is to undertake an in-depth analysis of all the factors that can have a bearing on the policy decision-making process at home and abroad. It requires an in-depth analysis of all the dimensions of an issue: the commercial interests at stake, the macro-economic impact of alternative policy options, the interests of all possible stakeholders and their political influence, the domestic policy issues entwined with the trade issue, the applicable domestic and international legal provisions, and the impact of media coverage on public opinion.

Commercial Diplomacy deals with political decision-making, and, therefore, is all about exercising political influence. In fact, issues related to the access of foreigners to domestic markets, their right to buy domestic assets such as land and businesses, and their qualification to provide a wide range of services are often even more political than purely domestic regulation by governments. Thus, Commercial Diplomacy usually requires a heavy dose of domestic politics, both at home and in the foreign country, including the active use of a wide range of advocacy and coalition-building tools.

At home, the Commercial Diplomat must utilize a full range of political advocacy tools and techniques to assure support of the home government for desired outcomes abroad, or to obtain favorable policy actions by the home government in areas such as taxation, export credits, and export controls. To obtain governmental decisions favorable to the stakeholders he/she represents, the Commercial Diplomat must be able to make effective use of advocacy tools such as letters, testimony, white papers, speeches, op-ed pieces in newspapers, phone calls, and personal visits to key stakeholders and decision-makers. The Commercial Diplomat must also be successful in building coalitions within the government, industry or interest groups, or among stakeholders with political influence, thus increasing the political influence that is brought to bear in support of the desired outcome. The international phase of Commercial Diplomacy involves the same advocacy and coalition-building steps required at home, as well as negotiations, dispute resolution, and mediation.

Who Are Commercial Diplomats?

The most obvious practitioners of Commercial Diplomacy are trade officials who are charged with negotiating international trade and investment agreements and resolving policy conflicts that impact on international commerce. Trade officials are only the most visible Commercial Diplomats and are usually outnumbered by personnel with trade-related responsibilities in many other government departments and ministries.

Examples include:

• Officials from departments or ministries responsible for foreign affairs, finance, agriculture, industry, labor, health, the environment, the regulation of banks, telecommunications, air transportation, or the licensing of professionals.
• Managers in the international departments of industry associations, corporations, unions, and non-governmental organizations who have a stake in the outcome of trade policy decisions and therefore play a role in the domestic and global political advocacy and coalition-building process that usually precedes negotiations on international commerce.
• Corporate managers posted in foreign countries where they must interact extensively with the host government on a broad range of regulatory issues.
• Professionals in international organizations that deal with global trade, investment, and trade-related regulatory issues.

What Happens When Commercial Diplomats Are Not Well Trained?

Company x lost a billion dollar investment because its managers failed either to understand or to ameliorate latent domestic political opposition to a crucial aspect of that investment. Country y lost a billion dollar market because its trade negotiators failed to understand the requirements for a mutually satisfactory solution to some policy conflicts. Countries have fought major wars because their trade negotiators failed to arrive at a mutually advantageous basis for trade.
Most losses due to poor training in Commercial Diplomacy, however, are less dramatic but have no less of an impact. Commercial Diplomats must wrestle with numerous unimportant detailed issues that nevertheless add up and can lead to increasing friction in bilateral relationships between key countries and missed opportunities in creating new business opportunities.

In the highly interdependent world economy that has emerged from the globalization of production, the commercial success of corporations and the economic welfare of nations can be affected by the whims of petty bureaucrats in remote foreign locations. Even in the absence of ill will, the economic machinery of globalization requires the intermeshing of uncounted regulatory decisions by governments at all levels around the world. Resolving policy conflicts is a task that is best done by professionals trained in integrating the commercial, economic, political, legal, cultural, environmental, and other policy considerations that have a bearing on the issue; in short, professionals trained in Commercial Diplomacy.

What Does the Commercial Diplomat Need to Know?

Commercial Diplomacy requires all the finesse and knowledge of traditional diplomacy. In addition it requires an in-depth knowledge of commercial and macroeconomic analysis, the analysis of policy issues ranging from health and the environment to the prudential supervision of insurance, the politics of trade and foreign investment, national trade laws and global trade rules, and the role of the media in forming public opinion.

What Kind of Training is Required for Commercial Diplomacy?

A comprehensive training program in Commercial Diplomacy calls for courses in many different disciplines: economics, business, politics, law, media and public relations, international relations, negotiation and dispute settlement, area studies, foreign languages, and culture. Commercial Diplomacy programs have four distinct stages of instruction: (1) theory; (2) institutions; (3) techniques and skills; and (4) integration. An ability to integrate the many dimensions into a multifaceted strategy that advances stakeholder interests is a critical aspect of professional training in Commercial Diplomacy.

This new class of professionals - the Commercial Diplomats -- have emerged from the requirements for policy coordination and negotiation among nations on issues affecting global trade and investment. The training of this new class of professionals has been haphazard at best and has relied largely on a defacto apprenticeship system that generates neither enough qualified nor sufficiently well trained professionals. This gap between the demand and supply of qualified Commercial Diplomats has to be met through dedicated training programs focused on the skills and knowledge required of competent professionals in the field. If professional training is available for our architects, lawyers, accountants, doctors, business managers; why not for Commercial Diplomats?

Please contact AALEP Secretariat for further information