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Training Professionals in Trade Policy Development Geza
Feketekuty[1] The
expansion of trade brought about by the reduction of trade barriers and
the globalization of production has created a shortage of professionals
trained in commercial diplomacy. Commercial diplomacy encompasses all
the activities related to analyzing, developing, negotiating and
implementing trade agreements. Professionals with the unique set of
skills associated with commercial diplomacy are in demand not only in
trade ministries, but also in many other government departments, in
private corporations, in industry associations, in other
non-governmental organizations and in international economic
institutions. The shortage of well-trained professionals is particularly
acute in developing countries and transition economies, which face a
severe shortage of experienced professionals in the field and lack the
institutional capacity to train them. Training professionals in the
skills of commercial diplomacy is thus a new challenge for the global
trading system that needs to be addressed. Negotiating
and managing a country’s participation in trade agreements has become
an increasingly important task, since trade agreements have emerged as
the key driver of the global organization of production, investment and
trade, and consequently of the commercial success and economic welfare
of nations. Negotiating and
managing a country’s participation in trade agreements has also become
an increasingly challenging task, since trade agreements now address a
wide range of domestic regulatory measures, as well as measures at the
border such as tariffs. Professionals in the field must be able to
analyze complex commercial, political, legal, economic, institutional
and substantive policy issues. They have to be skilled communicators and
negotiators, able to formulate, negotiate and implement trade
agreements. Most
practitioners in the field today have acquired their skills and
knowledge through on-the-job training. On the job training requires
personal mentoring by an experienced supervisor, over a period of up to
several years. As a result of the sharply increased demand for
professionals with skills in commercial diplomacy, the old mentoring/on
the job training method is no longer adequate to meet the demand. Training
trade professionals in the skills of commercial diplomacy is thus a new
challenge that needs to be addressed. The problem is particularly acute
for developing countries and transition economies, now referred to as
disadvantaged countries. Without more trained professionals in trade
related fields, including commercial diplomacy, these countries cannot
take advantage of the economic opportunities provided by trade
liberalization. World
leaders have come to recognize the critical importance of helping these
countries to train trade professionals and to build an institutional
capacity for developing, managing and implementing trade agreements.
Commitments to support and fund such training have been made by the WTO,
the OECD and by the 1999 G-8 Economic Summit in Okinawa, Japan. The
formation of an effective training program in commercial diplomacy for
developing countries has been hampered by the fact that the economically
advanced countries have never developed a systematic approach to such
training. It is therefore necessary to examine what a professional
training program in commercial diplomacy should encompass, and the kind
of technical assistance and training materials that would be needed to
establish an institutional capacity to train commercial diplomats in the
developing countries themselves. This
article presents the content, scope and methodology of an integrated and
comprehensive approach to training in commercial diplomacy, and
describes the steps required to make such training widely available in
developing countries. It places the challenge of training commercial
diplomats into the context of the development needs of disadvantaged
countries and the commitments made by world leaders to support efforts
by these countries to develop an institutional capacity to train
professionals in trade-related skills, including commercial diplomacy.
It concludes with a modest proposal for reaching consensus on a way
forward. What
is Commercial Diplomacy?
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 on tariffs and quotas on imports. In
today’s more interdependent world, trade negotiations cover a far
wider range of government regulations and actions affecting
international commerce — including standards in health, safety,
environment, and consumer protection; regulations in 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, coalition-building
and negotiation chain that leads to international agreements on these
trade-related issues. A
commercial diplomat must learn how to analyze all the factors that have
a bearing on the policy decision-making process at home and abroad,
including an in-depth analysis of
Most
issues addressed by commercial diplomacy today are political in that
they affect the interests of many stakeholders. A stakeholder is anyone
who has a stake in the outcome of decisions and who can exercise
political influence of one kind or another to shape the outcome.
Stakeholders in trade policy decisions can include (a) officials of any
government department or regulatory agency with a policy interest or
bureaucratic stake; (b) any firm, union, or industry association with a
commercial stake; (c) any non-governmental organization with a policy or
organizational stake in the outcome: (d) individual citizens as voters.
The increased focus in trade negotiations on domestic regulatory issues
has substantially increased the potential pool of stakeholders, and thus
increased the domestic political dimension of commercial diplomacy.
Commercial
diplomacy increasingly requires the use of a wide range of advocacy and
coalition-building tools for favorable decisions at home and abroad.
To obtain the support of the home government in trade disputes
with other countries, or to gain favorable decisions from the home
government in on trade-related issues, the commercial diplomat must use
a range of advocacy tools. Advocacy tools include 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 build coalitions — within the government, industry
or interest group -- to exert political influence in support of desired
outcomes among stakeholders with political influence. Internationally,
commercial diplomats must apply the same advocacy and coalition building
tools to stakeholders in all other countries involved in the resolution
of an international trade or investment issue. Once
a domestic decision has been reached on a trade negotiating issue, a
trade dispute, or on a broader scale, on a national trade policy,
commercial diplomacy moves to the international negotiation and/or
dispute settlement phase of the process. The negotiation of politically
sensitive issues, however, may well require further interactions with
domestic stakeholders as part of a continuing consensus building
process. Once an agreement is negotiated or a decision is rendered in a
trade dispute, trade officials usually have to persuade domestic
decision- makers to effectively implement the agreed outcome. Who
Needs Training in Commercial Diplomacy? The
most obvious candidates for training in commercial diplomacy are the
officials responsible for developing their country’s international
trade and investment policies and for negotiating international trade
and investment agreements with other countries. What is less obvious is
that all other stakeholders involved in the trade policy development and
advocacy processes need the same training. Trade officials are only the
most visible commercial diplomats. They usually are outnumbered by
officials with trade-related responsibilities in many other government
departments and ministries — 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. Others
who need instruction in commercial diplomacy include managers in the
international departments of industry associations, corporations, unions
and non-governmental organizations that have a stake in the outcome of
trade policy decisions. In order to play an effective role in the
domestic and global political advocacy and coalition-building process
that precedes negotiations, these stakeholders need most of the same
commercial diplomacy skills as government trade negotiators. Skill in
commercial diplomacy is also required of corporate managers posted in
foreign countries, who often must interact with the host government on a
broad range of regulatory issues. Another
group that requires training in commercial diplomacy is the secretariat
staff of international organizations that deal with global trade,
investment and trade-related regulatory issues. While such officials as
a rule play less of a direct role in the political management of trade
issues, they can most effectively do their job if they understand the
politics of trade. The
Skills the Commercial Diplomat Needs to Acquire
The commercial
diplomat requires all the finesse and knowledge of foreign cultures
required by a traditional diplomat. In addition, the commercial diplomat
must acquire a wide range of analytical, advocacy, public relations and
negotiating skills. Analysis Commercial
Analysis. Commercial
diplomacy is all about commercial interests and the commercial diplomat
must have the ability to analyze and understand the commercial interest
that underlies most issues in trade negotiations. The commercial
diplomat must be able to read a company’s balance sheet and income
statement, and understand how a trade issue impacts the costs, revenues,
market share and growth prospects of a firm or industry. Economic
Analysis Commercial diplomacy touches not only the commercial interests of individual firms and industries, but also on the economic interests of the country as a whole. The commercial diplomat therefore must be sufficiently conversant with economic analysis to be able to analyze and discuss the impact of trade policy decisions on overall national economic output, growth, jobs, wages, consumer prices, industry profits, and income distribution.
Analysis
of Public Policy and Regulatory Issues Since
commercial diplomacy is increasingly embedded in domestic policies and
regulations, the commercial diplomat must be able to analyze and
understand a broad range of domestic policy issues, ranging from the
habitats of plant pests and the health effects of various toxic
chemicals to the testing required to assure the professional competence
of accountants, from the capital adequacy ratios of banks to the
competitive safeguards in telecommunications. Some of these issues
require a rudimentary understanding of science, and they all require an
ability to analyze the relationship between a stated public policy
objective and the regulations designed to implement them. They require
an understanding of best practices and the analysis of empirical
evidence. Political
Analysis Since
commercial diplomacy takes place against the backdrop of a domestic
political process, the commercial diplomat must be able to analyze the
politics of any particular issue. This requires an ability to identify
stakeholders, their interests, and their means of political influence.
The commercial diplomat must understand the similarities and differences
of the political process in different countries, and how the domestic
politics of each country impacts trade policy decisions. He or she also
must understand the institutional process that underlies trade decisions
and how bureaucratic rivalries can influence such decisions. Commercial
diplomacy also requires an appreciation of the role of public opinion in
influencing policy outcomes, and the role of the press in shaping public
opinion. Legal
Analysis Both
domestic laws and international trade rules influence government policy
on trade and foreign investment. Commercial diplomacy thus requires an
understanding and a rudimentary ability to analyze the domestic and
international legal issues that underlie a negotiation or trade dispute.
The commercial diplomat must be able to analyze the stated and implied
objectives of domestic laws and the legislative history that influences
their implementation. Developing
a Plan of Action A
commercial diplomat must be both a keen observer and a participant in
the political process leading to a desired policy decision and/or
negotiating outcome. In
order to assure that the actions are well targeted, the commercial
diplomat must translate the analysis of the issue into possible
solutions, and into strategies and policies for implementing desired
outcomes. Developing
a Solution Successful
Commercial Diplomacy requires creativity in the development of solutions
to trade problems or avenues for pursuing trade opportunities. This
requires an ability to integrate all the elements of the analysis into a
holistic view of the issue, and developing an approach that builds on
the opportunities and addresses the problems identified in the course of
the analysis. The solution must be politically feasible, i.e., meet the
needs of the most interested stakeholders, while also serving the
broader public interest, i.e., constitute good public policy. Strategy
Development In
order to translate a desired policy or negotiating outcome into reality,
the commercial diplomat must develop a strategy. A strategy moves the
commercial diplomat from the role of keen observer to an actor in the
process. The mistake that most students and practitioners make is to
think that a list of actions per se constitutes a strategy. Aspiring
commercial diplomats have to be taught that good strategy flows from
good analysis, and that a well-implemented strategy should provide a
coherent blueprint on how the problems identified in the analysis can be
addressed or how potential allies can be mobilized. Policy
Development Since
commercial diplomacy is all about government actions, the commercial
diplomat must understand the nature and role of policymaking in
government, and how policy is developed and implemented.
In the author’s experience, many otherwise highly qualified
individuals never grasp the essential role of policymaking in
government. A commercial diplomat who wants to influence government
behavior, either as a government official or as a private stakeholder,
often must seek to build a consensus around an abstract principle or
concept that will lend legitimacy to the desired outcome.
The successful commercial diplomat must learn when and how to
frame an issue as a matter of policy rather than just as a grubby little
problem that affects the mercantile interest of a particular
stakeholder. Building
Consensus on a Desired Policy or Negotiating Outcome In
addition to analytical skills, the commercial diplomat must possess
effective advocacy, coalition building and negotiating skills. In order
to advance the interest of the organization he or she represents, the
commercial diplomat must build a consensus among private sector allies
and government decision-makers on the desired outcome to a trade problem
or trade opportunity. To build consensus, the commercial diplomat needs
good public relations skills. The commercial diplomat must also acquire
sufficient political skills to influence and/or manage the political
decision making process. Finally, the commercial diplomat must be a good
negotiator, both internally with other domestic stakeholders and
externally with representatives of other countries. To accomplish these
tasks, the commercial diplomat must learn how to listen and to
productively interact with people of different personalities, languages,
cultures, and ethnic backgrounds. Advocacy In
order to persuade relevant stakeholders of the desirability of a
proposed course of action, the commercial diplomat must use a wide range
of advocacy tools. The basic advocacy tools of the trade include
briefing memos, advocacy letters, white papers, press releases, op-ed
articles, public testimony and speeches. These operational documents are
the essential tool kit of a commercial diplomat, and learning how to
write them in a short and succinct manner is key to success in the
field. Equally important is
an ability to make effective oral presentations to other stakeholders
engaged in the decision-making process. Coalition
Building A
commercial diplomat must learn how to build coalitions. Successful
coalition building is critical to the effective representation of less
powerful stakeholders or countries, and to the successful pursuit of
issues that lack popular appeal. Coalitions bring together different
organizations and countries in support of a common goal. Coalition
building involves identifying other stakeholder groups or countries with
common interests, and developing a common plan of action in support of a
desired governmental action, policy goal or negotiating objective. Negotiation Ultimately,
the commercial diplomat must be an effective negotiator. Effective
negotiations start with a thorough identification of the interests of
all parties, the constraints that limit possible outcomes, and the
alternatives to a negotiated outcome available to each of the parties.
Effective negotiation also is a process issue — a process of building
relationships, of building momentum through the identification of common
interests and the resolution of less difficult issues, and of building
up the information necessary for a negotiated solution. Good negotiators
know how to avoid certain pitfalls and how to deal with them when they
cannot be avoided. Being
an effective negotiator requires a great deal more than being effective
in bargaining. Trade negotiations in many ways are quite different from
bargaining in the bazaar or market place. The difference is a result of
differences in the number of stakeholders represented, in the degree of
authority exercised by the negotiator, by the extent to which the
negotiation is part of an ongoing relationship, and the extent to which
other issues are at stake between the parties. What
Knowledge Does the Commercial Diplomat Need to Acquire? Along with the skills outlined above, the commercial diplomat must acquire knowledge in a diverse number of fields. These fields include trade laws and institutions, current trade issues, foreign languages and cultures, major areas of domestic policy, and a combination of economic history and the history of economic thought. Trade
Laws and Institutions
The
commercial diplomat must know the basic rules that govern global trade.
These include the rules of the World Trade Organization, the rules of
key regional trade agreements like the European Communities (EC) and the
North American Free Trade Agreement (NAFTA), and the laws governing
trade within the home country and within trading partner countries. A
commercial diplomat must understand the institutions established for
managing trade issues at the national, regional and global level. He or
she also must understand the domestic procedures established for
negotiating international agreements and addressing and resolving trade
conflicts. Current
Trade Issues
A
trade professional needs to acquire a full familiarity with all of the
current issues on the proposed trade policy and negotiating agenda. No
matter what organization or particular issue a trade professional
represents, he or she must be sufficiently familiar with all the issues
on the current negotiating agenda to understand potential linkages and
trade-offs. Foreign
Languages and Cultures
To
some extent, the commercial diplomat operates within a global culture
defined by the rules and practices of the World Trade Organization and
by the English language, which has become the lingua franca in the
current era. Nevertheless, to be fully effective when working in a
foreign country, the commercial diplomat must be able to speak the
language of that country and be conversant with local cultural norms.
The commercial diplomats have to be able to discern and address
the cultural dimension of international interactions. Major
Areas of Domestic Policy
Trade
policy and negotiations cover an increasingly wide range of domestic
regulatory issues. Health, safety, and environmental standards; domestic
regulations in banking and telecommunications; domestic agricultural
support programs, and a myriad of other issues are covered by trade
negotiations. An effective commercial diplomat must therefore acquire
enough knowledge of the underlying regulatory issues to ask experts in
the field the right questions. History
of Economic Thought and Economic History
Knowledge
of the history of economic thought and of economic history is useful in
commercial diplomacy because it helps to put current issues and ideas
into a broader and longer-term context, thus providing the basis for a
deeper understanding of the issue and of possible solutions. Such
knowledge is not as essential as knowledge of current issues and
applicable laws and institutions, but it helps to prepare the truly
world class professionals in the field. What
kind of Training is required for Commercial Diplomacy?
The Training Challenge
The
commercial diplomat must be part commercial expert, part economist, part
public policy analyst, part politician, part lawyer, part negotiator,
and part public relations and media expert. In most universities, a
different department teaches each of these subjects. Few graduates of
traditional universities or graduate schools emerge with a rudimentary
knowledge of all of these fields. More importantly they usually lack an
ability to integrate the various fields into a coherent analysis and an
integrated strategy. In most cases they also do not know how to apply
their academic knowledge to real world situations. A Comprehensive Approach
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.
Students should not be expected to become experts in all of these
areas, but should be expected to develop a sufficient knowledge to ask
the right questions and to translate the answers into an intelligent
layman’s interpretation of the issue. Students should be expected to
understand linkages among the various dimensions of an issue and to
rank-order the issue for any stakeholder. A
comprehensive training program in the field would also help students
acquire effective written and oral communication skills, as well as good
consensus building and public relations skills. The program should
include instruction on the techniques of effective negotiation. A
commercial diplomat must learn how to assemble information on the
interests, constraints, and alternatives that influence the negotiating
positions of negotiating partners, and how to distinguish between
interests, beliefs, positions and arguments mobilized in support of a
position. An effective negotiator also must understand that the
successful negotiation of trade agreements requires more than a process
of bargaining within a zero sum game framework, and that success often
hinges on the ability of negotiators to establish a positive sum game.
Ideally,
the instructional plan would require students to practice their
analytical and writing skills by having them draft such operational
documents as briefing memos, white papers, advocacy letters, press
releases, op ed articles, speeches, public testimony, and negotiating
instructions on real world issues. Students should learn how to write an
operational document that integrates the many dimensions of a trade
issue – the commercial, political, economic, legal, regulatory, and
institutional dimensions - into a coherent analysis, and lays out a
course of action that advances the interests of the organization they
represent. Example
of a Comprehensive Graduate Degree Program in Commercial Diplomacy The
graduate program in commercial diplomacy at the Monterey Institute for
International Studies in Monterey, California provides one example of a
comprehensive professional training program in commercial diplomacy. It
consists of a Masters Degree and a certificate program in commercial
diplomacy. The educational
philosophy of the program is that training in commercial diplomacy, as
is the case generally with professional training, should be based on the
application of the tools of the trade to real world situations.
Students are asked to analyze real world trade issues in terms of their
commercial, economic, political, legal, institutional and public policy
dimensions, and to integrate the analytical results into real world
strategies and negotiating solutions. Students prepare operational
documents used in the trade, including options papers, white papers,
briefing memoranda, press releases, speeches and public testimony.
Finally, students engage in simulations of real world activities
involving commercial diplomacy, including negotiations, press
conferences, and public hearings. The objective is for graduating
students to master all the operational tasks of a commercial diplomat
and to be fully prepared to utilize the tools of the craft on behalf of
any government agency, industry association, corporation, union or other
non-governmental organization from which they may be hired. Footnotes: [1]
Distinguished Professor of Commercial Diplomacy at the Monterey
Institute for International Studies, Monterey, California, USA and
President of The Institute for Trade & Commercial Diplomacy,
Arlington, Virginia, USA. Mr. Feketekuty is a former senior US trade
official and former Chairman of the OECD Trade Committee. |
