US must go on trade offensive with commercial diplomacy

International trade, just like selling goods in the U.S. market, is about competition and fair rules. Often, government can play a key role in creating or expanding opportunities for trade and thus in boosting prosperity and jobs.

A new report by the American Academy of Diplomacy and the Una Chapman Cox Foundation states that the U.S. government needs to improve in supporting U.S. companies overseas via commercial diplomacy by getting our embassies and Washington agencies more active in fighting to help U.S. businesses win sales, investments and deals in growing international markets.

{mosads}To meet the fierce global competition, the report calls for a stronger government-business partnership and steps to improve support for U.S. companies around the world.

Winning in an increasingly competitive international trade environment demands setting priorities and using a range of tools. It is good, for example, to look carefully for unfair trade practices that harm American exports and, thus, U.S. jobs. Aggressive steps to correct unfair trade barriers and practices by others can also help U.S. companies participate on a more level playing field in other countries’ markets.

But, at its heart, international trade (as in domestic sales) is about competing with others, whether they be U.S. or international companies, to sell goods and services.

It might be helpful to use a sports metaphor: You need a good offense as well as a good defense to win. You want to make sure that you have deployed all of your best players to compete with the other team, as well as assure that the rules and referees are fair.

In the case of trade, you try to assure that your trade agreements are fair, that the partner-country and other competitors are playing the game fairly and that you are using the best tools possible to support your companies against the competition. We need to play offense as well as defense, and we need to understand what the competition doing.

The aforementioned report highlights that the U.S. should take up the offensive game via “commercial diplomacy” — helping U.S. companies win sales and contracts in third-country markets. In the lineup of U.S. trade tools, commercial diplomacy should sit right beside the negotiation of good trade agreements or the imposition penalties on unfair traders or protectionist markets.  

The report takes a careful look at what America’s global competitors are doing to support their own companies and finds the U.S. is lagging behind. Looking at China, France, the U.K., Germany, Japan, Canada and others, the authors find that most other governments have forged a comprehensive national strategy to promote exports and attract investment that is supported by solid financial and technical resources and is developed and implemented with their business communities.

The role of diplomacy in managing political risks that foreign investors face: https://t.co/U4JaXaKAbf

— Brookings Global (@BrookingsGlobal) August 16, 2017

These governments often offer packages of export credit financing, technical assistance grants, technical standards and regulatory cooperation that greatly enhance the benefits of buying from their companies. They also regularly support their companies with high-powered commercial missions led by very senior officials.

These governments have made commercial diplomacy a clear priority for their embassies overseas, and they are able to respond flexibly and rapidly to go after commercial opportunities. It is important to add that the support packages they offer do not just help get one sale. For example, when they offer technical assistance packages to help set standards or regulations, the effect can be to favor future sales by companies already using those standards, e.g., not U.S. companies.

As a two-time U.S. ambassador overseas and assistant secretary of state for economic and business affairs for three secretaries of state, I observed the energetic efforts of our competitors, and I supported work to improve U.S. coordination and flexibility to help American companies.

We have an excellent corps of ambassadors, State Department economic offices and commercial officers at our embassies and consulates around the world. However, we need to energize, empower and guide them to better support U.S. companies and bring down unfair barriers to U.S. goods and services. We should not reduce economic or commercial work overseas as this year’s initial budget proposals would do. Washington needs to organize to make this work a priority.

Specifically, key recommendations in report are that the U.S.:

• Craft a comprehensive commercial diplomacy strategy backed by financial and technical resources;
• Create an ongoing public-private partnership to implement the strategy, with White House sponsorship and cabinet-level support;
• Build more flexibility and speed into the process for deciding where and how to support and advocate for U.S. companies;
• Strengthen U.S. capacity to do “policy advocacy,” aggressively targeting foreign regulations, standards and practices that are unfairly tilted against U.S. business.
• Elevate the priority given to commercial diplomacy in Washington, D.C. and in U.S. embassies;
• Initiate, as part of the public-private collaboration, enhanced training for state and commerce officers to support more effective business on cutting edge issues.

The Trump administration has rightly brought attention to the importance of maintaining and creating U.S. jobs. A vigorous U.S. commercial diplomacy can help do just that. Let’s play some offense!

Earl Anthony Wayne served as U.S. ambassador to Mexico (2011-15) and Argentina (2006-09). He was assistant secretary of state for economic and business affairs (2000-06). He received the Department of State’s Cobb Award for Initiative and Success in Trade Development in 2015. He is currently a public policy fellow at the Wilson Center.

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