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Commercial Diplomacy : A New Profession and a New Program of Study Geza Feketekuty The world of trade and international

commerce is becoming more important and challenging every day. Global markets are far more integrated than ever before. Firms are expanding their multinational production networks. Governments are negotiating far-reaching trade agreements. We live in a world where more and more business executives and government officials have to work and negotiate with people from other countries. These countries have different laws and institutions, follow different business practices, speak different languages, and are influenced by different cultural norms.. altogether different realities! The new global economy has created a demand for business executives and government officials who can manage complex international economic relationships effectively. "orporations need executives who can negotiate #oint ventures, contracts and sales agreements with foreign-based companies, as well as manage relationships with a wide range of governments around the world. Governments need officials who can negotiate agreements and who can help to resolve conflicts among nations in a wide range of commercial, social, environmental and other domestic issues related to trade. $usiness executives and officials who deal with international commercial issues re%uire a new kind of professional training in the public and private conduct of commercial diplomacy. This new breed of commercial diplomat combines the role of diplomat with the role of economic manager. &any of the problems and opportunities that arise in international commerce inevitably have a political dimension. For this reason, success re%uires not only an ability to deal with economic issues but also an ability to navigate political and legal channels and to help mold public opinion globally. 'ealing with commercial issues across national borders effectively, re%uires special knowledge and skills. This is over and above the professional knowledge and managerial skills re%uired of a competent business executive or government official. The commercial diplomat masters this new global dimension of commerce. (n the past, most professionals engaged in commercial diplomacy received no formal training. (nstead, they had to ac%uire the re%uired knowledge and skills in a piecemeal fashion while carrying out their duties as business executives or government officials. )spiring trade negotiators learned the art by working with more experienced professionals and by making mistakes. This apprenticeship system was a *school of hard knocks*. Today, there are a few educational institutions and international organi+ations that offer training programs designed to provide the kind of skills and knowledge re%uired of a commercial diplomat. The author of this article created one of the first graduate programs specifically designed to train commercial diplomats at the &onterey (nstitute of (nternational ,tudies, in &onterey, "alifornia in the -nited ,tates. The program awards &asters of )rts degrees in "ommercial 'iplomacy to students from around the world. .The content of the program is described below. The -kraininan )cademy of Foreign Trade also teaches many courses focused on the skills and knowledge re%uired of a commercial diplomat. This article is designed to describe the knowledge and skills re%uired to achieve professional competence in the field of "ommercial 'iplomacy.

The article will be organi+ed around four key aspects of commercial diplomacy .

• • • •

the historical forces that are creating the need for commercial diplomats, the professional skills and knowledge re%uired of a commercial diplomat, particularly in the realm of negotiation, the institutions and laws that guide international commercial transactions, and the wide range of sub#ects a commercial diplomat may have to master.

"ommercial diplomacy has become so important in recent years because.

trade and foreign investment have consistently grown faster than domestic output in most developed countries since World War (( and therefore now constitute a significant share of the G/0 of those countries


• • • the more recent adoption of market-oriented economic reforms and export driven growth strategies by most developing and former communist countries has served to integrate these countries more effectively into the global economy the globali+ation of production through the outsourcing of components and business services has multiplied the need to coordinate closely the activities of enterprises in many different countries. the negotiator can begin to work in partnership to develop creative options and solutions. The negotiation of new regional trade agreements to eliminate barriers to international trade and investment 1agreements such as the 2uropean -nion. ) commercial diplomat has to learn how to navigate through the administrative. real-life situations. ( find that one of the most important skills lacking in many managers today is the ability to write short. it becomes crucial in negotiations on international trade and investment issues to identify both the economic and non-economic interests of the parties. 4ne very important skill is the ability to negotiate. While commercial diplomacy deals with commercial issues. • • • • • officials responsible for regulatory decisions legislators and politicians the press opinion leaders in research institutions and elsewhere allies at home or abroad who could lend political support "ommercial diplomacy also re%uires some basic political and public relations skills. &ercosur. trade agreements have become the principal means of strengthening political relationships and security ties among countries. This involves a detailed understanding of institutional roles. and for interactive bargaining. and business managers who need to interact with their foreign counterparts on a day to day basis 3et me next turn to the professional skills and knowledge re%uired of a commercial diplomat. 5ather than preparing term papers and other traditional academic exercises. the commercial diplomat can successfully craft durable and mutually beneficial agreements. for exploring alternative outcomes acceptable to the two parties. and what is likely to be persuasive in different situations. These include. in the aftermath of the "old War . and political procedures of other countries. since most international trade negotiations outside 3atin )merica are carried out in 2nglish.which is to attract the interest of its readers. /uances in language can have ma#or conse%uences for the interpretation of an agreement. (n fact. There are some important principles about getting your side of the story to the press. )nother obvious skill re%uired of a commercial diplomat is the ability to speak foreign languages and to use interpreters effectively. a fluent command of 2nglish is essential. the information needs of officials or executives in different positions. This re%uires learning how decisions regarding trade and investment issues are made in different countries. This is further accelerating international cooperation on a wide range of domestic policies and issues. students learn to master the preparation of letters. "ommercial diplomacy is therefore an increasingly important skill for government officials. but which nevertheless influence the commercial outcome. (t must be done in a way the press can use for its own purposes -. legal. and /)FT) has significantly expanded the role and impact of trade agreements. Therefore. simulations and role playing can be useful educational techni%ues.. $y learning to recogni+e the full range of interests of all parties to a negotiation. and speeches. there are many issues that arise that are not businessrelated. issue advocates. 3earning how to negotiate re%uires the ac%uisition of a specific set of skills for analy+ing the interests of the parties involved in a negotiation. concise memoranda designed to convince the recipient of such a memorandum of a desired course of action. For non-2nglish speakers. based on realistic scenarios drawn from current. (n order to develop these skills effectively. and how an outsider might be able to influence such decisions. $y following certain key principles of negotiation. a commercial diplomat may need to work with many different governments and individuals to change government regulations that impede trade or investment. )n effective press conference must also succeed in shaping 2 . memoranda. Whatever the country involved.

the company which faces a restrictive regulation in another country is first expected to make an effort to resolve the issue through direct contacts with the 3 . • • • • • • knowledge of foreign languages and cultures cross-cultural negotiation and consensus-building legislative strategy and advocacy media strategy and public relations development of integrated negotiating strategies investigation of issues and research into new areas of knowledge ) commercial diplomat needs to be able to ac%uire a working knowledge of many different sub#ects. safety.uccessful resolution of the dispute may re%uire an in-depth knowledge of • • • • • the science underlying health. or the World Trade 4rgani+ation for disputes involving government regulations. (n the case of disputes involving governments belonging to the World Trade 4rgani+ation. The dispute might be over whether the supplier met the agreed delivery schedules or %uality standards. 5esolving such disputes may re%uire in-depth knowledge of the scientific facts underlying regulations in areas such as health. the practice of commercial diplomacy re%uires the following set of professional skills. The commercial diplomat needs to be able to address issues or disputes that touch on a wide range of topics. (n this case. . [ • • • identify experts and research material ask the right %uestions in researching the issue frame the facts obtained from experts in a coherent way to make a case ) commercial diplomat also has to ac%uire knowledge about dispute settlement proceedings.. $efore an issue becomes a matter of discussion between governments.uch proceedings can take place in national courts or in international arbitration bodies such as the (nternational "hamber of "ommerce for purely commercial disputes between private parties. or architecture. the commercial diplomat has to be able to . including production and distribution the revenues and costs associated with the commercial activities in %uestion . The resolution of (nternational trade disputes can touch on many different areas of speciali+ed expertise. (t may also re%uire knowledge of the terms of international agreements covering the application of trade measures and domestic regulations to imported goods and services. (t might focus on whether damage to goods during shipment were the fault of the exporter or importer. the nature of agricultural pests in two different countries6 the chemical. )n effective commercial diplomat has to be able to develop a comprehensive and integrated negotiating strategy. telecommunications. . "ommercial diplomacy may also be re%uired to resolve purely commercial disputes between firms located in different countries.ince no one can be expected to know all these sub#ects. re%uiring in-depth knowledge and expertise in diverse areas. biological and environmental effects of fumigants6 and the substantive provisions of international agreements. or a dispute with a foreign government an in depth knowledge of many issues may be needed. however. environmental and other regulations the content of national regulations affecting imports or foreign investors the international commitments made by governments in applying their laws the organi+ation of the industry. legislators. (n summary. or to foreign firms. environment. and whether the importer met agreed marketing obligations. safety. industrial engineering. .the substantive issues in the public debate taking full account of the concerns and perceptions of public policy makers.uch a strategy needs to encompass all the various players who have an interest in the issue and who can have a bearing on the outcome. Whether the dispute is a private commercial dispute. and the public at large. member countries can decide to establish a dispute settlement panel made up of trade and scientific experts from third countries.

)mong private corporations. and a masters pro#ect in which each student demonstrates his or her ability to integrate the necessary skills and knowledge in the context of a real world issue. could lead to a great deal of strife and friction between firms and countries. and to explore whether the re%uisite skills can really be learned through training and education. The program hones the application of these skills in real world settings through case studies. more formal mediation or arbitration proceedings. The cost of failure in most instances is wasted time. or the use of national courts. and therefore more successful in making the firm more profitable or the country more prosperous. and The languages.. and international trade centers. Firms and countries that employ better trained commercial diplomats will be more successful in promoting their exports or foreign investments. the World $ank and the 4rgani+ation of )merican . 4bvious failures due to a lack of skill in commercial diplomacy abound. 4 . effort. &isunderstandings. . organi+ations such as ($& stand out for the trained professionals that handle their relationships with governments around the world. and money. political. (t includes both a two year masters degree in "ommercial 'iplomacy for recent university graduates.. The international rules and procedures that apply to global trade and investment. and they are most inclined to help those businesses that have already made a significant effort to identify the regulatory issues involved and to solve the problem on their own. the author. 4ther (T" video conferences have explored these approaches and techni%ues. Government officials only have limited resources. They could also lose a great deal of good will to resolve other issues. trade official and now a trade consultant and professor. for example. These methods include direct conciliation discussions between the parties. the parties can utili+e a number of alternative method for the resolution of disputes. and on current negotiations. The cost of failure could be a great deal more than lost opportunities. to interact with politicians at home and abroad. even billions of dollars. stand out in their effectiveness and professionalism. and more generally to shape public opinion. and to build relationships with the right local leaders.tudies. The trade laws and policies of the key developed and developing countries. (nvestments have gone sour because companies failed to understand the local environment. )s mentioned earlier. a former senior -. simulated negotiations and press conferences. "an these skills be ac%uired through education and training9 (nnate personality traits certainly play an important role in successful commercial diplomacy. foreign trade institutes. and failed opportunities to resolve an issue amicably. The skills re%uired to manage the political dimension of internal commercial diplomacy. )n opportunity may also be lost in reaching agreement on new export or investment possibilities.tates also offer special training courses on international trade and investment rules. cultures and customs of countries around the world. and domestic policy analysis. The program covers • • • • • • The re%uired techni%ues of economic. the -nited /ations "onference on Trade and 'evelopment. (n closing ( want to reflect briefly on the cost of failure and the benefits of success in commercial diplomacy. as do those of $ra+il. countries or corporations that have developed a well-trained group of commercial diplomats have been very successful in pursuing their international commercial ob#ectives. and a one year masters degree in "ommercial 'iplomacy for mid-career professionals who want to polish their skills and update their knowledge. to handle relationships with the press. 4ther courses are offered by business organi+ations such as chambers of commerce.uch training can e%uip the commercial diplomat with the tools and knowledge otherwise ac%uired only through a long and costly apprenticeship. including the ability to build consensus. 'eveloped a comprehensive course of study on commercial diplomacy at the &onterey (nstitute of (nternational . The parties involved could condemn themselves to allocate scarce human and financial resources to a prolonged dispute.foreign officials involved. Firms have wasted hundreds of millions. 4n the other hand. The right kind of training can help the aspiring international commercial diplomat the to become effective almost immediately upon entering the field. Where the dispute is of a purely commercial nature. The trade diplomats of 7ong 8ong. They are an important part of the tool kit of the modern commercial diplomat. The development of coherent and comprehensive negotiating strategies and knowledge of the negotiating tactics employed by different countries. &any international organi+ations such as the World Trade 4rgani+ation.

trade information. They also have a wealth of links to other sites with valuable information on trade matters. The (T" offers technical assistance in six areas. The WT4. educators and industry association executives from developing countries and transition economies on trade rules. 5 . development of trade support services. including product and market development. and needs assessment and program design for trade promotion. trade policy development and negotiations. )ll the ma#or international organi+ations with a mandate for international trade and investment issues have web sites that offer information about international trade and investment rules and about the issues under current discussion in the organi+ation. lists all of the technical assistance pro#ects and publications recently completed or under way. organi+es Trade 0olicy courses for trade officials from developing countries and transition economies. Three of the most important programs are • • • T5)(/. -/"T)'. The lectures and discussions focus on trade theory.ome of these publications are free. technology and enterprise development. international purchasing and supply management. which offers training to officials.The (nternet itself is an extremely valuable source for ac%uiring much of the information and knowledge re%uired to conduct effective commercial diplomacy. The ma#or substantive accomplishments of :. The "enter is #ointly managed and supported by the WT4. .. the WT4 has also developed an extensive list of publications and training materials which can be obtained through their web site. which is available at its web site. the -nited /ations "onference on Trade and 'evelopment. and the work program of the 4rgani+ation. the Trade (nformation program. ( have previously mentioned one of these linked sites. or from designated distributors in many countries. While these courses are open only to trade officials. also has an extensive technical cooperation program for assisting developing countries and transition economies on trade and investment. which provides assistance to small exporters in developing countries. They also report that they are working on the development and testing of diagnostic tools and learning systems for small and medium-si+ed enterprises engaged in international business. -/"T)' offers access to information. other are sold on a commercial basis. and The T5)(/F45T5)'2 program. The Trade 0oint 0rogram. training and policy advice. (t enables any individual to pursue his or her own tailored self-study program.. (ts annual report for :. The (nternational Trade "enter organi+es training courses and produces training materials which can be obtained through its web site.< included the publication of a book on forward-looking strategies for trade in services. 4ne of the most important international organi+ations which provides training and information for businesses in developing countries is the (nternational Trade "enter. and -/"T)'. the World Trade 4rgani+ation. the formulation and implementation of trade policy. reviews of the trade policies of member countries. the (nternational Trade 3aw &onitor. The -nited /ations "onference on Trade and 'evelopment.. The WT4 web site also has an extensive amount of information available on the rules of the organi+ation. (n most case they also include useful links to other relevant web sites and extensive bibliographies of books and articles that cover the issues in greater depth. the World Trade 4rgani+ation. the provisions of WT4 legal instruments and )greements and the structure. These activities fall under five broad headings • • • • • international trade sustainable development financial resources investment. • • • • • • product and market development.<. current trade issues. and transport (n the area of international trade. human resource development. scope and functioning of the WT4 system.

cities. "ommercial diplomacy and effective international negotiation ultimately are the means for effective global cooperation. The material you received for this program includes some useful contact points.The (nternet. even small businesses from developing countries can succeed in the new global market place. and access to the global information infrastructure. educational institutions. the sites offer references to books. With a little browsing of the (nternet you should be able to expand this list significantly. The mutual economic gain which comes from such cooperation will contribute to strengthened social and political ties around the world. articles and training manuals. Where information is not directly available on line. We live in a new era of unlimited potential. and excellence. For those with the necessary computer skills. What it takes is an individual drive for knowledge. selfimprovement. innovation. The (nternet is a powerful tool that empowers anyone with the re%uisite interest and determination to ac%uire the knowledge and skills re%uired for effective "ommercial 'iplomacy. covering every aspect of international These can often be obtained by sending an electronic order on line to the organi+ation involved. With these ingredients. and associations. or to any one of the cyber bookshops on the (nternet. everything has become possible. 6 . such as )ma+on. countries. provides access to a vast number of web sites maintained by individual firms. of course.