Adapting Economic Diplomacy To The E-Commerce Era: Štěpánka Zemanová

The Hague Journal of Diplomacy 15 (2020) 279-302
brill.com/hjd
Adapting Economic Diplomacy to the

E-commerce Era
Štěpánka Zemanová
University of Economics, Prague, Czech Republic
zemanova@vse.cz
Received: 15 October 2019; revised: 7 June 2020; accepted: 29 June 2020
Summary
During the past decade, the ongoing progress of digitalisation has triggered so rapid a
spread of cross-border e-commerce that it has required the responses of governments
in their domestic and foreign policies. This article focuses on the related developments
in economic diplomacy, almost neglected in the existing research. It attempts to high-
light a growing need for state engagement and to trace the related shifts in the activi-
ties of governments and diplomatic representations. Drawing on the concepts of the
economic diplomacy cycle and the economic diplomacy process, the newly emerg-
ing practices of countries leading in e-commerce and digitalisation are analysed. The
analysis shows that the concurrence of rapid globalisation and slow international
regulation has been creating favourable conditions for the upswing in e-commerce-
related diplomacies. A new complex branch of economic diplomacy has been emerg-
ing, based on the adaptation of traditional economic diplomacy patterns but bringing
also far-reaching change and innovation.
Keywords
economic diplomacy – e-commerce – digital trade – export creation – export and

investment promotion
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280 Zemanová
1 Introduction1
In recent years, we have witnessed a robust trend in digitalisation. This has

been widely reflected in the scholarly literature on diplomacy,2 including
works on online export promotion tools.3 Similarly, economics and business
research has reflected the evolution and rapid spread of digital commerce (or
e-commerce) for almost three decades, since the search engine Archie was
launched in 1990 and the first electronic transactions were carried out over
NetMarket. It has demonstrated that various forms of transaction, based on
new technologies and breakthrough applications, modify ways of doing busi-
ness, rewrite the rules of competition, and almost spontaneously create a new
economic landscape.4 Far-reaching changes in the ‘scope, scale, and speed of
trade’ resulting from digitalisation are now a widely recognised fact,5 and phe-
nomena such as e-commerce and digital markets are considered integral and
extremely dynamic parts of our present and future.
However, despite enormous scholarly interest in the digitalisation of both
trade and diplomacy,6 almost no effort has been invested in the better under-
standing of their mutual linkages; that is, the responses of diplomacies to the
new reality of e-commerce and digital business. Little is known about the spe-
cifics and difficulties of related international negotiations, about the adapta-
tion of diplomatic assistance designed for traditional physical trade in goods
and services to the e-commerce reality or about possible innovations provoked
by their divergences.
This article aims to contribute to deeper understanding of the impacts of
e-commerce on economic diplomacy creation and implementation, in par-
ticular a growing need for the response of states to the enormous dynamic
of e-commerce operations and the related shifts in the activities of govern-
ments and external representations. Consistent with the existing economic
diplomacy literature,7 the new developments are seen through the lenses of
the economic diplomacy cycle and process.
To capture the possible range of emerging practical approaches, the empiri-
cal part of this article draws on official documents and websites devoted to pro-
motion of export and investment. The documents and websites both belong
1 The author gratefully acknowledges institutional and financial support by the Faculty of
International Relations, University of Economics, Prague.
2 Bjola and Holmes 2015, 4; Pilegaard 2017, 317-320; Bjola, Cassidy and Manor 2019, 86-89.
3 Ruël, Gesink and Bondarouk 2015, 300-309.
4 Mesenbourg 2000, 2; Day, Fein and Ruppersberger 2003, 132.
5 Lopez-Gonzales and Ferenz 2018, 4; World Bank 2016, xiii.
6 Cf. Justinek 2018, 30-34.
7 Coolsaet 2001, 8; Okano-Heijmans 2013, 24-25; Reuvers and Ruël 2012, 5-9.

Adapting Economic Diplomacy to the E-commerce Era 281
to states that are leaders in the field. The group of states combines the 2017
Top Five countries in e-commerce activity,8 with countries at the top of the
2018 Oxford Economics Digital Society Index9 and the European Union (EU)
2018 Digital Economy and Society Index.10,11 It comprises the United States,
Japan, China, the Republic of Korea,12 Canada, the United Kingdom, Germany,
Denmark, Sweden, Finland and the Netherlands. The choice reflects the het-
erogeneity of economic diplomacies13 and enables us to capture a broad spec-
trum of current and future trends in this area. However, it is beyond the scope
of this article to reflect considerable differences between countries and their
economies. In particular, it does not cover the less advanced modes of eco-
nomic diplomacy implementation which, related to e-commerce, may emerge
as a result of average performance or underperformance in digitalisation.
The picture of leaders in the empirical part of the article is based on their
national materials and completed with qualitative data from the reports of
international intergovernmental organisations — particularly, the World
Trade Organization (WTO) — and, to a limited extent, media releases relevant
to economic diplomacy making. Quantitative aspects are intentionally omit-
ted as, for the time being, development of relevant international statistics
by the WTO and Organisation for Economic Co-operation and Development
(OECD) is only in progress, and data on international e-commerce from vari-
ous resources are fragmented, unreliable and incommensurable.
As is typical for economic diplomacy research, this article concentrates only
on positive diplomatic interactions. This is given mainly by its limited extent
and does not mean that e-commerce would be unaffected by negative eco-
nomic diplomacy (coercion). On the other hand, the significance of negative
economic diplomacy has been demonstrated by the impacts of tariffs imposed
on current US-China trade for e-retail giants on both sides (Amazon, Alibaba,
JD.com). The expected losses of small Chinese e-commerce companies, related
to US attempts to either renegotiate the rules of the Universal Postal Union
or to withdraw from the organisation, provide another striking example.14
Therefore, negative economic diplomacy must be considered a possible topic
for further investigation in this area.
8 WTO 2018a, 51.

9 Oxford Economics 2018, 9.
10 European Commission 2018, 2.
11 For all indicators, the latest editions available at the beginning of this research — that is,
January 2019 — were used.
12 According to WTO 2018a, 51, the United States, Japan, China and the Republic of Korea
together made 50 per cent of B2B and B2C e-commerce transactions by volume in 2017.
13 Cf. van Bergeijik and Moons 2018, 11.
14 White House 2018; Wang 2018.
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282 Zemanová
2 Theoretical Background: The Economic Diplomacy Cycle

and Process
In contemporary scholarly literature, economic diplomacy mostly refers to a

broad interface of diplomacy and economic affairs of a state. It overwhelms
trade and commercial diplomacy, which concern primarily the employment
of political and diplomatic tools for economic reasons.15 As the common
understandings of these terms overlap, and their contents evolve dynamically
together with the rapid changes in international economic relations, Peter A.G.
van Bergeijk and Selwyn J.V. Moons suggest unifying the research under the
economic diplomacy umbrella.16 Their notion of economic diplomacy then
combines the following three elements:
– ‘the opening of markets to stimulate bilateral cross-border economic activi-
ties such as imports, exports, mergers and acquisitions and greenfield for-
eign direct investments
– the building and use of bilateral cultural, political and economic relation-
ships between countries in order to assist domestic companies
– the use of bilateral economic relationships, including (the threat) to discon-
tinue these activities, as a tool of diplomacy’.17
As shown in the existing studies, intensity of economic diplomacy varies across
time. It develops in global cycles and gains prominence in the periods of accel-
eration of globalisation not captured by the relevant rules of conduct. In these
periods, it is boosted by the demands of companies, to which governments
respond in order not to disadvantage them against rival foreign firms.18 The
logic of the global cycle mingles with the changing interests of states, induced
by power shifts in the international system, and the dynamics of domestic poli-
tics, according to which governments usually adopt new initiatives at the ear-
lier stages of election periods.19
15 The use of the concepts in the earlier economic diplomacy literature and in practice
is somewhat fuzzy and inconsistent. A tendency existed to link the commercial diplo-
macy with the support of private sector profit-making activities by bilateral diplomatic
tools, the trade diplomacy with broader bilateral and multilateral promotion of trade
and investment, and to understand the economic diplomacy as an overwhelming term.
However, under the pressure of practice, the terms — in particular economic and
commercial diplomacy — were sometimes synonymised. Cf. van Bergeijik and Moons
2018, 2-3.
16 van Bergeijik and Moons 2018, 1-2.
17 van Bergeijik and Moons 2018, 2.
18 Coolsaet 2001, 8.
19 Okano-Heijmans 2013, 24.

Although economic diplomacy, as a cross-cutting issue at the interface of

politics and economics, as well as international and domestic environments,20
can be studied from multiple perspectives, in diplomacy research it is usu-
ally captured as a process characterised by its specific inputs, throughputs
and outputs.21
According to previous research, the range of state actors involved in the
economic diplomacy process spans from the high-policy level (heads of states,
parliament representatives) to ambassadors and low-level diplomatic staff
(commercial counsellors, attachés). Commonly, these are complemented with
non-diplomatic facilitators such as trade promotion agencies, chambers of
commerce, and so forth.22
Thus, the inputs of economic diplomacy include a wide scope of drivers
(objectives, rationales) and shapers (resources, characteristics) behind these
actors’ activities.23 Through state representatives, the drivers absorb the inter-
ests, considerations and needs of businesses as the main recipients and con-
sumers of the economic diplomacy service. In the same way, they also reflect
the impulses given by the rapid growth of multinational companies and the
shifts in power from states to business.24 The inputs are closely related to the
outputs; that is, the expected political and economic achievements of the dip-
lomatic activity.25
The throughputs comprise various tools that economic diplomacy actors
(governments and their foreign representations, export promotion agencies,
private interest groups etc.) create to transform their objectives into the desired
outcomes.26 In several recent studies, the tools have been classified according
to their relation to the territory of a state; that is, as either international or
domestic activities.27
The international dimension of economic diplomacy combines general
multilateral and bilateral initiatives to boost prosperity of a state and its exter-
nal economic relations with assistance to individual companies in their inter-
national operations. The respective toolkit comprises multilateral negotiations
in various theatres (e.g., international bodies, particularly the World Trade
Organization), the creation and implementation of plurilateral and bilateral
20 Okano-Heijmans 2013, 33-34.

21 Reuvers and Ruël 2012, 6-9.
22 Ruël and Zuidema 2012, 107.
23 Reuvers and Ruël 2012, 6-9.
24 van Gorp 2018, 48-49; Stopford, Strange and Henley 1991, 20-23.
25 Reuvers and Ruël 2012, 8.
26 Reuvers and Ruël 2012, 7.
27 See, for example, Okano-Heijmans 2013, 34; van Bergeijik and Moons 2018, 9-10.

284 Zemanová
trade and investment agreements to remove barriers to trade and foster inter-
national cooperation as well as related dispute settlements and coercion.
The service to companies includes business intelligence, with emphasis on
gathering and disseminating market information, matching companies with
foreign business partners, the advocacy of the national business community
and assistance with fairs, trade missions and other networking activities.28 It
is complemented with a set of activities designed to make companies in the
domestic environment export ready.29 Traditionally, these services target firms
established in the domestic market that have newly decided to start their inter-
nationalisation. In addition, they also help established exporters to expand
their exports and succeed in difficult markets. The necessary assistance differs
depending on the firm’s characteristics.
3 The Global Cycle and the Broader Context of Current Diplomatic

E-commerce Support
For analytical purposes, commerce is usually understood as a combination of

trade (i.e., buying and selling goods and services) with other related activities
such as payments or deliveries.30 Thus, e-commerce refers to doing some of
these activities over the internet, and international e-commerce to all cross-
border trade transactions of this kind.31
According to Kenneth C. Laudon and Carol Guercio Traver,32 e-commerce is
now in the third phase of its evolution. After the wild pioneering period of the
late 1990s, which came to the end with the ‘dot.com crash’ in 2000, it under-
went consolidation. Since 2007 it has been experiencing reinvention and, as
soon as the world recovered from the global financial and economic crisis in
the early 2010s, has shown double-digit growth rates. The global number of
digital buyers has soared from 1.34 billion to 1.79 billion and is expected to
reach 2.0 billion in 2020.33 As the United Nations Conference on Trade and
28 Narray 2011, 130-133.

29 Potter 2004, 57; Ruël and Zuidema 2012, 111-112.
30 Cf. Cambridge Dictionary 2019a, 2019b.
31 For statistical purposes, the OECD considers the digitalisation of placing orders as the
crucial defining feature of e-commerce, whereas other relevant operations do not have
to be proceeded with online, via computer networks or mobile facilities. See OECD 2013.
However, the distinction did not transpire to be significant in the governmental materials
analysed in the empirical part of this research and therefore is not applied throughout the
article.
32 Laudon and Traver 2018, 70-75.
33 Statista 2019.

Development reports, the lead segment of business-to-business transactions

(B2B) amounted to $19.9 trillion in 2015, and business-to-customer transac-
tions (B2C), which are more dynamic than B2B, reached $2.3 trillion.34 One
year later, the McKinsey Global Institute estimated that e-commerce con-
stituted approximately 12 per cent of cross-border trade in goods and 50 per
cent in services,35 and predicted eightfold growth of cross-border internet
traffic by 2025.36
Recent economists’ research has shown that the rapid growth of e-commerce
has been changing the business environment in many regards.37 The more
companies enter cross-border business operations, the more intensive com-
petition becomes,38 and new cost effectiveness and innovation pressures
emerge. This requires extensive alterations of industries and firms, distribu-
tion channels, business, marketing strategies and so forth. In recent years, the
changes have reached so far that e-commerce is even reported to facilitate
globalisation and transform it.39 The trend has been further boosted by the
second transition, launched with the introduction of social media (Web 2.0)
and mobile applications and the related challenges to presentation, process-
ing and interaction with the customer.40 In the upcoming period, further
strong impulses for the evolution of e-commerce can be expected in connec-
tion with the COVID-19 outbreak, the related economic crisis and altering pur-
chasing patterns during and in the aftermath of the governmental quarantine
restrictions.
Due to the specifics of e-commerce, as well as its dynamics, governments
perceive a need for a respective regulatory infrastructure at the international
level. As early as the 1990s, diplomatic efforts to create suitable international
rules penetrated the agenda of many international bodies, ranging from the
WTO to the UN system as well as the Group of 7 and Group of 20. Some of these
bodies, such as the World Intellectual Property Organization (WIPO) and the
UN Commission on International Trade Law (UNCITRAL), responded to the
e-commerce challenge immediately.
However, legally binding regulations have remained constrained primarily
to property rights issues, covered by two 1996 WIPO internet treaties and the
34 U N Economic and Social Commission for Asia and Pacific 2016, 105.
35 Manyika et al. 2016, 7.
36 Lund and Manyika 2016, 1.
37 Laudon and Traver 2018, 49-50; Qi and Tapio 2018, 55-60; Hua et al. 2019, 1907; and many
others.
38 Even hypercompetition is reported in many branches.
39 Lund and Manyika 2016, 1.
40 Laudon and Traver 2018, 57; Kourouthanassis and Giablis 2012, 5-7.

286 Zemanová
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIP s).41

A comprehensive, broadly recognised normative background is still missing.
Such a background would prevent the replication of offline barriers to trade
in the online world as well as other forms of digital protectionism and would
help harmonise national regulatory frameworks. The UN Convention on the
Use of Electronic Communications in International Contracts, presented by
UNCITRAL in 2005, entered into force in 2013 and had only twelve parties by
the end of 2019.42 The WTO has not yet been able to cover the problems of
e-commerce with a new treaty, although they have been on its agenda since
1998 and the related debates have ranged from barriers to trade and fiscal
implications, to developmental aspects and the specific symptoms of the digi-
tal divide.43
Overall, due to rapid globalisation and persisting slow progress in the cre-
ation of respective multilateral legally binding rules of conduct, there have
been favourable conditions for the adaptation and acceleration of economic
diplomacy to cross-border e-commerce for more than a decade. Therefore,
the shift towards proactive approaches by states can be considered a vital and
natural response.
4 Divergences and Analogies of E-commerce and ‘Traditional’

Physical Trade
As the emergence and rise of e-commerce is a phenomenon with wide-ranging

economic, societal and even political impacts, it has provoked the interest of
states from the outset. In efforts to boost external economic relations, atten-
tion has been paid to advantages over physical trade in goods and services that
could be used for the internationalisation and globalisation of enterprises, in
particular the ubiquity given by limited ties to concrete geographical spaces.44
The broad availability of e-commerce almost everywhere and at any time
where the potential customer is online, as well as the reduced market entry
costs of bringing goods and services to the customer digitally, creates plenty of
opportunities for companies and thus makes economic diplomacy attractive
for a variety of business stakeholders. Yet as in the case of physical trade, there
41 Connolly and Ravindra 2006, 31-32; Gao 2018, 3.

42 United Nations Treaty Collection 2020.
43 For details of WTO involvement see, for example, Gao 2018, 2-4; Lee-Makiyama and
Narayanan 2019, 2-4.
44 Laudon and Traver 2018, 60.

are huge differences between their needs, depending on their previous export
experience as well as their size and economic power.
Thanks to its variety, e-commerce especially suits the internationalisation
of young small and medium enterprises (SME s).45 Nevertheless, as the failures
of US companies such as eBay, Amazon, Uber and Airbnb in China demon-
strate, even the giants might need assistance to cope with local specifics when
entering extremely difficult markets.46,47 And as the #backaSpotify campaign
in Sweden recently revealed, state assistance is demanded even by the ‘born
globals’ — new companies that are international from the outset such as in the
information technology, gaming, music and design branches.48
Whereas ubiquity differentiates e-commerce from traditional trade, in a
growing number of cases the need for economic diplomacy is given by their
analogies. This is particularly true for a platform-enabled e-commerce trans-
action (i.e., a trade facilitated by a matchmaker), which leads to the rise of
strong multinationals both outside and inside the territory of the purchasers/
sellers.49 Currently, it is estimated that there are more than 400 such market-
places worldwide,50 either general or specialised, in selected products.51 The
necessity to introduce and establish national companies in these marketplaces
creates a new space for state-firm diplomacy.52
Another important analogy with traditional trade, which urges economic
diplomacy in the e-commerce sphere, insists on its remaining ties to states and
45 Business Sweden 2016.

46 Lee 2018, 34-40.
47 This is confirmed by CEO s of large international companies. To illustrate, Jais Valeur, from
Danish Crown, put it this way: ‘The Trade Council has helped Danish Crown establish
contact to high-level executives in Alibaba, the world’s largest e-commerce platform,
which opens totally new and exciting sales opportunities. Even a major international
company such as Danish Crown needs the expertise found at the Trade Council’. Ministry
of Foreign Affairs of Denmark s.d.
48 Fleischer and Kullenbe 2018, 316-317.
49 W TO 2018b.
50 Amazon, eBay, and Wish are the most well-known examples in the Western world.
Alibaba, AliExpress (China), Mercado Libre (South America), Rakuten Ichiba (Japan) or
Tejuri (the Gulf) are a few representatives in other regions.
51 Government of Canada 2019a.
52 The emergence of state-firm diplomacy was originally observed by Strange in 1992 as a
response by ‘greatly intensified competition among states for world market shares’. Cf.
Strange 1992, 6. In that period, this new diplomacy mode existed mainly in bargaining
of states with foreign and domestic firms on the location of commercial operations on
their territories and resulted in partnerships between states and firms. This element is
now newly combined with the efforts to ensure access to foreign customers through the
location of national companies at virtual (extraterritorial) market places.

288 Zemanová
their territories: nationality/domicile of legal and physical persons involved

and related duties such as tax payments, IP addresses of devices through
which the transactions are realised, storage, shipment routes and so forth.
The ties make e-commerce prone to some obstacles typical for traditional
international trade such as regulatorily barriers, different or double taxation,
intellectual property rights protection and copyright framework, prices and
inefficiencies of telecommunication services and courier services.
As the obstacles may obviously result in market distortions,53 their preven-
tion or removal through political and diplomatic tools contributes to extend-
ing exports and the full use of underexploited growth potential. Motivation
for the employment of economic diplomacy is further deepened by some
e-commerce-specific problems — for example, costs of small parcel deliveries
and parcel logistics in its B2C segment; the malpractices of unjustified geo-
blocking, which excludes orders from other countries; geolocalising, which
insists on different pricing for customers from different countries, as well as
the need to combat the possible illegal content of digitalised products and
other related illegal activities.
Many of these obstacles could be removed through the creation of a new
international regime. However, as already stated above, progress has been
slow. As a result, regulatory uncertainty persists. Divergencies in the relevant
national legal environments have even deepened, which is primarily apparent
from the very different approaches of the main players in electronic trade; that
is, the United States, the EU, and China.
The United States, since the Bill Clinton administration, has emphasised
a laissez-faire approach, primarily focused on the removal of barriers to data
flows and free access to digital markets. This interest in preventing digital
protectionism has been, in principle, shared by the EU but with emphasis on
online trust, and thus privacy and personal data protection. The emphasis has
been so strong that it resulted in the prohibition of transfers of personal data
to countries with lower protection standards and, in relation to its trade part-
ners, this rule is non-negotiable.54
Finally, China, with its great firewall, has created a system of cyberpater-
nalism, which prevents its citizens from accessing foreign websites and unfa-
vourable content and introduces a wide system of data localisation. Combined
53 For example, the European Commission reported in 2015 that these obstacles prevented
many SME s from entering international e-commerce. As a result, only 7 per cent of SME s
originating in the EU were involved.
54 Aaronson and Leblond 2018, 253-262.

with the specific online culture of the Chinese population,55 this has stimu-
lated the extreme growth of its domestic companies, such as Baidu, Alibaba
and Tencent, and forced the cooperation of foreign companies with domestic
ones in some branches (e.g., cloud services).56
These three models have been spreading across other countries which is, in
the case of the United States and the EU, rather a matter of the attractiveness of
their markets, and as a result of systemic policy within the Belt Road Initiative,
in the case of China. However, when creating their national law, many govern-
ments interested in e-commerce face severe dilemmas due to their substantial
differences. For example, Canada and Mexico are balancing between the US
and European approaches, whereas many African countries waver between
the European and Chinese ones.57 The Chinese approach seems to be attrac-
tive for several latecomers, especially Russia, but some of its elements have
even been adopted by Germany and France.58
Moreover, the regulatory differences interrelate with specific symptoms of
the digital divide in e-commerce. To some extent, these result from the differ-
ences in information and communication technology infrastructure and digi-
tal and mobile connectivity across countries. At the same time, they deepen
with logistical problems, the unavailability of electronic payment tools and
pricing strategies of global electronic platforms.59 As a consequence, leaders
in digitalisation and e-commerce have to accommodate the accusation of new,
digital colonialism, based on the use of their advantage in setting the rules and
dominating less developed markets.60
5 The Adaptation and Creation of Diplomatic Tools for

E-commerce Support
The lack of progress in international negotiations on e-commerce, in particu-

lar the WTO debates, has so far been the key driver shaping the related diplo-
matic tools applied at international and interstate levels. The inability of the
WTO to create a relevant legal milieu for e-commerce transactions has made
many states replace its plenum with smaller groups of like-minded members or
move outside its institutional framework. The new diplomatic efforts include
55 See Lee 2018, chap. 3.

56 Gao 2018, 21.
57 Aaronson and Leblond 2018, 269.
58 Quinn 2017, 425-426; Azmeh and Foster 2016.
59 W TO 2018a.
60 Cf. Petrenko et al. 2017, 96; Pinto 2018, 16-21.

290 Zemanová
especially the recent initiative of over 70 WTO countries to launch debates on

removing barriers and ensuring transparency in cross-border sales that would
result in a worldwide digital trade pact, and the negotiations on the plurilateral
Trade in Services Agreement (TiSA).61 In addition, the issue is also addressed
by regional integration and co-operation bodies such as the European Union
and Asia-Pacific Economic Cooperation.
Due to the embeddedness of negotiations and treaty arrangements, the
diplomatic toolkit in the international and interstate dimension remains very
traditional. In contrast, the service to companies combines proven tools, such
as joint, governmentally supported delegations at e-commerce exhibitions and
visits to foreign markets, with original and innovative approaches. To a large
extent, these approaches are born in new public-private partnerships involv-
ing experienced professionals in state and diplomatic support of cross-border
e-commerce. Those partnerships created between the Grow Global interna-
tional digital strategy and training company and the governments of the UK
and New Zealand62 and within the Canada Business Network,63 the Japanese
J-start-up programme and Global Acceleration Hubs64 are a few illustrational
examples.
The recently introduced services range from the training of companies’
staff in internationalisation paths and expert advice related to various techni-
cal aspects of international e-commerce, to international website reviews. The
spread of these services results in new requirements regarding training, skills,
competencies and activities of diplomats. These include the call by Canadian
Manufacturers & Exporters for Canadian government specialists to spend one
day per week in work with companies, helping them develop international
strategies, including e-commerce ones.65
At the same time, market intelligence tailored for e-commerce appears. It
goes far beyond the standard export and investment information,66 with its
focus on the country-specific contexts of e-commerce, particularly available
channels, solutions, infrastructure, data security, market protection, regulatory
framework, intellectual property protection and counterfeiting.67 Additionally,
61 Congressional Research Service 2019; WTO 2019.

62 ‘Grow Global’ 2019.
63 The Canada Business Network unifies Canadian federal departments, provincial govern-
ments and non-profit entities to support SME s.
64 J ETRO s.d.
65 House of Commons of Canada 2018.
66 That is, on business opportunities, local conditions, risks and prerequisites, customer
preferences, habits, regulations, duties and so forth.
67 German Trade and Investment 2019.

attention is paid to the new, digital dimension of consumer behaviour. Next to

the usual consumption and purchasing patterns, these cover unique cultural
and language preferences, device preferences68 and established payment and
delivery modes.69
Thanks to the broad opportunities opened by e-commerce to various types
of companies, an integral part of state support in this segment becomes
e-export creation; that is, encouraging these enterprises to enter cross-border
e-commerce through awareness raising, advice, training and dissemination
of success stories. This happens in particular with the help of local economic
diplomacy or export promotion offices, sometimes combined again with the
assistance of non-state experts from the business sector. Specific and highly
specialised diplomatic service portfolios are then developed for the born
globals. As states compete to host these companies in their territories, a new
task for economic diplomacy (combined with smooth domestic economic
policies) is to prevent them from moving abroad.70
6 Traditional Agreements, Innovative Support Portfolios
As José-Antonio Monteiro and Robert Teh demonstrate, the application of tra-

ditional economic diplomacy tools to bridge over the insufficient regulatory
framework has brought a steady rise in the number of plurilateral and bilateral
trade agreements. These include, among others, the Japan-Australia Economic
Partnership Agreement and the Additional Protocol to the Framework
Agreement to the Pacific Alliance (concluded between Mexico, Chile, Columbia
and Peru). The complexity of provisions relevant for e-commerce conduct has
also been increasing. Again, a variety of issues can be addressed, among which
promotion of e-commerce, cooperation, no customs duties, definitions and
consumer protection are the most frequent ones. Singapore, the United States,
the EU, Japan, Korea and Australia appear the most active in engaging in these
types of commitments at the moment.71
Similarly, within the service to companies, specific information on e-com-
merce has already become an integral part of some territorial export guides
published by ministries, embassies and export promotion agencies.72 Several
68 That is, current and future trends in the usage of personal computers, tablets, mobile
phones and wearables for online shopping.
71 Monteiro and Teh 2017, 10.
72 Cf. Government of Canada 2019a, 2019b.

292 Zemanová
countries, such as the UK, attempt to go even beyond this and provide their
online exporters with more in-depth data analytics.
A possible direction for further progress in e-commerce-tailored informa-
tion services has recently been demonstrated by the Republic of Korea and its
Korea Trade-Investment Promotion Agency (KOTRA), which was able to trans-
late its business information web pages into an international B2B marketplace
(www.buykorea.org). In the present day, the web pages connect Korean sup-
pliers with demand from more than 80 countries in all the main world regions
and is supported by an ecosystem of almost 130 overseas trade centres, trade
delegations and related business intelligence.73
Other alternatives for future evolution are indicated by the eCommerce
Innovation Lab project by the US Department of Commerce, and Denmark’s
TechPlomacy, both introduced in 2017.74 The Lab, a Silicon Valley — based
office, boosts US online sales overseas primarily through assistance with digi-
tal strategy development and Website Globalisation Review Gap Analysis. In
addition, it has been building an online eCommerce Export Resource Centre
— a library making relevant sources on digital business and trade accessible
in one place.75 The Danish concept of TechPlomacy should, according to the
recent Government Strategy on Economic Diplomacy, support the position of
Danish entrepreneurs as forerunners in digitalisation with a new kind of busi-
ness intelligence focused not only on new technologies but also on innova-
tive business models.76 At the moment, this is provided by three TechPlomacy
offices (called Digital Embassies) located in Silicon Valley, Copenhagen and
Beijing.77
The opportunity window for export creation through e-commerce has
also been reflected by several countries such as the United Kingdom, in the
‘Grow online, expand worldwide’ campaign, and Finland, in its eComGrowth
initiative.78 The UK created the first-ever e-exporting programme and, more
recently, the Passport to Export for E-commerce.79 With the use of a global
network of B2B support, its Trade and Investment Department (UKTI) has
assisted more than 7,000 SME s to match their exporting potential with the
73 KOTRA 2016.

74 US Department of Commerce 2019; Ministry of Foreign Affairs of Denmark 2018.
75 U S Department of Commerce 2019.
76 Ministry of Foreign Affairs of Denmark 2018.
77 Frijs-Madsen 2018, 6.
78 Business Finland s.d.
79 Hunter 2013.

extremely dynamic world of online markets.80 In December 2017, the UKTI and
the US tech-e-retailer, Newegg, started a pilot campaign of British products on
their sites.
Regarding larger companies (including born globals), the traditional bar-
gaining on the location of their businesses, know-how, technologies, their capi-
tal on states’ territories and the need to provide incentives to attract and retain
firms’ operations and the value added81 also translate into the e-commerce
realm. This is apparent from the Chinese initiative to create Cross-Border
E-commerce Free Trade Pilot Areas, starting in 2014 in Hangzhou, Zhejiang,
which was soon extended to 12 cities and, in the third wave, to another
22 cities.82
The new momentum in these efforts is given by the platform-enabled
e-commerce phenomenon. The electronic marketplaces, currently operated
by a number of powerful multinationals, provide promising distribution chan-
nels not only in terms of the internationalisation of SME s, for which they are
particularly suitable. They are also prospective in terms of general export cre-
ation since their attractiveness has been growing for large sellers, who have
been changing distribution patterns in many branches. Yet at the same time,
the competition in these markets is enormous and any state assistance can
mean a significant advantage for national entrepreneurs.
As the top management of e-commerce platforms are aware of their rising
bargaining power, they approach governments with requirements that should
ease their business operations; for example, building warehouses in places
with a high concentration of demand. In response, states, within investment
promotion programmes, compete to attract distribution centres. This was
clearly demonstrated by the recent race between the Netherlands and Belgium
to invite Alibaba to their territory.83
Some countries have even responded to the Alibaba Group’s suggestion
to create digital duty-free zones. The first one is being built in Malaysia and
should be operational by 2020. Subsequently, the project is to continue with
Rwanda and Belgium. Malaysia, Rwanda and Belgium were also the first states
to join the global private multi-stakeholder initiative called the Electronic
World Trade Platform, which was initiated in 2016 by the founder of the
Alibaba Group, Jack Ma.84
80 For example, Red Herring games’ overseas expansion through Amazon or Rarewaves’ suc-
cessful online entry into Australia.
81 Cf. Strange 1992, 6-7.
82 Yongqui 2018.
83 Retail Detail 2018.
84 ‘Alibaba Signs Agreement with Belgium for E-commerce Trade Hub’ 2018.

294 Zemanová
The UK can be considered again as an early bird of governmental support for

the entry of national companies into the rapidly growing global and regional
e-commerce platforms. After the pilot introduction of about 100 British
brands to several Chinese and Persian Gulf e-market places in 2013, it became
an integral part of the British e-commerce programme, which was launched
to assist more than 50,000 British companies by 2020.85 Subsequently, it was
extended by special deals with several leading e-commerce platforms (e.g.,
Fruugo, Linio and ttHigo), which enabled British entrepreneurs to enter these
marketplaces in advantageous conditions such as with reductions of standard
commissions.86
In several national economic diplomacies, meetings of national companies
with the sales representatives of global marketplaces are also an emerging tool.
In Canada, companies are introduced to digital platforms by the Canadian
Global Affairs Trade Commissioner Service.87 In the UK, establishing an ini-
tial contact between Tmall and Tangle Teezer hairbrush producers enabled the
company to create a brand store on their platform. This step, supported with
campaigning on Weibo and Weixin social media, led to the rapid growth of
their sales.88 An official Dutch visit to China in 2015 launched the cooperation
of Tmall with the Dutch consulate. This opened new outlets for several Dutch
retail companies and initiated contacts between KLM Dutch Royal Airlines,
the Netherlands Board of Tourism & Conventions and Alitrip.89
Denmark signed a Memorandum of Understanding with the Alibaba Group
in 2017, which resulted in the creation of Denmark Pavilions on its Tmall Global
marketplace and in the travel booking platform Fliggy. As soon as Denmark
became the first country to enter Alibaba’s visa innovation programme, Scan
dinavian Airlines opened its flagship store on Fliggy.90 The Japanese Ministry of
Economy, Trade, and Industry (METI) and Export Promotion Agency (JETRO)
have been running the Japanese Mall websites project since 2018. Currently, it
covers the most important online channels in eighteen countries, including
the Alibaba Group in China.91
Future trends could depart from the Danish TechPlomacy, which has gone
even further with Denmark’s aim to be the first country in the world to have
85 U KTI and Lord Livingstone 2014.

86 Department for International Trade 2019.
87 House of Commons of Canada 2018.
88 U K Trade and Investment 2014.
89 ‘Alibaba Partners with Major Dutch Brands’ 2015.
90 Arnason 2017; Gillet 2018.
91 ‘METI and JETRO to Boost E-commerce Support for Japanese Firms via Japan Mall
Websites’ 2019.

diplomatic relations with leading technology companies, including e-com-

merce platforms.92 The initiative not only aims at using opportunities opened
with deterritorialised platforms. Individually, or in cooperation with other
countries,93 it is also intended to cope with several challenges resulting from
digitalisation, especially cybersecurity, tax evasion, tax avoidance and viola-
tions of intellectual property rights. Thus, to give an example again, provisions
regarding anti-counterfeiting and protection of intellectual property appeared
in the Memorandum of Understanding that Denmark agreed with the Alibaba
Group.
7 Conclusions
Since the reinvention of e-commerce in the second half of the 2000s, there
have been favourable international conditions for the upswing of its support
within the framework of economic diplomacies. The rapid globalisation in this
area has intertwined with the lack of broader, legally binding international reg-
ulation, as attempts to create an appropriate international regime have been
burdened with discord globally. Further complications have developed due to
the linkages of e-commerce issues to standard international trade agenda as
well as by the intensifying attempts of the three key players, the United States,
the EU and China, to spread their regulatory approaches to other countries.
A new branch of economic diplomacy has emerged that covers sectors cap-
tured by digitalisation and responses to new electronic ways of selling and
buying goods and services. Currently, it can be considered complex, as it takes
in the whole economic diplomacy process, and its peculiar inputs, through-
puts and outputs can be observed. To some extent, this branch is based on the
adaptation of traditional economic diplomacy to the new e-commerce reality.
But at the same time, the uniqueness of e-commerce has been an important
driver of far-reaching change and innovation.
The adaptation of existing economic diplomacy features to the e-commerce
reality is enabled primarily through the similarities of electronic commerce to
the traditional form. In particular, they insist on persisting ties to states’ territo-
ries and the related risks such as digital protectionism. The protectionism may
be constrained through international negotiations and agreements, although
so far there have been only plurilateral (regional) and bilateral ones.
92 Torrealba 2018, 8-9.

93 Klynge, Ekman and Waedegaard 2020, 185.

296 Zemanová
In addition, parallels are also given by the rising economic power of the
most successful firms, either born globals or those operating key global and
regional marketplaces. The necessary geographical location of important parts
of their entrepreneurial activities (research and design, warehouses, distribu-
tion centres) within the territories of a state has become a new target of the
competition among states. It not only provokes the application of economic
policy tools, such as the creation of duty-free zones, but also requires new
directions of state-firm diplomacy.
At the same time, as the importance of assistance to companies increases,
foreign policies and diplomatic services are forced to search for innovative solu-
tions on their own and in close co-operation with the private sphere. The exist-
ing architecture of the support to companies has served as a point of departure
for the creation of relevant patterns in the e-commerce area. However, as it is
much more influenced by the specifics of e-commerce, in particular ubiquity,
it is the main centre of innovation.
As the examples of the leading countries in e-commerce and digitalisation
show, there is a multitude of new programmes, tools and approaches, rang-
ing from making companies export ready and export promotion to investment
support. Attention is no longer paid only to conventional entries in foreign
markets. Partnership with private companies operating international market
spaces becomes a strategic goal, not only to boost foreign trade but also to
prevent and solve problems related to intellectual property or taxes. In these
regards, the impacts of e-commerce on economic diplomacy can be consid-
ered transformative.
Undoubtedly, the new trends deserve further scholarly attention and should
become an integral part of future economic diplomacy research. Although
it will be, in the initial phase, limited by the lack of quantitative data, most
topics introduced by existing qualitative economic diplomacy studies94 can be
addressed, reaching from the articulation and promotion of national interests
over agendas and tools created by the domestic and foreign representations
of states, to the newly emerging regional and multilateral arrangements. Once
the relevant international statistics are available, the research agenda could
move to the traditional issue of economic diplomacy effectiveness in relation
to various types of e-commerce and sectors and across countries. In addition,
there will be need for cost-benefit analyses of the related diplomatic infra-
structure as well as specific responses of economic diplomacies to uncertainty,
volatility and possible shocks to digital markets.
94 Cf., in particular, van Bergeijik and Moons 2018; Okano-Heijmans 2013; Reuvers and Ruël
2012.

Last but not least, future research should not only cover the countries that
pioneer the path toward digitalisation. As this obviously is a multi-speed pro-
cess reflecting, to a large extent, heterogeneity and current economic and
technological imbalances in the world, it also has an important developmental
dimension. Thus, the timely response of economic diplomacy research could
be of practical relevance if it is able to identify possible problems and recom-
mend ways to address them in the early stages.
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Štěpánka Zemanová
is Associate Professor and Head of the Jan Masaryk Centre for International
Studies, Faculty of International Relations, University of Economics, Prague,
Czech Republic. Her research interests cover economic diplomacy, economic
statecraft, international sanctions and the political and economic aspects of
international human rights protection.


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The Hague Journal of Diplomacy 15 (2020) 279-302