Faculty of International Management

and Business Studies

MA in International Relations

Economic-Commercial Diplomacy

Academic year 2020/2021

 
 
The term economic diplomacy implies the use abroad by a state of a wide spectrum
Of economic tools to secure its national interest:

The involvment of a range of actors

Public and private sector, civil society, and array of issues such as security,
natural resources like water, energy, trade and investment and development.
• Facilitating access to foreign markets for national businesses

• Attracting foreign direct investments (FDI) to a national territory

• Influencing international rules to serve the national interetst.

The goal can be as narrow as boosting economic growth or as broad

as developing geo-political infuence and diplomatic network.

Definition also include the notion of rewards and sanctions.

Economic instruments have clearly become a major tool of political diplomacy and
foreign Influence, as illustrated by the economic sanctions imposed on Cuba, Iran
and Russia
Economic diplomacy is functional at four levels:

National

Bilateral

Regional

Multilatreal
 Players

• State actors, Government agencies

• Corporate actors

• International organisations, NGOs

Economic diplomacy requires application of technical expertise:

• Versatility

• Flexibility

• Strong business skills

 Economic diplomacy:
political and economic
means as leverage in
international negotiations
for economic prosperity
and stability of a nation (sanctions!)

Commercial diplomacy: Business diplomacy:

network of public and private
actors supporting
international business using
diplomatic channels and
processes
representation & communication
deployed by MNCs with host
goverments and non-goverment
parties to establish and sustain a
positive relationship to mantain
legitimacy and a ‚license to operate’
Commercial Diplomacy: - Developing business and goverment contacts
- State visits / delegation
- Buyer-seller meetings
- Match-making
Network - Search for partners / distributors / inventors / lawyers
activities - Personal network of commercial diplomat

- Gathering /diseminating commercial information

- Market research
- Reporting to home country
Intelligence - Consultant to both countries
- Image studies, joint scientific research

Commercial Diplomacy - Promoting goods and services

- Participainting in trade fairs, introducing
potential exporters
Image - Sensitizing potential foreign investors
campaigns -
Gathering export marketing data
Tourizm promotion activities
- Awareness campaigns

Support - In negotiations; contract implementation and problem sloving

- Gather export marketing data
business - Supervision of violations of IPRs and contracts
- Advocacy activities
- Coordination of legal actions
Activities of Commercial Diplomacy lead to:

 Export and investment promotion,

bilateral meetings, agreements

Benefits business/increases export and

trade

 Job creation and domestic growth

 Public welfare to the benefit of the society

 Political focus and strategic policies

 Arguments against Commercial Diplomacy

 Firms can do it themselves

 It’s a free market economy
 Buyers and sellers can meet without embassy’s assistance
 It’s internet age  easy and fast availability of information
Diplomats are generalist
 Do not understand businesess
 They’re overloaded with issues other than trade and investment
Cannot measure embassy’s business performance
Diplomats help friends
 Encourages corruption within the diplomatic services
 10 Guidelines for Commercial Diplomacy (by H.J.M. Ruel 2013)

1. Keep on improving, shaping and innovating commercial diplomacy policy,

Instruments and organization: commercial diplomacy is most likely to grow in
Importance as part of foreign policies and as main task for diplomatic missions.

2. Increase focus on commercial diplomacy on emerging economies. Asia in particular

But do not forget neighbouring countries. Commercial diplomacy seems more
relevant in countries with weak institutions.

3. Efficiency and effectiveness will push commercial diplomacy most likely to incorpporate
More „market” elements (charging fees) or hybrid structures, rather than Foreign
Ministry (hierarchy) based strucures. Likely more local staff, fewer home country diplomats
4. More diplomats to be turned into „business supporters” rather than civil cervants.
More proactive than reactive behavior.

5. Improve the quality of service to business of diplomatic mission and commercial

diplomats. Foreign post experience of commercial diplomats and large business network
Help to improve the service level

6. Increase awareness among small and medium sized firms( SME’s) about commercial
Diplomacy.
The higher the sevice level, the more SME’s value commercial diplomacy.
Especially newly internationalizing firms need commercial diplomacy as well as firm with
Public organisations as costumer.
7. Innovate strategies for commercial diplomacy online-presence.
For example, embassy website need to be 21st century-commercial diplomacy ready.

8. Get ambassadors focused on commercial diplomacy.

Private sector experince of ambassadors seems to be positivily related to trade volume
With a host country.

9. Coordinate commercial diplomacy policies, efforts, instruments and organisation in

The European Union. Many EU countries have similar commercial diplomacy
Policies interests and outside the EU many times is not productive.
Coordinate commercial diplomacy priorities at foreign post level.
10. Acknoledge Multi National Companies (MNC’s) as diplomatic actors and
Formulate a transparant strategy on how to collaborate with them. MNC’s conduct
Businesses diplomacy more and more.

Business Diplomacy: „ The representation and communication activities deployed by

International businesses with host government. Representatives and non governmental
Representatives in order to establish and sustain a positive relationship to maintain
Legitimacy and thus a „license to operate”

(Ruel, Walters, Loohuis, 2013)