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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
COMMERCIAL DIPLOMACY IN A WORLD OF MULTIPLE SCENARIOS: A range of trade corridors and regional and interregional negotiations

by Félix Peña
January 2013

English translation: Isabel Romero Carranza


 

The new international realities are impacting the way in which countries face the development of their commercial diplomacy. These are the result, among other things, of technological changes that are shortening the physical, economic and cultural distances; of relative economic power shifts between countries and regions; of the growing importance of non-state actors; of the development of transnational production chains; of the rise and empowerment of urban consumers with middle class incomes, and the proliferation of "private clubs" in world trade.

Given these new realities, the quality of commercial diplomacy impacts the effectiveness of a country's strategy for an active integration in the multiple scenarios of international economic competition. These may be single countries, especially when they have great economic dimensions, but increasingly also regional and interregional spaces.

In a multi-space commercial diplomacy the key is knowing how to identify the communicating vessels that exist or may be developing, sometimes imperceptibly, between countries and regions. They can be the different forms of transnational value chains and also the new axes or corridors of trade, investment and movement of people (workers, tourists, businessmen).

In a world of multiple regional and inter-regional spaces with varying degrees of connectivity and complementarities, it is in terms of its commercial diplomacy as the expression of its strategy for development and international integration that a country may produce the necessary articulations. Concerted efforts and synergies generated both internally as well as with other countries and regions can be, in the measure that they involve a large number of all types of players, a key factor for the success of a strategy of active inclusion of a country in the global economic competition.


The quality of commercial diplomacy is an important factor for the effectiveness of a strategy of active integration of a country in international economic competition, both at the global scale and in the different regions, beginning with its own region. It would seem that this factor will be increasingly important in the future.

Among other possible unfoldings, a good quality commercial diplomacy involves making other markets aware of what a country can offer that is of value in terms of goods, services, technology, capitals, ideas as well as job opportunities, training and business cooperation. And, in turn, it can convey what it desires to obtain from those with which it aspires to maintain close trade relations. It implies the knowledge and, above all, an understanding and appreciation of the multiple diversities, especially cultural, between countries in order to maximize them in terms of more intense relations. It also involves generating conditions for building an ideal framework to promote optimal economic interactions with each of the other countries. One can hope to achieve all this only through an active, consistent and non sporadic presence and through negotiations -usually governmental- and other kind actions that lead to the creation of an image, to the development of different kinds of coalitions and alliances and, especially, to the development of multiple forms of social networking.

It is possible to witness how the new international realities are impacting the way in which countries face the development of their commercial diplomacy. These are the result, among other things, of technological changes that are shortening the physical, economic and cultural distances; of relative economic power shifts between countries and regions; of the growing importance of non-state actors; of the development of transnational production chains; of the rise and empowerment of urban consumers with middle class incomes, and the proliferation of "private clubs" in world trade.

In many cases these impacts involve radical changes to what has prevailed in commercial diplomacy until recently. In fact, governments and in particular their diplomatic services are ceasing to be the only or even the main protagonists of an activity that is becoming multifaceted, complex and very dynamic.

Increasingly we are seeing multiple other players who can help develop an effective commercial diplomacy, considered in the broader sense as raised here. Besides government technical areas other possible players through their presence and activities can be, among others, businessmen, athletes, artists, musicians, intellectuals, scientists and scholars, travelers, backpackers, tourists, politicians and union leaders, students and workers and those members of the many diasporas. Many times without being aware of it they become like trade agents for their country. They can be carriers of a country's image and readers of other realities. They are transmitters of visions, insights and information that may be critical for the competitive intelligence of their country. They are also relevant actors in the web of interrelations that helps facilitate the economic interactions between countries.

Their potential can be increased in the measure that a country has sufficient focal points able to capture and process information that helps develop a strong capital of competitive intelligence which is, today, a key factor in a country's ability to negotiate and compete in the world. Often times, such capital results from a dense and adequate interaction between the government, business and academic sectors. That is, from the valuation of the triangle proposed years ago by the engineer Jorge Sábato.

The aforementioned becomes more important still if we consider the fact that global economic competition takes place simultaneously in different scenarios with different intensities of connection between each other. Hence, the commercial diplomacy of a country now resembles a game played on multiple boards simultaneously. However, that game would not necessarily be chess but something closer to poker, given that a key factor for success, besides luck, is bluffing. In our tradition it would resemble playing the local card game 'truco' against different players at several tables simultaneously!

The multiple scenarios can be individual countries, especially when these are of great economic dimension, but spaces are increasingly becoming regional and interregional. In a multi-spatial commercial diplomacy the key is then to be able to identify the communicating vessels that exist or that may be developing, sometimes imperceptibly, between countries and regions. They can be different forms of transnational value chains. And so are the new axes or corridors of transportation, trade and investments. Being able to detect what these interconnections may mean for the international trade integration of a country, for example Argentina (and its South American partners and neighbors), is then one of the core qualities of an effective and modern commercial diplomacy agenda.

Investment and trade corridors have existed for many centuries. In the past they were the Silk Roads or spices trade routes. Highly valued merchandise continuously travelled back and forth through them, but also people, ideas, technical knowledge, customs, beliefs. They were not static corridors. They were of variable geometry and changed over time.

For many centuries in the past camels, horses and, above all, merchants travelled through these corridors, as did wooden ships and warriors. The trade corridors had a deep geopolitical impact. They were power vectors. In the new trade and investment corridors of the 21st Century we find goods, services, technologies, financial resources and people. We can also find drugs and weapons. They travel in containers as a result of the continuous technological evolution of intermodal transportation -for example, the growing size of container ships and their subsequent impact on the capacity of ports- (on this regard refer to the book by Marc Levinson listed as recommended reading of this newsletter). Or they travel through digital channels, through the Internet. Also, workers, businessmen, technology agents and tourists, among others, travel in ever larger aircraft with more efficient economic performance.

In the perspective of Argentina, and also of its South American neighbors and partners, the multi-space commercial diplomacy of the future will have to take into account the communicating vessels that are beginning to intensify within the different regions and between them. Sometimes they result from international agreements that do not meet pre-established models. This involves monitoring closely the agenda of trade negotiations and economic integration of the various spaces and being able to detect the novelties.

A regional case to watch closely in Asia is that of the negotiations driven by ASEAN countries (the Regional Comprehensive Economic Partnership-RCEP). At the interregional level there is, and will be in the future, much dynamism. There are two negotiation processes that would be convenient to monitor closely due to their potential economic and political relevance. One of them is in the Pacific space (the Trans-Pacific-Partnership - TPP); the other is in the North Atlantic space (the idea promoted on both sides of the Atlantic to initiate negotiations for a comprehensive economic and trade agreement between the US and the EU). These are negotiations that could have, if concluded, a strong impact on the map of international economic competition, even with clear geopolitical connotations due to the domino effect that they might produce by encouraging other negotiations and, in particular, due to their eventual erosion effects on the WTO multilateral trade system (see the December 2012 edition of this newsletter on http://www.felixpena.com.ar/).

In a world of regional and interregional multiple spaces with different degrees of connectivity and complementarities, it is through commercial diplomacy as an expression of its development strategies and international integration that a country can produce the necessary articulations. Concerted efforts and synergies generated both internally as well as with other countries and regions, and in the measure that they involve a large number of all types of players, can be a key factor for the success of a strategy for the active integration of a country in global economic competition. The advantage of Argentina -but also of its South American neighbors and partners- is that there are no reasons to prevent a commercial diplomacy that is open in all directions ("tous les azimuts"). The country's geographic location, resource endowment, cultural mixing and remoteness from the main international tension lines, enables it precisely to have an external trade integration of multi-regional scope.

It is noteworthy in this regard that in December 2012 the Arab-Latin American Forum was held in Abu Dhabi. Its theme was precisely the prospect of a closer relation between the two regions (see the final declaration on http://www.uaeu.ac.ae/). A relevant fact in the future development of this interregional relation is that the Persian Gulf countries, in particular Qatar and United Arab Emirates, are fast becoming a major hub linking the large economies and regions of the South. It is reflected in the increasing links between Arab countries with China, India and other Asian countries as well as with African and, now, Latin American ones (on this regard see the book by Ben Simpfendorfer listed as recommended reading at the end of this newsletter).

The air links between Asia and South America (especially in the corridor Buenos Aires-São Paulo-Rio de Janeiro with China and India via Doha and Dubai) help develop a connectivity with huge possibilities, including great potential in the field of energy, food, construction and financial and productive investments, among others. The recent visit of President Cristina Fernandez de Kirchner -along with several businessmen- to the United Arab Emirates, Indonesia and Vietnam, illustrates the importance given to these new trade and investment corridors in the strategy for the international insertion of Argentina.

The CELAC-EU Summit, to be held in Santiago de Chile on 26 and 27 January 2013, will provide another opportunity to renew and re-launch a valuable bi-regional relationship that, even when it has progressed in recent years, is still far from achieving the goals originally set (on the agenda of the Summit see the opinion piece by Héctor Casanueva listed as recommended reading at the end of this newsletter). The fact that there has been no progress on a key element of this relationship, the association agreement between Mercosur and the European Union, is eloquent in this regard (refer to the opinion piece by Rafael Estrella, mentioned in the recommended reading section of this newsletter).


Recommended Reading:


  • Bhagwati, Jagdish, "Why the TPP is undermining the Doha Round", East Asia Forum, 14th January 2013, en: http://www.eastasiaforum.org/.
  • Baptista, Luiz Olavo; Sampaio Ferraz Junior, Tercio (coordenadores), "Novos Caminhos do Direito No Século XXI. Uma Homenagem a Celso Lafer", Juruá Editora, Curitiba 2012.
  • Bitar, Sergio, "World Trends and the Future of Arab Latin-American Relations", presentación efectuada en ocasión del Arab-Latin American Forum, realizado en Abu Dhabi los días 16 y 17 de diciembre de 2012, y que fuera publicada por el Inter-American Dialogue, Washington DC. 17 de diciembre de 2012, en: http://www.thedialogue.org/.
  • Casanueva, Hector, "Cooperación Europa-América Latina: Ciencia, Tecnología y Competitividad", en América Economía, Santiago de Chile, 2 de enero de 2013, en: http://www.americaeconomia.com/.
  • Chauffour, Jean-Pierre, "Trade Integration as a Way Forward for the Arab World. A Regional Agenda", The World Bank, Policy Research Working Paper 5581, Washington DC., February 2011, en: https://openknowledge.worldbank.org/.
  • Creel, H.G., "Confucius. The Man and the Myth", The John Day Company, New York 1949.
  • Drysdale, Peter, "Asia and the international trade regime", East Asia Forum, 7th January 2013, en: http://www.eastasiaforum.org/.
  • Estrella, Rafael, "El riesgo de un fracaso por abandono", Blog Elcano, Madrid 22 de diciembre de 2012, en: http://www.blog.rielcano.org/.
  • Frondizi, Arturo, "Mensajes Presidenciales 1958-1962", 3 vols., Fundación Centro de Estudios Presidente Arturo Frondizi, Buenos Aires 2012.
  • Gupta, Sourabh, "Will the TPP facilitate or disrupt supply chains?", East Asia Forum, 6th January 2013, en: http://www.eastasiaforum.org/.
  • Hillman, Jennifer, "Global Swing States and the Trade Order", The German Marshall Fund of the United States (G/M/F) - Center for a New American Security, Global Swing States Working Paper 2012, Washington DC., November 2012, en: http://www.gmfus.org/.
  • Höllman, Thomas O., "La Ruta de la Seda", Historia-Alianza Editorial, Madrid 2010.
  • Kliman, Daniel M.; Fontaine, Richard, "Global Swing States. Brazil, India, Indonesia, Turkey and the Future of International Order", The German Marshall Fund of the United States (G/M/F) - Center for a New American Security, Washington DC., November 2012, en: http://www.gmfus.org/.
  • Mansfeld, Edward D; Milner, Helen V., "Votes, Vetoes, and the Political Economy of International Trade Agreements", Princeton University Press, Princeton and Oxford 2012.
  • Lamy, Pascal, "The Future of the Multilateral Trading System", Director-General of WTO, Richard Snape Lecture, Melbourne, 26 of November 2012, en: http://www.wto.org/.
  • Leal-Arcas, Rafael, "International Trade and Investment Law. Multilateral, Regional and Bilateral Governance", Edward Elgar, Cheltenham, UK - Northampton, MA, USA 2010.
  • Levinson, Marc, "The Box. How the Shipping Container Made the World Smaller and World Economy Bigger", Princeton University Press, Princeton and Oxford 2006.
  • Liu, Xinru; Norene Shaffer, Lynda, "Connections Across Eurasia. Transportation, Communication, and Cultural Exchange on the Silk Roads", McGraw Hill, New York 2007.
  • Mazower, Mark, "Governing the World. The History of an Idea", The Penguin Press, New York, 2012.
  • Pernot, Francois, "La Ruta de la Seda. Desde Asia hasta Europa tras la huella de aventureros y comerciantes", Parragon Books, Bath UK 2007.
  • Simpfendorfer, Ben, "The New Silk Road. How a Rising Arab World is Turning Away from the West and Rediscovering China", Palgrave Macmillan, London-New York 2011.
  • Zedillo, Ernesto, "Governance Falls Behind Globalization", Published on YaleGlobal Online Magazine, 3 December 2012, en: http://yaleglobal.yale.edu/print/8256.
  • Zeilar, Thomas W., "Free Trade - Free Worlds. The Advent of GATT", The University of North Carolina Press, Chapel Hill and London 1999.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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