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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
THE AGENDA OF FOREGN TRADE OF THE 21st CENTURY:
Relevant topics for the training of those who assist SMEs with global projection.

by Félix Peña
October 2014

English translation: Isabel Romero Carranza


 

There are several issues that due to their relevance and the multiple unfoldings they can lead to, should be taken into account when defining or updating the training programs of human resources, especially of those who have already acquired through academic study or practice a good understanding of why and how goods are produced or services are provided spanning multiple national markets.

The main issues in this case are those resulting from the sharp increase in urban consumers with middle class income and consumption patterns; the transnational production chains of regional and global scope; and the proliferation of preferential trade areas, including some resulting from mega interregional agreements.

The three above-mentioned issues share common elements at the moment of defining the contents and methodology for training specialists fit to guide SMEs in their internationalization processes. Such common elements refer to recognizing the absence of a single model on how to access remote and culturally diverse urban consumers; to valuing practical experience as an essential complement to academic learning, and to using imagination and creativity when addressing the problems that may arise.

To travel to different countries and try to understand and appreciate the differences with one's own country would be one of the main recommendations for those training to guide and direct companies with their global projection. To facilitate such experiences and provide academic and practical direction would be the role of those institutions that train specialist on international trade. But this training could be more effective if it were coordinated with trade promotion institutions and the business sector.

It is a task that could be enriched within the scope of cooperation networks between the academic, public and business sectors of several countries of the region. The idea of the "triangle" inspired by Jorge Sabato, who was a great connoisseur of the region and its potential, could be functional to an initiative with such scope. Capitalizing on the European experience of "Erasmus for Entrepreneurs" could also prove valuable.


As noted on other occasions, when training international trade specialists who aspire to succeed in their careers it is important to consider some issues that could have the most impact on the design and development of strategies for world insertion of firms doing business in our country, especially SMEs (see the June 2014 edition of this Newsletter).

These are issues that, due to their relevance and the multiple unfoldings that they may originate, should be taken into account when defining or updating training programs for human resources, especially of those who have already acquired, through academic studies or in practice, a good understanding of why and how goods are produced or services are provided with a transnational scope.

This time we will focus on three issues that we have mentioned on other occasions and that deserve special attention because they stand out in the agenda of world trade of the 21st Century. Even when they have deep historical roots they have not always been as current as they are today, or as influential as they have become in recent times, a fact that will probably continue in the future. Nor are these the only relevant issues to consider. Other issues refer, for example, to the relationship between world trade and the protection of both the environment and knowledge.

The three topics we are considering in this opportunity are those resulting from the sharp increase in the number of urban consumers, especially those with middle-class income and consumption patterns; the development of transnational production chains of regional and global scope; and the proliferation of preferential trade areas, including some resulting from mega interregional agreements.

These are issues that are enhanced by deep changes taking place in global economic competition as a consequence of, among others factors, the shifts in relative power between nations, the emergence of new major players and the collapse of physical distances.

The first issue concerns how to reach urban consumers, many with middle-class income and which, in growing numbers, have become characteristic not only of developed countries but increasingly of other countries that have a strong potential to influence the growth of world economy. This involves reaching, especially with differentiated end-products, the different types of outlets that urban consumers use to stock up. But it also means being able to render them attractive and adapted to the multiple and very diverse cultural realities that characterize different world regions.

Arif Naqvi (http://en.wikipedia.org/wiki/Arif_Naqvi) reminds us that, in accordance with current trends, by 2015 urban consumers will reach 4.5 billion and by 2050 70% of the world population will live in cities. Hence, the title of the very interesting article he wrote: "Cities, not countries, are the key to tomorrow's economies", (published in the Financial Times of April 25, 2014, on http://www.ft.com/).

In the South American space it has been estimated that in the upcoming years fifty cities will have more than one million inhabitants (half of these in Brazil) and many of them will have middle-class incomes (the Brazilian C class). This reminds us of the vision, inspired by the strategic musings of Eliezer Batista (http://pt.wikipedia.org/wiki/Eliezer_Batista), that was maintained at the beginning of Mercosur and which conceived it as a network of large cities located in the original member countries and also in Chile.

In this perspective, the quality of the connection between the respective cities and their areas of influence becomes of fundamental economic value. This considers not only the physical infrastructure but also the transport and logistic services and the measures aimed at improving trade facilitation, starting with the quality of customs and the preparedness of those involved in the corresponding procedures.

International trade geared towards urban consumer's means having a good knowledge of their tastes and preferences and, in particular, becoming familiar with the linkups that lead to urban retail outlets. They will be, increasingly, consumers well informed about their options and demanding in terms of the quality of the goods offered to them -especially including the sanitary quality of foods- and of the consistency of production and distribution methods, with the growing requirements for an adequate protection of the environment.

The second issue concerns how to articulate on a transnational scale the production processes and channels of access to urban consumer's of those goods and services that they will demand in the future. This leads to assign greater importance to the accurate knowledge of the multiple forms of global and regional value chains, through which to produce and distribute goods and services valued by sometimes distant consumers and, above all, with very diverse tastes, values and customs.

In particular, it makes the question of scaling towards higher added value links in the corresponding value chains something of importance for companies seeking to add the greatest intellectual value to the product that will finally reach the consumer. How to scale in the context of a production chain will be an issue of increasing practical value to SMEs going international. In this regard, in its latest report on "The International Outlook of Latin America and the Caribbean" the ECLAC again provides valuable insights on the importance of production chains, including their relationship with the strategies of industrialization and regional integration in Latin America (see the reference to the ECLAC report in the Recommended Reading Section of this Newsletter).

And the third issue relates to the proliferation of preferential trade agreements. Their denomination, form and scope may vary greatly. But whatever the name, it would be difficult to point out a single model for them. They can be bilateral (such as the network of preferential agreements that have been concluded by the countries of the region with third countries, either within the region or with other regions); regional (Mercosur and the Pacific Alliance are current examples), and interregional (the most publicized today are those negotiated between groups of countries from different regions, such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, even when their actual content and completion dates are still uncertain). And their real contents, topics and sectors involved can be very different as well.

Such agreements are always discriminatory, even when they are held within the framework of existing WTO rules. How they discriminate against the goods and possible services and investments not coming from member countries, it may be something that can be difficult to understand in practice. Many times the discriminatory effects can be found in the "fine print" of the agreements and, in particular, related to the scope of the rules of origin. Therefore it may also be relevant for an international trade specialist to be able to advise an SME on how to take advantage of preferential agreements concluded by third countries, even if one's country is not a member.

The three issues mentioned in this opportunity present common elements that should be taken into account when defining the content and methodology for the training of specialists who are fit to guide SMEs in their internationalization process. Such common elements relate to recognizing the inexistence of unique models on how to access remote and culturally diverse urban consumers, to knowing how to scale in a value chain or how to take advantage of a preferential trade agreement; to valuing practical experience as an essential complement to academic training and to using imagination and creativity when addressing practical problems that may arise in real life.

Travelling within different countries and trying to understand and appreciate the differences with one's own country, would be one of the main recommendations for those training to guide and direct SMEs in their global projection. Facilitating such experiences and providing academic and practical guidance would be the role of those institutions that train foreign trade specialists. This training would become much more effective if it were coordinated with trade promotion institutions and the business sector. The idea of the productive "triangle" introduced at the time by engineer Jorge Sábato, great connoisseur of the region and its potential, could be functional for an initiative of such scope (see, among others, the article by Gastón Lucas, "El triangulo de Sábado como paradigm de una exitosa inserción internacional", in GEIC from August 21, 2013 on http://www.geic.com.ar/).
.
Moreover, these are issues that lend themselves to much interaction between those seeking to specialize in the thrilling task of guiding SMEs aspiring to go international and, at the same time, to facilitate the design and development of their strategies. Sharing experiences seems to be something highly recommended. Such interaction may be more fruitful if academic activities are combined with professional practices through program networks of transnational scope developed, for example, between Latin American countries and eventually including countries from other regions such as could be, at least in the initial stages, China and India and some others from the European Union.

Even with different contents, Latin America could capitalize on the rich experience gained by Europe with its Erasmus program, considered one of the most successful pillars of European integration. And, in particular, this would be still more enriching if combined with a recent variation of the program called "Erasmus for young businesspeople and entrepreneurs" (in this regard see http://www.erasmus-entrepreneurs.eu/).



Recommended Reading:


  • Armstrong, Karen, "Mahoma. Biografía del Profeta", Busquets, Buenos Aires 2006.
  • Beverelli, Cosimo; Neumueller, Simon; Teh, Robert, "A New Look at the Extensive Trade Margin Effects of Trade Facilitation", WTO, Economic Research and Statistics Division, Staff Working Paper ERSD-2014-16, Geneva 13 October 2014, en: http://www.wto.org/.
  • Burrows, Mathew, "The Future, Declassified. Megatrends that will undo the world unless we take action", Palgrave Macmillan, New York 2014.
  • Desiderá Neto, Walter Antonio, "As Mudanças no Sentido Estratégico do Mercosul para a Política Externa Brasileira: da Democratizaçâo (1985) à Crise Brasileiro-Argentina (1999-2002", IPEA, Revista Tempo do Mundo, Rio de Janeiro, Volumen 5, Número 1, Abril 2013, ps. 153 a 169, en: http://www.ipea.gov.br/.
  • ECLAC, "The economics of climate change in Latin America and the Caribbean. Paradoxes and challenges. Overview for 2014", Economic Commission for Latin America and the Caribbean (ECLAC), Santiago de Chile, September 2014, en: http://www.cepal.org/.
  • Fernández Alonso, José, "Controvérsias entre Estados e Investidores Transnacionais: Reflexões sobre o Acúmulo de casos contra a República Argentina", Revista Tempo do Mundo, Rio de Janeiro, Volumen 5, Número 1, Abril 2013, ps.45 a 88, en: http://www.ipea.gov.br/.
  • Fonseca, Diego (ed.), "Hacer la América. Historias de un continente en construcción", CII, Mirada-Crónica, Tusquets Editores, Buenos Aires 2014.
  • Fundación CEIC, "Punto Cardinal", Centro de Estudios Internacionales Contemporáneos (CEIC), nro. 1, Córdoba, Agosto 2014.
  • Gersten Reiss, Daniel, "Reduzindo Custos de Comércio no Mercosul", Revista Tempo do Mundo, Rio de Janeiro, Volumen 5, Número 1, Abril 2013, ps. 137 a 151, en: http://www.ipea.gov.br/.
  • ICTSD, "Post-Bali Negotiations on Agriculture: the Challenge of Updating Global Rules on Trade", International Centre for Trade and Sustainable Development (ICTSD), Information Note, Geneva, October 2014, en: http://www.ictsd.org/.
  • Lyrio Carneiro, Flavio, "Comércio e Protecionismo em Bens Intermediários", IPEA, Texto para Discussâo 2007, Brasilia, setembro de 2014, en: http://www.ipea.gov.br/.
  • Marconi, Nelson; Fróes de Borja Reis, Cristina; de Araújo, Eliane Cristina, "O Papel da Indústria de Transformação e das Exportações de Manufaturas no Processo de Desenvolvimento dos Países de Renda Média", IPEA, Texto para Discussâo 2006, Brasilia, setembro de 2014, en: http://www.ipea.gov.br/.
  • Matus, Carlos, "El Lider sin Estado Mayor. La Oficina del Gobernante", Universidad de la Matanza - CIGOB - Fundación Altadir, San Justo 2008.
  • Meléndez-Ortiz, Ricardo; Bellmann, Christophe; Hepburn, Jonathan (eds.), "Tackling Agriculture in the Post-Bali Context. A collection of short essays", ICTSD, Geneva, October 2014, en: http://www.ictsd.org/.
  • Morando, Mario, "Frigerio, el ideólogo de Frondizi. Apogeo, ocaso y renacimiento del desarrollismo argentino", A-Z Editora, Buenos Aires 2013.
  • Ratton Sanchez Badin, Michelle; da Fonseca Azevedo, Milena, "Propiedade Intelectual e Tendências Regulatória nos Acordos Internacionais de Comércio: Impactos para Estratégias de Desenvolvimento no Brasil", IPEA, Revista Tempo do Mundo, Rio de Janeiro, Volumen 5, Número 1, Abril 2013, ps. 109 a 136, en: http://www.ipea.gov.br/.
  • Rapoport, Mario, "Bolchevique de salón. Vida de Félix Veil, el fundador argentino de la Escuela de Frankfurt", Debate, Buenos Aires 2014.
  • Tintelnot, Felix; State, Penn, "Global Production With Export Platforms", World Trade Organization (WTO), Economic Research and Statistics Division, Staff Working Paper ERSD-2014-17, Geneva 16 September 2014, en: http://www.wto.org/
  • Wang, Zhen, "Never Forget National Humiliation. Historical Memory in Chinese Politics and Foreign Relations", Columbia University Press, New York 2014.
  • WTO/OMC, "World Trade Report 2014. Trade and development: recent trends and the role of the WTO", World Trade Organization, Geneva 2014, en: http://www.wto.org/.

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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