BUS403: Negotiations and Conflict Management (2016.A.01)

Definition

While, some authors argue that commercial diplomacy is a subset of economic diplomacy, others say these concepts are distinct, closely related, and irrevocably intertwined. Many use economic and commercial diplomacy interchangeably.

Purpose

Commercial diplomacy emphasizes the government's role of serving the business community by developing socially-beneficial international business ventures. Diplomatic missions support their home country's business and finance sectors, inward and outward investment, and expanded trade options. Commercial diplomacy includes all aspects of business support and promotion, including investment, tourism, research and development, and intellectual property.

Commercial diplomacy can influence foreign policy and regulatory decisions that affect global trade and investment, including:

• international commerce and standards in areas of health, safety, the environment, and consumer protection;
• regulations covering services, such as banking, telecommunications, and accounting;
• competition policy and laws concerning bribery and corruption;
• agricultural support programs; and
• industrial subsidies.

E.H. Potter (2004) argues that commercial diplomacy creates value because it helps businesses:

• respond to managerial and government concerns;
• increase their profits by making exporting and operating abroad easier;
• promote their exports and expand their foreign operations;
• perform tasks abroad more quickly;
• stay informed about rules, regulations, culture, public tenders, and the market of the host country;
• search for partners;
• stay informed about trade disputes, fairs, and missions; and
• access reliable information to maintain a broad foreign network, especially if they have financial limitations.

Practitioners

Practitioners of commercial diplomacy typically include diplomats and trade officials charged with negotiating international trade and investment agreements and resolving policy conflicts that impact international commerce.

Commercial diplomats include officials from departments or ministries responsible for agriculture, air transportation, bank regulation, the environment, finance, foreign affairs, health, industry, labor, professional licensing, and telecommunications. Advocacy tools include opinion articles in the local newspaper, personal letters, phone calls, speeches, white papers, testimony before government agencies, and personal visits to key stakeholders and decision-makers.

Private Sector

The private sector can play a role in commercial diplomacy. For example, some private consulting agencies advertise their ability to perform many of the functions described above that government diplomats perform. Chambers of commerce and non-governmental organizations (NGOs) are examples of private actors involved in commercial diplomacy.

Activities

Traditional commercial diplomacy activities include networking, intelligence, image campaigns, and support. These activities are shown in the table below.

Other activities commercial diplomats engage in to respond to business needs include:

• provide access to reliable and neutral business information;
• provide credibility and image support in foreign markets;
• help companies search for partners;
• help companies handle conflicts;
• support home country delegations (such as state missions); and
• help companies navigate certain strategic concerns (such as sources of energy).