Trade & Investment Promotion: A Field Perspective Kishan S Rana CUTS/2009/Rana

Introduction

WTO Director General Pascal Lamy at CUTS-FICCI Conference on 13 Aug 2008: “Making trade possible, and making trade happen are two different things.”

Proposition 1: Too many trade ministries focus on the regulatory frame, and not enough on promotion.

CUTS/2009/Rana

1. Eco Dip Stages

ED typically progresses in 3 stages, which remain concurrent: 1. Export & investment promotion 2. Sustained networking, abroad & at home 3. Managing regulatory & eco environment, FTAs, RTAs, dumping CUTS/2009/Rana

1. Contd

• No unanimity over definition of ‘economic’ & ‘commercial’ diplomacy • The two largely cover concurrent areas, but ‘economic dip’ is the wider term • Following graphic presents one perspective CUTS/2009/Rana

ECONOMIC & COMMERCIAL DIPLOMACY

Trade promotion

, networking with business

FTAs. RTAs

+ other trade agreements

World Bank, IMF

, UNCTAD, etc

Aid, Technology

transfer, S&T Agreements COMMERCIAL DIPLOMACY ECONOMIC DIPLOMACY

Brand Image

, Tourism promotion

WTO

, multilateral trade issues

FDI Promotion

+ investment & other accords

Joint Commissions

, business councils. EP Groups CUTS/2009/Rana

2. Role of Embassies

• Field units contribute to all 3 tasks, but expertise in: promotion & networking • Regulation mainly headquarters task, but embassies provide inputs • Close Hq-Emb interactions produces ideal result, embassies must be tasked • Embassies can contribute to policy, but unlike Hq, have a

pure marketing

task, for them home conditions are a given CUTS/2009/Rana

2. Contd

• Are embassies given sufficient tasks?

• Should they not contribute to fixing country targets?

• Why not stipulate an economic ‘action plan’ for 20 key countries, developed jointly?

• Can we identify 6 countries for intensive promotion, in a 2-year plan?

Proposition 2: Most embassies have unused reserve capacity; need better ‘TASKING’

CUTS/2009/Rana

3. Export Promotion

A. MARKET SHARE ANALYSIS: what is country’s share in the import basket of target country? What are key products; what is missing; who are the competitors?

B. FIX HARD TARGETS: these can only be indicative, but help focus CUTS/2009/Rana

3. Contd

C. INFORM + MOTIVATE HOME ENTERPRISES: done through EPCs, apex chambers, direct outreach D. NEW PRODUCTS + MARKETS: key priority, hinges on information + overcoming local hurdles ; once market opened, one can rely on ‘lemming effect’ to produce volumes E. Write own market reports, learn on job CUTS/2009/Rana

3. Contd

F.

DELEGATION VISITS: hinge on ‘match making’, advance preparation G. FACILITATE BUSINESS VISITORS: proactive mindset to help in local contacts, use embassy facilities,

gratis

when possible H. BUYER-SELLER MEETS AT EMB: possible even with modest infrastructure + market center

Proposition 3: Teaching craft skills is sadly inadequate in most developing countries

CUTS/2009/Rana

4. Trade Fairs

Own trade show • Getting visitors is the biggest hurdle • Works well with established local buyers • Also helps in making a splash in new market not accustomed to trade fairs • Useful to gain attention Join established show • Best option in sophisticated markets • Provides rich market intelligence, product trends • Requires discipline, conforming to norms for max impact • Master methodology

Proposition 4: Trade Fairs are underused

CUTS/2009/Rana

5. Investment Promotion

• Entails 2 parallel tasks: Addressing BROAD CATCHMENT in potential investor country: PURSUIT OF IDENTIFIED TARGETS, possible only by careful study of own needs.

• We are yet to find our optimal investment agency (after demise of India Investment Centers): a PPP model is one possibility • Foreign Investment Promotion Board makes little impact on ground • Embassies operate on self-motivation, are underused CUTS/2009/Rana

5. Contd

• Embassies pursue targets on basis of local assessment, Fortune 500 type lists • Experience confirms that sustained efforts aimed at identified potential investors yield result, as does establishment of mission’s ‘target-10’ kind of lists • Export promotion, local networking and outreach integrate into one another • Technology targeting tasked from home fits this • Outbound FDI from India is new phenomenon, offers limited role for embassies CUTS/2009/Rana

5. Contd

• Success stories’ are more effective than any amount of one’s own publicity • Networking with local business chamber, industry associations, business press helps • Organizing one’s own investment promotion seminars is good, but joining such events held by others may work even better • State-level marketing works well if pursued seriously

Proposition 5 :UK’s ‘Trade & Invest Britain’ is an good promotional mode, needs study

CUTS/2009/Rana

6 Challenge Funds

• A British innovation, it sets up a competition among field units, for promotional funds • Typically, modest amounts are disbursed to 10 or 12 best project proposals • Project must cover a real target • 10% of allocation used to measuring impact, 6 months after event • Encourages competition + innovation • Builds up a ‘library’ of workable ideas • Encourages emulation and spread of ‘best practices’ CUTS/2009/Rana

7. Other Methods

• Identify 5 or 6 target countries for export + invest promotional for a maximum of 2 years • Follow up through embassies to convert ‘approved’ FDI, to implementation • Use public-private partnerships (PPP) in promotional activities, in innovative fashion • Treat dispute settlement as a priority, with a promotional value CUTS/2009/Rana

8. Country Brand

• Integrate ‘brand marketing’ into FDI and export promotion, esp. IBEF • Treat country branding as a core activity, relevant to all promotional, integrate tourism marketing • Accelerate the modernization of India’s own exhibition & convention facilities, which integrate directly into branding.

• Further professionalize trade fair hosting

Proposition 6: Branding needs policy direction, e.g. French & UK ‘public diplomacy boards’

CUTS/2009/Rana

9. Harnessing ICT

• Canada offers a ‘virtual’ trade exhibition on the website of its combined Department of Foreign Affairs and International Trade • We can do the same through ITPO, FICCI and others, as a means of trade promotion • The bulk of market reports and product surveys should be on the websites of the EPCs which are linked to one another • Similarly, embassies should post the bulk of their promotional information + reports on website CUTS/2009/Rana

10. Local Outreach

• Bilateral chambers (AmCham, Indo-German) are often neglected in our promotional efforts • India-based purchase offices of foreign buyers are potential multipliers in export promotion, should be harnessed • Our apex bodies (Assocham, CII, Ficci) not used to joint action, but can be mobilized for targeted marketing P

roposition 7 : Eco Dip demands a ‘Whole of Govt’ approach + promotional direction

CUTS/2009/Rana