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  • 2002-1 ISSUES

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  • ISSUE 1/2002

                                                                                                                                                      1-2002 

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  • The Export Development Board (EDB) of Sri Lanka was set up in 1979 by an Act of Parliament as the focal point export promotion organization. At that time, the economy was liberalized with the state recognizing the private sector as the "engine of growth". The EDB has both public and private sector high-level representatives and is responsible for formulating and implementing the National Export Development Plan (NEDP), as well as export development policies and programmes.

    © International Trade Centre, International Trade Forum - Issue 1/2002 International aid agencies including United Nations agencies and non-governmental organizations (NGOs) spend large amounts on procuring goods and services for development and disaster relief operations. Most of this aid goes to Africa, but

    How does a home-based craft business showcase its products on international markets? One answer is through a private sector-driven trade support network, an example of which is found in the Canadian province of British Columbia. Businesswoman Barbara Mowat has set up a process that has given over 5,000 small businesses the chance to launch their gifts and household items on the international market. Peter Hulm interviewed Mrs Mowat about her experience of building up a network of small home-based businesses.

    Access to finance is still a major limiting factor for small and medium-sized enterprises (SMEs) in most countries, and particularly in developing countries. In general, banks refuse credit to SMEs because they are perceived as risky and unprofitable. However, experience in the field shows that SME lending can be profitable and does not necessarily involve more risk for the bank than lending to large enterprises or the public sector.

    To be competitive in today's rapidly changing business environment, national export strategies must be redefined and trade support institutions (TSIs) must embrace new roles.

    The Executive Forum on National Export Strategies is structured as a debate on "best practice" among "national strategy teams" from developing and transition economies. Each team consists of a senior public sector strategy-maker and a leading representative of the business community. Best-practice propositions are presented by ITC on the basis of research and then debated in plenary and more focused breakout sessions.For the debate, the trade support network has been defined as the institutions from the public and private sectors directly involved in ensuring that: (1) the national business environment is conducive to developing international competitiveness; and (2) all relevant trade support services are provided to the current or aspiring exporter.No single networking model has universal application. However, the conclusions reached in Montreux provide a checklist of basic principles from which the national strategy-maker can make a fairly accurate assessment of whether his or her national trade support network is, indeed, working.

    All companies today face a highly competitive economic environment in global markets. Large corporations often have the resources to develop a competitive edge without recourse to trade support institutions. But for enterprises in developing and transition economies, finding the means to improve their competitiveness and showcase their products internationally is far more difficult. They must be able to meet the basic prerequisites for international participation: goods and services available for export that meet the standards and expectations of the market; and the ability to develop export management skills.

    During the 1980s, Mexico ambitiously began modernizing and transforming its economy at all levels in order to participate more fully in the global marketplace. This included developing a commercial policy based on liberalization, deregulation, privatization and integration, as well as a flexible exchange rate policy. Bancomext, the Mexican Bank for Foreign Trade, was founded in 1937 to finance Mexican foreign trade and played a key role in developing international commerce domestically ("border-in"). In this interview, Raul Arguelles, deputy president of Export Development, considers the Bancomext experience and what lessons it holds for other developing countries.

    As a follow-up to developments at the Fourth World Trade Organization (WTO) Ministerial Conference in Doha, Qatar in November 2001, ITC has organized a series of activities focusing entirely on the pharmaceutical sector in Central America. The first activity was held online via the Internet from 18 to 22 March, and brought together experts to examine various aspects of trading in pharmaceuticals, namely patents, studies of bio-equivalence, good manufacturing practices and marketing of OTC (over the counter) and Rx (prescription drugs) medication. These topics were moderated by academics from Latin American universities and observed by international experts. More information can be found on the Forum web site: (http://www.ecie.org/latinpharma2002/).

    Does your trade support network help promote your export strategy? For many countries, the question follows on from another issue: why have a trade support strategy at all? Very few developed countries have a national strategy for trade support or export promotion, so why should developing countries? Indeed, at the 2001 Executive Forum, one veteran of trade support institutions asked bluntly whether any developed or developing country had a strategy that worked. "I don't think you'll find many," he suggested.

    There is no official strategy for Sweden's export promotion or for developing the country's exports. At the same time, many Swedish companies are very successful internationally. The absence of a documented official strategy is replaced by a strong structure of common business and social values. How can such an unstructured system work? What can developing countries learn from "trade promotion practices" in Sweden? The key seems to be the role of the public-private Swedish Trade Council (STC) which has some 1,600 member companies. From its activities, we can identify at least nine elements that ensure the network works effectively:

    Over the years, New Zealand has adopted or tried out a variety of formal and informal network structures for export development. On the basis of this experience, a strong case has emerged for creating a formal structure around the national trade support network.

    Today, new challenges face both strategy-makers and business as we put new demands on trade to serve broader objectives than just to increase commerce. However, new networks are springing up that aim to help both sides in the dialogue - government and civil society - and to bring business effectively into the broader discussion.

    There is little doubt that in this age of globalization, speed and digital distance, the effectiveness of a trade support institution (TSI) is relative to its ability to participate actively in formal and informal networks. Without networks and their related industries, such as information and communications, the modern economy would be much diminished, and the TSI fundamentally altered.

    Can the successes achieved by the Uniquely B.C. Creative Arts Show and the Uniquely Canada Show be transferred to a developing or transition country? The experience of Slovenia, whose trade officials hired Barbara Mowat and her team to help them prepare to showcase local crafts internationally, suggests the model is indeed transferable. Peter Hulm interviewed Zdenka Kovac, director of Slovenia's Small Business Development Centre (PCMG), about the origins of the First Uniquely Slovenia Gift Show held in Los Angeles, California, in July 2001.

    Argument for private sector lead "According to our experience in Guatemala, trade promotional activities have better results when led by the private sector. The private sector has a better understanding of SME needs and it is easier to provide assistance. The private sector can also respond more quickly, tackling the issues much earlier than the governmental apparatus can."Giovanni Passarelli, Head, Trade Promotion and Information Department, Guatemala Non-Traditional Product Exporters' Association - AGEXPRONT

    The ITC's three Executive Forums to date have dealt with the need to redefine trade promotion strategy, the challenge of the digital economy and how to ensure trade support networks are working. The logical question now is, "What do we need to tackle next at the strategy-making level?"

    Participants at the ITC Executive Forum 2001 in September were asked: is your network working? They could have turned the question back to us and asked ITC: is your own network working? Our answer would have been: yes, most definitely.