• back
  • REDEFINING TRADE PROMOTION

  •  

    Redefining Trade Promotion

     

     
     
    The Need for a Strategic Response
    © International Trade Centre, International Trade Forum - Issue 4/1999

    Since the Uruguay Round of trade agreements was completed in 1994, rapid evolution has occurred in several business areas that would have been difficult to predict then, including electronic commerce, industrial clustering and out-sourcing. Many entrepreneurs in developing countries are ill-equipped to respond. Traditional trade promotion services are no longer sufficient. To respond strategically, ITC organized its first Executive Forum, bringing together trade development professionals from 22 countries. This Close Up section highlights the event.

    The world of international trade is changing very rapidly. Even in the international trade development environment of Geneva, it is difficult to keep up with changes in the international business environment.

    Five years ago, most of us had not even heard of electronic commerce. Now many believe that this will be the kingpin of future of business-to-business relationships. A new vocabulary for business is emerging, with formerly arcane terms such as "out-sourcing" and "industrial clustering" becoming standard terminology. In short, the world of international trade has changed dramatically. The rules of the trade game are being refined, markets are liberalizing and globalizing, international business practices are changing and competition is becoming much more intense.

    Fast-paced change

    Where does that leave the entrepreneur and business manager in developing and transition economies? Like all other entrepreneurs, no matter where in the world, they need to respond swiftly and effectively to these changes if they are to remain competitive and profitable - indeed, in many cases, if they are to remain in business at all. Yet many are not currently equipped to do so. Similarly, trade support institutions in both the public and private sectors must respond to this series of challenges. This is where the strategy maker comes in.

    It is for these considerations that ITC invited public-sector strategy makers and senior business executives to participate in ITC's first Executive Forum. This event allowed ITC to explore new approaches to trade promotion and jointly develop some basic principles to guide a strategic response to trade promotion in the new trading environment.

    We assembled key individuals who design and implement the national export strategy of their countries. We also invited resource persons from specialized international organizations, as well as academic experts and consultants. In order to help export strategy makers, ITC is publishing a book on the views and ideas expressed at the Executive Forum; it has also created a special web site (http://www.intracen.org/execforum) and is providing meeting highlights through this magazine.

    National export strategies

    I say "a national export strategy" on purpose. I am not referring to national trade policy. Nor do I refer to positions taken by governments in multilateral trade negotiations. These provide the framework within which the national export strategy is designed. Rather, we must focus on the process by which countries arrive at effective national strategies to support exports and competitiveness of the business sector. We must review how national export strategies are devised, implemented and constantly refined.

    While traditional trade promotion services remain relevant, they are no longer sufficient to promote exports and competitiveness. Trade information, missions, exhibitions, generic publicity and commercial representation abroad are not enough to generate export success. National export strategies that confine themselves to these operational programmes are, in our view, unlikely to meet the challenges we now face - not to mention those around the corner.

    Put exports in the mainstream

    A trade promotion strategy designed and implemented in isolation from other economic and commercial initiatives in a country is unlikely to succeed. Creating a national export strategy is by definition a national issue involving all relevant players. While trade is universally recognized as fundamental to economic development, in the majority of cases, trade development is not treated as a national, interdisciplinary and multi-sectoral imperative. Export strategy formulation is all too often left to trade ministries or trade promotion agencies, with only minor involvement of key economic ministries and insufficient participation by the business community. A solid national export strategy has to include the effective participation of the ministries of economy, finance and industry as well as experienced exporters.

    For a national export strategy to be effective, strong linkages with other economic and developmental strategy initiatives are required. Strategy makers must look beyond existing export capacity and work towards ensuring that new export capacities are generated. Promoting export-oriented foreign direct investment must go in tandem with promoting exports in the international market place.

    Developing higher value-added export performance must be directly supported through, for example, developing strong backward linkages in industry and forward linkages in agriculture. Strategy makers must look at "on-shore" domestic production issues, as well as "off-shore" market development issues when developing their future responses.

    Trust-based partnerships

    Finally, let me insist that for a strategy to work, the private sector - perhaps the key player in implementing export strategy - must be fully involved and committed to the overall process. The private sector must "buy in" and feel responsible for the success or failure of the strategy.

    There must be a real and effective partnership between the public and private sectors. But this does not seem to happen easily. Mistrust between the public and private sectors has to give way to understanding, trust and genuine collaboration.

    We are all aware that there is no universally applicable approach that can be applied by strategy makers worldwide. A national export strategy must be tailored to the requirements and conditions of each country. Each strategy will, therefore, be unique. There are, however, many lessons that have universal application and must be shared.

    Our purpose in hosting the Executive Forum has been to analyse these practices; help strategy makers clarify issues with which they have been grappling; and in the final analysis, contribute to stronger export strategy development and management.

    J. Denis Bélisle is Executive Director of ITC.

    This article is based on the opening address he made to participants at the Executive Forum.