• home

    Future Roles for TPOs: Meeting the Competitiveness Challenge


    © International Trade Centre, International Trade Forum - Issue 2/2002

    J. Denis Bélisle addressed Conference participants on future roles for TPOs.

    In a turbulent business environment, the immensity of commercial opportunity will be matched only by the intensity of competition. Buyers' positions will continue to strengthen and exporters' capability to compete will increasingly determine their success. Trade promotion organizations in developing and transition economies need to refocus on competitiveness to help their exporters succeed in the new trade environment.

    The world of business has changed drastically in recent years, and there is every indication that it will continue to change. Forceful factors are affecting markets:

    • The Doha round of trade negotiations is under way. These will result in greater trade liberalization, in the emergence of a new commercial dynamic and in an inevitable shift in established trading patterns.
    • The international marketplace will be increasingly influenced by information and communication technology. Markets will become more specialized, more sophisticated, more efficient and ultimately more demanding.

    Total competitive response

    In this context, business winners need to offer best quality, lowest price, fastest delivery and greatest flexibility. What are the implications for developing and transition economies' trade promotion organizations (TPOs)? They will have to adopt a total competitive response, addressing:

    • "border in" issues of export capacity and competency development within the local business community;
    • "border" issues, such as systemic bottlenecks in trade facilitation that increase transaction costs; and
    • "border out" issues of market development and promotion, which have been the traditional preserve of the TPO.

    This wider, competitiveness-based approach to trade development must replace the market-based focus that many TPOs continue to pursue. TPOs that do not take this approach will have very little impact on future export performance and, in short, are likely to fail. The changing times set another challenge to the TPOs of the developing world: to ensure that export performance makes a significant contribution to overall economic development and, specifically, to poverty alleviation.

    Complementary objectives

    Competitiveness and development objectives are compatible. Together, they ensure long-term, sustained improvement in export performance, but their compatibility is not automatic. Another challenge now confronting national trade promotion organizations is how to make them complementary. What does this mean for TPO managers?

    • First, they must be comprehensive in their approach. A competitiveness-based export development approach requires that trade support be available to the business community at all critical points of the export value chain. Support must be available to enable the exporter to produce, market and deliver more competitively. Support must also be available to the new entrepreneur, to the aspiring entrepreneur and to the export-oriented non-governmental organization.
    • Second, they must specialize. General services do not contribute much to competitiveness. Specialized services do.
    • The spectrum of services that is needed to sustain export competitiveness at the national level and the investment that specialization implies are beyond the capabilities of a single trade support organization. A multiple-agency approach to export development is required, so, third, they must build a national trade support network.
    • Fourth, they must strengthen the network through partnerships, both in-country and abroad. TPO managers must reinforce the network by implementing joint programmes with other specialized trade support organizations, ideally focusing on a specific need within the export community.
    • Finally, they must keep on top of this turbulent business environment by being prepared to adapt. TPOs must benchmark their performance, measure results and adjust when the impact is less than planned.

    It is a daunting assortment of tasks. ITC has been engaged for a few years in adjusting its own operations to the challenges of the new business environment and has learned some lessons in the process. TPO managers can draw from this experience.

    Four suggestions for TPOs

    • Every network needs a catalyst and a coordinator. The national TPO is best qualified to undertake both roles and should take the lead to:

      • identify the elements of a competitiveness-based approach to export development;
      • determine the areas where trade can best contribute to overall economic development; and
      • create a national trade support network that involves public-private sector partnerships. The network should be based on specialization and address all aspects of the export value chain.
    • Establish a unifying vision for all members of the network. Initiate the preparation of a national export development strategy that is not a wish list, but is based on a realistic assessment of medium-term export opportunities, of the constraints to achieving competitive advantage and of the strengths and resource limitations of key members of the national trade support network. Develop the strategy with the full participation of other network members. Ensure that it has a development dimension and that it receives ongoing political endorsement.
    • Position yourselves at the centre of the network. Become the first point of contact for the individual exporter. Focus on providing three specialized services: commercial intelligence, export counselling and a hands-on referral service to other specialized members of the network.
    • Look to ITC as a full partner, which can be of considerable assistance through its strategic and competitiveness support tools. The TradeMaps, WorldTr@deNet and E-Trade Bridge programmes are all designed to reinforce the activities of TPOs.

    Expand networks

    Other multilateral development organi-zations, such as the World Bank and regional development banks, can assist in this process of repositioning TPOs. ITC urges them to include TPOs in their efforts to mainstream trade into national economic development. By the late 1980s, some development agencies had become highly critical of the performance of many developing country TPOs, some of which were indeed not competent, while others were. Since that time, many more have become competent and efficient. Today, TPOs are prime national players in ensuring that trade is an effective engine for development. They are legitimate and valuable partners.

    ITC will continue to be the friend and partner of TPOs. It also looks forward to other international agencies joining in this partnership to ensure that TPOs realize their full potential in these turbulent years. Not making them full members of the team for development through trade would be a mistake.

    J. Denis Bélisle is ITC's Executive Director. This article is taken from a speech he gave at the 4th World Conference of Trade Promotion Organizations in Beijing, People's Republic of China, on 16 May 2002.