The Ambassador's Changing Mission: Commercial Diplomacy in the 21st Century

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THE AMBASSADOR'S CHANGING MISSION
COMMERCIAL DIPLOMACY IN THE 21ST CENTURY
ECONOMIC STRENGTH AND FOREIGN POLICY
April 11, 2005

Robert D. Hormats, vice chairman, Goldman Sachs (International)
Kent H. Hughes, director of the Science, Technology, America and the Global Economy Program, Woodrow Wilson Center
Jerry K. Mitchell, former deputy director general of the Commercial Service
Virginia A. Weil, senior adviser to the Business Council for International Understanding

In addition, Charles E. Cobb, Jr., former undersecretary of Commerce, Bruce S. Gelb, former U.S. ambassador to Belgium, Alfred H. Kingon, former U.S. ambassador to the European Union, and Carl Spielvogel, former U.S. ambassador to the Slovak Republic, offered brief remarks.

The Woodrow Wilson Center and the Council of American Ambassadors co-sponsored an April 11 conference on The Ambassador's Changing Mission in the 21st Century. An opening panel explored the growing importance and complexity of traditional diplomacy – representing and advocating America's economic interests abroad. A second panel examined the ways in which commercial diplomacy has been used to achieve national security and foreign policy goals.

Bruce S. Gelb, President, Council of American Ambassadors, Woodrow Wilson Center Board Member, and Chair of the Woodrow Wilson Center Council and Kent Hughes, Director of the Center's Program on Science, Technology, America and the Global Economy (STAGE) opened the conference. Ambassador Gelb specifically thanked Ambassador Charles E. Cobb, Jr. for suggesting and helping shape the conference. In pursuit of Cobb's vision, Gelb asked each panel to make specific, actionable recommendations that will help the ambassador pursue both types of commercial diplomacy.

Promoting U.S. Commercial Interests: Stuart E. Eizenstat, former Deputy Secretary of the Treasury, moderated a panel that included Jerry K Mitchell, former Deputy Director General for the Commercial Service, Dr. Peter S. Watson, former President and CEO of the Overseas Private Investment Corporation and Virginia Weil, Senior Advisor, Business Council for International Understanding. Carl Spielvogel, former US Ambassador to the Slovak Republic, provided the commentary.

The panel shared the view that commercial diplomacy had become more important in an era when global competition for markets, investment opportunities, and technologies had become the rule of the day. At the same time, the panel recognized that with so much cross-border investment, mergers, and join ventures, identifying the specific American interest had become more complex. Because several American companies or American based operations were competing for the same contract, the Ambassador often had to advocate on behalf of the United States rather than a single company.

Everyone on the panel expressed their appreciation for a recent publication on commercial diplomacy published by the Business Council for International Understanding. By including specific cases, the volume promised to be a useful educational tool for new ambassadors and other concerned with representing U.S. economic interests overseas. They also praised the institution of the Cobb Award (named after Ambassador Cobb) that provides a cash award for Foreign Service officers that excel in commercial diplomacy.

A number of panelists noted the managerial challenges facing the Ambassador. In addition to a hosting the varying responsibilities of the Department of State, an embassy now includes representatives of a number of other U.S. Departments. On the commercial side alone, the ambassador would be working to coordinate the activities of the Agriculture, Commerce and Treasury Departments.

After the formal presentations, commentary, and discussion, the panelists made a number of specific recommendations. Among others, they called for reworking National Security Directive #38 (which spells out the powers and responsibilities of the ambassador) to emphasize the importance of commercial diplomacy. The panel also called for opening the door to ambassador to Foreign Service officers who had pursued a career in the economic cone or the commercial service. Career and politically appointed ambassadors should be linked to key contacts in the various agencies that support commercial diplomacy including the Ex-Im Bank, OPIC, and the Trade and Development Agency.

Commercial Diplomacy and Foreign Policy: Dr. Peter Watson moderated the second panel composed of Robert D. Hormats, Vice Chairman, Goldman Sachs (International), Sebastian Mallaby, editorial writer and columnist, Ambassador Charles Cobb, former Under Secretary of Commerce and former US Ambassador to Iceland, and Kent Hughes. Al Kingon, former US Ambassador to the European Union provided added commentary.

The panel complemented the State Department for continuing to pursue commercial diplomacy. They stressed that by fostering economic growth in the U.S. economy, traditional commercial diplomacy helped provide the underlying foundation for many foreign policy and national security goals.

A number of the panelists noted some significant gains for commercial diplomacy in the opening to China and the formation of the European Union. They also noted that the vision of Middle East Free Trade Area and the greater integration of the Middle East in the global economy would contribute to peace as well as prosperity in the region. The qualified investment zones that are expanding in the Middle East were viewed as a step in the right direction.

During the Cold War, a combination of moral concern, enlightened self interest, and competition with the Soviet Bloc had led the United States to focus on growth and national building in the developing world. In the brief, post-Cold War era that interest waned. As the country refocuses on the importance of growth promoting governments and the need for private investment in the developing world, the ambassador will be faced with the added challenge of working with the US Agency for International Development, development agencies from other major donor countries, and key international agencies.

The panel also noted instances in which traditional commercial advocacy would have to take second place to foreign policy priorities. In the discussion period, one former ambassador noted that the United States had limited its pressure on China with regard to intellectual property because China was a critical partner in the on-going effort to persuade North Korea not to develop nuclear weapons. One panelist also noted that in representing a particular company the United States ran the risk of making globalization appear to be about nothing but corporate risks. Pushing for broad policies – the rule of law or open markets – or working through multilateral organizations would reduce the charge of conducting what one participant dubbed a "Halliburton foreign policy."

Among other recommendations, the panel stressed the importance of preparing ambassadors for working with development agencies. The opportunities for career foreign service officers should be broadened to include business, commercial and international development matters as well as the current emphasis on political and public affairs. By meeting with international businesses, current and future ambassadors can glean a better sense of what conditions in a country are needed to attract foreign direct investment.