bout de papier, Vol. 11, No. 3 (1994) — Fall 1994 // Automne 1994, pp. 10–12
The completion of the Uruguay Round and the implementation of NAFTA in augur the second century for our Trade Commissioner Service. Andrew Griffith looks at the ongoing evolution of the TCS and points out directions for the next century.
Trading Nation to a Nation of Traders: Toward a Second Century of Canadian Trade Development reflected the ongoing debate among Trade Commissioners regarding the role, function and relevance of the Trade Commissioner Service (TCS). Through Corporate Review in 1990 to the Unofficial Trade Commissioner Survival Guide, the debate continues. This year of the TCS Centenary provides an opportune moment to look back at the issues raised over past years and how the focus of debate is changing.
Strategic Approach to International Business Development The debate has highlighted the need for a more strategic approach to international business development. In an environment of limited fiscal and personnel resources, it is argued that government programs should concentrate on sectors, regions and approaches where such assistance is instrumental to private sector success. Moreover, a more sophisticated approach to international business development by the private sector, whereby our clients are increasingly integrating trade, technology and investment approaches to expansion and, of equal importance, are more aware of policy and access issues, forces an equally sophisticated response on the part of government.
This approach was considered heretical by many who argued that Trade Commissioners provided an essential service to companies in all markets and all sectors. Universality was largely unquestioned. Today, implicitly or explicitly, a more strategic approach, incorporating such concepts as differentiating our clients, providing value-added and targeting has become ubiquitous in publications as diverse as The Unofficial Trade Commissioner Survival bout de papier Vol.
Guide, the bulletins of the Trade Development Branch and the International Trade Business Plan (ITBP).
Efforts from within are encouraging. Innovative targeted programs such as the Action Plan for Japan — the “agent of change” approach at its best, whereby government encourages industry-based cooperation in adapting to the challenge of the Japanese market — have been developed. The NEWMEX program to introduce companies to the Mexican market incorporates obligatory export preparation in Canada. The Department has started to shift program resources to providing additional Trade Commissioners in priority regions. The ITBP is becoming sharper and more strategic. The new government has agreed to a government-wide review of international business development programs precisely to ensure a more strategic and coordinated approach. To ensure a The new generation of Trade Commissioners have more varied backgrounds, higher educational qualifications and more sophisticated expectations of what being a Trade Commissioner in the 1990s means, reflecting the more sophisticated approaches of many of our clients. They bring a stronger policy sense to the service, expecting to have a mix of policy and development assignments, recognizing the importance of each to the private sector. They are more demanding of their managers, expecting managers to be able to set strategic directions and establish priorities.
This change in corporate culture is far from complete. A brief review of ongoing issues is encouraging:
Differentiation of markets, sectors and clients: There is more differentiation and targeting than acknowledged yet we are often poor at articulating our region, sector and client-specific objectives. We have started to shift resources into the new growth sectors (e.g. services). We are being forced to articulate our objectives with respect to client profile (e.g., the emphasis on small and medium sized enterprises). Yet we remain largely unable, given the nature of the organization, politics and personalities of the Department, to make real trade-offs between geographic regions. We still do not, in policy and program terms, distinguish between market size and potential for individual companies, and market and client requirements for government assistance (i.e., markets with high potential but where market entry is difficult because of less transparent business practices and different business cultures). As a result, resources are concentrated in the USA and Europe. The modest shift of resources to Asia and Latin America have been taken only at that level given the current structure of the Department.
PEMD (Program for Export Market Development): The shift in emphasis towards a market strategy approach rather than individual events has largely changed the nature of the program from an entitlement to an incentive program. There has been some criticism that companies still confuse a “shopping list” of activities with a business development strategy and we may need to consider obligatory exporter preparation and counselling. SME focus groups tell us this approach is most welcome. They tell us as well that what they really want is information and service, not more funding. If we are in a situation of increasing trade-offs, what would these companies prefer: maintaining PEMD and other programs or strengthening our representation in priority markets and sectors?
Universality: It is widely accepted that we can no longer afford universality. Individual posts and some geographics have established more systematic and effective screening techniques, with senior management support. This post-based approach does not help us address the governmental coordination approach. Companies can choose to participate in a number of missions led by different government departments and levels of government. The ITBP has helped in this area but lacks “enforcement” muscle.
The most appropriate approach is the definition and establishment of clear levels of service. This applies to both public and private sector clients. For the private sector, we need to ensure that expectations are reasonable and that we are able to deliver. If we cannot deliver, or believe we should not deliver a particular service, then we have to advise companies up front. For the public sector, we should equally consider a fee for service for other government department (OGD) missions and trade fairs. If we collect full co-location costs for OGDs within posts, should we not also impose service charges for missions? This would reduce the number of trade events and make OGDs understand our cost structure (and, more important, opportunity costs) for providing such a service. A “performance” contract with OGDs would thus impose service requirements on both other departments and ourselves, ensuring better prepared mission participants and better service at post.
Tracking system: The tracking system is finally being revamped as a proper evaluation tool. Integration of in-house data bases is proceeding. This should provide us with the ability to assess the effectiveness of programs through tracking our clients’ participation in trade events, use of programs such as PEMD and use of other post services. This will further enhance sourcing, as this data is compared to the actual “international track record” of individual companies. We may wish to define other criteria as well as to assess a company’s readiness to pursue specific market opportunities. Future challenge includes development of “cross-walks” with CIDA Inc and Export Development Corporation databases to provide the base to assess the effectiveness of different programs as well as ensuring that WIN Exports is an effective sourcing tool.
Delivery mechanisms: Outside delivery should be more strongly oriented towards cost sharing. We should not be creating more intermediaries by providing funding. The policy on funding for business and bilateral trade associations — essentially, funding should support incremental activities and should sunset — will be buttressed by ongoing fiscal pressures.
Aid-Trade Linkages: This is an ongoing and major management challenge. CIDA Inc is not the main issue. Consolidation/ coordination with other trade development programs through shared data bases could dramatically improve the effectiveness of CIDA Inc, by forcing more rigourous evaluations.
We need to focus more on CIDA bilateral programming. While hard numbers are not CIDA Inc), in key markets of Asia Pacific may exceed our Department’s spending. There are considerable questions on just how effective CIDA bilateral trade initiatives have been. Of equal concern is the shift away from programs in middle income countries such as Indonesia and Brazil. Is it really in Canada’s economic and development interests that close to fifty percent of bilateral funding is earmarked to Africa, where development prospects are poor in comparison to Asia Pacific and Latin America? Can we not strike a better balance between purely humanitarian assistance and that which is mutually beneficial? While it is unlikely that the Foreign Policy Review will lead to such dramatic shifts in direction, we should nevertheless continue to press for such change.
Science and Technology: This is the orphan of international business development which needs to be integrated into our programs. Our lack of strategic focus reflects Canada’s lack of strategic focus in S&T. The Department’s natural focus is “technology acquisition” for our SME clients, often through investment linkages, rather than “science” which is institution- and government-based, access to which requires significant funding. Given the continuum of trade, technology and investment, more training for officers, and better deployment of our existing base of technically-literate officers, particularly in OECD markets, may be required to address the issue, with specialized expertise in certain key sectors/markets as appropriate.
While there has been a change in how more and more Trade Commissioners approach their work, there has been less effective change in how we should be organized to design, implement and deliver our programs and services.
An Appropriate Organizational Structure?
The current post-consolidation Department has remained intact despite major government-wide reorganization and two changes in government. Our official name has (finally) been changed to the Department of Foreign Affairs and International Trade. The fundamental argument or an integrated department — coheren anagement of international relations — remains valid. Given this framework, do we still face serious internal organizational programs? Our international
The reorganization of June 1993 reduced the number of functional Trade Branches from three to two. Implicit in the reorganization was the need to strengthen the policy capability within the Department in both trade development and trade policy. The geographic Branches are different. Their role is inherently more program management and delivery than design or policy making. Given this, does the current structure of two parallel geographic divisions in each Branch — i.e., trade, and political relations — provide effective direction and support to our trade objectives?
According to our private sector clients, our business development value-added lies in the quality of service provided by our international network and not headquarters. Trade policy is different with a strong and visible Ottawa role. Providing strategic direction to this international network would appear to be the major function of head- E quarters, in order to ensure that the posts respond to government and industry priorities.
The geographic Branches have concentrated on filtering of government and private sector enquiries, recruiting for trade events, preparing briefing material, liaising with other domestic players and resource management. This role needs to be refined given today’s technology.
With SIGNET (the Department’s information technology), the tendency to go directly to posts will increase even further. Briefing material will be even more compiled by post. Given the high costs of resources abroad, briefing requirements need to be reduced to what is needed and what will be read. Direct access means that the only way to limit the insatiable appetite both within and outside the bureaucracy will be through the establishment of policy guidelines to define the mandate of the particular posts — i.e., levels of service guidelines for both public and private sector clients. The filtration of demands on posts by the geographic divisions will be central to the effectiveness of the international network.
We also need to get the geographic divisions out of fairs and missions through the creation of a central “logistics support group”. One recruitment contact point would greatly reduce client irritation at multiple contact points. It should also free up the geographic divisions to focus more on what the posts should be targeting in their respective regions.
What alternatives are there to the current parallel structure of political and trade divisions within the geographic Branches? Country desks/divisions are feared by many trade and political directors. Trade officers are concerned that political officers may not be sufficiently service-oriented to respond to private sector requirements. Political officers in turn may question the political and policy judgement of trade officers. As a result, the extension of country desks, destreaming, is highly contentious.
Yet from a management and post perspective, the country desk could provide greater focus and integration. For example, it might be particularly beneficial for secondary markets (e.g., Sweden, Malaysia) where the post would have one dedicated officer rather than two half-officers in two divisions. Country teams, being implemented on a pilot basis within Asia Pacific Branch, should provide greater coherence, focus and management to our posts.
If separate divisions are preferred, the sectoral model of large single country geographic divisions of the USA and Japan could be considered for Western Europe and Latin America. This would likely mean a shift away from individual country “action plans” toward regional “action plans” such as the plan developed for the telecom sector in Latin America. This regional “overview” and direction could be an effective complement to the particular geographic expertise at post. Yet applying the US or Japan trade division model to other geographic divisions risks creating the impression of rebuilding a sectoral capability rather than applying the matrix structure within the geographics. Given senior management’s decision last year to focus the sectoral function on coordination, liaison and dissemination, the establishment of sector expertise within geographic divisions may send the wrong signal to other government departments.
The goal in any such reorganization should be a leaner headquarters in favour of strengthening resources abroad. Both models — the country desk and the “sector” desk — could free up resources to be redeveloped elsewhere, presupposing greater central agency flexibility with respect to personnel management. We may need to consider a number of pilot projects, recognizing that different models may be appropriate for different regions.
Organizational change without personnel management change is unlikely to be productive. Greater specialization, geographic and functional, imposes some operational constraints. Clients continue to complain about Trade Commissioners being only posted for two or three years. High relocation costs provide an additional impetus. Three year postings should be the absolute minimum, matched with a “domestic” posting in the geographic division, ideally both prior and following the posting. This would not preclude assignment in functional branches but would serve to address the concerns of our clients. Can we not aim that fifty percent of all trade officers are placed in the appropriate geographic division for a one year period following postings?
Entering the Second Century The fundamentals of a Department of International Trade may not change — the provision of quality value-added service to our private sector clients — but definitions and strategies may. The end result should be even more differentiated levels of service, depending on markets, sectors and client characteristics.
With the Uruguay Round and the implementation of NAFTA, government needs to address how best to position and assist Canadian companies to take advantage of the market access to The communications and political challenge in telling our clients, both inside and outside government, what services we will and will not provide, is not to be underestimated. Yet the responsiveness to client needs implicit in greater differentiation provides the means to address this : communications challenge.
With the completion of the Uruguay I Round and the implementation of NAFTA, government needs to address how best to position and assist Canadian companies to take advantage of the market access to painstakingly negotiated. A more auspicious start to the second century could not exist. It is for us, collectively and individually, to ensure that this opportunity translates into continued and ongoing renewal of the Trade Commissioner Service.
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Originally published in bout de papier, Vol. 11, No. 3 (1994) — Fall 1994 // Automne 1994, pp. 10–12. Read the rest of this issue →
