bout de papier, Vol. 9, No. 2 (1992) — Spring 1992 // Printemps 1992, pp. 7–9
1994 will mark the centenary of the Trade Commissioner Service (TCS). Our contribution to the Canadian exporting community and to the Canadian economy is cause for celebration. It is also cause for reflection: do we serve the changing needs of Canadian business, and can we integrate trade policy more with trade promotion?
Resistance to change, inertia and entrenched attitudes are problems common to all of us in External Affairs — in political reporting and immigration selection as well as in trade development. More and more energy is devoted to process, and less and less to the solid analysis of substantive issues. Yet, a changing global environment and continued government cutbacks underline the need to adapt and to adjust.
The New Reality
The world trading environment is changing. The Canadian economy has made a shift from natural resources to services and knowledge-based industries. Trade increasingly follows investment and is more and more conducted on an intra-firm and intraindustry basis, as long-term supplier relationships become more prevalent. More companies from more countries are investing abroad. Governments are moving away from economic interventionism toward greater integration with the global economy, especially in the countries of the OECD where Canada does most of its business.
Instant communications and widespread information on world market opportunities also contribute to a more global business environment. Foreign travel has become less foreign. Companies have become more sophisticated; trade, technology and investment are now viewed as complementary tools to international business development.
Small- and medium-sized companies are no longer protected from these trends.
Redefining the Trade Commissioner Service
Just as trade policy is slowly adjusting to globalization and integration between trade and domestic policy, trade development — i.e. promoting exports — must become more sophisticated.
The Trade Commissioner’s role used to be clear. We are salespeople, helping Canadian firms increase their exports of goods and services. Mary Hill’s history of the Trade Commissioner Service was aptly called Canada’s Salesman to the World.
This role continues in countries where the language is difficult, the culture different and business practices dissimilar. Government can provide exporters with political leverage, access to key decision-makers, assessment of market intelligence and identification of local companies or intermediaries. Where few effective private sector alternatives exist, government sponsorship of trade fairs and missions is necessary. Government trade financing and insurance are often required. We do make a difference in such markets.
The review of the Australian trade service (“Austrade”) by the management consulting firm, Mckinsey, focused on this role. Austrade, the firm recommended, should “help Australian enterprises access overseas customers through utilizing government clout and in-depth local market relationships and know-how”. The firm also told Austrade to focus on specific markets where government influence is important, and to reduce drastically the resources devoted to the USA market where government intervention is not needed.
Canada has taken a different course in redefining our trade service. Our posts in the USA are busier than ever with encouraging Canadian companies to form business partnerships or “teaming” with American counterparts. We have introduced the notion of investment promotion, technology inflow, and corporate liaison. Similarly, the “Strategic Ventures Program” in Western Europe is highly targeted and is selective in assisting specific Canadian sectors to establish a presence in Europe.
Leaner, More Focused Assistance
Downsizing in the Public Service is a reality that will continue in the ’90s. EAITC has to overcome the bureaucratic resistance to change and to reallocate resources quickly. To set priorities, the Department needs better strategic planning; to implement our priorities, we need increased flexibility to move and to shift resources as required.
EAIT’s support to exporters will have to become better differentiated and more selective. Should we continue to support fairs and missions given strong private sector alternatives in markets in the OECD countries? Should we provide expertise for fewer sectors? Should we concentrate greater resources in leading edge sectors where backward and forward linkages among investment, technology and trade are strongest, as the USA Trade Development Bureau has started to do? Should long-term strategies of looking for niches, similar to the Strategic Ventures approach, become more common for OECD markets? Will market-access issues become even more important? The answer to all these questions is likely to be yes. In effect, EAITC will have to develop a mixture of approaches, matching needs and capabilities to different markets.
The Department cannot expect companies to set our priorities for us. A recent Conference Board survey revealed that companies reflect “the traditional concerns of Canadians about having programs which are widely available and do not ’discriminate’ against businesses in certain sectors or in certain markets”. Companies, at least individually, do not yet seem to recognize that limited resources require priority setting.
We Are All Busy But Are We Making a Difference?
Canada is no longer a protected market. Small- and medium-sized firms, given the FTA and globalization, now have to compete on North American terms. Export education needs are changing. ISTC and the provinces, rather than the Trade Commissioner Service, may have a special role in bringing companies up to the export-ready stage. EAITC’s role would then follow.
Programs like PEMD and CIDA INC are, in effect, subsidies for unsuccessful export promotion activities, and need to be reconsidered rigorously. Companies that cannot afford travel and trade fair expenses are not export ready. PEMD funds could be better used to improve Canada’s market intelligence, to strengthen export education, and to provide additional resources in the field. CIDA INC funds could then be diverted toward concessional financing.
Trade Commissions Require Better Training
As trade and investment-development programs become more sophisticated, so do the training requirements for trade officers. We need a better understanding of the changing nature of international business and, in particular, the linkages between investment, technology and trade. Short “consultant management” courses are also required. If we are to provide more in-depth consulting to export-ready firms, our training requirements should correspondingly broaden. This applies to recruits, experienced officers, managers and to our commercial officers abroad.
Does this mean we should become geographic, sectoral or functional specialists? While sector specialization may be useful, this can be easily hired in OECD markets, precisely where it is most useful. But technical specialization is dynamic and requires constant updating and would be better left to companies or to other departments. Our best contribution would appear to lie more in our first-hand knowledge of international business practices and distribution techniques than in specialized sector knowledge per se.
The Primacy of Policy
Government, after all, is driven by policy and not by programs. Policy — for better or worse — will always set the agenda.
Under consolidation in 1982, the two solitudes of trade policy and trade development ironically have become more entrenched within the Department – an ingrown trade policy priesthood and a trade promotion tribalism. However, the increasing sophistication of international business requires closer coordination between trade policy and trade development. Trade development, closer to the business community, often leads Canada’s trade policy. Yet international trade policy – the negotiation and management of issues under GATT and the FTA — creates the necessary environment for trade and investment that affect Canada’s competitiveness. To progress further on the trade development side, policy changes are often required.
In an increasingly liberalized and harmonized global economy, trade policy concerns and frictions will continue to set the agenda with our major trading partners. This is already the case with the USA in such disputes as pork and softwood lumber, and is rapidly becoming so with the European Community as well. These disputes demand more resources or personnel to manage the frictions and, given a dwindling Public Service, these come only at the expense of trade development. Liberalization of the Japanese economy may have similar implications, as will the removal of restrictions on investment, imports and services in the emerging economies. Cultural and linguistic differences may continue to justify trade development activities, but their relative importance will likely decrease in our major markets.
The Policy Imperative: Where Does the TCS Fit In?
Trade policy and trade development have different styles. Trade and investment development is entrepreneurial and results-oriented. Trade policy is bureaucratic, incremental and dedicated to process. Our instinctive preference for the former should not mask the need to address the latter.
The Trade Commissioner Service has not seized the opportunities presented by the prosperity initiative — our involvement is largely limited to existing international trade development consultations. We need rather to explore fully the forward and backward linkages between international business and the domestic economy.
To remain relevant in government, Trade Commissioners need to be part of the upstream policy development. Yet to remain relevant to business, the Department has to roll-back bureaucratization. Frank Petrie, former Director General of the Office of Overseas Projects and former President of the Canadian Exporters Association remembers that he often told his deputy minister that he was unavailable as “businessmen come first”. No one in EAITC is prepared to say that today. Instead, we are all busy preparing briefing notes. We may risk even more bureaucratization in becoming more involved in policy formulation; it is, however, a risk that we will have to take. And we should take it by insisting that the trade policy system be aimed at achieving results in improving our international trade.
Although we may prefer trade development, trade officers have the necessary prerequisites for developing relevant trade policy. Good knowledge of foreign business environments, barriers to new markets, and the Canadian industrial and service base, all complement an instinctive search for pragmatic solutions to the problems at hand. We will need, however, the patience to deal with the slow pace of policy development.
The twinning of ISTC and International Trade under one Minister reflects the recognition that trade policy is increasingly integrated with domestic adjustment policy. An unwritten objective of the FTA was to force Canadian industry to adjust structurally and to become more competitive both domestically and internationally. A more integrated trade policy and development presence within EAITC should ensure that Canada’s political foreign policy concerns reflect more strongly the long-term interest of the Canadian business community.
The Trade Commissioner Service has a strong and noble history. As international trade and investment become more sophisticated and complex, the role of the Trade Commissioner will have to evolve and change. Greater expertise in trade policy and market access will be required. Our existing strengths must be supplemented by new skills to deal with the challenge of a global economy and a more demanding business sector.
Meeting this challenge will be the test for the second century of the Trade Commissioner Service.
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Originally published in bout de papier, Vol. 9, No. 2 (1992) — Spring 1992 // Printemps 1992, pp. 7–9. Read the rest of this issue →
