As U.S.-China Trade Clouds Gather, Five Lessons I Learned in Asia as the U.S. Department of State's Top Commercial Diplomat
With US-China trade clouds gathering over the Asia-Pacific region (APAC), leaders in the public and private sector across APAC are girding themselves for a down pour. As Singapore’s Prime Minister Lee Hsien Loong has noted, the potential fall-out is not just economic in nature in terms of disrupted trade patterns and supply chains but also geopolitical with increased trade friction eroding the prospects of US-China cooperation on key transnational challenges.
Helping US firms navigate such geopolitical and economic currents was a central part of my mandate as the US Department of State’s top commercial diplomat in the Obama Administration. As the Special Representative for Commercial and Business Affairs, I led the Office of Commercial and Business Affairs at State and served as the Department’s primary liaison with the US private sector.
In this capacity, I met regularly with US corporations, SMEs, and trade associations at home and abroad to brief them on key developments from the Trans-Pacific Partnership to China’s Belt and Road Initiative and Asian Infrastructure Investment Bank and integrate their concerns into policy deliberations within the US Government.
Building on this dialogue and working closely with my colleagues across the US Government, we helped US firms secure foreign government contracts worth $50.9 billion in FY2016; strategically positioned US firms by, for example, leading delegations of US. companies across APAC to promote America’s brand of innovation; and elevated regulatory concerns at key policy dialogues such as the inaugural US-India Strategic & Commercial Dialogue.
To be sure, we also encountered significant structural constraints to US commercial advocacy abroad, such as the lack of robust financing mechanisms, in an increasingly competitive global landscape where key US competitors enjoy far more aggressive support from their governments.
Distilling my commercial diplomacy experience with a focus on APAC, below are the five lessons I learnt on advancing US commercial goals amidst geo-political and regulatory complexity:
1. Demonstrate Policy Alignment
Successful commercial diplomacy rests, in large measure, on showing how a company’s products and services dovetail with the policy priorities of a government. In my interventions with foreign counterparts, the goal was to demonstrate that alignment in as compelling a manner as possible and amplify that alignment through engagements with the media and local industry partners.
If there was one cross-cutting theme in my engagements from Beijing to Tokyo, Jakarta to Vientiane, Singapore to Delhi, it was a desire by all governments to generate jobs and growth by spurring innovation and entrepreneurship; expanding the SME sector; and leveraging technology.
Aligning with this policy imperative often required adjusting the narrative a firm was presenting. In its quest to secure a license to operate a healthcare facility overseas, for example, one firm led its pitch by emphasizing the quality of the technology it would deploy. Yet, the policy exigency we were hearing from the government was to create jobs for the vast pool of unemployed college graduates and ameliorate the risk of economic discontent boiling over into political instability.
In response, we worked with the firm to develop the concept of a skills center to train and source local workers for the facility. We expanded our engagement beyond the licensing authority to stakeholders such as the Ministers of Vocational Training and Trade and Industry. Our goal was to ensure that when the Cabinet met to vote on the license – an issue of first impression in the health sector – multiple hands went up in approval. The license was ultimately approved.
2. Invest in Relationships and Solutions
Many companies with whom we engaged in APAC were understandably focused on putting out regulatory fires from data localization policies in ASEAN to the protection of intellectual property in India to the application of anti-monopoly laws in China. The most effective firms, however, were able to play on two fronts: defending their immediate interests while proactively developing the relationships and solutions needed to generate a long-term enabling environment.
Partnering with such firms, we worked to facilitate forward-looking policy conversations with regulators across APAC. In ASEAN, under the auspices of the US-Singapore Third Country Training Program, both governments along with industry partners hosted a series of week-long workshops for regulators from across ASEAN to discuss best practices across varied sectors. One such workshop that I had the privilege of helping launch in Singapore was convened in partnership with FedEx and brought together top customs officials from all ten countries in Southeast Asia.
The strength of such a training program was three-fold. First, it brought regulators together in a neutral group setting of learning – spurring a healthy conversation with experts and each other about their challenges and a healthy race to the top. Second, given the scope and fragmented nature of the APAC market that leaves companies having hyper global or hyper local conversations, leveraging such a platform enabled a sub-regional conversation across multiple governments given ASEAN’s ongoing efforts to create an integrated economic community. Third, the program allowed private sector partners to interface with regulators in a more symmetric manner as thought partners in a collaborative setting instead of as policy supplicants in a government building.
Building on such programs, the US Government and US firms need to continue to not just pursue deals and put out fires but also invest in relationships, technical capabilities, and standards.
3. Leverage Deliverables
Nothing focuses the mind in government more than a pending high-level visit, particularly at the head of state level. Such engagements trigger policy deliberations within and between both sides to tee up what is known in US Government parlance as “deliverables.” Deliverables are policy announcements to strengthen and show progress in a bilateral relationship; commercial outcomes are often tacked on to those in the diplomatic and security arena to show holistic progress.
Governments across APAC in my engagements were consistently keen to attract high quality US investment with the ancillary technology and training benefits and diversify their economic relations; yet tariff and non-tariff barriers frequently undercut their rhetoric. Conversely, for many of my colleagues in the US Government, commercial issues were often eclipsed by other items on the policy agenda. High-level engagements thus provided a unique window of openness among officials on both sides to advance a firm’s bid for a contract or a regulatory fix or to embrace a signature investment project or corporate social responsibility initiative to generate goodwill.
One such notable case in APAC during my time at State was VietJet’s announcement that it would order 200 jets worth $11.3 billion from Boeing during President Obama’s visit to Vietnam in May 2016. The deal was carefully cultivated by Embassy Hanoi and colleagues across the US Government, including in my former office at State, to cross the line during a Presidential visit.
To leverage deliverables, in a nutshell, thus means to anticipate high-level government engagements; plan backwards to develop and seed commercial priorities; and cultivate senior government champions to convert those priorities into outcomes at the moment of engagement.
4. Lean in on Sub-National Engagement
In some of Asia’s largest economies, direct sub-national advocacy at the state level instead of a singular focus on engaging with top officials in the capital is key to success. Cities and states are increasingly important commercial and regulatory actors in their own right.
That is why as part of Secretary Kerry’s Asia Innovation Roadshow Series that saw senior State officials leading US business delegations across ten cities in APAC to promote the American brand of innovation and tackle regulatory issues, we tacked on at least stop beyond the capital.
In India, given its scale, our Roadshow visited three states – Andhra Pradesh, Gujarat, and Telangana – and engaged with Chief Ministers and top bureaucrats, as well as the media, local chambers of commerce, universities, and incubators.
In the state of Andhra Pradesh, one of our delegation members had been awarded a lead role on a Smart City project; however, the firm had incurred a costly months-long delay in getting the clearance to start work. In meeting with the Chief Minister, we pegged our advocacy to the concept of “competitive federalism” and his desire to see his state rise in an Ease of Doing Business ranking that compares openness for investment across states in India.
With concerted follow-up in tandem with the US Embassy and US-India Business Council over the next few months, we managed to dislodge the clearance. Direct sub-national engagement was key to breaking the logjam instead of relying on a Delhi-only channel.
5. Know Your Limits
Notwithstanding some of the positive lessons and outcomes described above, my colleagues and I frequently encountered the shortcomings of US commercial diplomacy overseas. Two often discussed areas with the US private sector related to financing and high-level advocacy.
Many US firms expressed their acute concern regarding the insufficient financing that the US Government was putting on the table to back them relative to, for example, significant financial outlays for Chinese firms in the infrastructure arena from state entities such as the China Development Bank, China Exim Bank, and a host of other financing entities.
Many US firms additionally cited the lack of commercial interventions and top-flight business delegations led by senior US Government leadership in contrast to such engagements being regularly championed all the way up to the head of state level in other systems.
To be sure, many US firms do not need or avoid US government advocacy on their behalf depending on a host government’s posture toward the United States. They have skilled public affairs executives who know how to navigate regulatory shoals and proactively build partnership and are, in effect, commercial diplomats in their companies negotiating internally and externally.
As discussed in the Corporate Affairs Forum last month in Singapore hosted by PublicAffairsAsia, these abilities will be increasingly called upon in APAC on substance and on process — from managing the reverberations of US-China trade tensions and growing nationalism and populism to operating in the spotlight and speed of the social media era.
This article originally appeared on the website of PublicAffairsAsia.
Ziad Haider is a Senior Adviser at the Center for Strategic and International Studies and served as the Special Representative for Commercial and Business Affairs at the US Department of State in the Obama Administration. Twitter: @Asia_Hand