The Foreign Service Journal, January-February 2019

32 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL More than 80 percent of global purchasing power now lies outside the United States, including several large emerging markets with annual GDP growth rates that are double our own. We’re not just competing with Europe, Canada and Japan these days; China, India, Korea, Brazil, Mexico and Singapore, among others, now have world-class firms with aggressive support from their governments. And third, like it or not, we are in a new world of globalization, supply chains, data flows and blockchains. Yesterday’s companies and yesterday’s strategies will not prevail. We can, as some American political leaders are wont to do, opt to complain, invoke protectionist barriers and cry foul; but just playing defense and trying to deny new realities is not a win- ning strategy. With more than 80 percent of America’s labor force working in a disintermediated service sector and a rapid increase in automation in manufacturing, erecting barriers in response to goods trade imbalances risks ignoring future sources of American commercial competitiveness and job growth. We see six critical elements in an effective U.S. economic/com- mercial diplomacy program. l. International commerce and economics must be top priorities. The U.S. government can’t compete and win on the cheap; we can’t just mail it in. Recent passage of the BUILD Act, which wraps the Overseas Private Investment Corporation into a newly created U.S. International Development Finance Corpora- tion that will be able to further U.S. economic interests through strategic investments overseas, is a strong indication of bipartisan and administration support for an effective program. Across the political spectrum, U.S. lawmakers are recognizing the competi- tive threat to our national interests posed by what appears, at first glance, to be simple promotion of Chinese commercial interests in countries as disparate as Montenegro, Sri Lanka and Nicaragua. However, though the U.S. government’s expertise is deep, it is also fragmented. Short of a dramatic restructuring of federal agencies, we owe it to U.S. taxpayers to coordinate efforts better—not only across federal agencies but also with state and local governments. Within the federal government, State and Commerce will certainly need to play a leading role. As foreign affairs agencies with a global footprint and diplomatic accreditation, they are uniquely poised to be the field-forward force for economic/com- mercial diplomacy. Their career Foreign Service officers are on the front lines. But programs at the Department of Agriculture, the Export-Import Bank and the Trade and Development Agency also need to be incorporated and aggressively funded. Worryingly, the Export-Import Bank is now in limbo because of congressional inaction, putting several important U.S. exporters at a competi- tive disadvantage. An effective economic/commercial diplomacy program is a great investment and will pay for itself, but it does require sustained appropriations, good coordination and strong leadership. 2. Top leaders must be personally involved. Cabinet mem- bers, the vice president and the president need to consistently engage foreign counterparts to push U.S. competitors in major deals around the world. Cabinet and sub-cabinet officials must be available to lead trade missions and economic dialogues. And in the field, ambassadors must be personally engaged. If a chief of mission opts to delegate economic/commercial diplomacy to staff, it sends a clear message to senior foreign decision-makers. Ambassadors need not be economic experts; they simply need to be forceful, effective diplomats. U.S. ambassadors such as Stu Eizenstat, Jon Huntsman, Charles Ford and Tony Wayne, who had strong economic and business backgrounds, have been very effec- tive. But so were legendary diplomats like Tom Pickering, Frank Wisner, Kristie Kenney and Marc Grossman, who had little hands- on experience in the economic area. They are just great diplomats. Effective economic/commercial diplomacy is more about leader- ship, diplomacy and hard work than it is about economic policy or commercial contract details. Understanding the growing strategic importance of U.S. commercial wins in certain areas (e.g., new LNG ports and regasification infrastructure) should make it easier for U.S. ambassadors to take the lead in the field. 3. The Commerce and State Department partnership is criti- cal. Frankly, over the years there has been some counterproduc- tive rivalry between the State and Commerce Departments, and between individuals at various levels in Washington, D.C., and at posts around the world. Such rivalry—sometimes personal, some- times over whether an individual issue or event is “economic” (i.e., State-led) or “commercial” (i.e., Commerce-led)—is not totally surprising. After all, President Franklin D. Roosevelt gave the State Department full responsibility for international economic/com- mercial diplomacy in 1939. But based in large part on a perception that State had not consistently and effectively led commercial issues and support for U.S. business, the 1980 Foreign Service Act pulled that responsibility out of State, transferred it to Commerce and established the Foreign Commercial Service. The divorce was painful, especially at State, and left scars,