Commercial Diplomacy

“Commercial diplomacy involves business and government overseas in cooperative efforts to achieve commercial objectives that advance national interests.”

Harry Kopp, Commercial Diplomacy and the National Interest

Throughout history, nations have sought to advance their economic and commercial interests by negotiating trade agreements, lending support to their own commercial entities and fostering an environment where national businesses and entrepreneurs can succeed in the international marketplace. 

Virtually since its inception, the United States has vigorously asserted the business interests of its citizens.  From the Treaty of Tripoli, which sought to establish U.S. commercial rights in North Africa, to later well-known U.S. policies such as the Monroe Doctrine in the Western Hemisphere and the Open Door policy toward China, United States diplomacy has always had commercial motives at its core. 

Since the end of the Second World War, when the Bretton Woods agreements established the commercial and financial instrumentalities at the heart of the international trading system (e.g., the International Monetary Fund, the World Bank and the General Agreement on Tariffs and Trade, or GATT, which later became the World Trade Organization, or WTO), the United States has taken an active lead in creating and supporting international arrangements that further its specific and broader interests. 

Kopp, Harry W.  Commercial Diplomacy and the National Interest.  New York, NY: American Academy of Diplomacy; Business Council for International Understanding, 2004. 

Commercial Diplomacy Today

As the world’s leading trading nation, the United States has a multiplicity of interests to protect in the international commercial arena.  Many U.S. Government agencies advance these interests, but the Department of Commerce has the lead role; its United States & Foreign Commercial Service (FCS) is one of four Foreign Affairs agencies under the Foreign Service Act of 1980. Foreign Service officers in the commercial service are assigned to foreign and domestic offices to promote U.S. exports and defend U.S. commercial interestes abroad. 

The Office of the United States Representative (USTR), part of the Executive Office of the President, takes the lead in negotiating trade agreements, bilaterally, regionally, and in the WTO. Together with the Departments of State and Treasury, USTR also negotiates Bilateral Investment Treaties with other countries. 

U.S. commercial interests are often defined as embracing three distinct policy priorities: (1) expanding the U.S. private-sector stake in the international economy, (2) spearheading the global effort to liberalize trade and investment through promoting a rules-based system and open-market policies and (3) supporting economic development in all countries.  In recent decades, particularly since the end of the Cold War, the United States has promoted numerous free trade agreements, both regional and bilateral, including those leading to the establishment of the North American Free Trade Area (NAFTA) with Canada and Mexico.  In addition, it has been an active participant in many international instrumentalities, from the World Trade Organization to the Asia Pacific Economic Cooperation (APEC) forum.

The Administration of George W. Bush emphasized U.S. interest in promoting open markets not only as a means for advancing specific commercial objectives but also as a means of promoting the rule of law and more open governments. 

President Obamaís 2009 Trade Policy Agenda, released in March 2009, calls for respect for entrepreneurship and market competition, the environment, opportunity for all, and the rights of workers. It emphasizes the importance of continuing education and of new technologies in maintaining U.S. competitiveness and of pursuing sustainable energy and environmental policies. The Presidentís policy priorities include: support for a rules-based trading system, advancing the social accountability and political transparency of trade policy, using trade as a polity tool for achieving progress on energy and environmental goals, esnruing that trade agreements address unresolved issues that are contributing to trade friction, building on existing free trade agreements and bilateral investment treaties, upholding U.S. commitment to act a s a strong partner of developing countries, and ensuring the availability of adequate trade financing, especially for small and medium-sized U.S. exporters.

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The Department of Commerce

The Department of Commerce’s mission is to foster, promote and develop the foreign and domestic commerce of the United States.  It advances these objectives by participating with other government agencies in the creation of national policy, promoting and assisting international trade, strengthening the international economic position of the United States, promoting progressive business policies and growth, improving comprehension of the environment, ensuring effective use and growth of scientific and technical resources, and assisting states, communities and individuals with economic progress.  Foreign Service Officers of its United States & Foreign Commercial Service (FCS) staff the commercial sections of embassies worldwide.

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U.S. & Foreign Commercial Service (USFCS)

The U.S. State Department established the Bureau of Foreign Commerce in 1897.  This branch, as well as corresponding branches of the Department of the Treasury, was later integrated into the U.S. Department of Commerce in 1903.  In 1927, the Foreign Commercial Service (FCS) was established as a new branch of the Commerce Department “for promotion of foreign and domestic commerce,” but in 1939 is was disbanded by President Franklin D. Roosevelt and integrated into the State Department for the next four decades.   

In 1980, the Foreign Commercial Service was reestablished under the Department of Commerce (in 1981, it was renamed the U.S. & Foreign Commercial Service), under the International Trade Administration, to better monitor and support domestic and international commercial operations.  It is responsible for promoting exports of U.S. goods and services while at the same time protecting U.S. business interests.  FCS currently operates in the 81 most commercially active countries around the globe.  The State Department has responsibility for commercial functions in an additional 90 countries.

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International Trade Administration (ITA)

The International Trade Administration was created in 1980, along with the USFCS, to help American companies better compete in a more globalized world.  Its stated goals are to provide practical information to help Americans select markets and products, ensure that Americans have access to international markets as required by trade agreements to which the United States is a party and safeguard Americans from unfair competition from dumped and subsidized imports.

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Market Access and Compliance (MAC)

One branch of Commerce’s International Trade Administration, Market Access and Compliance (MAC), works to “level the playing field” by identifying and reducing trade barriers, settling trade disputes and ensuring compliance with trade agreements.  It specializes in resolving trade complaints as they pertain to intellectual property rights, import quotas, standards, customs, transparency and contract sanctity, national treatment of American companies and individuals, good governance and sanitary standards.

The Office of the U.S. Trade Representative (USTR) is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries. The U.S. Trade Representative, the head of the agency, is a Cabinet member who serves as the presidentís principal trade advisor, negotiator, and spokesperson on trade issues. USTR coordinates trade policy, resolves disagreements, and frames issues for presidential decision. USTR also serves as vice chairman of the Overseas Private Investment Corporation (OPIC), is a non-voting member of the Export-Import Bank, and a member of the National Advisory Council on International Monetary and Financial Policies. Founded in 1962, USTR has offices in Washington, Geneva, and Brussels.

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Office on Commercial and Business Affairs (CBA), Department of State

The Office on Commercial and Business Affairs (CBA) is in charge of directing State Department advocacy for American businesses abroad.  It works closely with other U.S. Government trade promotion partners in coordinating trade and investment policies, and provides information on corruption and other investment conditions in foreign markets.  CBA also helps businesses with questions concerning U.S. export controls on sensitive technologies or business-related visas.

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U.S. Trade and Development Agency (USTDA)

The U.S. Trade and Development Agency (USTDA) is an independent foreign assistance agency created by the Foreign Assistance Act of 1961. It works to build partnerships between U.S. companies and overseas project sponsors and bring private sector solutions to developmental challenges.  Using overseas grants, contracts with U.S. firms, and trust funds at several multilateral development bank groups, this agency helps countries establish favorable trading environments and modern infrastructure that promotes sustainable economic development. 

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U.S. Export-Import Bank (Ex-Im Bank)

The Export-Import Bank (Ex-Im Bank), the official export credit agency of the United States, helps U.S. businesses find and exploit business opportunities in the global marketplace.  Occupying a niche in the global financial market that the private sector is unable or unwilling to fill, the Ex-Im Bank assumes needed credit and country risks by providing working capital guarantees (pre-export financing), export credit insurance, and loan guarantees and direct loans (buyer financing) to both large and small businesses.  Over the past 70 years, Ex-Im Bank has supported more than $400 billion of U.S. exports, primarily to developing markets.

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Overseas Private Investment Corp (OPIC)

The Overseas Private Investment Corp (OPIC) is a small, independent agency in the executive branch of the federal government that aids economic development in emerging economies by promoting U.S. private investment.  OPIC attempts to mobilize American private capital and technical skills for the social and economic advancement of transitional and lesser developed markets.  Since its establishment in 1971, OPIC has supported $164 billion worth of investments that have helped generate $13 billion in host-government revenues and created more than 732,000 host-country jobs.

For an article which discusses the role of OPIC and the Ex-Im bank in Asia and may provide a clearer understanding of their function, see: http://www.ciaonet.org/conf/cfr03/cfr03aa.html

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Foreign Agricultural Service (FAS), U.S. Department of Agriculture (USDA)

The Foreign Agricultural Service (FAS) of the Department of Agriculture works to open existing markets, as well as build new ones, for the benefit of U.S. agricultural interests.  In addition to its responsibilities for market development, it participates in trade negotiations and collects research on market conditions and national policies.  It also heads the USDA’s export credit guarantee and food aid programs, and offers its technical expertise to developing nations trying to increase farm sector incomes and food availability.

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American Chambers of Commerce Abroad (AmChams)

American Chambers of Commerce Abroad, known as AmChams, are found in virtually every country with a substantial U.S. business presence.  Their members include American companies and individuals doing business in a given country and companies and individuals from that country doing business in the United States.  AmChams help American companies, law firms, private consultants and others learn about and exploit business opportunities abroad.  U.S. citizens and those employed by American firms find substantial social as well as professional advantages in joining AmChams in the host countries where they work.  Many AmChams vigorously advocate for U.S. business interests with their host countries, and also with the U.S. Government and Congress.  Presently, there are 112 AmChams in 99 countries affiliated with the U.S. Chamber of Commerce.

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