Envoys conference: a lost opportunity?

BR Research December 31, 2018

Islamabad held a two-day envoys’ conference late last week. The agenda was to deliberate ways and means to grow foreign direct investment (FDI) inflows and trade, particularly exports. That’s a noble cause. But can investment and trade diplomacy flourish without fixing the overarching framework – a subject that did not feature in the statements made by top government officials.

If media reports are any guide, the following themes were discussed, and the same reflected in the presentations, speeches, and press conferences of top government leaders: that ‘envoys should help curb money laundering’ and ‘boost the shattered confidence of overseas Pakistanis’; that CPEC is entering an exciting new phase; that ‘Pakistan needs to be a part of global value chain’; and that ‘Pakistan should aim for product and market diversification’. Here are four broad areas that should have been hotly debated instead.

First, the dichotomy between security lens and economic lens. Pakistan thinks everything from the security lens. Citing a long list of examples across China, India, Vietnam and many others, Dr Manzoor Ahmed, former ambassador to the WTO, maintains that trade diplomacy is no more a small subset of overall diplomacy. Instead, it has become the focal point and key driver of diplomatic efforts worldwide.

“It has long been understood that if a country is strong economically, only then it will have a much stronger hand on diplomacy,” says Dr Manzoor flagging high presence of defence attaches abroad, and Pakistan’s reluctance to unilaterally reduce the time and cost of visa issuance. To what degree will Pakistan replace its security vision with economic vision – that direction was missing from the post conference government communication.

On a related note, can trade diplomacy or ‘being a part of global value chain’ flourish in the absence of regional trade? Instead of asking envoys to help in money laundering, this is a question that should have been answered following the two-day moot.

Second, Pakistan’s relations with the United States. Economic diplomacy may have become the focal of diplomatic efforts, but it still cannot be divorced from broader diplomatic relationships. In that vein, whether one likes it or not, whatever the pros and cons, the western thought process is led by the United States. Even after the current US President Donald Trump managed to irk the heads of European states on account of backing of Iran and climate change deals and the embassy in Jerusalem, they have little option but to follow the US. Such is the exorbitant privilege of the dollar and the military might of the US.

This means that Pakistan can send the best resource to the WTO, the IMF or other multilateral agencies, if she doesn’t have a good rapport with Uncle Sam, then that will define the limits of her investment and trade diplomacy. Case in point: the ongoing US-IMF-CPEC episode, and ADB’s decision to resume policy lending “after IMF bail-out is finalised”. Ergo, the envoy conference should have resulted in some policy statements about the future of Pakistan-US relations, which haven’t been the best in the last twelve months.

Third is the reliability factor. There are institutions that don’t seem to have apparent bearing on diplomacy, but they eventually affect both trade and investment diplomacy. For instance, when FBR blocks tax refunds, its financial pain on foreign companies operating in Pakistan is felt globally. Case in point: during one of his trips to the US, the former finance minister Ishaq Dar met the global CEO of Coca Cola, whose first item on the agenda was tax refunds issue faced by Coca Cola in Pakistan.

Likewise, as Dr Manzoor points out, when a country revises or threatens to revise contracts (say LNG contracts), trade agreements, or her apex court gives a ruling against a foreign company, then regardless of whether or not she has done so for justifiable reasons, the move impairs the country’s international rating. This is because such news eventually features in the country risk reports made by global private sector country risk assessment and rating agencies or when consulate offices report back home on Pakistan’s business environment.

Lastly, the envoys’ conference should have also led to some soul searching on reforming the overall machinery involved in trade and investment diplomacy. In Japan for instance, foreign office staff has to learn at least one foreign language aside from English, because they recognize that one cannot make inroads without having necessary language skills. Case in point: the current deputy consular of Japan, Katsunori Ashida, in Karachi speaks such fluent Urdu that he can put many Pakistanis to shame. The man got his MA in Urdu in Pakistan many years ago when he had joined the Japanese foreign office. In contrast, Pakistani missions abroad lack language skills.

A bigger aspect of reforming the machinery revolves around the dichotomy between foreign office staff and commerce ministry staff. Ever since commerce ministry staff started becoming trade attaches, the economic and commercial knowledge base of senior embassy staff who eventually comes from foreign office department has started eroding, whereas opportunities for training on commerce affairs for foreign office staff aren’t enough to keep them up to speed on topical affairs, and coordination between the two is inadequate.

Pakistan also lacks the vision and wherewithal to ensure it that her people staff the various senior, mid and entry level job vacancies in the IMF, WTO, World Bank, BRICS bank, ADB, EU Commission, AIIB and the likes. Globally, astute foreign office machinery maintains a complete chart of the vacancies emerging in such organisations over the next five years. Accordingly, they negotiate with relevant power corridors, train their staff for expected vacancies, and maintain a linkage with the universities back home, so that their country is able to fill the vacancies in these organisations with their own people. Having people on the inside is of critical importance in the long run, but Pakistan hasn’t had the vision to realise these benefits in last few decades.

Addressing the envoys PM Imran Khan said that “team work among Foreign Office, Ministry of Commerce and the BOI is a key to our success in economic diplomacy.” The importance of the fact there is no formal coordination mechanism between Pakistan’s missions abroad and market & producers here at home is a realisation that hasn’t yet dawned on the government machinery, former or current. More on that aspect later!

Copyright Business Recorder, 2018

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