Economic diplomacy: A new tool for promoting development

The new Minister for Foreign Affairs has made economic diplomacy a high priority for the country. Vishnu Lutmeenaraidoo is multiplying his ministry activities and is talking about diplomacy focusing primarily on economic development. He plans to redefine the mission and vision of his ministry and restructure the organisation. Julie Isabel Bishop, Australian Minister for Foreign Affairs, famously said that “if the goal of traditional diplomacy is peace, then the goal of economic diplomacy is prosperity”. In Mauritius, Vishnu Lutchmeenaraidoo wants the foreign ministry to become a catalyst for economic development. According to him, our embassies abroad should be able to play a much more active role in promoting investment, exports and general business. In this context, he is encouraging all the staff of his ministry to make this reform project a success. He says he is confident that the ministry will be able to contribute significantly to economic development “in 2016, 2017 and beyond”.

Economic diplomacy explained

Economic diplomacy is traditionally defined as the decision-making, policy-making and advocating of a state’s business interests. Economic diplomacy requires the application of technical expertise which analyses the effects of a country’s economic situation on its political climate and on economic interests. The agenda of economic diplomacy is comprehensive and includes, amongst others issues pertaining to foreign trade and import-export relations, promoting of national economic interests in other countries, informing and updating potential foreign investors on investment opportunities, negotiating economic and trade agreements on economic and trade co-operation, as well as co-operating with a view to eliminating problematic divergences and harmonising standards in various sectors (economic, social, environmental, educational etc). Economic diplomacy is functional at three levels:  bilateral, regional and multilateral. Bilateral economic diplomacy plays a major role in economic relations. It includes bilateral agreements on trade, investment, employment, taxation, as well as a wide range of formal and informal economic issues between two countries. Bilateral Free Trade Agreements have been the order of the day and are being implemented by many countries around the world. Regional cooperation is of growing importance in economic diplomacy. The removal of barriers and opening of markets become easier within a regional framework. Indeed, Mauritius is a strong proponent of regional cooperation and there have been major economic and cultural exchanges with African and Indian Ocean nations. Multilateral economic diplomacy takes place within the framework of World Trade Organization (WTO), as well as numerous international economic and financial organisations such as the World Bank (WB), the International Monetary Fund (IMF), various UN agencies etc. Foreign policy, also known as ‘diplomacy of influence’, includes not only the economic actors, but also the scientific, technical and cultural. Mauritius already has a large network of embassies and consulates around the world and will soon see a new embassy in Saudi Arabia. In a globalised world, the redistribution of cards is in fact based largely on economic criteria. All modern countries, through economic diplomacy, pursue two complementary objectives: sustain their businesses in foreign markets and attract foreign investment creators of jobs. In Mauritius, both roles are played by organisations like the Enterprise Mauritius and the Board of Investment, one falling under the Ministry of Industry and the other under Ministry of Finance. The network of embassies is rarely involved in these roles, though the potential is there. Worldwide, the trend is more and more about economic issues in foreign policy,

The role of embassies

The role of an embassy is essentially diplomatic, its mission relating to negotiations between governments. It thus has a function of representing a government to the authorities of the country where it is located. Thus, it mediates between the two governments: it is through this medium that communications take place and its role is essential in the context of bilateral relations between States. The embassy also occupies an informative function: the diplomatic staff reports to their government news about the host country. Sometimes, because of the special relationship they have with the authorities of the country of residence, diplomats may have information which is not relayed by the mainstream media. This may be important in the preparation of international treaties and official visits.

Embassies under utilised

The reform of the Ministry of Foreign Affairs comes at an opportune moment as most of our diplomatic missions abroad are under utilised. With the advent of technology, embassies have lost some of their roles. For example, many services are now offered directly online and people no longer flock to the embassies for information. Given our ambition to be an ideal investment destination, our global diplomatic network can do much to promote the island. But to succeed, it is imperative that our embassies are equipped with the necessary tools and human resources, people who perfectly master the laws and regulations of Doing Business, investment opportunities in our established and emerging sectors, immigration policy and residency options in Mauritius, as well as comparative economic data from countries in the region, etc.

Maintaining subsidies

The Minister of Foreign Affairs, Regional Integration and International Trade, Vishnu Lutchmeenaraidoo, has sent a strong message to the World Trade Organization (WTO) on the issue of subsidies. He was speaking at a WTO seminar on “WTO Agreement on Subsidies and Countervailing Measures” held on Monday at the Maritim Hotel, Balaclava. According to him, Mauritius still needs a subsidy policy and incentive plan (package of incentives) for its industries to continue on its economic development path. Faced with the argument advocated by the WTO, to the effect that subsidies granted by states to their national industries end up distorting competition worldwide, the Foreign Minister stressed that Mauritius has neither the critical mass nor the means to compete with major world economies on equal terms. He reiterated his firm stand on maintaining the subsidy policy and package of incentives to different sectors of the economy, arguing that small states like Mauritius have been unfairly excluded from the negotiations that led to the agreement WTO on subsidies and countervailing measures. The major economic powers had, however, maintained a stranglehold on the negotiations and were able to preserve arbitrarily grant programs to benefit their industries. He advocates the principle of positive discrimination which must prevail in the WTO multilateral framework to provide an opportunity for small economies to engage more in international trade and protect themselves against unfair competition from the powerful. “I would not bow down to any ideology,” he said in very clear terms.

The main goals

The new economic diplomacy has various targets. Mauritius wants to strengthen economic ties with key countries, which have always been our friends. Among them, China, India, France, England, Russia, Pakistan and our neighbours in the region. The country also wants to expand its overseas network, hence opening a new embassy in Riyadh, which will probably be followed by others. Promoting exports and investment is high on the agenda. Visa policy is also designed as an attraction tool. Food security, climate change, trade and security in the region are among the major issues. There is also the expiration of the ACP-EU Partnership Agreement of in 2020.

Visa exemption

Mauritians travelling to Russia and Indonesia for short stays are now exempted from visas. An agreement between the Government of Mauritius and the Government of the Russian Federation on 23 December 2015 on mutual abolition of visa and entered into force on 10 April 2016. The agreement provides for visa exemption for citizens travelling between the two countries for a period of 60 days. Similarly, visa for Mauritians nationals has been waived since March 10, according to a presidential decree of the Republic of Indonesia issued on March 2, 2016. The decree is a unilateral measure taken by the Indonesian authorities regarding the abolition of visas for 169 countries, including Mauritius. The exemption applies for stays of up to 30 days and for trips for official purposes, business, tourism, social and family visit and transit. Regarding the visa for India, the Electronic Tourist Visa is now free for Mauritians.