The term " economic diplomacy" did not exist before the seventies. Now it has become a buzz-word in diplomacy of all countries. In the process the term has raised confusion among many as to its exact meaning, although every one has a general idea about it.

In the traditional sense, diplomacy is political diplomacy. This means that diplomats are primarily engaged in political relations because stable political relations are the underpinnings of state-to-state relations. If political relations go awry, other relations get waylaid. However, there is a realisation that if economic relationship is strong, political relationship remains stable and whatever ripples occur in political relations, it gets sorted out because both countries have a stake in not losing out beneficial economic relationship. Economic relations act as glue to political relationships.

What is economic diplomacy?
There is no exact definition of it but it can be described as formulation and advancing policies relating to production, movement or exchange of goods, services, labour and investment in other countries. Economic diplomacy was earlier known as Trade Diplomacy.

A distinctive feature of economic diplomacy is that private sectors are involved in the decision-making process to influence negotiating position to remain in the global or regional competitive market. This is because firstly market developments are rigorously monitored by private sectors. Secondly, they are in the field and they know where and how to sell goods and services in the interests of a country. In the case of traditional diplomacy, it is the officials/ diplomats who are involved in it and there is no participation from private sectors.

Economic globalisation has increasingly made economic diplomacy a significant factor in foreign policy. Progress and prosperity depends on beneficial relationship with other countries and each country wants to penetrate into other countries with its goods, services, labour and investment.

The size of middle class has been growing in all developing countries and they have become consumers of all varieties of sophisticated and state of art goods. Some say that Asian consumer is set to drive global demand in the years to come, as did the American consumer decades ago.

Economic globalisation has also made increasingly difficult to draw a clear-cut distinction between what is domestic and what is international. Global economic issues have great impact on domestic issues and in the process, economic diplomacy involves in global economic issues.

Global economic or trade issues are complex and it needs skilled persons to negotiate within a framework of a given international institution, say World Trade Organisation. Economic diplomacy is concerned with the prediction of outcomes of future trade regimes and therefore it will need an understanding of market factors at work in a given global economic environment and in that process, a country will involve in making decisions in advancing economic interests.

To pursue economic diplomacy presupposes that there must be a pool of skilled persons in the government and private sectors to understand and negotiate the issues from national perspective. Economic diplomacy will fail if there is dearth of skilled persons who are able to negotiate from position of understanding and strength.

Globalisation of economy has greatly increased the range and variety of economic diplomacy. The range of countries active in economic diplomacy has expanded and now spans the whole globe. There is an awareness that economic diplomacy may drive for greater transparency -- for better information, greater clarity and more publicity. Private sectors give high priority to transparency. However in all case transparency may not be desirable because negotiation on trade is like courtship: there is usually a period of private exploration and preparation before the parties are ready for public commitment.

Issues
Economic diplomacy may face certain issues, namely tension between politics and economics, tension between international and domestic pressures and tension between government and private sectors. Let us briefly examine each one of them.

With regard to first tension between politics and economics, since states are political entities, politics encroaches upon economic field. If there is a tension or conflict between the two, political considerations outweigh economic interests. For example, Bangladesh does not trade with Israel because of political considerations.

When governments choose policies, private sectors often find that those policies which make most sense in economic terms are not approved for political considerations. However, in certain circumstances, governments strike a balance between politics and economics. For example, when Taiwan private business office was opened in Dhaka in 2004, there was a hue and cry from a section of media that Bangladesh's relations with the People's Republic of China would be adversely affected. However, government of Bangladesh managed the situation in such a way that commercial interests with both China and Taiwan continue in a robust way.

The second tension is between domestic and international pressures in economic policy-making. Often domestic pressures are contrary to international regime in respect of trade and investment. Generally domestic positions get modified in order to reach an internationally good result. For example, opening national economy to foreign companies is usually opposed by domestic companies, because of stiff competition they would face from foreign-made products. However governments have to abide by international regulations for long- term interests and as a responsible member of international community.

The question is how governments make sure that their decisions are understood and accepted by private sectors. Eventually the benefits to be accrued to the domestic stake holders for opening up national economy may persuade them to accept de-regulation and liberation of economy. Bangladesh is currently one of the most open economies among the developing countries and the result is that on average Bangladesh exports have grown by about 15 per year.

The third tension is between the government and private sectors. Often private traders, financiers and investors play an important role in economic diplomacy but governments often do not heed to their advice because of policy considerations, political or otherwise. Since governments call all the shots in the matter, there exists a tension between private sectors and governments.

Multi-level nature
Economic diplomacy may operate in three levels : (a) bilateral (b) regional and (c) multilateral.

Bilateral economic diplomacy forms a major part in economic relations, whether this consists of informal dealings between two countries on a range of issues or formal bilateral agreements on trade or investment or avoidance of double taxation.

Regional dimension in economic diplomacy is of growing importance. Regional economic agreements offer a more rapid way of opening markets. Liberalisation of economy may be easier to accept for national interests when it occurs within a regional grouping of countries. For example, SAFTA within the SAARC countries has been agreed by all member-countries and it is due to commence in January next year.

Almost all researchers working in the area of Bangladesh-India economic relations have argued the desirability of a closer cooperation or even integration of Bangladesh economy with that of the seven northeastern states of India. Such close cooperation will arguably have several beneficial effects including a bigger market for both countries, import of minerals from the northeastern states to Bangladesh for cement production and earning substantial money by allowing transit of goods from the rest of India to the northeastern states via Chittagong port and by train to Agartala (Tripura) of India.

Multilateral economic diplomacy ordinarily takes place within the framework of World Trade Organisation, International Monetary fund and World Bank. The last Multilateral Trade Agreement ( known as Uruguay Round) was concluded in 1994. The current Doha Round of negotiations is continuing and hopefully it will succeed.

How do they interact?
Different countries may use different levels of trade agreements. The multi-level nature of economic diplomacy means that governments take advantage of such levels. It implies that governments have many options to take.

Bilateral trade agreements have been the order of the day. Bilateral Free Trade Agreements (FTA) are concluded by many counties. For example, Singapore and Australia have concluded separately bilateral agreement on trade and investment with the USA.

India has proposed a bilateral Free Trade Agreement with Bangladesh This proposal is seen as India's counterproposal to Bangladesh's persistent request for a preferential access of its commodities into India. The devil is in the details of FTA. For instance, how extensive will be the cover of FTA? How large is going to be the negative list of commodities that will be exempt from FTA? Are tariff and non-tariff barriers simultaneously eliminated or reduced gradually?

Regional agreements may suit neighbouring countries and countries of the same level of economic and social development. SAFTA is being introduced in South Asia and some states may wait for bilateral FTA to see the effectiveness of SAFTA in their trade promotion.

Multilateral treaties are used for global trade. It is being conducted under the WTO. Although it takes a long time to conclude a multilateral trade agreement, it is beneficial for all.

Conclusion
Economic diplomacy is dynamic and has to adjust to the contemporary realities. New questions always emerge and the context can change sharply. The terrorist attacks on September 11, 2001 have raised many complex questions about the likely direction of economic diplomacy. New rules for shipping and road transportation of goods have been introduced and for many developing countries their compliance is not only costly but is often found beyond means.

Economic diplomacy is the order of the day. Bangladesh has embarked on the course of economic diplomacy for some years and it is rightly so. It is, therefore, imperative that within the government, a group of officials is imparted training on skills of negotiation of complex subject of trade, investment and intellectual property rights. Furthermore, the Bangladesh Missions in Geneva, Rome and New York need to be adequately resourced so that they can rise up to the occasion to advance national economic interests.

Barrister Harun ur Rashid is a former Bangladesh Ambassador to the UN , Geneva.