UNIVERSITY OF NAIROBI INSTITUTE OF DIPLOMACY AND INTERNATIONAL STUDIES ECONOMIC DIPLOMACY AND ECONOMIC INTEGRATION: THE ROLE OF KENYAN DIPLOMATIC MISSIONS ANASTASIA NZISA MUSAU R50/67656/2013 A DISSERTATION PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF A DEGREE OF MASTER OF ARTS IN DIPLOMACY OCTOBER, 2015 i DECLARATION This project is my original work and has not been presented for any other academic award in any other university. Anastasia Nzisa Musau Reg. No. R50/67656/2013 Signature: ……………………………. Date: ……………….…… This research paper has been submitted for examination with my approval as a university supervisor. Supervisor: Prof. Maria Nzomo Signature: ………………………………. Date: ……………………… ii ACKNOWLEDGEMENT I thank God for His is grace that enabled me pursue this course. To all my classmates, your support and encouragement were motivating. Special thanks go to Professor Maria Nzomo for her scholarly advice throughout my studies. Also to the staff of University of Nairobi, School of Diplomacy and International Studies and the Nairobi University library for the reading materials that assisted in making this work what it is. I also thank all others who contributed to the success of this study, especially the Ministry of Foreign affairs staff who assisted me in getting the required information. Finally, my deep thanks go to my two lovely daughters, Maria and Ruth who gave me moral support during my studies. iii LIST OF ABBREVIATIONS ACP-EU African Caribbean and Pacific European Union APSEA Association of Professional Societies in East Africa CET Common External Tariff COMESA Common Markets for Eastern and Southern Africa EABC East Africa Business Council EAC East African Community EASFCOM Eastern Africa Standby Force Coordination Mechanism EC European Communities EPC Export Promotion Council ERS Economic Recovery Strategy FDI- Foreign Direct Investment IGAD Intergovernmental Authority for Development KEPSA Kenya Private Sector Alliance KIA Kenya Investments Authority MEAC Ministry of East Africa Community MDG Millennium Development Goals MFA Ministry of Foreign Affairs MoT Ministry of Trade NAFTA North American Free Trade Agreement NESC National Economic and Social Council NGO Non-Governmental Organizations NSAs Non-State Actors iv NTBs Non-Tariff Barriers NTP National Trade Policy PSED Private Sector Economic Debt RECs Regional Economic Authorities SMEs Small and Medium Size Enterprises UPR Universal Periodic Review v TABLE OF CONTENTS Declaration ...................................................................................................................................... ii Acknowledgement ......................................................................................................................... iii List of Abbreviations ..................................................................................................................... iv Table of Contents ........................................................................................................................... vi Abstract .......................................................................................................................................... ix CHAPTER ONE ........................................................................................................................... 1 1.1 Introduction ............................................................................................................................... 1 1.2 Statement of the Problem .......................................................................................................... 4 1.3 Objectives of the Study ............................................................................................................. 6 1.4 Literature Review...................................................................................................................... 7 1.4.1 The Concept of Diplomacy and Economic Diplomacy ..................................................... 7 1.4.2 The Relationship between Diplomacy and International Business .................................. 10 1.5 Justification of the Study ........................................................................................................ 13 1.6 Theoretical Framework ........................................................................................................... 15 1.7 Hypothesis............................................................................................................................... 17 1.8 Research Methodology ........................................................................................................... 18 1.9 Chapter Outline ....................................................................................................................... 19 CHAPTER TWO: THE ROLE OF KENYAN DIPLOMATIC MISSIONS IN ECONOMIC DIPLOMACY AND ECONOMIC INTEGRATION .............................................................. 20 2.1 Introduction ............................................................................................................................. 20 2.2 Role of Foreign Office in Coordinating Embassies and High Commissions ......................... 21 2.3 Role of Embassies and Consulates in Economic Diplomacy ................................................. 22 vi 2.3.1 Trade Promotion ............................................................................................................... 24 2.3.2 Technology Acquisition ................................................................................................... 27 2.4 Building Partnerships with Economic Diplomacy Actors ...................................................... 28 2.5 The Role of Foreign Policy in Advancing Kenya’s Commercial Interests ............................ 29 2.6 Other Actors ............................................................................................................................ 33 2.7 Kenya’s Enhancement of Economic Integration .................................................................... 36 2.7.1 Selected Cases of Kenya’s Involvement in Bilateral Economic Diplomacy ................... 38 2.8 Kenya’s Diplomacy for Economic and the Management of Foreign Policy .......................... 41 2.9 Conclusion .............................................................................................................................. 43 CHAPTER THREE: THE OPPORTUNITIES AND CHALLENGES OF ECONOMIC DIPLOMACY AND ECONOMIC INTEGRATION .............................................................. 45 3.1 Introduction ............................................................................................................................. 45 3.2 Political Challenges ................................................................................................................ 45 3.3 Kenya’s Challenges as a Regional Actor in Africa ................................................................ 47 3.4 Domestic Challenges .............................................................................................................. 47 3.5 Opportunities for Kenya’s Economic Policy .......................................................................... 54 3.6 Conclusion .............................................................................................................................. 58 CHAPTER FOUR: ENHANCING DIPLOMACY PERFORMANCE: A CASE OF THE EAC .............................................................................................................................................. 59 4.1 Introduction ............................................................................................................................. 59 4.2 Importance of Professionalizing Diplomacy .......................................................................... 60 4.3 Entailment of Professional Economic Diplomacy .................................................................. 61 4.4 Training in Economic Diplomacy for the Domestic and Foreign Offices .............................. 63 4.5 The Skills the Economic Diplomat Needs to Acquire Professionalism ................................. 64 vii 4.5.1 Economic Analysis ........................................................................................................... 64 4.5.2 Analysis of Public Policy and Regulatory Issues ............................................................. 65 4.5.3 Political Analysis.............................................................................................................. 66 4.5.4 Legal Analysis .................................................................................................................. 66 4.5.5 Developing a Plan of Action ............................................................................................ 66 4.5.6 Developing a Solution ...................................................................................................... 67 4.5.7 Strategy Development ...................................................................................................... 67 4.5.8 Policy Development ......................................................................................................... 68 4.5.9 Other Skills ....................................................................................................................... 68 4.6 Knowledge Required by the Economic Diplomat .................................................................. 70 4.6.1 A Comprehensive Approach Training ............................................................................. 71 4.7 Role of Foreign Offices in Economic Diplomacy Efforts, and Outcomes ............................. 73 4.8 Enhancing Kenya’s Commercial Diplomacy Performance .................................................... 77 4.8.1 Enhancing Kenya’s Economic Diplomacy in EAC ......................................................... 81 4.9 Conclusion .............................................................................................................................. 86 CHAPTER FIVE: FINDINGS, CONCLUSIONS AND RECOMMENDATIONS .............. 87 5.1 Summary ................................................................................................................................. 87 5.2 Findings................................................................................................................................... 89 5.3 Recommendations ................................................................................................................... 90 5.3.1 Area for Further Study ..................................................................................................... 92 REFERENCES ............................................................................................................................ 93 APPENDICES ............................................................................................................................. 99 Appendix 1: Letter of Introduction ............................................................................................... 99 Appendix 2: Interview Guide...................................................................................................... 100 viii ABSTRACT This research project was carried out to establish the role of Kenya’s diplomatic missions of commercial diplomacy in facilitating international business at the Kenya High Commissions abroad. Commercial diplomacy is a newer avenue for countries to promote international trade with friendly states. The study was therefore guided by three objectives: to examine the roles of diplomatic missions in effective economic diplomacy and economic integration; to analyze the challenges faced by diplomatic missions in facilitating commercial business; and to, apply the importance of professionalizing economic diplomacy and economic integration for maximum trade benefits. To realize the objectives of the research, the study used the theory of comparative advantage which proposes that all countries will benefit from trading with each other regardless of how well-endowed they are in labor, capital and land, and regardless of how efficiently they can produce any particular good. Data was collected by use of personal interviews with open- ended questions administered as well as review of academic literature and policies. The findings of the study showed that the Kenya High Commissions have facilitated international business through a number of ways such as export promotion, import promotion, international relations, advisory and consular services as well as tourism promotion. The study recommends that the Kenyan government through the Kenya High Commissions abroad should encourage professionalism, as well as reviewing current trade and economic diplomacy policies, and vie investment opportunities available in Kenya and sourcing markets for the Kenyan products both regionally and internationally. ix CHAPTER ONE 1.1 INTRODUCTION The purpose of diplomacy, throughout the ages and at different levels of societal evolution, whether at interpersonal, inter-communal, or at international level, has always been to promote national interest abroad. That endeavour has led to a steady development of international relationships aimed at fostering understanding and promoting tolerance, albeit with limited success.1 Since then, new factors have emerged, including an ever increasing number of varied players in current complex international relations, coupled with the power of modern media and the speed with which news travel in our times.2 With these two significant developments, the very concept of state representation is being gradually transformed and the traditional role, which until now was assigned to diplomatic envoys, as sole representatives of the interests of a sending state in a receiving state or in an international forum, is being effectively eroded.3 It is important to note that many of these new players are beyond state control and not hesitant about making public what diplomatic envoys would rather carry confidentially, to the authorities of their respective states. These challenges call for deep reflection on how to handle diplomacy in this new environment - how to practice diplomacy in an era of transparency. Whilst new international actors and the information revolution necessarily alter the diplomat’s old monopoly on knowledge and conduct of international relations, some arrangements need to be put in place to preserve a good measure of the aura that surrounds the all important persona of the ‘Excellencies’. This is imperative against the backdrop of timeless reality of need for secrecy 1 UNCTAD. 2013. Key Trends in International Merchandise Trade 2 Abbink, G.J.M. et al., Involvement of Ambassadors in Commercial Diplomacy. Enschede/Zwolle: University of Twente/Windesheim University of Applied Sciences. 2014 3 Ibid 1