At a time when the US is experiencing historic levels of unemployment, there is a new urgency to protect or find jobs for the millions of Americans who have been made redundant or furloughed because of the Covid-19 epidemic.

Winning foreign business for US companies through exports is one way to do that, and a key demand of the nation’s manufacturers. Furthermore, the administration’s national security strategy is emphasising that “commercial diplomacy is central to our foreign policy” – code for competing with China.

But looming over the prospects of success for this or any other strategy is a world reshaped by lockdowns and layoffs.

Get organised

Trade-related officers and staff at US embassies around the world have been organised as ‘deal teams’ to identify investment and business opportunities, including FDI, for US companies.

“Deal teams aim to do everything possible to support US business in a systematic way with ‘one voice’ that draws from the rich diversity of US agencies and expertise,” says Joseph Semsar, the US acting under secretary for international trade.

As a successful example of the deal team approach, Mr Semsar cites a project by Texas-based Anadarko Petroleum (now Occidental Petroleum) in Mozambique. In addition to the department of commerce, the team drew on the resources of the Export-Import Bank of the US (Exim Bank), one of the participating agencies.

Major project

Exim Bank’s $4.7bn loan to support the onshore and offshore development of an integrated liquefied natural gas project in northern Mozambique represented its most significant undertaking in Africa. Exim Bank reports the project will create 16,700 US jobs among 68 US suppliers (Occidental sold the project to French Total, which is committed to applying the conditions of the Exim Bank loan).

A DC central deal team was also launched in February by the department of state and commerce, and this consultative 14-agency body “will advance US strategic commercial interests”. It will flag new opportunities in export markets for US companies, support them as they compete for contracts, put together ‘support packages’ from the 14 member agencies, and develop best practices to share with embassy-based interagency deal teams.

Fred Hochberg, author of the book Trade Is Not a Four-Letter Word notes that while he was chair and president of Exim Bank under president Barack Obama, the idea of establishing a trade cabinet was discussed, but never came to fruition. “The central deal team, essentially a trade cabinet, is a very thoughtful and needed approach,” he says. “Establishing new business overseas will be much more challenging after the Covid epidemic.”

However, Marc Busch, professor of international business diplomacy at Georgetown University’s School of Foreign Service in Washington, DC, has concerns. While welcoming official support for US exporters, he worries that under the administration of Donald Trump, a one-stop shop approach like this could politicise outbound investment and trade by promoting politically motivated deals.

Some scepticism

Harry Broadman, a partner at Berkeley Research Group in Washington, DC, is also sceptical. “On the face of it, it is old wine in new bottles,” he says. “The question is how committed and capable they are.”

In countries whose economies have been disrupted, the quest for trade and investment opportunities will be even more challenging.

The effect will vary from country to country, says Mr Broadman. “The operative question is: how much of what you observe is transitory and can be alleviated? Is the sky clear or is it murky?” Ultimately, he notes, Covid-19 is a public health crisis, where the usual economic tools do not apply.

“Put aside currency and other variables, if two countries are otherwise equal, but one country has a pretty robust health system and the other has a pretty weak system, the one with the stronger system will benefit,” he says.

All other things being equal, a strong dollar will create FDI opportunities, Mr Broadman adds. “A strong dollar can make a foreign project more attractive, but the strength of the currency today does not mean it will remain strong in the future,” he notes. “Bona fide FDI investors are long-run players.”

Creative solutions

While this is a difficult moment to initiate an export campaign, Mr Busch believes the closer that companies come to recovery from the Covid-19 closures, the more pressure they will be under to find their way to financial viability through exports. However, there will be a premium on safety and stability, which will probably make funds and investors relatively risk averse.

To attract FDI, Mr Busch says, host governments will be anxious to sweeten the deal and may be more willing to bind themselves through free trade agreements, enabling the US to insist on investor rights and other protections in agreements. “Governments will have to be especially creative to look like a stable environment to do business,” he says.

US embassy-based deal teams can help in the search for viable business partners and in providing other resources, according to Raymond Zoukpo, a senior advisor on Africa with Washington, DC-based Albright Stonebridge Group, and former executive at the African Development Bank.

Local insight

At the same time, Mr Zoukpo cautions, embassies can be seen as very bureaucratic or might not have deep local business knowledge – and if embassy officials try to assist in disputes, the public may perceive it as an intervention by the US government in a private matter. Finding a local partner who understands the complexity of the local market will still be advisable.

Regarding the US decision to challenge what it perceives as China’s undue economic and political grip on many African countries, Mr Zoukpo argues that the continent’s sheer volume of needed investment – $100bn for infrastructure alone – cannot be met by a single country. Chinese investment, he says, compliments spending by the US and other countries, and can fill a vacuum when the US holds back; and Exim Bank’s assistance does not create the massive debt burden that loans from China do.

However, Daniel Runde, senior vice president at the Center for Strategic and International Studies in Washington, DC, fears many African companies will face bankruptcy and could be easy targets for Chinese buyers. He would like the US to beef up its commercial officer staff to help US companies take advantage of the enormous business opportunities the continent offers.

The question now is whether any number of commercial officers in deal teams in any of the regions can broaden US companies’ reach into foreign markets.