Audit Office: Authorities' competing roles hampering foreign commerce

Enterprise Estonia logo.
Enterprise Estonia logo. Source: ERR

While the private sector is generally happy with Estonia's approach to commercial diplomacy, improvements could be made in communications, cooperation and organization, the National Audit Office (Riigikontroll) finds.

The issues particularly relate to apparent competition and duplication in roles and tasks between state agency Enterprise Estonia, and the Ministry of Foreign affairs, which can hinder progress, the audit office wrote in a recently released report.

Nonetheless, while the two bodies, along with the Ministry of Economic Affairs and Communications, have a different role and function, they have mostly so far complemented each other, the audit office added.

One solution might be to bring Enterprise Estonia (also known as the EAS - ed.) activities and personnel further under the foreign ministry's purview, the report stated.

Commercial diplomacy definition

In broader terms, commercial diplomacy means all activities of the state aimed overseas which improve the international competitiveness of Estonian economy, including boosting exports, attracting foreign investment, attracting tourism and improving the country's reputation abroad.

Activities to date have been divided between the agencies belonging to the Ministry of Foreign Affairs and the Ministry of Economic Affairs and Communications, with Enterprise Estonia being supported in turn by diplomats and business and investment advisers working at Estonia's foreign missions.

The work also has a foreign policy dimension, the audit office says.

Enterprise Estonia overseas agencies employ foreign representatives in 46 cities across 38 countries who, in addition to the above, get acquainted with local knowledge, culture, and markets/economies – tasks boosted by diplomatic support, which can help with credibility issues as well as liaising with authorities in the host country.

A network of honorary consuls additionally provides commercial diplomatic support.

Keeping commercial diplomacy going requires at least €20 million of public funds every year under the current system, the office adds.

Audit office: Private sector feedback generally positive

Companies have generally given positive feedback on the system, the audit office says.

The "Estonian Foreign Policy Development Plan 2030" approved by the Riigikogu in the summer also enhanced the standing of commercial diplomacy; the audit office says it agrees with Ministry of Economic Affairs and Communications/Enterprise Estonia/ Ministry of Foreign Affairs cooperation, saying it works well despite some differences of opinion.

"If one institution says 'let's cooperate' but another demands to be given a pre-eminent role, it's clear that their visions of the future are different," Auditor General Janar Holm gave as an example of one such difference, via an audit office press release.

"Estonian commercial diplomacy does not need a lot more work, as such, but a little more cooperation," he added.

Main issue connected with communication, or lack thereof

Deficiencies also exist in guiding development plans at cabinet level, as well as in information exchange and cooperation management level, the audit office adds.

According to a survey conducted by the National Audit Office, more than half of the diplomats in charge of economic issues do not make use of Enterprise Estonia memos or analysis as an information, simply because they miss them due to poor communication.

A common information transmission channel or system, or a similar environment, would improve the quality of information exchange and save working time, the audit office says.

"What President Lennart Meri hoped for from Estonia foreign policy could also go for commercial diplomacy: we should think with a million heads but talk as one mouth," said Holm."

"Unfortunately, different institutions make similar plans at the same time, managing to surprise one another, with both intending to send more employees to the same country."

The risk of duplication could be reduced by agreeing on a division of labour both in broader terms and in specific target countries, he added.

Impact of changes should be assessed before being carried out

Assessment of the impact of any key steps aimed at changing the current organisation of commercial diplomacy is necessary before going ahead, and to alleviate risk, the audit office says.

Three bodies – the Estonian Chamber of Commerce and Industry (Eesti Kaubandus-Tööstuskoda), the Riigikogu Foreign Affairs Committee and the foreign affairs ministry have all expressed their opinion that bringing Enterprise Estonia under the foreign affairs ministry's ambit would lead to efficiency gains.

This would include reassessing Enterprise Estonia foreign representatives' status vis-a-vis the ministry, as non-diplomatic contractual employees, to ensure they complement diplomatic staff's roles and vice versa, the office finds.

Changes should also be planned long-term, holistically, and with an eye on EU grants – which Enterprise Estonia receives – as opposed to the state budget, not least since either of these can diminish going forward.

This cautious approach also helps entrepreneurs plan for the future. 

An existing portal is aimed at planning for high-level foreign visits which include a business delegation and joint stands at trade fairs. 

Better use could be made of this portal by planning and coordinating things more in advancce, particularly if the visits include ministers or ministerial chancellors, the audit office added.

The original NAO report (in Estonian) is here and an English summary is here


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Editor: Andrew Whyte

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