Address by the Hon. Minister at the Presentation of the 2nd Prometeia Report on economic diplomacy

Address by the Hon. Minister at the Presentation of the 2nd Prometeia Report on economic diplomacy 

Kind guests,

Distinguished Ambassadors,

Dear business friends,

Allow me to greet and thank Prof Angelo Tantazzi, President of Prometeia, who edited the second Report on our economic diplomacy.

From the very beginning of my term at the Foreign Ministry, I have wanted to confer a top priority status to economic diplomacy in our foreign policy.  

For example, through the “Foreign Ministry meets Companies” project, I toured different Italian cities, from North to South (Turin, Udine, Padua, Treviso, Florence, Ancona, Pescara, Naples, Bari) to listen to the needs of entrepreneurs and to help them fully leverage the potential of the Foreign Ministry’s network around the world. Another initiative was launched precisely with Confindustria at last July’s annual Conference of Ambassadors, where we promoted direct meetings between 88 Ambassadors and 118 business representatives.

This year especially I realised that there is a mismatch between what diplomacy does to support companies and the perception that public opinion has of that contribution. This is why Prometeia’s survey is so important, inasmuch as it tangibly and measurably determines the result of this support.  

In 2016, the assistance provided by Italian Embassies and Consulates towards the adjudication of contracts and orders to our enterprises has directly or indirectly contributed to producing 1.4% of our GDP and 307,000 jobs, i.e. involving 1.2% of all working Italians. It represents a considerable rise from the previous year, in which our economic diplomacy actions had contributed to producing 1% of GDP and 234,000 jobs. 

In 2016, our economic diplomacy assisted over 300 Italian companies engaged in 599 projects abroad, worth 39 billion euros. We started off supporting 319 projects in 2014, which were worth 23 billion euros. This means that in three years we have almost doubled the number of projects supported, with a 70% rise in value to the benefit of Italian companies.

What is surprising is that almost half of this value returns to Italy. The work of these companies abroad has produced, on the Italian territory, more than 21 billion euros in value added and almost 9 billion euros in tax revenue. 

These figures acquire even greater significance if we carry out a small cost-benefit analysis. Please consider that the Foreign Ministry’s effective budget[1] in 2016 amounted to 0.11% of the State budget, approximately 0.05% of GDP.

This means that an expense of 0.05% had a return of 1.4% on GDP and that the Foreign Ministry has a multiplier effect of 29. In other terms, 1 tax-payer euro has generated 29 euros in terms of Italy’s growth. 

Of course, we do not want to attribute to the Foreign Ministry the whole merit of these brilliant results! Behind these numbers there is, first and foremost, the work of hundreds of small, medium-sized and large enterprises that have brought their competence and professionalism abroad in a wide variety of sectors: infrastructure, construction, engineering, industry, energy, machinery, agro-food, automobiles, trains, aircraft, ships, fashion and design, and I could go on and on… 

Allow me to dwell on a particular figure that concerns enterprises: 54% of all the companies that have benefited from the Foreign Ministry’s support is made up of medium to small-sized companies. This is without even considering that the same contracts that are adjudicated to large companies activate a supply chain – which is revealed in the survey – that mostly involves small and medium-sized enterprises.

It is an encouraging result but we must do more. Because it is precisely these enterprises that need to be able to count on our institutional support abroad. Especially in emerging markets, that are geographically, linguistically and culturally distant but have a great economic potential.  

I am thinking, for example, of China, which I will be visiting next week (18-19 December) to attend the Italy-China Intergovernmental Committee. Italian exports to this market have recorded a full-fledged boom over the first ten months of 2017: +24.2% compared to the same period of 2016 (source: SACE).  

These data do not only concern China. Italian exports have been driving the Country’s growth for several years now and currently represent 30% of GDP. They are worth more than 417 billion euros, and account for a trade surplus of more than 515 billion euros. And, by the end of the year, we will hit a record 450 billion euros worth of exported goods (source: ICE-Prometeia).   

In countries like China – but I am also thinking of India, Russia or South Africa – the support of the Embassy or Consulate can really make a difference. Helping a company to overcome internal obstacles means not only enabling that company to position itself in a new market but also enabling the whole Country to win market shares from our major competitors. 

Many of the obstacles that companies find they have to overcome abroad are of a non-tariff nature. These are sanitary, phytosanitary and technical barriers. What is new in this second edition of the Prometeia Report precisely concerns this aspect. The Report measures the effects of the actions carried out by Embassies in coordination with the technical Ministries (Economic Development, Health and Agricultural Policies) in removing non-tariff barriers to the export of Italian goods.

Prof Tantazzi will illustrate the benefits produced by these interventions on Italian exports in the 2013-2015 three-year period. The interventions aimed at overcoming non-tariff barriers have generated the following: 23 million euros in 2014; 29 million euros in 2015; 45 million euros in 2016. Therefore, as you can see, the amount rises steadily year after year.

When we read on newspapers that the Chinese market is opening up to Italian cheese, including Gorgonzola, or that the obstacles to the marketing of Bresaola have been overcome in Japan, we have to consider that upstream there is a coordinated diplomatic effort in which Embassies, Consulates and technical Ministries have worked together with enterprises and trade associations to enable those products to be admitted into the Country: a truly ‘systemic’ action. 

This support does not end at bilateral level. We are also very active in multilateral contexts, in Brussels as in Geneva, in defending Italian products from protectionist barriers and regulations that limit the competitiveness of Italian companies. For example, we are committed to fighting the phenomenon of the absurd “food traffic light system”. It is an issue that concerns us all, both as producers and consumers, as Government and as private sector.  

On the part of the Foreign Ministry, I assure you that we continually monitor the traffic light system which greatly interests European Institutions as much as the other European capitals. And we are taking action also in extra-European capitals to avoid this system from spreading around the world. We have even appointed a Coordinator of the policies to support the internationalization of enterprises in the agro-food sector (Minister Plenipotentiary Giovanni Umberto De Vito), whom I have mandated to represent Italy’s concerns on the adoption of provisions of this type in every Country and at every level. 

But all these results have been achieved thanks to what is defined as a systemic action. And we can continue to have success only if we act together. If companies give us a timely report of their needs and problems, this will enable us to intervene in a synergistic and timely manner. 

I conclude by calling on all enterprises to continue to increasingly rely on the support of Embassies and Consulates around the world, not only in the interest of your own growth but of that of the whole Country.