The private sector has emerged as a powerful diplomatic actor. Skillfully forging and maintaining international relationships is the bread and butter of traditional diplomacy, and as more and more companies traverse borders into foreign markets, opportunities arise to engage with diverse stakeholders with varying cultural and institutional backgrounds. As new technology innovations and emerging markets produce policy and legislation, the door has swung open to allow the private sector a seat at the table alongside the national and international regulatory bodies that affect trade. Communication, negotiation, and relationships are not only core facets of diplomacy but indispensable to doing good business. Relationships with not only stakeholders but governments, communities, NGOs, and international organizations are increasingly significant. Companies thrive when they successfully manage these interdependencies, engaging and negotiating with the broader economic community for the benefit of all involved; this is corporate diplomacy.

It is well known that the U.S., Mexico, and Canada reside in the top twenty largest economies by nominal GDP, and the dedication to advancing the success of the North American allies is clear. Since NAFTA in 1994 and the USMCA in 2020, all three countries have seen substantial increases in trade and reshoring operations despite doubts about the lifespan of each agreement. The U.S. private market sector has grown $4 trillion over the last decade, and the successful and expanding trade opportunities with Mexico and Canada illustrate the cooperative vision of the North American Way. At the Summit of the Americas in 2022, President Biden and the U.S. Department of State announced the Americas Partnership for Economic Prosperity, an initiative to stimulate economic recovery and growth in the Western Hemisphere by mobilizing investments, nearshoring sustainable supply chains, and creating clean energy jobs. Companies have an essential role in shaping the infrastructure and workforce that underpin sustainable market growth, and a diplomatic lens provides tools to manage the regulatory and political challenges that come when engaging in multilateral operations. Understanding the economic, political, social and legal frameworks the company is working in can greatly enhance their ability to be a good corproate citizen while driving economic value for its stakeholders. Working closely with neighboring ally nations to build a shared vision of socioeconomic prosperity calls for stakeholder collaboration, risk mitigation, and competitive advantage that drive the private sector. Strong businesses lead to strong nations and international relationships.

Corporate diplomacy can be a catalyst in creating a unified North America. While globalization remains the historical objective and loudest voice in the room, regionalization has ridden the tailwinds of global expansion and brought significant economic prosperity for regional economic partnerships as countries expand into foreign markets. Intra-region trade has strengthened economic competitiveness and growth capacity in many regions of the world, with 68% of Europe’s trade and 59% of Asia’s trade taking place on the same continent. While the U.S. traded $1.78 trillion with Mexico and Canada in 2022, North American trade partners are majority extra-regional. This must change, and corporate diplomacy is a key to strengthening this trilateral economic relationship.

Effective private sector engagement within regional partnerships fosters sustainable and secure economic development while advancing social and economic goals. The U.S. is running to catch the train, and other parties are filling this gap to invest in our neighbors’ infrastructure. After years of selling EVs in Mexico, Chinese automaker BYD launched a new hybrid truck only available in the Mexican market as well as plans to build a manufacturing plant in Mexico. Despite the Biden Administration's 100% Chinese EV tariffs, a strong presence in the Mexican market still impacts the North American green technology economy. Locally mining, refining, and manufacturing EV critical minerals and materials allows for China’s low production costs, and localized competition further drives down prices. This is where North America must adapt. Chapter 26 of the USMCA promotes economic integration and strives to enhance the competitiveness of North American exports. Now more than ever, the countries of North America need to have a keen focus on how to increase their competitiveness as a block when engaging with (and sometimes confronting) other emerging regional blocks. Through multilateral collaboration, the U.S. must incentivize its neighbors and create complete and sustainable supply chains that promote regional manufacturing, trading, and competition. As the largest national economy in the world and in North America, U.S. companies especially have the capacity and duty to engage with neighboring product chains and build out the Western Hemisphere’s potential as a cooperative and mutually beneficial economic partnership.

Supporting sustainable global energy markets requires holistic solutions to North America’s shared problems. Countries compete for investments in emerging energy sectors. The North American region is rich in natural resources and critical minerals with ample capacity for advanced energy technologies such as solar, wind, and nuclear. U.S. energy security depends heavily on this region, with most oil, gas, and electricity imports coming from neighboring countries. America is gradually opening the door to vertical trade routes to drive domestic critical mineral production. In an example of leveraging shared goals and interests by governments and corporations, the Department of Defense announced $6.5 and $8.4 million awards to Canadian mining and mineral development companies to support the U.S.-Canadian Joint Action Plan on Critical Minerals. Canada is becoming a leader in sourcing and supplying critical minerals in the new green and digital economy. It is in America’s interests as a regional economic partner to invest in Canada’s sustainable future and also the North American region as a whole. In this case, North American companies aligned business interests with broader regional needs to create secure and productive economic partnerships and ecosystems. These partnerships in turn give confidence to other sectors of the economy to build new linkages across the borders of North America, bringing in new actors into the market who further drive resilence in the North American bloc. This commitment to a shared vision of prosperity will galvanize U.S. business competitiveness, policy innovation, and technological advancements.

Corporate diplomacy is not only a tool but a platform for engagement, creating new strategic alliances, learning from and educating stakeholders, and contributing a voice on some of North America’s most important challenges. For companies in North America to see their bloc emerge as a dominant force on the global trading landscape (like the EU or APEC/ASEAN) the private sector needs to lead the way in shaping the narrative around the continent’s ability to cooperate and achieve resilience for both the consumer and producer sides of the equation. The diplomatic landscape is evolving, and businesses have become the focal point of many shared global issues. They must adapt to not only meet these challenges but also shape the solutions. Cultivating dynamic diplomatic relationships with corporate partners, governments, and foreign organizations yields considerable benefits, both for the private sector’s global reach and for the unique and powerful partnership between the U.S., Mexico, and Canada.

Other Resources:

The Globalization Myth: Why Regions Matter, Shannon K. O'Neil, Yale University Press, Oct 18, 2022

Corporate Diplomacy: Building Reputations and Relationships with External Stakeholders, Witold J. Henisz, Routledge, Sep 8, 2017

*in collaboration with FedEx Corporate Diplomacy Fellow Jamie Lord