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CSEAC: (#001) Agreement on Common Trade

Bajorország

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CSEAC Building: Winter Palace of Prinz Eugen, Bécs

The Pannonian Foreign Minister took to the stage to welcome all of the guests and delegations. “I welcome you all here today to begin an initial phase for a common trade zone between the nations that have agreed to join CSEAC, and potentially the observers as well. It is the goal of myself and of course my government to make you all feel at home here. We have felt that it would be best to gather today to agree upon a Common Trade Zone with a list of goods that could be traded freely between all CSEAC nations. I as do not wish to force our talks in a particular direction, I wish to leave it to you the delegates to make the initial recommendations.”
 

Elbaron

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The Elbarone representative knew that it was not his time to speak. Only recently, the Francophone colonial remnant had scored a diplomatic success by having been officially invited to CSEAC as a an observer. If Elbaron was to address any of the topics that truly concerned it, first and foremost, the border and immigration issue which it hoped to make an issue for northern states as well, it would have to bide its time.

Thus, he remained politely quiet and waited for another, proper, member to make the first response, while keeping his notepad and pencil close at hand to take notes about any interesting comments that would be made. He was old fashioned that way.
 

Remion

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Remion's Foreign Minister, Federico Bertone, observed with interest the intervention of Bajorország's colleague. When the colleague finished the introduction, Bertone immediately spoke.

"Hello, esteemed colleges,
first of all I thank my colleague for the introduction and for hosting us in this magnificent building. Without stealing any more time from my intervention, I want to expose Remion's willingness to take part in this project, only and only if all parties agree to exclude from the agreements all state and non-state companies that enjoy public funding. Their presence within this agreement would create unfair competition with companies from countries that do not offer this policy, suffocating their market and possibility. "
 

Eiffelland

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Eiffelland's Foreign Minister, Dr. Norbert Schmelzer, had a lot of experience in international institutions. Since a couple of months, he had the job he always wanted: Minister of Foreign Affairs. Now he led the Eiffellandian delegation.

"Dear esteemed colleagues, also my thanks to the government of Bayororzság for hosting this conference in this marvellous building. I understand Minister Bertone's concerns about the competition advantage that companies enjoy when they receive public funding. It is indeed needed that we formulate rules on that. However, I would not impose a complete ban on that. Under very extraordinary circumstances, for instance a very severe economic crisis, it should be possible to support companies that have enough potential to flourish under normal circumstances but need to temporarily be supported for the duration of the very extraordinary circumstance."
 

Bajorország

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The Foreign Minister for Bajorország Kásmér Széchényi listened carefully to the arguments of the men from Remion and Eiffelland. They more or less seemed to be on the same value set, but had a big enough difference to have a barrier between them. Kásmér wasn’t prepared for this talking point either. He did not foresee it and felt embarrassed to be unprepared. Either way, he wanted to try to get Eiffelland and Remion on the same page. They were the largest trade partners for Bajorország and he needed them.

“Gentlemen, if I may enquire... but are you both in the same place at heart on the issue? I want to suggest a compromise where perhaps we have quotas for state aid? Thus not over ‘x’ amount. I am merely tossing out ideas, and I am not sure that there is a disagreement here at all. I do believe there might be some virtue in allowing for a selected industry to have an exemption in each nation?”
 

Serbovia

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"I second the opinion expressed by my Eiffellandian colleague that any mechanism should maintain a provision for the temporary support of domestic enterprise under particular and exigent circumstances. Furthermore, such provisions should include any state support given by a state to sectors of private enterprise considered essential to national wellbeing and security, for instance ensuring the operating capability of private companies that provide critical infrastructure or other essential services."
- Aleksandar Plesic, Serbovian Foreign Minister
 

Tarusa

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Deputy Foreign Minister Vitomir Sharshin sat listening to the discussion, glad that he was only there as an observer as he thought to himself;

This would never work for bringing Tarusa into the fold, our oil, gas, and several companies had the state in their pockets as they were deemed essential for the national interest. It was however interesting to see how this would fold out and he would potentially have some interesting things to return back to the ministry with the views of the parties of CSEAC members.
 

Vistarika

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Fighting to keep his pale eyes from rolling too far behind their droopy, heavy lids,
Gideon Birodeins - Fré-Reginés* Birodeins - jotted another quick note down and shuffled it to one of seconds. He waited for the younger bureaucrat Asdin, a promising if lowly born man with an inborn sense for upward mobility, to scan the directive.

The swarthy Vicovaroan answered with a nod, sharing a discreet glance in the direction of their Tarusan "counterparts." Asdin Carderici leant closer to his superior, whispering in a hushed and conspiratorial tone, "They do indeed seem primed to pounce, Excellency, might we not ought to seize the initiative in steering this towards our own benefit now, sooner than later?"

The elder, almost comically rotund Councilor jerked a quick nod, patting at the breast pocket of his coat to ensure cigarettes waited for the next intermission. "By all means then, please do us the honors."

Gideon would, of course, never let slip even a hint that his willingness to allow his eager subordinate a share of the spotlight had more to do with him being old and lazy, and not caring to haul himself up from his reasonably comfortable chair.

"We of the Apostolic Kingdom would lend further support to the sentiments expressed by our inestimable colleagues from Eiffelland and Serbovia. Such arrangements must, as matters of necessity, include such provisions as to allow for the maintenance of the general upkeep and continued development of our national economic character and enterprises." Deputy Councilor Carderici proffered formal bows in the Eiffellanders and Serboves in turn before continuing.

"There is much to be gained here, but we must each alike ensure that that we steer our own nations into this agreement on the best possible course. Perhaps it is possible through the creation of such Zones as those previously alluded to might allow for some degree of guaranteed work for at least some, through contract quotas and the like, yes? I thank your Excellencies."




*Lord-Councilor
 
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Kurkhazia

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The Republic of Kurkhazia deployed a shrewd and silent type to this severely western conference. Karim Shugurov, a low level Foreign Office functionary, had been chosen to represent in this event because he had studied, rather poorly actually, in Bécs for one summer semester. To this effect "Ambassador" Shugurov knew how to greet everyone in the local language, and to shake both left or right hand despite the former's filthiness.

Prior to the session, the Kurkhazians agreed to share a translator with the Tarusans in a rare yet increasingly common arrangement. Shugurov often looked towards Sharshin, the Tarasuan Deputy Foreign Minister, for facial reactions and muttering to aids. Shugurov's own two aids knew foreign languages among themselves, one Serbovian and one Vistarikan, and were tasked with passing supplemantary notes on what they were observing.

What caused extreme stress and worry for Shugarov was that everything and every major business in Kurkhazia was touched by government influence and subsidy. That Remion representatives and others here would seek to block this symbiosis deeply troubled him because surely, he thought, major enterprise cannot succeed anywhere without government entangling for good or ill. If any here would claim that their nations were not influencing enterprise, Shugarov surmised and perhaps matured, they were either liars or fools.

Finding the courage to speak up, Karim Shugurov entered the arena by clearing his throat in broken Pannonian: "It was of earlier asked what could, and it is, that the list of goods we can offer are listed. Well, Kurkhazia offers labor. For the Kurkic purse: minimum wages in your countries or just below, would make a rejoicing Prince or Princess."

Shugarov shrugged and adjusted his weight from side to side, "Kurkhazia has surplus of workers, be known of it, who desire to return home remittances at a fair rate."
 

Eiffelland

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Dr. Schmelzer was happy with the support he got from his counterparts from Serbovia and Vistarika. But he also wanted to keep the Remians on board.

"Thank you for your support, Your Excellencies Minister Plesic and Lord-Councilor Birodeins. Indeed, apart from extraordinary situations where I pointed at, each country has some assets and infrastructure that is essential to the country. Oil can be such an asset, or the weapons industry, or the electricity network, or the telecommunication networks. Another point of interest would be system banks, banks that fulfil such a special role regarding financial transactions that they would pull down the whole financial system when they would fail. However, let's also look at how far we can go w.r.t. that. His Excellency Minister Bertone prhases a justified concern. Structurally supporting a company that manufactures products in an inefficient way disturbs the market and makes competing more difficult for companies that work as efficiently as possible. Would it be an idea to define beforehand when support may be given to companies, or define a procedure to obtain approval from the CSEAC to support a company?"
 

Remion

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Bertone again waited for his turn to speak. He listened to every intervention from the other represented and was somewhat annoyed, especially because the excuse of emergency help was very often used to save industrial groups who were friends of politicians.

"Colleagues, we are not opposed to state aid in case of emergencies, but who is deciding what an emergency is? If that decision is the prerogative of their respective governments, then this mechanism can be used to bail out insolvent companies and to provide state aid in the form of economic bailouts for emergencies created for the occasion. Therefore, I suggest the creation of an international office that evaluates the funds, to define them as extraordinary measures due to times of emergency, or mere state bailouts with public funds."
 

Elbaron

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The Elbarone delegate gave a passing glance to the attendant from Tarusa. Both nations were not at liberty to just voice their opinions, at least not at this point. But surely just like Elbaron, Tarusa had a specific interest in this meeting beyond just becoming aware of the latest diplomatic developments in the central continental world. Perhaps this new proposal of a neutral body was an avenue that could help the two nations to get involved and win favor? The older man looked up to assess whether his counterpart perhaps was entertaining similar thoughts.
 

Serbovia

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"Unfortunately, we must find the Remurian suggestion of an international mechanism of bailouts to be untenable. Such a proposition is considered to be an unacceptable and excessive breach of state sovereignity."
- Aleksandar Plesic
 

Remion

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"Colleague, I may have expressed myself wrongly, I do not intend to promote an international financing office, but an office that evaluates whether individual countries are bailing out a company or financing it in order to create an unfair business practice towards other members."
- Federico Bertone
 

Vistarika

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Fré-Reginés Birodeins' attention had immediately snapped to at the mention of "bailouts." A shrewd, almost hawk-like expression crept over his face, his already squinting eyes narrowing even further.

Carderici noted immediately- it was his job, after all - but before he could offer to act on his master's behalf, the elder fat man was stabbing their delegation's indicator button, ready to speak for himself in all his jowly glory.

In a voice not at all unlike an avalanche of gravel, Birodeins began, "Colleagues, partners and future partners - Excellencies most noble and foul - let us not be too hasty in regards to the matter of certain fiscal guarantees for..." he trailed off a moment, casting his attention about the attendees with pointed purpose, "...should we perhaps say, enterprises of critical import to the health of our individual nations and the region at large."

Another pause, this time to knock back the remainder of the glass on the Vistaran desk - not water, whatever it was. "Pardon me, I am fat and old and my whistle requires more care now than it did in times not so recently past. Though it is an example that will never come to pass, as we all know the acumen of Eiffellanders in keeping their books - but consider the chaos that might arise from some disruption to the pharmaceutical industry there. This is not an eventuality that many of us would well suffer. Prudent then, perhaps, to institute some measures now, when it will be easy and far less costly than when scrambling to counter some unforeseen disaster."
 

Bajorország

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Kásmér Széchényi was not really sure how to fix this topic, but felt that perhaps the easiest way would be to make the agreement very simple. Creating a huge new mechanism and bureaucracy would be challenging and open up entirely new problems that they had yet to uncover. By keeping the first agreement simple, they could avoid unforeseen pitfalls and come to an agreement.

”My friends... gentlemen... I believe that our problems will only expand if we create larger mechanisms for bailouts, definitions of aid packages, or even creating new organizations designed to adjudicate trade issues. I cannot say I have the desire to create a European trade court. Instead, I believe we should start small. The smallest of all possibilities. First we should maintain and emphasize free trade and the free market. I want us to all agree to banning cartels. Next, I want us to open up free trade on these products to begin this organization: steel, coal, and petroleum. You might note I have only listed three items. I believe everyone else should also add one more industry to add to the list. In these industries, we all agree that no government assistance is allowed; however, CSEAC assistance is allowed in these industries, and CSEAC will create a fund for these industries struggling in the member nations. What do we think of this?
 

Eiffelland

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Dr. Schmelzer suddenly realised what could be the cause of Bertone's objections against bailouts: Large countries were more capable to step in with large bailouts than small countries. When something extremely bad would happen to the Eiffellandian car industry, the Eiffellandian govermnent would be able to bail the complete industry out and make it profitable again. Countries like Remion were not able to do so on that scale. So in the case of a big world-wide crisis, Eiffelland would get out of it in a better shape than Remion.

On the other hand, it will help nobody when everybody is lying on the ground after a big world-wide crisis. And exactly that was the reason why the possibility for a bailout should be there: To make sure that everybody is still more or less standing after the crisis so that rebuilding goes faster.

But indeed, like Széchényi, he saw that it would become difficult to reach concensus on this. Furthermore, he was here to get a good agreement that would benefit everyone, not to win the argument. Winning the argument would be good for the short term, but potentially harmful on the longer term. In contrast, getting a good agreement that would benefit everyone would be advantageous on the long term.

So he said: "I agree with Minister Széchényi's suggestions regarding maintaining and emphasising free trade and the free market and banning cartels. I also agree with his suggestion to already open free trade of steel, coal and petroleum, although I would like to suggest to add natural gas, copper and uranium to that list."
 

Serbovia

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"My Pannonian counterpart highlights an important point that should not be forgotten. We should not be excessively ambitious with the establishment of this mechanism lest there might be adverse effects to the stability of our respective economic systems, and surely no one is in need of a sprawling octopus of different bureucratic regulatory mechanisms that will merely induce collective headaches for all parties concerned.

However, I must voice my disagreement with the proposal to enact such a CSEAC fund that would handle all subsidies and assistance measures in the sectors that will be covered by the free trade mechanism. Some of the sectors proposed, such as petroleum and natural gas, do include the kind of critical infrastructure which I mentioned beforehand. Domestic energy production is essential in crisis for any nation, of that there can be no doubt.

Perhaps my words fall on deaf ears to the delegates from countries that have known decades upon decades of deep peace. Serbovia, however, occupies a somewhat more instable region of our continent and as a result we have seen it necessary to regard issues of our national security with seriousness. This leads to my interest, and that of my administration's, to ensure that this mechanism serves to provide benefit but will not compromise our - or your - ability to function in the event of a serious geopolitical crisis or security threat.

States should be allowed to support those industrial sectors considered necessary for vital national interest and security, so there must either be a mechanism that ensures that these provisions of support are not abused to affect fair competition, or alternatively sectors defined vital for national interest and security should be thoroughly excluded from the mechanism."

- Aleksandar Plesic, Foreign Minister
 

Remion

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The total lack of foresight of the Eiffiland representative, for Remion, was definitive proof that the fat industrial class of that country was unable to see beyond their stomachs. However, Bajorország also disappointed Remion's expectations, a project like this could have been a turning point, but once again the project is killed in the cradle by its creator for lack of courage.

"We understand the opposition of respectable colleagues, but we not sharing it, to continue the dialogue we limit ourselves to requesting the addition of the category of Textiles and Food products to the list." -Federico Bertone
 

Eiffelland

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"I understand your concerns, Minister Plesic," Schmelzer said. "Indeed, energy sources are of vital importance. But my thought about bailouts is, that they should be temporary measures for acute situations. When you give permanent state support to an economic activity that could not survive without such support, you're using the instrument in the wrong way from an economic point of view. Of course there can be other interests that overrule the economic interest, like indeed the safety of the country, or a very expensive medication for a very rare disease. So indeed, it can be defendible for Serbovia to support its oil sector, so that it has an energy source for the case of cases. That is a valid reason to give state support to keep the sector alive. But that should be the limit. State support becomes an issue, when it gives companies the possibility to put their products on the market at dumping prices and push their competitors off the market in that way, even if those competitors are more efficient and deliver the better products. I am convinced that nobody on this table is planning to do so, but also then it would be good to put on paper that this won't happen."

Schmelzer paused for a moment. Then he continued.

"My esteemed colleagues, I have the feeling that we have to look into a different way to get a compromise. Most people on this table agree that in certain circumstances state support is needed. I just voiced my opinion on how such state support should look like, what its purpose should be and what its purpose should not be. I also see that one our esteemed colleagues wants to make sure that state support does not lead to too big advantages for companies receiving state support. Both points of view are valid. I think we must come to an agreement in which both points of view are taken into account. I also think that it is possible to come to such an agreement.
Minister Bertone's idea of an office evaluating the various kinds of state support may have its benefits. The advantage of such an office is, that it can become a concentration of knowledge on macro-economic topics, including the effects of state support. Alternatively, we ourselves or our successors will have to evaluate claims about disruptive advantages resulting from state support, while having limited economic knowledge. Or alternatively, our respective parliaments should discuss it out. That costs time. Then such an ofice can come to a conclusion faster.
I don't think we should be afraid of such an office. What we are talking about, is a vehicle through which we agree together which economic policies we conduct.
I understand Minister Széchényi's approach to start small and build up from there,but when we take energy sources out of his proposal and stick to steel, we risk starting too small. If the establishment of Minister Bertone's office makes it possible to add more items to the plan, we may be able to create a stronger basis to expand the CSEAC from.
Indeed, it can be that we discover flaws in the setup, but then we can always decide to adjust. That is how it has always gone. James Watt didn't invent the steam machine in one go. He tried out several designs, and modified his designs several times to find the design that worked. In the same way, the combustion engine was invented: The first successful design was not the first design. The first design underwent several modifications before it became a successful design. It could be that Minister Bertone's office doesn't work as intended; then we change the design and see if it works from there.
The same will apply to the complete CSEAC. But let's focus on what we want to achieve with this new organisation on the long run: A market of 300 to 400 million people. That will be a powerful economic bloc. Within that economic bloc, we will determine together which economic policies we conduct. It will not be the CSEAC which orders its memberstates what to do, it will be the memberstates who discuss together within the CSEAC what to do."
 
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