Tagmatine-Iverican Trade

[Iverica]

 

TAGMATINE-IVERICAN PREFERENTIAL TRADE AGREEMENT (TIPTA)

@Tagmatium Rules

 

---

OOC Premises:

-Assume that Tag and Ive have had seedoil-coffee trade for a while. Thus have always had a fair to moderate amount of trade because of tariff agreements.
-A Tag-Ive study has been researching on an equitable tariff arrangement to include biofuel and Tagmatine proprietary condiment brands into the agreement in the last year
-The expansion of TIPTA was planned during the last quarter of 2019 and may take effect in Fiscal Q2 of 2020

[Tagmatium Rules]

 

To: Tullio Ruben S. Biel, Trade Minister of the Republic of @Iverica

From: the Agios Basilikon Kounsistorion of the Megas Agios Basileia ton Arhomaion

 

Your excellency,

I am happy to state that the Agios Basilikon Kounsistorion has a similar view to your government with regard to the renewal of Tagmatine-Iverican Trade Agreement. It acts as not just a boost to the economies of both of our nations, but helps to strengthen the bonds that have flourished between our nations for the last half-century and more. Iverican coffee has long been a staple of Arhomaiki beverage consumption, although somewhat behind tea.

You may have seen recent news reports coming from Arhomaneia is not just expanding its seed oil business, but also increasing investment into the use of biofuels, such as biodiesel. Whilst I am not suggesting that we amend anything at this stage, it is something that we might consider in future discussions of the trade relationship between our nations. It is also a key point in my nation's attitude towards increasing both renewable energy use and removing a reliance on fossil fuels produced by foreign powers.

A reduction of Iverican tariffs on biofuels produced by Arhomaniki companies and state concerns would certainly aid this expansion and provide an expanded market, strengthening both of our nations' alternative fuel industries and providing boons to companies in related sectors. It will also help to reduce the wurldwide demand for fossil fuels and may even encourage other nations to make steps down this path, although that is far beyond the scope of a trade agreement between our two glorious nations.

I have ordered an inter-ministerial working group (diflogothesiki omada ergasias) to look into the numbers that you attached to your communication and to investigate how it might effect our local industries. Some within the software and consumer electronics industries have expressed concern that the Arhomaniki economy is being opened up to foreign competition, more so than before – we already have a similar reduction in tariffs with Salvia. However, other voices have stated to my own Logothesion that they welcome foreign competition. At the moment, those in favour of it outweigh those who are against but we will need to digest our own findings and compare them to the numbers that you have provided.

Similarly, I imagine that there are those within your honoured nation who are against the intrusion of Arhomaiki food companies into the Iverican market. I will not talk about how my nation's hygiene standards are amongst the highest on Eurth – that will be something that will have to be judged against the standards of your own nation. I believe that the people of Iverica will come to enjoy the range of products that Arhomaiki manufacturers have to offer.

I am sure that we will be able to conclude this with favourable terms for our nations, our industries and our people.

May God see to it that our nations are forever in agreement,

Takitos Khalkeos,

Megas Logothetes

of the

Logothesion ton Kommerkiarionikou

of the

Megas Agios Basileia ton Arhomaion

[Iverica]

Summary of TIPTA Provisions

• Tariff Reduction
  • Assuming both countries use a Fixed Tax scheme for imports:
  • Bilateral reduction of tariffs; both nations will agree to a fixed deduction of the amount taxable per unit of good.
    • E.g. If one "unit of Iverican consumer electronics export is valued at $500 million, Tagmatium will reduce its fixed tariffs by X amount. Likewise, Iverica will reduce its fixed tariffs to every $500 million worth of Tagmatine biodiesel by the same X. 
    • Supposing that Tagmatine tariff is currently at 5% of the unit value ($25 million in this case) for every "unit" of Iverican electronics bound for their markets, both parties will agree to a reduction that works for both parties. If this is to reduce the tariff to 1%, then both will agree to reduce the amount taxable for the goods agreed upon. If we apply those values, Iverican taxes on Tagmatine biodiesel will be reduced to $5 million per $500 million unit of Tagmatine biodiesel. Same application for Iverican electronics entering Tagmatium. 
• Affected Goods
  • Renewals:
    • All Seed Oil/byproducts originating from Tagmatium (refined)- for chemical, cosmetic, and preservative use.
    • All Coffee products originating from Iverica- in whole bean form or as preserved grounds or powder which may have added sugars, sweeteners, syrups, dairy, etc.
  • Included as of 2020
    • All Biodiesel originating from Tagmatium- for fuel use.
    • All finished consumer electronic products originating from Iverica (completely assembled, finished products)- screensets, smartphones, smart accessories, audio devices, charging cables/systems, personal computers, tablets, etc.
• Implications
  • Iverica
    • Currently, domestic extraction and production are far behind the demand curve. Cheap crude oil from Hellenic Rus because of a tariff agreement and Iverican holdings there are currently supplying most of the Iverican oil and fuel needs. Though even with those suppliers, overhead and costs of production could be lower if competitive alternatives were found. Tagmatine biodiesel, given the scale of Tagmatine production and the current Iverican demand, could be a competitive alternative for the civilian fuel market, driving prices to a more desirable balance. Overall, the manufacturing sector hopes to see a marginal if not sufficient gain from supply moving closer to meet the demand curve--reducing their operating costs. Likewise, transport and freight companies could also benefit from this arrangement.
    • Fortis Electronics is currently trying to expand its export sales. Without notable competitition on a comparable scale of production, FOREL senses that expanding into Occidental markets would be commonsensical at this point.
  • Tagmatium
    • Tagmatine Biofuel companies experience a large sales increase by tapping into a developed market that drinks millions of barrels a day. Aside from industry, Tagmatine biofuel taps into a civilian market where there is a sharply growing demand but a slowly growing supply. Its 58 million people, >70% of which live in developed areas where every household probably has 1 or more motor vehicle(s). If Tagmatine prices are low enough because of their sheer biomaterial output, then it's safe to say that they fill a high-demand slice of the Iverican fuel market without as much taxes that say, an OPEC exporter would incur. TLDR: Sales. Up.
    • OOC: I don't know how the tech situation in Tagmatium is, but I'm assuming that Iverican electronics, being affordable but still industry leading, will find a market if there is demand in Tagmatium for more powerful consumer devices at the competitive price large-scale manufacturing allows for. This could do two things: either it supplies an existing demand and therefore balances the curve, or if Tagmatine tech companies are big enough, but are not lately innovating or adequately supplying affordable consumer goods, it forces them to innovate in response to the entry of Iverican tech. If there might be potential interference with startups or smaller tech companies, I'm sure something can be arranged.