Overview

At present the civil service operate a complex tariff system using a set of controls developed during the reign of Emperor Giovanni and which has continued largely unchanged since that day. Merchants bringing goods to the Empire pay tariffs that can vary based on the nature of the cargo involved, the port where the ship is docked, the size of the vessel, and even the time of the year in the case of some goods. The situation is made more complex by a wide range of associated costs, including trading permits, docking fees, unloading fees, and warehousing fees. There are also factors that vary by nationality of the captain and the crew - for example many Imperial captains obtain favoured rates with local stevedores who work the docks, due to their shared national bonds.

As a result of the bewildering complexity of this patchwork of overlapping fees, tariffs and charges, the civil service operate the system on behalf of the Empire inline with the guidelines laid down by Giovanni. To do this, they employ autumn magic rituals cast by members of the prognosticators office to calculate the most efficient possible levels for the charges that will produce the outcome the Senate has requested.

Giovanni was of the firm conviction that tariffs should be set at whatever level produced the highest taxes for the Imperial Senate - and while there have been countless adjustments to the many different charges since his day - the guiding principles have rarely changed. Periodically the Senate will identify some foreign power or other to whom they wish to apply favourable or punitive rates - but in the past they have always returned to Giovanni's mercantilist status quo eventually - usually when the Senate has run short of money. As a result the Senate there are four possible options that the Senate can apply to trade.

The rates have not been changed in decades - and nobody alive is now certain what the actual quantitative outcome would be if they were changed. Crucially the actual impact would be partly determined by any equivalent response from the other nation - in practice most other nations or powers will retaliate in kind - but that is not always a given.

Senate Motion

The Imperial system of government does not support senators making individual decisions about the charge to unload a cargo of Sumash offal pies from a Sarcophan vessel tied up at the anterior docks at Sarvos on a given Tuesday in June. There have not been enough Senate motions since the Empire began to control Imperial tariffs in this way. What the Senate can do is use a Senate motion to issue fresh guidance to the civil service who administer the Imperial ports - causing them to change the whole system of charges in line with the Senate's wishes.

To ensure that the civil service are correctly identifying what the Senate want them to achieve, there are four different trading positions that the Empire can take vis-a-vis other nations. To changing the trading relations with a nation requires either a Senate motion or treaty ratification.

Embargo

Embargo represents the most serious step that the Empire can take against another nation or foreign power. It prevents vessels of that nation docking at Imperial ports and completely prevents captains and merchants of that nation unloading and selling their goods at Imperial ports. An embargo is automatically applied in the event that the Senate declares war on a foreign nation - but it is possible for the Senate to impose it without declaring war by using a Senate motion.

Reciprocity is an important factor in determining the impact of such arrangements. During the recent disagreements, the Sumaah declared war on the Empire, closing their ports to Imperial ships. The Empire refused to dignify the declaration of war with a response, which meant that Sumaah ships were still free to dock at Imperial ports during this time. This was unusual - traditionally a foreign power that is subject to an embargo will respond in kind.

An embargo produces the most severe decline in taxation for the Empire - the immediate loss of trade between the two nations causes a decline in the strength of the Imperial economy accompanied by the loss of all tariff revenue. If the other nation responds in kind, the losses are increased even further, as all trade between the two nations ends. The Empire's prudent decision to ignore Sumaah's declaration of war shielded the Imperial economy from some of the adverse impact of their embargo.

The diplomatic impact is dramatic; an embargo goes hand-in-hand with a declaration of war because it is the trade equivalent. It is one of the most hostile gestures that the Empire can make towards another state short of a physical invasion - and is treated accordingly.

Sanctions

The practical alternative to an outright ban on all trade is for the Senate to instruct the civil service to impose punitive sanctions. This can take a wide variety of forms, the civil service can increase tariffs on key goods originating from a nation, they can impose lengthy delays in issuing permits to dock, to unload, to trade. They can seize vessels that dock at Imperial ports to carry out summary inspections of the contents to check for smuggling.

The purpose of imposing sanctions is to harm trade between the two nations, but to stop short of declaring all out economic war. In practice the gains provided by increased taxation are partially offset by the overall reduction in ships docking at Imperial ports. There is a decrease in overall taxation, though it is smaller than the losses incurred by imposing an embargo. Again, if the other nation responds with sanctions of their own then there is a loss of overall taxation by both sides, as trade between the two nations is cut in half.

Imposing sanctions has significant diplomatic repercussions, but they are usually limited in nature. Inevitably the diplomatic ramifications of such a move are linked to the impact on trade and taxation experienced by the other nation - usually around half what would be felt if an embargo were put in place.

Mercantilist

Emperor Giovani was a strong believer in the benefits of efficient tradition relations between nations, provided that they were directed to support the wealth and prosperity of the Empire. His mercantilist ideas were enshrined in civil service practice as a set of guidelines intended to produce the most efficient possible trade for the Empire. Tariffs, fees, and charges are all adjusted in such a way as to maximise the taxation raised by the Empire. The mercantilist position does not suit every Imperial citizen, there are always merchants seeking protection for their own trade, but it does produce the highest possible taxation for the Imperial Senate.

The Empire currently enjoys mercantilist trading relations with all known foreign powers, including local foreigners such as Axos, the Thule, Faraden and the Iron Confederacy, all of which employ large numbers of slaves. Any change to any of these trading relations will mean a decline in taxation flowing into the Imperial treasury.

The efficient trading relations involved produce no diplomatic outcomes by themselves. Tariffs and fees exist - and hurt the trade of foreign merchants - but there is a clear understanding that the Empire has not singled a nation out for punitive action. Instead they have simply adjusted their tariffs to the rate that serves them best. Other nations might want or seek more beneficial trading relations, but they don't expect to get them for nothing.

Free Trade

It is within the power of the Senate to instruct the civil service to apply highly advantageous trading conditions towards another nation. This will usually involve a significant reduction in tariffs, but it can also mean expedited checks of cargo, the removal of the need for docking and unloading permits and so forth. There are a wide range of benefits that civil servants can apply to reduce the effective cost of doing business with the Empire.

Doing so will cause a rise in the level of trade coming from that nation to Imperial ports. This enhanced trade will help stem some of the losses incurred by reducing individual tariffs, but the trade will also harm some Imperial businesses, so the net effect overall is a noticeable loss of taxation by the treasury. Half of this loss will be mitigated up by an increased flow of trade to the foreign nation, provided that they reciprocate in kind.

The diplomatic benefits of free trade with a nation are significant. The improved trading conditions are clearly visible to everyone involved in trade between the two countries and produces a steady flow of positive support for the other nation amongst merchants and traders affected.

Summary

Trading ConditionImpact on TradeImpact on TaxationDiplomatic Impact
EmbargoAll incoming trade ceasesSignificant loss of taxationExtremely damaging
SanctionsIncoming trade is halvedSmall loss of taxationDamaging
MercantilistTrade remains stableTaxation is maximisedNo adverse impact
Free TradeIncoming trade increasesSmall loss of taxationPositive impact

Fiscal Consequences

The civil service do not have the capacity to carry out a rigorous analysis to predict the quantitative impact of imposing different trading relations on the various different foreign powers. The only way the civil service could provide figures to accompany the options above is if they were instructed to carry out a full appraisal of the situation. This would be time-consuming and expensive - but a single appraisal could identify the costs involved in changes to the trading status for up to five different nations.

Nation
Sarcophan Delves
Jarm
Asavea
Faraden
Commonwealth
Axos
Thule
Sumaah
Iron Confederacy

What is known is the effects will vary by nation - the more trade the Empire does with a foreign nation, the large the impact on taxation of any change will be.

However it will also depend crucially on the response if any - that the other nation takes. The most likely outcome is that a foreign nation retaliates in kind - but as the recent incident with Sumaah showed, that is not guaranteed. They may do nothing - or they may opt for more severe retaliation depending on the diplomatic overtures that accompany the decision.

The civil service had been able to rank foreign nations in order based on how much taxation trade with that nation creates, starting with the most important. These estimates were produced for the Winter Equinox 382YE.

The Imperial Senate notes that the Iron Confederacy's trading status with the Empire could best be described as the equivalent of punitive sanctions. They have relaxed their embargo, but Imperial shipping still faces numerous hurdles in trading there. The Empire's own status towards the Confederacy remains mercantilist.

Further Reading

Core Brief

Additional Information