*Minister Talbott arrives at the CAFTA conference unannounced, a complete surprise to all participating.
Reverend Teano, Director Ghoebia...how glad I am to finally see both of you in person again. I was not aware that you were going to make the journey here yourselves; otherwise I would have been here from the beginning. But we're all here now, and that's what matters.
*Minister Talbott whispers a short statement to Ambassador Gonzov, and receives a lengthy whisper in return. It appears that he may be attempting to catch up with the situation.*
*Minister Talbott readjusts his tie and sharply sits down in a chair next to Gonzov.*
Director Ghoebia, from what I've ascertained, it seems that you are favoring rather protectionist attitudes because of the "ill effects of unilateral free trade." Now, even disregarding the economic validity of that statement (which we could discuss for years even though the vast majority of economists have a clearly united stance on the issue), it still does not apply to this situation. The reason why CAFTA is holding these talks is exactly to avoid such ill-effects; around this table, representatives from all three countries can discuss and negotiate multilateral free trade between our countries, so that no one country lets down its guard first and disadvantages itself.
Of course, in reality, there's no real reason to speak in such negative terms. Free trade is not a bad thing, especially in our situation. We have had free trade between what are now the three nations on the island of Eutopia for over 200 years; if it were to be eliminated now (or at any time in the future), it would prove the greatest shock to the smallest and most fragile of the three economies--St. Espirit and, by your own admission, Director Ghoebia, Tilapia. Companies throughout the island of Eutopia are dependant on pan-Island trade; a company here in New Lancaster buys items from Buen Puerto, one in Castries buys from Chateauvallon. As artificial barriers to trade are erected, these companies' operating expenses increase, as do the prices of everyday imported goods, resulting in higher prices across the board--which spells inflation and hardship for all consumers throughout Eutopia. And for the Eutopian worker, wages do not increase at the same pace as prices, leading to further problems for him and possible labor unrest down the road. Yes, the government does receive a bit of revenue to ameliorate these problems--but nowhere near enough.
But what about those protected industries, you may ask? Don't they benefit? Well, they don't get pushed out of business by the more efficient competitors, true...so now they can charge higher prices (as long as its still Ð.01 cheaper than the competitors)...again, hurting consumers. With less danger of foreign competition, there's now less incentive for the industry to be efficient--quality will go down, they won't invest in technology, etc. And if the foreign competition does get close to competing again, what's easier? Actually trying to improve your business...or lobbying the government for another tariff increase? So now on the global market, these industries, made lax by the tariffs, cannot compete at all. Because your goods don't have the advantage of the tariff overseas, foreign consumers would be paying more for what would likely be an inferior good if they bought your products. So that market's gone...which leaves the domestic market. In countries like the US or Japan, where the population is huge, they can get away with it because the domestic market is so large. In Tilapia, St. Espirit...to a lesser extent, the UPE...the market is so small that industries could really only produce for that tiny market, and would have to downsize anyway.
Furthermore, no-one's going to put capital into your country to start new industries, as operating expenses will be higher due to tariffs, and there's a high likelihood that your tariffs will provoke reciprocating tariffs from other countries--decreasing the potential revenues from the foreign market.
Protectionism gravely hurts the economy as a whole in exchange for dubious benefits to one sector of it. Small countries like us simply cannot afford it. I'm taking the point to a bit of an extreme here, but there's a good reason why small places like Hong Kong and Singapore have free trade policies--and that's much of the reason why their economies are envied throughout the world.
Now, of course, there are still some problems with the treaty as it stands--ones which you brought up. What about unfair trade practices, like subsidized dumping? Well, we're here at a conference to sort these sorts of things out, aren't we? Let's think rationally about the situation and come to a mutually acceptable agreement that allows all countries to reap the rewards of free trade without letting any country take unfair advantage of it.
), and we wish to do so and develop a healthy trading relationship with Eutopia, but not at the expense of our own economic self-determination.