European Commercial Alliance

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Intention

In an effort to bring the European nations closer together, the government of Orioni seeks to create a commercial alliance with other European nations. This alliance is to carry the name European Commercial Alliance (ECA). Within it shall be all nations who volunteer to be a member of this ECA. The main focus is commerce: the free movement of goods between the ECA countries. This means that all members agree to a equalization of tax, tariff and trade.

The ECA will be a commercial alliance but will NOT be a political instrument. It is not the objective of this alliance to influence of determine a country's government policy.

Explanation

In economics, the theory of comparative advantage explains why it can be beneficial for two countries to trade, even though one of them may be able to produce every kind of item more cheaply than the other. What matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things.

Let me explain this with the following example:

Suppose there are two countries, Northland and Southland. Both have a wine-making industry and a clothing industry. In Northland, it takes a worker 3 days to make a suit of clothes, and 5 days to make a bottle of wine. Southland is more efficient in both industries – a Southlander can make a suit of clothes in 1 day or a bottle of wine in 1 day.
Southland has an "absolute advantage" in both industries – it is more productive at making both wine and clothes. However, it is 5 times more productive than Northland in wine making and only 3 times more productive than Northland in Clothes making. That is, it has a comparative advantage in wine making. While Northland is worse at making either kind of goods, it is least deficient at making clothes.
The price of goods must reflect the cost of making them, so it is likely that in Northland, a bottle of wine (takes 5 days work for a Northlander to make) costs more than a suit of clothes (takes only 3 days). As the Southlanders can make either wine or clothes at the same production cost, it is rational to export wine to Northland, and take the higher profit. Wine will be a better export than clothes for Southland as long as this is true, and it would be rational to deploy more resources into the wine industry at the expense of the clothes industry.

Objectives

As you may have learned from this example, the creation of such a ECA is beneficial to all nations who wish to join it. The objectives of this ECA will be:

  • 1. The basic principle of the ECA is peacefull cooperation. By working together, we will get to know each other and see one another as equals, not enemies.
  • 2. The ECA will be a commercial alliance but will NOT be a political instrument. It is not the objective of this alliance to influence of determine a country's government policy.
  • 3. Every member of the ECA shall agree to a equalization of tax, tariff and trade. (OOC: I won't get any more detailed on this issue, it won't get us anywhere since this is NS-RP.)
  • 4. Every member of ECA sets up a port that will be that nations port of entrance for all goods that are traded in the ECA. (OOC: Almost every nation that is on the map of Europa connects to the sea, except Empire Europa. If this nation wishes to join, it must create some sort of trade-airport.) Trade-cities at borders may also be created.
  • 5. Every member of the ECA that is on the map will be marked by the same color (or symbol, if color is impossible). example.

Members

All nations who will agree to this will be considered as founding members. All nations who join afterwards must agree to the same objectives and must be admitted by the present ECA-members.

These are the founding members of the ECA (joined before 28th of october 2004):

These are the other members of the E.C.A. (joined after the above date):

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