Spain and the Iron / Wood market
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by scrabman
Citizens, Countrywomen, Countrymen
I know it has been a while since I have published an article but its time to start up again.
There have been a lot of developments in the past few weeks and they have been discussed ad nauseam So much that a few interesting changes affecting our citizens went semi-unnoticed.
One of those changes is Spain's new import tax on wood. It has risen from 1 to 50 percent. A review of their forum discussions indicates this is solely to protect their medium productivity companies because they felt too many foreign businesses were selling wood in their country.
Who sells wood in their country? The USA of course! (of sure and some other countries, but seriously, we are the main importers). They are effectively trying to ensure that US companies can not compete in their wood market so that their companies have the advantage. Nationalism at its best. I understand why they made their change, but why does it matter to us?
The higher we can sell our wood for oversees, the higher our own citizens get paid. Its that simple. To ensure the best wages for our wood workers it is necessary to export a lot of wood to other countries as we can sell for a higher price due to our High productivity Zones. Because we have a glut of wood in the US, prices in our market stay relatively low compared to the wages needed to hire the employees. Now, selling in Spain brings in the same gold/item that selling it in the US does.
In addition, many companies have previously paid the 20 gold to obtain a license to sell to Spain. Only time will tell if their investment can be recouped. The question remains, will this hurt our workers or will we simply switch our exports to another country (with those that wish to do so, investing another 20 gold for an additional export license).
A review of our iron market shows that Spain is taking advantage of our low import tax and selling a good amount of products here. I am certainly not advocating that we raise our export taxes in response. I am advocating that discussions be opened with Spain to address this situation. There is a difference between a 10-15 percent import tax which would even the playing field, and a 50 percent tax which is a blatant attempt at stopping our imports.
I welcome your comments as to what you think should be done, if anything, or if you even feel this makes a difference.
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Voted. You make an excellent point, glad you noticed that.
@ scarab... lol i was just about to write an article about the wood tax increase in spain.
As an exporter of wood, this pained me. It was a shock to log on and see my wood price up 50% overnight. I am in the Q1 level and there is not much give. Competition is firm in the US and I had yet to recoup my investment for the second market. Such is life I guess.
They are just trying to keep their own countrys businesses alive, so they can still get more work to people, its not nationalism, its just business...
Well its shame to you, i had the same with eCroatia, tax change from 10 percent to 99 was a dead blow to my company, lately sold q1 food company for such an low price as 17 gold...
Protectionism at its finest. If Spain cannot be competitive in wood, then they should import. They have other areas where they are more than competitive - let them concentrate on their strengths rather than shore up their weaknesses.
You would think the main motivation of an Atlantis member would NOT be to prohibit imports by a fellow member.
A point I made when the CTPA was first argued and proponents said they could raise the import tax if we got flooded with foreign products: if we allow through low import taxes the marketing of foreign products and then raise the import tax we are going to make enemies. We should (have) lowered the import tax slowly until it reached a good place rather than the across the board settings we chose. How many foreign companies are going to dislike us if we raise the import tax after they purchase an export license for 20 gold?
Increasing import taxes on their iron would be a good first step to force trade negotiations. I'm not sure how much iron they import vs. how much wood we export, but I would imagine it is nearly the same.
@hokiehigh: sadly we can not direct import taxes at a specific country or group of countries as is possible in RL. That would be an interesting addition though.
@ MOishe
That was Tremanine statement Moishe. While I wish we could do it though!
voted.
Yeah, it would be an interesting module, but would get super complicated I suppose lol. Regardless, at least we have people talking about this.
we should run a free market. Buy the cheapest RM and sell manufactured product. If we can't compete in RM, import them. No taxes, no VAT, no tariffs. Free the market to move.
Declare war, honor our mutual protection pact with them, and we can fight amongst ourselves over the issue. 😉
No- WE should raise our import tax.
The time is coming when we will have to take steps to do the same thing they are. Unfortunitly we need the iron I beleive more then they need the wood. We just do not have enough demestic production of Iron to support our needs should war break out. We would find ourselves in a very tuff spot if we started playing around with an industry that we have set ourselves up to fail in. Its time we start looking for a new market for our wood. Or if we raize the import tax on Iron we will need some more Iron companies here in the US fast. I suggest as eUS companies hit the purchase RM button that we all begin to boycot spanish products in favor of US wood. It might cost a little more but you will be supporting your country and in the long run ts the only real preasure we can put on Spain without treating our other allies unfairly.
*Iron not wood
Aye, buy Romanian Iron or the like, similarly priced.
@Window Despite the fact that a no tax system is literally impossible within game mechanics, it is also a horrible system of government. Where would we get the money for MPPs, the Quartermaster, citizen fees? The system you advocate would leave us defenseless and new citizens destitute.
On subject: I think Spain will eventually learn what we did with iron, its just not realistic to support yourself with only medium regions. I believe we should probably say something to them, but if that doesn't work I'm sure their wallets will eventually.
Very nice point, and an ambassador and someone on the economic council should contact Spain today.
Myself and a few others may have to contact Spain and talk to them about their actions.
@Moishe: My point was not directed solely at taxing Spanish imports, but all iron imports.
@Moishe: I realize we can not tax Spain's iron directly, but they are the primary importer and we tend to be their primary wood importers.
We should at least increase the import taxes slightly, otherwise there is no incentive at all for Americans to have an iron company. There is absolutely no way to make a living as a GM for iron and we should not solely survive on imports alone!
Good to see you writing again Scrab.
Spain is simply protecting their med productivity companies, something I wish we would do.
Raise the import tax, Buy American.
Members of Atlantis should abide by a fair trade agreement between member nations. Spain needs to lower its import taxes or the US needs to raise our import taxes.
Good article Scrabman.. Also a couple of weeks ago I was musing with a friend how nice it would be to be able to set import taxes by country. Likely won't happen anytime soon. Hope for the sake of economic relations we can get this worked out.
Spain is currently undercutting on the food market. RAISE the import tax, lower our taxes. Make your money off of foreign companies not Americans.
Nice article Scrab.
Unfortunately if Spain is trying to keep the US from importing goods to their country there isn't much that we can do about this, but it does provide an excellent "opportunity," if you like, to search out new markets. From what I understand some countries in Asia need wood (not sure how accurate that information is) and this could be the moment to strike into them. However, I do feel that Spain should be negotiated with by our leaders to try to lower this high tariff down. Twenty gold for the rights to trade there is a lot of money to make up for anyone.
@mindflay: I think you've got the right idea...the only modification I would say is to start dialogue with Spain before doing things like boycotts and such. If that doesn't work, we could find another market for wood and should try to produce more iron in the eUS.
@Donovanator
i agree with you,we should increase our import taxes.
An easy way to get around this: donations buying. Pure, simple and easy.
Look for aternative export markets.
Germany needs urgent wood imports for example !
Nanook: True, Germany may need it, but the profits to be made in Germany are far less than other countries such as Sweden, Australia, and (when war is ended) Portugal. Spain, by far, was the greatest importer of American wood next to Sweden until now; I feel as if I may never use my Spanish export license again out of protest for their harsh and protectionist attitudes.
Spain is a (MAJOR) economy that we trade with. If the Govt of Spain is going to enact a protectionist policy on trade, then we need to match them tit for tat.
Otherwise, the United States is getting screwed. It is up to the Congress to resolve this issue and/or take action.
Moishe: "@hokiehigh: sadly we can not direct import taxes at a specific country or group of countries as is possible in RL. That would be an interesting addition though."
Nation to nation tariff treaties would be an invaluable tool. If this does get added to the game at some point I recommend that we immediately adopt a reciprocity policy and communicate that globally. Reciprocity means that any nation that lowers or raises their tariffs on eUS exports to their country will see an immediate and corresponding increase or decrease in our tariffs on their imports to eUSA.
I ask here and will also ask my Congresscritter to make this a government request to admin. I agree with hokiehigh's assessment that this will require some detailed record keeping, but that will make the Secretary of Commerce's job real and substantial.
Overall, I agree. Q1 Iron has gone from $1.50 - $1.70 to 80 cents on the US Market in just a few weeks.
I am doubtful that an open discussion with Spain will decide anything at all. If they are going to raise import taxes that much with no warning, I don't think you could talk them down.
Meanwhile, while you decide if you want to open a dialog, Iron companies such as the one I own will start to go out of business.
My suggestion is to act fast, match their import changes (to show you are serious) and then open a dialog.
When you talk to them, let them know that they are hurting themselves the most with this tax. I'm sure this was a contentious issue and you probably already have a lot of Spanish senate allies. Our wood will just find better markets until they wake up once they realize they don't like spending that much for wood. This is not to mention that there are probably at least a few Spanish owned wood companies operating in the US (although these could use the donating system to get around the tariff if they have their own construction companies).
KILL the MPP!!!
I also bought a license in Spain now 10 days. In this way I will never recover my 20 gold 🙁( We must do something!!!
It's too bad about Spain's high wood tariff. But in the end it will have only a small impact on the US, and a large negative impact on Spain. I hate to see an ally do this to themselves.
That is true One Eye. The 20 gold for the license is the max a us company can lose, they just need to buy another one to another country if they want to sell for a higher price.
However, if we failed to raise this issue and bring it to the attention of the public to let them decide, Scrab wouldn't be doing his job.
And a sidenote, if you hadnt't checked, the vote was real close 21-15