Treaty of Nakazara (1992)
The Treaty of Nakazara or, more formally a Treaty between the Socialist Republic of Menghe and Themiclesia for the Mutual Expression of Amity and Provision for Reductions in Tariffs and Other Impediments and Duties on Trade, is a treaty signed between Menghe and Themiclesia in Mar. 1992, normalizing relations between the two states and providing for a mutual reduction in barriers to trade, mainly tariffs. It is one of the first public agreements between the post-coup Menghean state and a GA power, often deemed a pilot of Menghe's GA-friendly foreign policy for years to come.
Context
International
After the Pan-Septentrion War ended in 1946, Menghe was briefly occupied by New Tyran, until the restoration of Menghean sovereignty under the Republic of Menghe in 1953. Totalist and Nationalist guerillas continued to challenge the Western-friendly government in the Menghean War of Liberation, which concluded in 1964 with the victory of Totalist forces and the formation of the Democratic People's Republic of Menghe. Loosely aligned with the FSR, the DPRM confiscated all foreign capital still in the country to set up a planned economy, and tightly restricted trade and travel.
Inefficient planning, agricultural collectivization, poor weather conditions, and an international embargo in response to the DPRM's nuclear weapons program resulted in a severe famine in 1985 through 1987. Concern over the famine and political instability led Major-General Choe Sŭng-min to stage a military coup, dissolving the Menghean People's Communist Party and establishing the Interim Council for National Restoration.
The post-coup government, which transitioned to authoritarian civilian leadership in May 1988, welcomed food and medical aid in an effort to stave off the lingering effects of the famine, and dismantled the country's nuclear weapons program as part of an effort to normalize relations with the developed capitalist economies of the GA. Temporary measures to encourage family farming and the sale of agricultural goods in town markets gave way to a broader program of economic reforms, which gave private enterprise a de-facto legal status and ushered in rapid growth. Yet by 1992, foreign businesses were still prohibited from operating anywhere in Menghe except the special economic zones in Sunju, Bokju, and part of Donggyŏng, and Menghe retained tariffs on many industrial goods.
Between contracting powers
Themiclesia and Menghe are historically related nations. Most of the former's population can trace their ancestry to migrants, escaping from prolonged civil war in the latter; however, such migrations largely stopped after the 6th century. Menghe's Yi Dynasty briefly held suzerainty over Themiclesia between 1385 and 1518 (this date is approximate, as Themiclesia never declared formal independence at any point).[1] During the Three Kingdoms Period (1854—1899), Namyang State of Menghe took Themiclesia's foreign policy as a model for similar domestic development. As the Federal Republic was replaced by the Empire, Menghe's attitude towards Themiclesia turned from sympathetic, if coersive, to hostile after a revolt in which the Menghean Emperor's nephew was killed. Menghe supported Themiclesia's enemies then itself invaded with Dayashinese assistance. They were soon pushed back by Themiclesian, Rajian, and Columbian forces. Some historians conclude that Menghe has, to this point, been more aggressive than friendly up to this point, perhaps regarding Themiclesia as a break-away state under the traditional paradigm in the Imperial Period.
During Menghe's national famine of 1987, Themiclesia's Humanitarian Council came into contact with Menghean authorities to discuss possible relief efforts. With the tacit assent of the OS, which accepted the value in courting Menghe as an ally to counter-balance Maverica, then firmly Totalist, the Humanitarian Council shipped large quantities of supplies to Menghe, including staples, clean water, medicine, and basic agricultural implements. As it turned out, these supplies helped the new leadership reverse deteriorating conditions and imbued confidence in its ability to provide for the public. This effect has been described by some scholars as a quid pro quo for GA-leaning policies after Choe secures the leading position in government. Two years later, Themiclesia's National Railway Company gifted a complete train, costing at least 40 million (OSD, 1990 nominal), for Choe's private use; opposition figures in Themiclesia have interpreted this gift as a "blatant bribe". After Choe came to endorse openly a policy of openness, Themiclesian companies also made considerable investments in the newly-open country, much to Choe's satisfaction as part of his plans to bring Menghe into the world economy.
Treaty provisions
The opening section of the treaty contains no operational requirements and solely declares a state of normalcy and friendship exists between the two states, and previous differences were to be "cast into oblivion".
In the realm of trade, Themiclesia agreed to grant Menghe most favoured nation status, subjecting Menghean goods to the same set of tariffs and regulations as goods from its other close trading partners. In effect, this meant Themiclesian customs treated Menghe as a default member of the Septentrion Trade Organization, even though it had yet to join. In return, Menghe steeply reduced its tariffs on Themiclesian imports, which had been heavily taxed under the DPRM as part of a strategy of import-substitution industrialization. The reductions were particularly generous for electronics and digital goods, which were in very short supply in Menghe.
Menghe also offered greater legal and regulatory safeguards for Themiclesian companies operating in Menghe's special economic zones. In tandem with a broader program for economic expansion, the number of SEZs was to be increased to nine, and Donggyŏng's SEZ was expanded to include the entire Directly-Controlled City area rather than the districts of Bingang, Sinsuk, and Haebuk alone. Nominally, Themiclesia also offered investment protection for Menghean companies, but as the vast majority of FDI flows were from Themiclesia to Menghe this provision had little impact.
Other provisions concerned freedom of travel. Both Menghe and Themiclesia agreed to expedite the approval of visas for citizens of the other country, and Menghe agreed to lift its remaining restrictions on travel to Themiclesia. These changes facilitated the flow of entrepreneurs and investors between the two countries, as a considerable Meng ethnic diaspora had settled in Themiclesia during the 1960s and had re-established regular business and investment connections with family members in Menghe. Themiclesia also offered to approve a larger number of student visas from Menghe, and Menghe agreed to recognize the credentials of Themiclesian doctoral degree holders seeking employment as professors in Menghe. This clause in the agreement opened the way for direct channels of interaction and collaboration between higher educational institutions, both in research and education.
Menghe and Themiclesia also agreed on a timetable for further bilateral tariff reductions, with the goal of reducing tariffs on 67% of product categories to zero by the end of 1997. Menghe insisted on stringent rules of origin protections in this clause, to ensure that manufacturers in the Organized States did not use it to bypass Menghe's tariffs on trade with the OS, but further tariff reductions during the 1990s somewhat alleviated this concern.
Notes
- ↑ Themiclesia did not legally acknowledge suzerainty but recorded this relationship as diplomatic; however, most experts in politics, including many Themiclesian ones, consider this an example of orthodox Themiclesian historians' tendency to euphemize embarrassing facts "to the extent of not concealing or falsifying them" (Boulton, 1890) because "[as] much, if not more, as it was a patriotic duty for historians to write of their country's humiliation as pleasantly as their vocabulary will exude, it was a moral imperative to record and preserve facts accurately that the nation's progeny could thereby be instructed; for their history may be euphemized but not become an apology" (Carisle, 1985).