My main concern about the trade rework

[acidsun]

I would like to express my main concern about the trade rework: that it doesn't result in higher competition against nationally produced goods.

Let me elaborate:

The main reasons cited for the trade rework are concentrated in this paragraph:

We have mentioned on a number of occasions that we are not happy with the way trade works in Victoria 3. It is unreliable, overly fiddly, and inherently inefficient since the introduction of Local Prices and Market Access Price Impact in 1.5. Establishing any kind of long-term trade relationship with another country is almost impossible due to the constantly shifting market conditions, and on top of all this the system exists in a confusing limbo where all trade routes are established and paid for by the government (via convoys) while the profits usually go into the pockets of private owners. Many of these issues are inherent to the way trade routes work, and as such aren’t easily fixable within the confines of the current system - there really isn’t a way to create a reliably profitable trade route with another market when you have no control of the price of the traded good in the other market.

But here, nothing is said about one important component of international trade which is currently either absent, feels absent or is easily bypassed in Vic 3: international competition.

To put it simply, I never ever in any game ever since Vic 3 was released had to worry about foreign goods out competing mine, in my own market or abroad.

Adopting a free trade doctrine has absolutely 0 negative consequences (Tariffs are irrelevant for government budget), as:

1) Foreign countries export too little
2) It's very easy to import substitute without tariffs or protectionism. Even If I voluntarily set my country to import tools during a shortage, I don't have to worry that the tooling workshops I am building will not be profitable when they are done, because they always seem to out compete anything I'm importing.

Free Trade vs Protectionism was a huge debate of that century (And beyond), and yet it is almost irrelevant in the game because of that. Free trade is always better.

We never have to worry that:
1) Foreign goods are going to enter our markets and out compete our industries, making our industry suffer and our quality of life reduce
2) We're going to lose our share in a foreign market because another nation has managed to make their industry more efficient
3) We're lagging behind technologically, and our industry suffers because of it

So my request for the devs, while the trade rework is still in development is: please be mindful of that while tweaking and fine tuning the numbers for the trade rework.

It will make the game so much more interesting if you now have to worry that, for exemple, in order to industrialize your country, you have to also push away foreign competition from the already established players. That as an already industrialized country, you chose to open up trade but now have to face an up and rising competitor that is exporting cheap goods to your country because they have cheaper wages, or because they have surpassed you technologically. That as Japan or China, being forced to open your markets (Thus adopting free trade) is not actually a blessing (I find it very funny that every Japan player on streams always celebrates that they have been forced to open up).

And I think one important way of making that is to ensure that tariffs matter, by balancing how they can be used to protect foreign industries while at the same time being a price a country has to pay in order to protect their nascent industries.

I believe the trade rework is inevitable going to bring at least a bit of that into the game but I wanted to make that plea for devs to ensure that it also surely plays that role (Of making it harder to set up and develop an industry because there's risk of foreign competition) and not just of making the gameplay more fun.

It will suck if even after the trade rework, protectionism is useless because industrializing is easy because foreign goods aren't a threat.

 

[PedroLuiz]

all of this is more due to how the internal economy of the AI works than how the trade system itself works

 

[FranklyJustNess]

I mean, it literally does. You open yourself to the global market, and the trade centers start automatically getting a good into your market, so if they can source it cheaper, than your local industry, you start heavily eating into the profit margin of those industries, and even if they don't close down, they at least become so unprofitable, that there's no point building more.

 

[TheFlemishDuck]

Adopting a free trade doctrine has absolutely 0 negative consequences (Tariffs are irrelevant for government budget)

The question has to be asked what country's you play and from which viewpoint you look. Though tariffs are for many country's "not nessecary" they can provide opportunity for some and so protectionism and mercantilism also has its own utility.

2) It's very easy to import substitute without tariffs or protectionism. Even If I voluntarily set my country to import tools during a shortage, I don't have to worry that the tooling workshops I am building will not be profitable when they are done, because they always seem to out compete anything I'm importing.

This would be situational. Assuming your using say steel tools and your steel is very expensive pushing the "minimum profitable price" of tools higher you can push to a situation where your tool factory's might start devolving as a result of the competition.

Free Trade vs Protectionism was a huge debate of that century (And beyond), and yet it is almost irrelevant in the game because of that. Free trade is always better.

Very hyperbole indeed, provably untrue even when using exploits like negative bureaucracy strat and minimal trade exploitation, notably a strat where one kills all other forms of taxation income to squeeze out a higher total income purely trough tariffs. It might also be possible to prove that the circumstances exist where "putting tarrifs on construction goods you import" can be a valid strategy when a disproportionate reinvestment rate per capita is achieved. Also buying minimal trade volumes of art over a 45% tariff is typically cost efficient even after cost of bureaucracy and shipping.

We never have to worry that:
1) Foreign goods are going to enter our markets and out compete our industries, making our industry suffer and our quality of life reduce
2) We're going to lose our share in a foreign market because another nation has managed to make their industry more efficient
3) We're lagging behind technologically, and our industry suffers because of it

Pretty much all these assertions are false in my observation of the game.

My impression is that you never encountered issues with free trade "with the countries you played". Somehow you managed to avoid playing the countries for which using it could be an issue or a detriment to their potential.

 

[acidsun]

My impression is that you never encountered issues with free trade "with the countries you played". Somehow you managed to avoid playing the countries for which using it could be an issue or a detriment to their potential.

I mostly play less developed and less industrialized countries - those in which I think this aspect should matter the most. European great powers are the ones I usually play the least (Except perhaps Prussia). If they are the ones which have problems fighting off foreign goods and not Brazil or Japan, then something is still wrong IMHO.

If you have a save game around in which you have this problem (Foreign goods out competing yours and free trade laws creating some sort of negative consequence), I'd love to see how you got there, how it looks like and how hard it is to turn that problem around, because frankly in my 1k+ hours post release I've never had that problem and although I might have used hyperbole here and there in my main post this one is not one of them.

 

[Desseabar]

There's two issues I think:

• Because very nation must be an autarkic island today, there's no economies of scale. You never get a +50% throughput bonus because each state is split across a dozen industries, rather than eg Pennsylvania specializing in steel or Northern Ireland specializing in shipbuilding. That means everyone is basically on the same level.
• Downsizing is very conservative: as eg Egypt, it should actually require a lot of subsidies to maintain a competitive textile industry. However, you can deal with unprofitable buildings for a while, even with no cash on hand.

Hopefully with 1.9, at least the former is tweaked so that AI prefers to specialize industries for a given state.

 

[Timewalker102]

The main issues are that

a. There aren't enough sources of comparative advantage yet. For example, throughput bonuses from terrain exist, but they're very general and very small (for example, minor +20% bonuses to all plantations). Unsure if this has been solved yet

b. AI does not minmax existing comparative advantage as hard as it should (or at least as hard as a human player would). Human players are very aware of throughput bonuses and economies of scale, AI still kinda just scatters stuff around. Also unsure if this has been solved

c. Even with comparative advantage, there's no way to exploit that comparative advantage through heavy trade balances. This looks like it's likely been solved, as the devs have said focusing on large volumes of trade has been their priority.

C is a good start, but unless they've also simultaneously improved A and B I don't think there'll be enough of a focus on export economies and trade policy yet. That's going to require some pretty big buffs to resources and comparative advantage.

 

[Bisonmask]

This is an AI problem not a trade system problem

Higher tech PMs are more profitable and richer countries can afford to subsidize entire industries. In PvP games people can and do flood your market with cheap goods to slow down your economy or force you out of an industry they want to dominate. Iirc the new system allows for a higher maximum quantity of goods traded so it should solve your problem

 

[IsaacCAT]

Agreed with @Bisonmask that this is mainly an AI issue as in MP trade can be devastating for free markets if you are not developed enough to have competitive industries.

Because this is more about technologies, economies of scale and access to resources rather than absolute advantages.

However, I may understand that improving the AI may be increasing difficulty too much for the average player.

I believe some difficulty levels should be introduced for more experienced players.

 

[TheFlemishDuck]

I mostly play less developed and less industrialized countries - those in which I think this aspect should matter the most. European great powers are the ones I usually play the least (Except perhaps Prussia). If they are the ones which have problems fighting off foreign goods and not Brazil or Japan, then something is still wrong IMHO.

If you have a save game around in which you have this problem (Foreign goods out competing yours and free trade laws creating some sort of negative consequence), I'd love to see how you got there, how it looks like and how hard it is to turn that problem around, because frankly in my 1k+ hours post release I've never had that problem and although I might have used hyperbole here and there in my main post this one is not one of them.

i dont have too many games where i play with free trade so i dont have too many examples, here is a more niche one:

i have to subsidize groceries in my little 30 SOL capitalist Switzerland. I got some glass factories that i dont want to subsidize anymore and they will devolve furthe under competition from abroad. We got factory's with 40 productivity going red "because its not enough" due to wage competition.

I'm not the cheapest producer of groceries here, much of the resources need to be imported its not like Switzerland produces grain or sugar or meat or fish (myeah) or even much iron or any oil, we do produce our own tools atleast. Kinda handy to have free trade so to be able to buy all of this but they come at above market prices and my wages are also well above what is normal across the board.

My neighbours can hence produce groceries far cheaper and will sell them in volume to me if i dont subsidize competing my industry away and causing devolvement, i can buy it too but then at 200 or so land trade limit i can at maximum import around 1600 groceries from my neighbours. The issue there is that while that may be just enough it would make groceries quite expensive and push my country actually in starvation when my neighbors would suddenly drop their supply which they might do to a drastic degree when they go at war. What good is it if all Swiss drive a car but have no food to eat?

Free trade certainly is a benifit to my nation here, dont get me wrong, but it does force me to subsidize the groceries in this case as labor competition in conjunction with this low productivity would make the factory run empty and push me to rely on limited foreign supply, my citizins have about 8 times more consumption per capita than the french or the Germans So the Swiss market demands as much groceries as the french one hence that a fairly large shift in supply makes it a big and lucrative market for my neighbours who all have trade agreements with me, my citizins have a lot of consumer power so to speak and and can pay a higher price if must and it costs my neighbours 0 convoys and bureaucracy to open a trade with me.

How to call this niche case and similar ones you could have? "The price of success"? Yeah having high SOl and rich pops with very high wages has many advantages for sure, but you can be cutting quite into your own competitiveness. Granted this wouldnt be an issue in this case atleast withought land limits, or withought lack of convoys perhaps.Well there are a number of complex cases where you can have this issue, and very high wages and specialization play a factor in that.

The glass factory's devolving is a result of plastics taking too much oil, so i can't use that pm considering the amount of oil i already consume, with houseware plastics the Ai outcompetes that industry. My pops do have better industries to move in but then again the land limits wont suffice for the volume of glass that my construction sector needs here.

There are other examples. it's true that the AI is not going to aim all that much at you if you are not all that significant or accessible for the purpose of trade, but the more you are and the more "inherit disadvantages" you might have to run a certain industry of your own the more that trade competition might cause an issue between capacity to get enough by trade and capacity to keep your own industry competitive to get the kind of prices you desire.

 

[Amina144]

In my other thread I talked about throughput bonuses are actually weaker than most think since they mostly benefit workforce efficiency

 

[TheFlemishDuck]

In my other thread I talked about throughput bonuses are actually weaker than most think since they mostly benefit workforce efficiency

There are applications where they arnt so strong as they wouldnt affect the cost structure much especially if wage cost is proportionally low in that industry, and then there are applications where throughput can be very strong. The trick really is to apply throughput in such a way that its strong.

 

[Vohen]

In my other thread I talked about throughput bonuses are actually weaker than most think since they mostly benefit workforce efficiency

I disagree, throughput isn't just workforce efficiency, but also building level (and thus capital investment) efficiency.
Yes, inputs are increased to the same degree as output, and as wages are often not the biggest expense a building has, it looks like that's not such a big deal.
However, the game has two main bottlenecks for economic growth: capital and pops, both of which benefiting heavily from throughput.

Pops are fairly straight forward, throughput allows you to produce more with the same amount of people, but that's only a concern once you run out of peasants, with a fair amount of industries already, so early on workforce efficiency isn't so strong, as you say.

But capital efficiency is always a concern, and arguably even more important, whether you're big or small, fully industrialized or still with peasants aplenty to go.
Consider this, you or you IP spent x to build 10 lvs of a building each in two states, one with a +50% throughput bonus (s1) and one without (s2).
The one with a bonus will bring +50% in dividends (it's more actually, but let's forget wages, let's consider only output - input), as s1_dividends = 1.5*out - 1.5*in = 1.5(out - in) = 1.5 * s2_dividends.
So for the same capital invested, one state got +50% dividends, and let's not forget, dividends go back to the IP, so this growth is exponential, even a small bonus early on can mean wild divergences layer on.

This makes throughput a very powerful modifier, though I do agree with people saying how states should have heavier modifiers, for the sake of making competition even fiercer.

 

[IsaacCAT]

My main concern with competition is cost per unit as this is the main factor to outcompete your competitors. Throughput helps a lot to decrease cost per unit.

The key is to have a surplus enough of goods at lower cost/unit and the means to sell it abroad.

However, the later is the one lacking currently in the game. Because you are limited by convoys you cannot sell your surplus to other nations and flood their market with your wares.

Hopefully with the World Market that would not be an issue and only player skill will be at test.

Beware though, not all nations can manufacture all goods and export them, you will have to decide what are your strong points. Many times I see players trying to build everything themselves.

PS: cost per unit is nowhere to be seen in the game, you have to calculate it by dividing costs per unit produced. Costs can be looked at the tooltip of building profit breakdown. It is independent of sell price.

 

[Vohen]

I think one big improvement will be how MAPI is going to be a factor now.
That means states individually will be exporting far more heavily to the world market, and the bigger the industry is (with their throughput bonus I mentioned before), more goods will be offloaded to the world.
The world market will also make those buildings even more profitable, leading to more dividends, bigger IP, and finally, increasing growth rate.

Now, that is for more industrialized nations, the ones trying to catch up should suffer the other side of this coin.
A world market flooded with goods means depressed world prices, so you end up importing those goods, depressing your own local prices, making local industries less profitable, leading to less dividends, smaller IP, and finally, stunting your growth.
And that is where protectionism and tariffs comes in, stopping this negative cycle to a degree.

This all feels very natural, but in theory doesn't look so different from what we have now, except for a few factors:
1- MAPI, as said before;
2- trade volume won't be artificially capped by convoys;
3- less dependency from the AI creating routes, the only factor now will be investment, both in profitable buildings, and in TCs to increase trade.
The last one is interesting, as profitable buildings will tend to be even more profitable, so the weight for the IP to invest in them should be even heavier, which is a great thing for economic growth (the player included).
This makes me think that trade will be far more intense then before, making its effects more pronounced and creating this competitive effect.

At least that's what I hope, if that'll really end up happening remains to be seen, but so far I'm optimistic.

 

[IsaacCAT]

A world market flooded with goods means depressed world prices,

This is not function of the World Market, but the AI building up to match demand. The World Market will spread demand thus higher prices. Do you think more profits will make the AI more prone to build more capacity?

In MP games for sure, but what is the AI logic behind building up their construction sector, their universities and buildings?

PS: if we look at the game files, it seems AI will have more construction sectors depending on government income and investment pool size, so if the World Market increases profits due to increased demand for existing buildings we shall see increased building capacity:

Also, AI logic has a weight on profit per employee to decide which building to build, but this is less important than the previous logic

 

[Vohen]

Also, AI logic has a weight on profit per employee to decide which building to build, but this is less important than the previous logic

This is also pretty important, as it's what directs the IP investment iirc.
It has a random factor, but overall the IP should favor the most productive buildings.
This and companies (which also makes the IP favor heavily their industries) are very important for specialization.

In fairness, with the rework giving us more integrated markets, I'd hope this randomness factor got a cut, for even more specialization.