Chapter 838: The Lingao Trade Agreement

The first round of business negotiations with the Dutch concluded "in a warm and friendly atmosphere." Skaed secretly found it amusing—many of the points the Dutch had argued for so strenuously were, in truth, entirely trivial to him, yet he had extracted numerous concessions in exchange. The Dutch's most resolute demand—the right to sell freely rather than through bulk purchase—stemmed from hard experience, which was why Van der Lanthroon had pressed so firmly for the Company's freedom to sell goods directly in Lingao.

Skaed "reluctantly" acquiesced to this request. In Lingao, besides the Transmigrators themselves, there was probably no one who actually needed such quantities of Dutch goods, nor anyone capable of producing sufficient working capital to purchase them. The Qionghai under Gu Baocheng certainly possessed this capability, but Gu Baocheng would never commit such a tactless act. In matters of foreign trade, no one in Lingao dared stray from the baton of the Department of Colonization and Trade.

The two parties reached a preliminary agreement on trade:

The goods brought by the Magdeburg, having already cleared customs and paid duties, would all be purchased at specified prices by the Foreign Trade Company under the Department of Colonization and Trade. Guide prices would be benchmarked against those at which the East India Company sold to Chinese sea merchants in Tayouan. For goods not sold at Tayouan Port, the two parties would negotiate separately.

From this trade forward, both parties would conduct bilateral trade under a new agreement. The conditions were as follows:

The Dutch East India Company would have the right to sell goods freely at the two ports of Lingao and Sanya under Senate control. Any person would be permitted to purchase goods directly from the Company. The Australians would levy no fees on Company imports beyond the mutually agreed customs duties.

The Dutch East India Company could dispatch unlimited trading missions—as many ships as they wished—each year to trading ports designated by the Senate. The specific trading ports would be revised annually. Currently, the Senate specially authorized the opening of Lingao and Sanya for trade. If necessary, the Senate could add or remove open ports at any time, though at least one trading port must always remain available to the Company.

Dutch East Indies vessels entering these ports must fly designated signal flags. Upon entering port, they must submit fully to the commands of port personnel and pay all port fees—these fees could not be reduced or waived. Otherwise, the port authority reserved the right to confiscate equivalent imported goods as compensation.

After Company ships entered port, all weapons must be sealed, and crews must accept all quarantine and disinfection measures. Those refusing would be immediately expelled from the port.

Half of the tonnage carried to Qiongzhou must consist of goods specified by the Department of Colonization and Trade; a detailed catalog would be provided separately. If insufficient specified goods were brought on any given voyage, the deficit must be made up on the next. Otherwise, related trade privileges would be suspended.

The Company could rent trading houses constructed by the Department of Colonization and Trade at designated open ports. Merchants and sailors must lodge together in the trading houses or aboard their ships—no outside lodging was permitted. Rent for the trading house was set at 500 guilders per year. Food and daily necessities would be purchased by Company personnel directly from local markets, with the Department of Colonization and Trade providing assistance.

The final item concerned judicial jurisdiction. Van der Lanthroon agreed to acknowledge Lingao's judicial authority but requested special privileges in commercial disputes. These so-called special rights were not extraterritoriality or anything of that nature, but rather a request that when commercial disputes arose between the Company and local merchants, the Department of Colonization and Trade must afford certain preferential treatment—primarily regarding debt collection and bankruptcy liquidation. He requested that Skaed guarantee the Company priority rights in such cases. Additionally, the Company should be allowed to station a consul in Lingao to protect its commercial interests.

Skaed indicated that execution posed no difficulty. So long as the East India Company recognized Australian judicial jurisdiction over commercial activities occurring in Qiongzhou, once the Lingao Maritime-Commercial Court rendered a judgment, it would certainly be enforced in full.

The Dutch East India Company would permit Australian ships to sail in East Indies and Taiwan waters under equivalent conditions. Australian ships would have the right to enter Batavia and Tayouan for trade at any time. Australians could also establish trading houses there and station consular personnel. Additionally, the Company guaranteed that Australian ships could enter Banten safely and without harassment at any time. Whatever privileges Lingao extended to the Dutch East India Company, the Company would simultaneously extend to Lingao.

Finally: Both parties agreed to station consuls in Batavia and Lingao respectively to protect their respective commercial interests.

Of course, given Lingao's current circumstances, dispatching many ships to Batavia in the near term was impossible—Lingao's fundamental problem remained insufficient transport capacity. But through this step, they could gradually draw those Ming merchants willing to trade in Batavia under Lingao's banner. Historically, Batavia had been a Southeast Asian destination that Chinese sea merchants frequently visited for trade, and neither the Zheng family nor Liu Xiang had much direct involvement in this route. Skaed planned first to wrest control of this trade route from their hands, then collect passage protection fees. After all, the Lingao regime already possessed at least a basic concept of protecting overseas merchants and citizens—a mentality far beyond the petty "mountain king" level of monopolizing routes merely to collect tolls. In other words, the Lingao regime operated on the principle of "taking money and providing protection," while the other sea lords merely practiced "taking money and not causing trouble." The difference was obvious at a glance. This very distinction was what allowed the Lingao regime to win more hearts than the Ming government ever had.

After reaching the trade agreement, both parties proceeded to negotiate details concerning specific commodities and customs procedures. Van der Lanthroon understood that the Company's greatest interest lay in dumping spices from the East Indies—one of the few commodities the Dutch could supply in large quantities. The Dutch had already established a tight network for purchasing, storing, and distributing crops in the East Indies. Compared to rice and timber, spices were by far the most convenient product for the Dutch to supply to China. But Lingao was plainly uninterested in spices. Moreover, the agreement had already stipulated that half of all cargo capacity must be devoted to goods from Lingao's designated catalog—which did not include spices. This meant that at most, he could fill only the remaining half of his hold with spices, while the 24% tariff would render spice trade completely unprofitable.

This junior merchant exerted every effort to demand a significant reduction in spice tariffs—at least down to 5%—but Skaed remained unmoved. Although spices could serve as useful entrepôt trade goods, Lingao had never actually sold spices on the mainland and might well be unable to compete with established distributors. If spice trade became profitable, the Dutch would grow too complacent to transport other commodities.

Finally, both parties reached a compromise: the import tariff on spice trade would be 12%, a 50% reduction from the original rate. Van der Lanthroon knew extracting sufficient profit from spices would prove difficult. For this reason, he had to consider what goods to export to Lingao. If suitable commodities could not be found, the Company would have to consider what silver quota to allocate to Lingao. In trade with the Ming, the East India Company's primary export commodity was, in fact, silver.

The silver that the Company transported from Japan, Persia, and Europe disappeared as though swallowed by a black hole in trade with the Ming. The East India Company had long hoped to reverse this situation. From present indications, the Australians had far greater material needs than the Ming, who seemed to require nothing from the outside world. Simply from the specified goods catalog, the East India Company could identify numerous viable trade commodities. Timber and rice—both bulk goods—could be effectively obtained from the East Indies. While rice did not have great export potential in the East Indies proper, the Company maintained trading posts in Siam, where rice was abundant. They could readily establish a Siam-Lingao rice trade route.

The Australian inventory indicated they required large quantities of metal products. But on this point, the Dutch were impotent. In East Asia, aside from copper being Japan's major export commodity, the principal metal exporters were primarily the Ming themselves. Direct importation of copper from Japan, however, was presently difficult. Dutch-Japanese trade had effectively been suspended in recent times. It would be necessary to petition the Batavia Council about opening a channel to obtain Japanese copper as quickly as possible.

The Australians also specified that the Company transport various colors of high-quality woolen cloth, fine and coarse linen, and leather goods. Not only locally popular deerskin, but also rougher goods like cowhide and sheepskin attracted their interest. Besides woolen cloth and linen, which had to be shipped from Europe, leather could be sourced from Basra in Persia—the Persians had ample leather supplies.

As for imports from Lingao, Van der Lanthroon had already made his decision. First came glass products. Lingao's glass goods, including mirrors, came in many styles, were of excellent quality, and commanded prices cheaper than European goods shipped from thousands of miles away. They could be sold in the East Indies, throughout Southeast Asia, and in Persia, serving as trade goods shipped to various destinations. Second was Lingao's white sugar. Judging from the quality of Lingao white sugar that the English had transported to the East Indies, this was a grade of product they had never before encountered—not only far superior to the various local sugar products from across Southeast Asia, but even better than the renowned Fujian and Guangdong sugars that had long been celebrated for their quality. Transported to Persia and Europe, it would fetch premium prices. Then there were the Ming products available for re-export from Lingao.

Van der Lanthroon and Skaed found themselves in immediate agreement on the matter of re-exports. Since trade with the Dutch at Tayouan—whether conducted through Zheng Zhilong or Liu Xiang—suffered from the problem of excessive prices, the Australians of Lingao could very well take their place. Skaed assured him they could supply "without limit" various silk products and raw silk, as well as any Ming commodities the Dutch desired.

Van der Lanthroon found this claim curious. Except for the Portuguese, who held the right to enter Guangzhou on a regular schedule, no merchant from any country had ever dared to boast so boldly. Without relying on Chinese merchants' own vessels to transport goods out of port for trade, it was exceedingly difficult for Europeans to obtain sufficient Chinese goods. After all, until now, all the efforts the Dutch had made along the Chinese coast had failed to achieve this purpose.

(End of Chapter)