Chapter 296: The Franco-Austrian Trade Agreement
Kaunitz’s pupils contracted sharply upon hearing the word “Silesia.”
Silesia was an eternal wound in the heart of every Austrian.
When this prosperous region, rich in handicrafts, was occupied by Prussia, Austria completely lost its position as the “leader” of the Germanic states.
At the same time, Prussia gained newfound respect from European nations, officially joining the ranks of the great powers and becoming a strong contender for the title of "leader" of the Germanic world.
If any Austrian dared to claim they didn’t wish to reclaim Silesia, they would immediately be branded a traitor and thrown into prison.
However, Kaunitz remained composed.
Silesia must return to Austria, but now was not the time.
Although His Majesty the Emperor's radical reforms would make Austria stronger in the future, at present, they only brought chaos and weakness to the nation.
Kaunitz vividly remembered the Bavarian War of Succession ten years ago, during which Austria mobilized over 100,000 troops in an attempt to retake Silesia amidst the chaos. Yet, they failed even to approach Silesia’s borders, being blocked by Prussian forces in Saxony, the western gateway to Silesia.
The Austrian and Prussian armies were deadlocked for more than a year, consuming massive logistical resources without achieving any battlefield breakthroughs. Eventually, they had no choice but to agree to a ceasefire mediated by France and Russia.
Moreover, Austria was forced to relinquish its gains in Lower Bavaria.
That war had taken place when Austria was stronger—before the reforms had begun. If they couldn’t defeat Prussia then, the chances of success now were even slimmer.
Kaunitz exhaled, shaking his head with a smile. “Austria has no need to go to war with Prussia for the time being. To be candid, General Würmser’s army is already poised to suppress the Brabant uprising swiftly. Once the rebellion is quelled, the Prussians will have no choice but to retreat to Potsdam.
“If you could persuade Bavaria to send more troops, the process would be even quicker.”
Talleyrand smiled, raising his glass in a toast. “To General Würmser and his brilliant victory.”
But inwardly, he recalled the Crown Prince’s confident prediction that the Austrian army would suffer a catastrophic defeat in the Southern Netherlands.
Talleyrand planned to remain in Vienna for some time, awaiting the news of Austria’s failure. Once confirmed, he would move to the next step: per the Crown Prince’s instructions, ensuring Austria redirected all its military resources to a decisive battle with Prussia.
His ultimate mission was to shift the theater of that battle from the Southern Netherlands to Silesia.
...
At the head of the banquet table, Joseph II barely touched the delicacies before him—he had spent the past year subsisting almost entirely on porridge and boiled fish. Yet, with great interest, he turned to his French nephew. “Are you saying that if this trade agreement is signed, France will impose tariffs of less than 5% on Austria’s exports of glass, fur products, silverware, and musical instruments?”
For someone in his deteriorating health, it was rare for Joseph II to speak so extensively in one breath.
Joseph smiled and nodded. “You’ve forgotten linen textiles, Your Majesty.”
“Oh, textiles.” Joseph II waved dismissively, chuckling. “I’m not senile yet. Austrian textiles don’t hold a candle to French ones—they could never sell in France.”
Feigning deep thought, Joseph replied, “Mother instructed me to assist you as much as possible. Since linen textiles are an important Austrian export, how about this: France will reduce tariffs on them to zero, including for shipments to North Africa and the Caribbean. Austria, in turn, may impose any tariffs it wishes on French linen goods.”
A rare gleam of delight flashed in Joseph II’s clouded eyes. “Ah, my dear sister! She is always so generous.”
According to Joseph’s proposed "Franco-Austrian Trade Agreement," Austria’s critical exports, such as glass and fur, would enter France at significantly reduced tariffs. Furthermore, goods like minerals, grains, cotton, and timber would enjoy toll-free transport within France—a privilege even French goods lacked. Currently, moving cargo from Lyon to Paris incurred at least ten toll payments along the way.
If implemented, the agreement could mark a historic milestone in Austrian exports.
Based on his experience, Joseph II estimated a 30-40% increase in export revenues, significantly bolstering Austria’s finances and supporting his embattled reforms.
Still, as the Holy Roman Emperor, Joseph II knew there was no such thing as a free lunch. Such substantial benefits would surely require Austria to make corresponding concessions.
He waved a silver fork toward Joseph. “Perhaps I should offer something in return to my dear sister—it would ease my conscience.”
Joseph smiled. “Uncle, you are my closest family. There’s no need to be so formal. However, if Austria could also lower tariffs on French goods, I believe Mother would be very pleased.”
Joseph II adopted a posture of attentive listening. “Be specific.”
“Well, you know, many workers in Lyon depend on textiles for their livelihoods. If France could secure lower tariffs than Britain on this front, it would be wonderful—except, of course, for linen goods.”
Joseph cast a sidelong glance at the Holy Roman Emperor and added, “Ideally, the tariff should be at least 5% lower than Britain’s.”
Although French textiles couldn’t compete with British ones, they still held a significant advantage over those from other European nations. Joseph estimated that with the widespread adoption of power looms and steam engines—and New Zealand wool supplies—it would take only a year or so for French textile costs to approach those of Britain.
At that point, a favorable tariff policy would allow France to dominate the Austrian textile market.
Joseph II hesitated before replying, “That might be difficult. Britain enjoys most-favored-nation treatment for Austrian textiles. At most, I can offer parity in tariffs for French and British textiles.”
Joseph found this acceptable—his initial 5% demand was simply a negotiating tactic. To achieve cost competitiveness, he could focus on reducing transportation expenses instead.
Feigning frustration, he said, “How can French textiles ever compete with British ones...?
“Well then, on machinery, steel products, paper, and chemicals, you must give us low tariffs.”
Joseph II quickly weighed his options. Among these items, only paper was known for France’s overwhelming cost advantage—so much so that no tariff could effectively block its importation. Conceding lower tariffs on the other goods seemed inconsequential.