The French had lost both their Canadian…
December 1785 CE
The French therefore believe that if prohibitions are abolished and import duties are reduced then legitimate trade will expand.
If French import duties are reduced as the result of a commercial treaty with Britain, a twofold advantage might be secured—more revenue from import duties, and greater opportunities for manufacturers and wine-merchants to sell their products to Britain.
Similarly, the British economy is highly inefficient.
With a national debt of £250 million, an extreme black market (only forty-two percent of the tea and fourteen percent of the brandy imported pays the government-issued one hundred and nineteen percent duties imposed), and the loss of the Thirteen Colonies, William Pitt and the British government are eager to find common ground with their historic rivals in order to secure these "greater opportunities."
The first discussions had taken place at the Anglo-French peace conference in January, 1783.
Article 18 of these talks stipulated that each country would delegate a commission ‘to discuss new commercial arrangements of reciprocity.’
Hopeful that the commercial agreement would be the first step towards the process of reconciliation, the French had lowered their tariffs in 1784 to levels that were laid out in Articles 8 and 9 of the Utrecht Treaty.
Consequently, British exports to France rose drastically, or were at least being traded through legitimate channels as opposed to being smuggled through the black market.
In Britain, however, there was no reciprocal reaction to the French liberal policy.
At the end of 1784, after the British had refused to meet the new standard of the French, France had no choice but to reinstall their prohibitory pre-1784 tariffs.
It is these failures that lead William Pitt to appoint William Eden as the lead negotiator of commercial talks with the French in the end of 1785.