The Galactic Republic is the government of a nearly galaxy-wide union of the various autonomous societies throughout the solar systems of the galaxy. The Republic, however, functions like a commonwealth, a confederation or even a mere international organization (analogous the UN, the EU or NATO). Among the thousands of societies joined to the Republic are the Trade Federation and the Naboo, the latter being the inhabitants of a planet named Naboo. The various societies do not always agree on the meaning of law set forth by the congress of the Republic, and they do not always bother to try settling disputes through the services of the Republic, since resolution process is too slow amid resolutions that cannot admit of delay. Hence there is galactic "turmoil". (Throughout the movie series, no explanation is given as to whether the Republic's law is like civil law or like common law, but no impression is ever given that the Republic's law arises out of judicial precedent.)



As the opening crawl explains, the Trade Federation is violently obstructing all shipping to Naboo, over dispute surrounding the general idea that a government shall take money from the use of trade routes to outlying star systems. Naboo is located in one such outlying star system and is also home to the particular system's capitol. Whether the disputed taxation is being imposed by the Republic, the Trade Federation or the Naboo, or is going unpaid by one of these parties, does not matter (though it is later revealed to be, as anybody would guess, levied by the Galactic Senate). There is a dispute and, unbeknownst to the parties involved, two "guardians of peace and justice" are on their way to settle it. In the opening scene, the Viceroy of the Trade Federation is under the impression that he is being paid a visit by diplomats as ambassadors (of the Supreme Chancellor, the leader of the Republic), not potentially violent "guardians of peace and justice" (who also work with the Chancellor). He has no intention whatsoever of murdering them even when he finds out "the ambassadors are Jedi Knights", until contacting his mysterious acquaintance, Darth Sidious, over a hologram teleconferencing link, for advice in the matter after having panicked. Meanwhile, the Queen of Naboo is waiting for the ambassadors.



Furthermore, according to Star Wars: Episode I - The Visual Dictionary: The shadowy figure of Darth Sidious has incited key individuals within the Neimoidian Inner Circle to take drastic measures in the pursuit of profit. When the Galactic Senate imposes taxation on the former Free Trade Zones of the outlying systems, Sidious goads the Trade Federation into aggressively blockading the planet of Naboo in retaliation—a measure by which he intends to force and end to the new regulations. All of this is just the calm before the storm.



The motives in play among Sidious, the Viceroy, the Chancellor and others have to be inferred to a significant degree. It stands to reason that the Trade Federation has some kind of monopoly on trade and is willing to defend such at almost any cost. The tax upon trade routes albeit effectively upon the Trade Federation means that the the trade regime may have to shift the tax burden onto its trade associates, like workers and customers, contractors and subscribers. Invariably there would be associates (the Naboo possibly being among them) who would proceed to fire, quit or circumvent the Trade Federation, undercutting them, so as to avoid the burden, to which the trade regime reacts by creating obstacles to those associates at the same time as extorting political support from them, with the overall goal of urging the Senate to repeal the trade tax. The Chancellor, in all of his corruption, simply wants the problem to go away as quickly as possible, so he opts to secretly send Jedi Knights who have the ability to use mind tricks, extortion or even coercion to achieve their goals. When the captain of the Viceroy's ship says, "They're here to force a settlement", he has legitimate reason believe such is the ambassador Jedi's intention and that not only would those ambassadors be victorious but the Trade Federation's redress of grievances would also go unheard.



So, what's left to be explored are the multi-layered, threaded motives of Sidious. His ultimate objective is to rule the galaxy, and the main obstacle to him doing so is the the Jedi Order. At the very least, he would want to stay out of the Jedi's way, as he lives his life in peace. His original approach may or may not have been what ultimately winds up being implemented, yet it's clear that in both his concealed legal identity and his Sith persona, he disfavors the trade tax. Perhaps the tax interferes with his operations in some way, whether in economy or by simply making him more exposed to the Jedi. Once it comes time for him and the Viceroy to "accelerate" their plains, he is looking to reward the Trade Federation with Naboo's assets, capturing the territory and its resources, which would help him to accumulate the influence needed for conquest of even more planets or for forcing the Senate to make concessions. Either of two approaches would work: amassing a military force to eliminate the Jedi and overthrow the Senate; or exploiting crisis in such a way as to gain favor in the Senate (while ultimately manipulating it to approve of an alternative to the Jedi as the principal galactic security apparatus). In the distant future, the taxation of trade routes becomes irrelevant to him. Edit (Coming Soon)