They can't trade with you. According to the tutorials, the defaults was supposed to be everyone was set at Embargo. Therefore, if you wanted to trade with that person you'd have to set your diplomacy to peace, or have high trade tech. However, somehow all diplomacy is set for peace. Really doesn't do anything I guess, other than not being able to tradem(which is probably a limitation). What I'd like to see is embargo not allowing other players into your orbit for more than a set amount of time. Of they stay there longer, all ships fire (ie:war). In fact, Im going to add this to the suggestions.