Correct, you can't enter into trade agreements. However, I think you'll find that merchants bring a lot of leather anyway.
Just out of curiosity, why do you need cut gems? Room value increasing?
Ah, that's an interesting quirk. The baron/count/duke stays. However, since said person is promoted to the next level by the outpost liaison, and the liaison stops coming when the king arrives, promotions stop. So if the king arrived right now, your baron would never become a duke. Another weird thing about how the king interacts with other nobles: when a human diplomat arrives, he'll normally want to talk to the king. However, I just recently discovered that if the king is unavailable (in this case, the king was locked away inaccessibly due to being a vampire), the diplomat will settle for talking to a duke. Not sure if this applies to other causes of the king being unavailable.
I said high quality leather, with an agreement I can always ask for the best leather (elephant, rhino etc they seem to have the highest value) so now looks like I won't be able to do that anymore and have to use normal leather

because I really need to see a monarch for the first time. Once you carve out your fortress, mining rate drops so I need a good supply of gems too(again here also I ask for high quality ones like diamonds or star rubies). I need to keep my gem setter busy, decorating the nobles furniture and in general remaining furniture.
Hmm so my duke stays so looks like I need to make an EVEN better room for the soon to arrive monarch.