[DRAFT] Valiantly Slaying The Hydra Of International Cartels

[Schutzenphalia and West Ruhntuhnkuhnland]

Valiantly Slaying The Hydra Of International Cartels

Category: Moral Decency | Strength: Mild

Description: The World Assembly,

Contending that cartels and other anti-competitive agreements to fix prices unfairly distort market conditions,

Believing that the problems posed by such cartels, especially in resources that are unevenly geographically distributed such as metals (for example copper or aluminium), crops (for example coffee or sugar), and energy sources (for example oil or nuclear fuel ores), constitute an extreme hazard to national populations,

Asserting that restricting contracts enforcing cartels meets a compelling public policy interest,

Convinced that tackling these anti-competitive trade practices is reasonable and appropriate in the interests of advancing economic prosperity, promoting sustainable development, and reducing poverty,

Determined to act multilaterally to prevent cartels distorting international markets,

Has decided:


1. Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices, shall be considered a cartel contract.
   
   
2. With respect to trade between member nations, all such cartel contracts shall be declared null and void, and no nation shall enforce any such cartel contract.
   
   
3. With respect to trade between member nations, any disputes arising from the interpretation and implementation of Article 2 shall be subject to arbitration of the World Assembly Trade Commission.
   
   
4. Nothing in this resolution shall be interpreted as restricting, yet nor as condoning, purely domestic cartels that have no impact on trade between member nations.

[Schutzenphalia and West Ruhntuhnkuhnland]

"This is very much a rough first draft, but on a subject we believe is worthy of serious consideration. As such, any useful contribution on how to better define cartels or anti-competitive prices would be gratefully appreciated."

~ Katinka von Ausserkundszell
Second Deputy Under-Secretary to the Foreign and Colonial Office

[Calladan]

While I admit I like the title, I have always been more of a fair trade than a free trade sort of person - at least within respect of certain areas of trade and certain areas of the world.

And because of this, I believe that there are times when it is necessary for groups to band together to get the best price, even if that means engaging in anti-competitive practices and offering less (more?) than the best prices to their customers.

Which I suspect would come under the proposal's definition of cartels?

[Schutzenphalia and West Ruhntuhnkuhnland]

Katinka sips her decidedly non-fair trade coffee, fresh from the plantations of New Schutzenphalia, the tears of the indigenous tribespeople giving it a distinctive tang.

"We had been considering including some kind of exception if the cartel served a public interest," she begins cautiously, "But, such exceptions are equally likely to be abused for detrimental purposes. So, Ambassador McGill, could you give some kind of more concrete example of a situation in which a cartel would be justified?"

[Calladan]

Katinka sips her decidedly non-fair trade coffee, fresh from the plantations of New Schutzenphalia, the tears of the indigenous tribespeople giving it a distinctive tang.

"We had been considering including some kind of exception if the cartel served a public interest," she begins cautiously, "But, such exceptions are equally likely to be abused for detrimental purposes. So, Ambassador McGill, could you give some kind of more concrete example of a situation in which a cartel would be justified?"

Areas of the world where people earn the equivalent of 1/100th of a coin a day, for picking sugar, bananas, coffee, mangos (etc) 12 hours a day, seven days a week, which - under "free trade rules" has to then be sold at the cheapest, most competitive price meaning that they are never able to earn a fair and decent wage for the work they are doing.

Whereas if they can organise an international group - say five or six nations - that agree not to compete but to sell at a given price, and that another group of nations will always buy from them, rather than from another supplier who might sell at a slightly lower price, for a fixed period of time, then at least they have a chance to set themselves up, earn a relatively modest wage (And I am not talking about making people millionaires here, I am talking about giving people enough to live on, to feed their families and so forth) and not have to live hand to mouth every day.

Fair tree, not free trade. Not being constantly undercut by massive corporations who can afford to sell some of their products at a loss (or even at cost) because they have tax write offs or other products they can sell for 1000% profits.

We think this is a not unreasonable way to do business. Yes - it might cost some of the wealthier nations slightly more to buy food and other products, and I am WELL aware that there are many nations who have..... well - who have a less than charitable attitude when it comes to socialist tendencies, but still - it's something we think is worth considering.

We are not universally opposed to the free market, but neither do we believe that free trade and the free market is the be all and end all of life (and there are parts of our government that think - in some areas - the free market does far more harm than good).

[Schutzenphalia and West Ruhntuhnkuhnland]

"I don't believe that example really stands.

"For a start, this legislation is only concerned with private cartels. Whatever the benefits of tackling public cartels, our Office of Legislative Analysis predicts a very low chance of success for any such proposal. It's possible the member nations of the World Assembly might take action to address cartels, but it's highly unlikely they will do so in a way that compromises sovereign immunity.

"Secondly, what you call "free trade rules" do allow nations to suspend their duties "in the event of a significant disparity in labour...standards".

"Thirdly, the World Assembly has already gone as far as it conceivably can in addressing a "minimum standard of living": how nations meet that obligation is up to them, and if they are genuinely incapable of meeting it, then a bunch of legislators cannot magic money into existence for them."

~ Katinka von Ausserkundszell
Second Deputy Under-Secretary to the Foreign and Colonial Office

[Araraukar]

"Secondly, what you call "free trade rules" do allow nations to suspend their duties "in the event of a significant disparity in labour...standards".

OOC: To be fair, in Calladan's example it's unlikely the nations themselves would do anything about it, especially if the big corporations were important on the national scale.

EDIT: As Gruen made it clear that my IC isn't welcome on his drafts, changed this post to read as an OOC one.

[Tinfect]

OOC:
You're going to want to define exactly what a 'Cartel' or 'Anti-Competitive' practice is.

[Imperium Anglorum]

OOC:
You're going to want to define exactly what a 'Cartel' or 'Anti-Competitive' practice is.

Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices, shall be considered a cartel contract.

[Imperium Anglorum]

PARSONS: I am happy to support this proposal.

[Tinfect]

OOC:
You're going to want to define exactly what a 'Cartel' or 'Anti-Competitive' practice is.

Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices, shall be considered a cartel contract.

OOC:
A circular definition isn't.

[Imperium Anglorum]

Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices, shall be considered a cartel contract.

OOC: A circular definition isn't.

But it isn't a circular definition. It defines 'cartel contract' as 'Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices'.

[Tinfect]

OOC: A circular definition isn't.

But it isn't a circular definition. It defines 'cartel contract' as 'Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices'.

OOC:
You're going to want to re-read my questions.

OOC:
You're going to want to define exactly what a 'Cartel' or 'Anti-Competitive' practice is.

[Frustrated Franciscans]

A minor nit pick: Isn't this more of a Free Trade: Mild as opposed to Moral Decency: Mild? I mean I don't think it really makes the people more morally decent.

[Bears Armed]

OOC: Unfortunately the rules currently seem to prevent the use of 'Moral Decency' proposals for limiting economic activity. (Reference the ruling on 'Trade of Endangered Organisms'... and it'll be clearer once the GenSec discussion before that ruling was made is released to the public...)

[Calladan]

"I don't believe that example really stands.

"For a start, this legislation is only concerned with private cartels. Whatever the benefits of tackling public cartels, our Office of Legislative Analysis predicts a very low chance of success for any such proposal. It's possible the member nations of the World Assembly might take action to address cartels, but it's highly unlikely they will do so in a way that compromises sovereign immunity.

I sort of misspoke - I wasn't suggesting the nations were in collusion, but groups of private organisations across several nations.

Seven farming collectives across three nations decide to work in partnership. They don't form a single entity, but they do agree that they will all sell their goods at a uniform price in the areas that they sell in - the three nations they are in.

They are doing this so they can ensure all the workers in their collective get an acceptable price for their goods and get paid a reasonable wage for their work.

If they had to compete in the free market, they would probably do no business at all, and go bankrupt with in a few months.

They do compete in the free market outside the three nations, but can only do this because of the fair trade aspect of their trade within the three nations.

This is what I was referring to when I said fair trade and asking of this proposal would destroy these types of "cartels"?

"Secondly, what you call "free trade rules" do allow nations to suspend their duties "in the event of a significant disparity in labour...standards".

They allow them to, but do they compel them to?

"Thirdly, the World Assembly has already gone as far as it conceivably can in addressing a "minimum standard of living": how nations meet that obligation is up to them, and if they are genuinely incapable of meeting it, then a bunch of legislators cannot magic money into existence for them."

I know - I might be an idealist, but I am not an idiot

However while I understand that The WA can not solve every problem under the sun, I would like to think they would not go out of their way to make things harder for people - especially for people at the poorer end of the scale, just so that people at the richer end of the scale can buy bigger jets and faster cars. To me that doesn't seem to be what The WA should be in the business (if you will excuse the pun) of doing.

[Araraukar]

OOC: Just realized that the proposal name is likely set at the new maximum mark limit for titles, 52.

Also, Gruen, your TG etiquette could use some brushing-up. But if you want to be childish and force me to use the forums to talk to you, then so be it. You're still welcome to partake any projects I'm in, in IC (or OOC, if you like), despite your behaviour.

[Imperium Anglorum]

OOC: Just realized that the proposal name is likely set at the new maximum mark limit for titles, 52.

OOC: I love this title.

Also, Gruen, your TG etiquette could use some brushing-up. But if you want to be childish and force me to use the forums to talk to you, then so be it. You're still welcome to partake any projects I'm in, in IC (or OOC, if you like), despite your behaviour.

Keeping things in the public is probably preferable to conspiracy in the dark. Gruen has been quite ideologically consistent.

[Araraukar]

OOC: Just realized that the proposal name is likely set at the new maximum mark limit for titles, 52.

OOC: I love this title.

OOC: Yeah, it is really funny.

Keeping things in the public is probably preferable to conspiracy in the dark. Gruen has been quite ideologically consistent.

Yeah, it just doesn't feel right having to use forums to say things that should be said in TG. I'm sure he's trying to make me look petty or something like that, but eh, I'm refusing be nasty at him.

[The Canadian North-West]

Ambassador Adán Reigez: "Well, I see the good intention of this bill. However, the definition of Cartels as described by this bill is vague enough that it could be used to unfairly target state-run economies. Case in point:

Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices, shall be considered a cartel contract.

"While, admittedly it does specify private entities, all of the statements given to describe what a 'cartel contract' is can easily apply to an economy which has prices partially or wholly regulated by a nation's government.

"In addition, 'collud(ing) to exclude new market participants through discriminatory trading patterns' can easily be used to describe trade embargoes."

[Araraukar]

OOC: So, since Gruen's ignoring me - not Foe list to my knowledge, just mental ignore list - could someone else ask in IC about what exactly do "private entities" mean in this instance, since the way clause 1 now reads, it sounds very much like it would include, say, a contract between a supermarket chain and a food producer, in which the supermarket chain will 1) buy goods from the producer at a fixed price and 2) only buy those goods from that producer (possibly because their food is the cheapest/cleanest/most ethically produced). In return the food producer will 3) not sell his products to other supermarket chains and 4) will not produce more than what the supermarket chain specifies in the contract (no use to produce more than they sell). If the supermarket chain is international, I think that fills all the tickboxes.

It might also include the restrictions that in real life are required for getting "Organic" or "Fair Trade" labels.

EDIT: Ty Aclion, but you forgot the bit about the chain being international. Clause 4 makes it not apply to national ones.

[Aclion]

The Aclionian delegate steps forward to speak, asking in a voice most unlike her own;

"Suppose a supermarket chain and a overseas food producer agree to a contract, in which the supermarket chain will 1) buy goods from the producer at a fixed price and 2) only buy those goods from that producer (possibly because their food is the cheapest/cleanest/most ethically produced). In return the food producer will 3) not sell his products to other supermarket chains and 4) will not produce more than what the supermarket chain specifies in the contract (no use to produce more than they sell).
Would such a contract be forbidden under this proposal?"

She continues, now speaking normally;

"I also have concerns regarding how this will affect firms seeking manufacture of goods to which they hold IP rights as well as firms which hold vendors to certain ethical or environmental standards and firms trading with partners in nations which engage in price fixing."

OOC: Should this really be Moral Decency? That's for stuff that lowers civil rights
It seem more of a Social Justice issue to me. A restriction of economic freedom(right of contract).

[Schutzenphalia and West Ruhntuhnkuhnland]

Katinka arches an eyebrow at Ambassador McGill.

"You don't by any chance have a side job writing economics textbooks, do you, Excellency? Because what you're describing is the absolute perfect definition of a cartel. You're talking about a group colluding to fix prices, driving up the cost of - in this case, given they're farmers - food. I'll note the only thing missing from your example, rather conveniently, is the impact of those unfairly inflated food prices on hungry families trying to feed themselves.

"You claim this is necessary in order that they can support themselves, but they already have a guaranteed minimum standard of living. If they can't pay a living wage, it doesn't matter, because the government will make up the difference. It would take a national economic crisis for them not to - and in that circumstance, cartels are even more dangerous, so any exception would be rife for abuse.

They allow them to, but do they compel them to?

"Not directly, the trade rules don't, but other articles of international law, and those trade rules do bar them from evading those responsibilities - so, indirectly, yes.

However while I understand that The WA can not solve every problem under the sun, I would like to think they would not go out of their way to make things harder for people - especially for people at the poorer end of the scale, just so that people at the richer end of the scale can buy bigger jets and faster cars. To me that doesn't seem to be what The WA should be in the business (if you will excuse the pun) of doing.

"That is..." Katinka struggles for words. "That is a completely ridiculous and unfounded accusation. History has shown, overwhelmingly, it has been the very "massive corporations" you rail against that have been the prime beneficiaries of anti-competitive practices. By their very nature, they are likely to exclude smaller producers from fair market access. The idea that banning price-fixing in international markets will let "rich people buy bigger jets..." She scoffs, and turns to address other concerns.

Ambassador Adán Reigez: "Well, I see the good intention of this bill. However, the definition of Cartels as described by this bill is vague enough that it could be used to unfairly target state-run economies. Case in point:

Any agreement between private entities to fix prices, limit production quotas, collude to exclude new market participants through discriminatory trading patterns, or otherwise engage in anti-competitive practices, shall be considered a cartel contract.

"While, admittedly it does specify private entities, all of the statements given to describe what a 'cartel contract' is can easily apply to an economy which has prices partially or wholly regulated by a nation's government.

"But in that context, the agreement isn't between private entities - it's a government mandate. Whatever the merits of that, it's not something this proposal addresses.

"In addition, 'collud(ing) to exclude new market participants through discriminatory trading patterns' can easily be used to describe trade embargoes."

"I don't agree with that interpretation. An embargo is a government action."

~ Katinka von Ausserkundszell
Second Deputy Under-Secretary to the Foreign and Colonial Office

[Calladan]

Katinka arches an eyebrow at Ambassador McGill.

"You don't by any chance have a side job writing economics textbooks, do you, Excellency? Because what you're describing is the absolute perfect definition of a cartel. You're talking about a group colluding to fix prices, driving up the cost of - in this case, given they're farmers - food. I'll note the only thing missing from your example, rather conveniently, is the impact of those unfairly inflated food prices on hungry families trying to feed themselves.

You realise that I am not talking about oil companies, car companies or other massive conglomerates here, right? I am talking about six or seven groups of farmers who are selling crops or bananas or melons or the like for a fair price (rather than "driving it up"), instead of being forced to sell them at a loss because the larger corporations can afford to sell them at a loss and offset any loss in profits by cutting their bosses bonuses for the year.

What if they were selling it purely for export, rather than for local consumption? So that it didn't impact the local families, but instead ensured a fair price on the world market (rather than being involved in the "free market" which sometimes is anything but?)

"You claim this is necessary in order that they can support themselves, but they already have a guaranteed minimum standard of living. If they can't pay a living wage, it doesn't matter, because the government will make up the difference. It would take a national economic crisis for them not to - and in that circumstance, cartels are even more dangerous, so any exception would be rife for abuse.

Again - I am not talking about a massive multinational billion coin operation here, just seven or so farms trying to ensure that they can get their product into the market that is flooded with cheap goods from massive multinational billion coin companies that - as I said - can offset any losses with ease.

"That is..." Katinka struggles for words. "That is a completely ridiculous and unfounded accusation. History has shown, overwhelmingly, it has been the very "massive corporations" you rail against that have been the prime beneficiaries of anti-competitive practices. By their very nature, they are likely to exclude smaller producers from fair market access. The idea that banning price-fixing in international markets will let "rich people buy bigger jets..." She scoffs, and turns to address other concerns.

While I understand the argument that the free market drives prices down, it also has the unfortunate habit of driving smaller businesses - those that have no way of competing with massive companies - out of business for good. Thus reducing the total number of businesses in the market place, creating more of a monopoly for the remaining businesses and pretty much defeating the purpose of the anti-competition rules in the first place because they have fewer competitors to deal with, so they are - more or less - able to name their price.

And it is one of those "who does it hurt more" things. Right now (assuming I understand the situation a right) the big companies can fix prices and make a frakton of money, while the smaller collectives can fix prices and make a frakgram of money. But if you ban the entire lot, the big companies can still manipulate the market in other ways and are still likely to make a frakton of money, where as the smaller collectives are most likely to go out of business. So - who does it hurt more? The little guy. Which - to me - is a reason to vote against.

I still think that there are times "cartels" are required to aid and help struggling areas, and that if there is a blanket ban with no ability for exemptions or exceptions, it would be a bad thing. However - despite my side job as Professor of Economics (grin) - I am not an expert, and I do (arguably) understand why competition across The WA is a good thing, and why price fixing on an international scale is bad.

[Excidium Planetis]

"I believe my nation can support this legislation."

OOC:
You're going to want to define exactly what a 'Cartel' or 'Anti-Competitive' practice is.

OOC
Why does 'Cartel' need to be defined when 'Cartel Contract', the important term, already is?