NationStates Jolt Archive

Greetings Fellow United Nations Members:

On behalf of my nation, The Allied States of KilgoreTroutia, and the other members of the South Eastern North West region, I implore you to support the newly submitted Fair Trade Act. This act will greatly increase the economic stability of people worldwide by guaranteeing fair prices for goods and living wages for workers. It will place a small but necessary regulation on the overambitious capitalist businesses of the world that falsely state that individuals can succeed if they want to. The reality is much more stark.

Agombo Migata, a native of a small and still developing state in KilgoreTroutia, has struggled for years to keep his kismet farm alive. (The kismet is a small bird-like animal native to the KilgoreTroutia area known for its sweet flavor. While poaching of wild kismet is illegal, registered kismet farmers whose businesses existed before the Kismet Freedom Act was passed in The Allied States of KilgoreTroutia are still allowed to grow and sell the birds.) He has been moderately successful, as the kismet is seen as a delicacy in many parts of the world. However, much of the kismet production is now controlled by large coporate conglomerates whose businesses are based in nations other than our own. Because his farm is independently owned and he has not succumbed to the corporations' rules, Agombo receives payment for his kismet at a rate less than his cost of production. As a result, Agombo and his family are currently living in poverty. His three young daughters and his wife are forced to work in local factories, earning just pennies a day. It is hardly enough to sustain themselves, let alone sustain the Migata farm, which has been in the family for centuries.

The Fair Trade Act will give people like Agombo a greater chance at success. It will require that companies pay a fair price for products, which means that Agombo would receive a minimum profit of 3% based on the stipulations of the act. The Fair Trade Act would also require that companies pay workers a fair wage--at least 15% above the national poverty line. Profits in many companies exceed 80% of what they pay for products (which they often buy at below cost). The impact to their bottom line would be minimal, and the increase in consumer costs would not be more than a few dollars (or whatever currency your country uses) for products. However, the impact for individuals would be enormous. Agombo's three young daughters could leave the factory and go back to school. His wife would be earning 300% what she currently earns. Their new buying power (and the buying power of people like them) would increase trade, not inhibit it.

Support the Fair Trade Act. Give workers and producers everywhere a better chance at success.

Thank you,

Lola Chimera
President of The Allied States of KilgoreTroutia
Regional Representative of the South Eastern North West

As a courtesy to your fellow Ambassadors, always post a copy of your resolution, please.
Fair Trade Act
A resolution to reduce income inequality and increase basic welfare.

Category: Social Justice
Strength: Significant
Proposed by: KilgoreTroutia

Description: Throughout the world, the giants of capitalism have been crushing small local economies of undeveloped nations. Despite legislation prohibiting it, young children must illegally work alongside their parents to help support their families because wages are so low. The rich get richer as the poor are sunk lower and lower into poverty. Action must be taken.

The Allied States of KilgoreTroutia and the nations of the South Eastern Northwest propose the following resolution to the United Nations in response to this egregious social problem:

All nations will agree to regulate trade in within their borders by enforcing the following rules:

(1)Companies purchasing goods will be required to pay a fair market rate to sellers, based on the current average price for that good, but also acknowledging the cost of production of that good. The price paid for any good shall not fall below the cost of production plus at least 3%.

(2)Worldwide, companies will be required to pay their employees a living wage for their work. This wage must be at least 15% above the poverty line in the nation where the factory exists.

(3)Contracts established between producers of goods and companies wishing to purchase those goods may not prohibit producers from selling their goods to others (companies may not, for instance, "lease out" farms, compelling farmers to only sell their crops to that one company).

(4)Products that have not been accredited by the Fair Trade Board (to be established by this proposal) will be considered illegal and should not be sold or purchased.
*All new products created must follow these rules immediately, although time will be given for official accreditation, and products created before the passage of this resolution will not be considered "illegal."

A timetable of four years will be set to implement the following actions:

(1)Establishment of a Fair Trade Board that will investigate and approve applications for fair trade status.
Upon establishment, the Fair Trade Board will create further rules regarding implementation of the Fair Trade Act (within the confines of the stipulations presented here), including standards for accreditation and development of an application system. The board will also elaborate and develop an appropriate timeline within the four year window established by this act.

(2)The eventual replacement of non-fair trade products with fair trade accredited ones in store and company inventories.

(3)Filing of fair trade applications by all existing companies that engage in global trade practices, and change in production and purchasing practices to reflect compliance with this act.

*It is recommended that companies begin to implement these new rules as soon as possible, although non-fair trade wares will not be "illegal" until four years after the establishment of this resolution.

Approvals: 1 (KilgoreTroutia)
Voting Ends: Sun Dec 12 2004

my apologies for not posting my proposal... i'll remember next time i promise :)

The Allied States of KilgoreTroutia and the nations of the South Eastern Northwest propose the following resolution to the United Nations in response to this egregious social problem:

All nations will agree to regulate trade in within their borders by enforcing the following rules:

(1)Companies purchasing goods will be required to pay a fair market rate to sellers, based on the current average price for that good, but also acknowledging the cost of production of that good. The price paid for any good shall not fall below the cost of production plus at least 3%.

Market rates are what the market will bear. In a cases where multiple countries compete by selling the same products, mkt p is dictated by competition.

So, if developing country's market niche is a natural resource that allows them to produce a product at lower cost than developed countries, and desire to sell the product at cost to eat up makt share so that it can later play a greater role in price setting (which allows the industry to create greater tax revenues for the country in the long run), in essence becoming a natural monopoly, the UN should not allow it to do so, but rather force the average price of that good, or the cost of production plus 3%, which may elliminate the advantage depending on the product?

If I was a developing country with vast uranium deposits that can be reached with a shovel by those wearing a protective suit, as opposed to deep mining, you're proposing to kill my developing economy.

(2)Worldwide, companies will be required to pay their employees a living wage for their work. This wage must be at least 15% above the poverty line in the nation where the factory exists.

Hmmm, explain this further. What if the difference of 10% is all that is required to remove a citizen from poverty to sustainable.

What if I put up shop in a tribal area, on the brink of starvation, that has no monetary system. And pay them in crags, which improves their living condition exponentially as it allows them to import food, but their tribal community culture of living is considered below poverty. Do I have to pay them more, despite their having no real need for it? I.e giving them money to live at a level not desirable to them.

(3)Contracts established between producers of goods and companies wishing to purchase those goods may not prohibit producers from selling their goods to others (companies may not, for instance, "lease out" farms, compelling farmers to only sell their crops to that one company).

Why not? This elliminates risks associated with finding a buyer of perishable goods. Sellers can still mandate that companies do not buy alternative goods from other sellers. That is not equitable.

(4)Products that have not been accredited by the Fair Trade Board (to be established by this proposal) will be considered illegal and should not be sold or purchased.
*All new products created must follow these rules immediately, although time will be given for official accreditation, and products created before the passage of this resolution will not be considered "illegal."

However, if companies can sell their products at a lower cost increasing profits in a black market, they will. Crippling legitimate business. Absent a punishment, this will happen, as it makes perfect business sense.

A timetable of four years will be set to implement the following actions:

(1)Establishment of a Fair Trade Board that will investigate and approve applications for fair trade status.
Upon establishment, the Fair Trade Board will create further rules regarding implementation of the Fair Trade Act (within the confines of the stipulations presented here), including standards for accreditation and development of an application system. The board will also elaborate and develop an appropriate timeline within the four year window established by this act.

(2)The eventual replacement of non-fair trade products with fair trade accredited ones in store and company inventories.

(3)Filing of fair trade applications by all existing companies that engage in global trade practices, and change in production and purchasing practices to reflect compliance with this act.

*It is recommended that companies begin to implement these new rules as soon as possible, although non-fair trade wares will not be "illegal" until four years after the establishment of this resolution.

AP will just tax revenues and allow businesses to participate in a black market selling illegal non-fair trade goods without any punishment. The profit potentials and tax revenues to be gained are enormous. In fact, the social programs the Government will be able to implement will more than negate the lower wages.

Agombo is either a) not a good kismet farmer, or b) has no business sense. In either event, maybe it is time he left the kismet raising business.

Agombo is either a) not a good kismet farmer, or b) has no business sense. In either event, maybe it is time he left the kismet raising business.

Now, now, this is not a case of individual incompetence, but if I read it correctly, a case of a group of companies taking control of a market by increasing the supply while demand remains about the same, with easily predictable consequences. In two words, unfair competition.

Well, on a national level, there are lots of solutions to this specifc problem.You could open an antitrust investigation into the multinationals. You could also pass legislation to regulate the price the companies have to pay the primary producer for the kismet.

While sadly, it's not likely that this kind of measure would pass in the UN, I'd reccomend you give this link a gander - http://invisionfree.com/forums/CACE/index.php?showtopic=536

Ah yes... IFTA...

Not unfair competition, just competition.

Not unfair competition, just competition.

Well, that does depend on how sensitive your unfairness-meter is, but in my opinion, since the person is put at a disadvantage through no fault of his own by factors beyond his control, that is unfair.

I don't mean to suggest that that automatically means he should be propped up by government support, but you have to at least recognise that it's not because he is a bad farmer or has poor business sense - even the best farmer with the best business sense would still have problems competing with a large company with more resources, economy of scale, and political power. Michael Schumacher wouldn't have much of a chance if he drove F1 races in a Honda Civic.

Well, that does depend on how sensitive your unfairness-meter is, but in my opinion, since the person is put at a disadvantage through no fault of his own by factors beyond his control, that is unfair.

I don't mean to suggest that that automatically means he should be propped up by government support, but you have to at least recognise that it's not because he is a bad farmer or has poor business sense - even the best farmer with the best business sense would still have problems competing with a large company with more resources, economy of scale, and political power. Michael Schumacher wouldn't have much of a chance if he drove F1 races in a Honda Civic.

If the company is employing unfair business practices, setting prices below production cost to undercut the market, or using slave labor to lower costs, that irks me. If circumstances dictate a business is no longer viable in a competitive marketplace, that is not unfair, that is competition.

No business sense takes on several options not employed on the part of Agombo: he could liquidate his resources, move, and offer his expertise to a company, or switch vocations altogether. Also, the first rule of business is when revenues are lower than AC, you get out. Same thing I tell family and friends when they complain about corporate farms.

It should be the countries choice whether they implement subsidies and tarriffs to save Agombo. Not a UN resolution that lowers the quality of life for all by maintaining artificially high commodity and goods prices.

The real point is Micheal Schumacker wouldn't drive/continue to drive a Honda Civic in an F1 race if he wanted to be competitive and successful. Not sure he would even be allowed to make that choice. If he did, I am pretty sure it wouldn't be stock. Moral of the story, he would be wasting sponsors money, win no prize money, and soon be abandoned. Not unfair, just poor choices on the part of Schumacker. If all he has to race with is a Honda Civic, he should switch racing circuits.

Take Care,
-AP

If the company is employing unfair business practices, setting prices below production cost to undercut the market, or using slave labor to lower costs, that irks me.

Chances are that is what is happening.

Also, the first rule of business is when revenues are lower than AC, you get out. Same thing I tell family and friends when they complain about corporate farms.

That's not always an option.

It should be the countries choice whether they implement subsidies and tarriffs to save Agombo. Not a UN resolution that lowers the quality of life for all by maintaining artificially high commodity and goods prices.

Yes. I myself said this wouldn't have any chance of passing.

The real point is Micheal Schumacker wouldn't drive/continue to drive a Honda Civic in an F1 race if he wanted to be competitive and successful. Not sure he would even be allowed to make that choice. If he did, I am pretty sure it wouldn't be stock. Moral of the story, he would be wasting sponsors money, win no prize money, and soon be abandoned. Not unfair, just poor choices on the part of Schumacker. If all he has to race with is a Honda Civic, he should switch racing circuits.


In reality, that would be against the rules but for metaphorical purposes... The metaphor was meant to suggest that good competitors, even the best ones, can still be severely disadvantaged by circumstances beyond their control. You are meant to assume that like many farmers, he is unable to switch circuits (job/profession), and that he has no choice but to drive one (representative of the different power of the farmer versus a large foods corporation). But metaphors are just that, so let's not go too deep in dissecting them.

Making people pay more than fair market value is unfair. Even to large corporations.

Let's take a real life example of labor and business costs.

Walmarts spring up all across the nation all the time. They offer thier customers cheap goods at a cheap price. They do this by controlling and entering into agreements with thier suppliers to buy items at a fixed price. They pay thier employees almost nothing, because if one person leaves, two more want a job.

Now, if Walmart was forced to compensate thier suppliers for lost revenue, that takes away from profits, and prices go up. If they have to pay thier employees, who already WILL work for dirt cheap, more money, they lose profits and have to make prices go up.

When prices go up, they will still be selling cheap goods at a normal price. This is not want the market wants, which causes Walmart to lose even more money, causeing prices to go up more, in a continuing cycle, which causes Walmart to turn into K-Mart (pre-Sears deal).

Now, you are expecting this to happen to all businesses? As was stated about a shop on tribal lands, entrepenurs would also be affected, not just big buisiness.

I will not vote for this, even with signifigant rewrites, because the logic is flawed.