NationStates Jolt Archive

Something cooked up over at Wall Street (http://www.nationstates.net/page=display_region/region=wall_street), probably submitted in the next few weeks:

Fair Trade Act

BELIEVES that trade reduces the risk of military conflict,

FURTHER BELIEVES that increased protectionism and trade barriers can lead to global recession,

OBSERVES that apart from sectors such as the Food, Nuclear Energy Research and Recycled Waste sectors the UN has done little to promote free and fair trade,

FURTHER OBSERVES that little has been done to make the complex system of trade barriers erected more transparent and simple to allow easier trade,

CONCERNED that the UN is not doing enough in promoting and simplifying trade,

CONCLUDES that by promoting and encouraging fair trade the UN will make the world more secure and prosperous.

MANDATES the following:

1) All imports from UN nations should be treated equally regardless of country of origin, unless the UN legislates otherwise or where a seperate preferential trade agreements have been reached;

2) The removal of taxes, quotas or other protectionist measures once imports have entered a country to prevent discrimination between domestic goods and imported goods;

3) That, for transparency and simplicity, all nations convert all protectionist measures including, but not limited to, subsidies, subventions and quotas, into their equivalent value in tariffs;

EXEMPTS areas concerning National Security unless the UN legislates otherwise;

PERMITS nations to impose import duties to prevent predatory pricing or to counteract an artificial advantage, such as production subsidies, given to a foreign firm;

REMINDS UN member nations that they can employ retaliatory tariffs and other trade barriers towards non-UN member nations;

AUTHORISES the United Nations Free Trade Commission to arbitrate any trade disputes which may arise concerning the interpretation of this legislation.

Any thoughts/comments/suggestions/abuse?

A noble and well intentioned resolution, but yet another example where the UN seeks to rule the nations it was created to serve.

The National Socialist Alliance will strongly oppose any such resolution if introduced.

The NSA believes that nations have every right to protect and secure their economies by all means possible. In the course of normal trade and interation between nations we contend that a doctrine of fairness will naturally emerge.

Once again the NSA seeks other nations and regions that oppose this march towards one-world goverment by a misguided UN. We seek to work with other nations and regions that desire to see the UN restored to the original intent of its founders.

Baron von Bismark
UN Ambassador-Delegate
The National Socialist Alliance

Mmm yeah, can't wait to vote for a resolution on trade from people who can't spell 'value'.

The UN has passed at least two other free trade resolutions - Nuclear Energy Research Act and UN Recycling Commission - that were virtual carbon copies of GFDA, so saying the UN has done 'little else' is a bit odd. Otherwise, the preamble seems reasonable enough, but it provides no justification for some of the operative section, such as why converting all forms of protectionism into tariffs is worthwhile. Simply putting 'for transparency' in the operative clause doesn't really cut it.

The grammar of 2) makes no sense. Parsed, it would be the following sentence: 'Mandates prevents discrimination...' You would have to rephrase it to 'The removal of...to prevent...' or similar. And why is national security given preference over, say, humanitarian concerns?

Otherwise, isn't this is danger of becoming a bit HotRodian? A hopeless, useless and vague sponge of a resolution that will actually prevent the UN from legislating on something you want it to legislate on (because the UN prohibing torture is a grotesque violation of national sovereignty, but completely rewriting national trade laws is par for the course)? In particular, the 'grants' section could take up a whole proposal, and that means the UNFTC will be constantly invoked. Given they are not necessarily an impartial body, that strikes me as hugely dangerous. This proposal should be more specific: even if you are going to write The Great UN Free Trade Resolution, it needs more detail or else you may as well simplify it down to '1. Free Trade; 2. Go whine to the UNFTC otherwise'.

-- George Madison
Legislative Director
Quintessence of Dust Department of UN Affairs

Mmm yeah, can't wait to vote for a resolution on trade from people who can't spell 'value'.

Fixed, thank you.

The UN has passed at least two other free trade resolutions - Nuclear Energy Research Act and UN Recycling Commission - that were virtual carbon copies of GFDA, so saying the UN has done 'little else' is a bit odd.

They are very small sectors, but I see your point. The fact is that if you take the three sectors (Nuclear Energy Research, Recycled Products and Food) they still make up an incredibly small portion of the global economy. I'll look at reworking that with that in mind.

Otherwise, the preamble seems reasonable enough, but it provides no justification for some of the operative section, such as why converting all forms of protectionism into tariffs is worthwhile. Simply putting 'for transparency' in the operative clause doesn't really cut it.

That was my main concern in general, the preamble does need working on a bit more.

The grammar of 2) makes no sense. Parsed, it would be the following sentence: 'Mandates prevents discrimination...' You would have to rephrase it to 'The removal of...to prevent...' or similar.

Agreed.

And why is national security given preference over, say, humanitarian concerns?

Nations tend to get more uppity about National Security, particularly wishing to keep manufacture of their own weapons in their country so they are not reliant on foreign producers which may share their secrets. I can't really see what would need to be continued to be produced domestically for "humanitarian concerns", could you perhaps provide an example?

Otherwise, isn't this is danger of becoming a bit HotRodian? A hopeless, useless and vague sponge of a resolution that will actually prevent the UN from legislating on something you want it to legislate on (because the UN prohibing torture is a grotesque violation of national sovereignty, but completely rewriting national trade laws is par for the course)?

I'm not entirely sure that is the case. The idea is to remove everything but tariffs, I don't see how that would prevent the UN from legislating in future on the issue of tariffs. Obviously it would prevent the UN from doing something about quotas and such like, but as we want to see free trade and we've already banned quotas I don't see the problem.

As for the NatSov aspect with this proposal nations still have the option of maintaining barriers to trade, even if some of the weapons to do so have been removed.

In particular, the 'grants' section could take up a whole proposal, and that means the UNFTC will be constantly invoked. Given they are not necessarily an impartial body, that strikes me as hugely dangerous.

Hmmm, that is a good point. This obviously opens up a whole range of questions if you wanted to do it seperately: Namely which would you submit first? If it is the trade rather than the developing nations one then would the trade resolution pass without offering such a carrot to the poorer nations? And how would the original be crafted, to go back to the point before, to prevent the first ruling out the possibility of the latter?

I suppose if you did ban all the quotas and everything, the preferential access could relate to introducing a lower tariffs rate (i.e. 20% lower than standard). But it is an interesting possibility to do that as two resolutions and it would probably be better going that route.

This proposal should be more specific: even if you are going to write The Great UN Free Trade Resolution, it needs more detail or else you may as well simplify it down to '1. Free Trade; 2. Go whine to the UNFTC otherwise'.

It's not intended as "The Great UN Free Trade Resolution", the idea is to make trade fairer and to make barriers more transparent and obvious. But I do note you concerns about a lack of detail.

Thank you for your comments Quintessence of Dust, looks like I have a few changes to make.

I've made some changes, I think I will go with the developing country access after this one.

I'm not entirely sure that is the case. The idea is to remove everything but tariffs, I don't see how that would prevent the UN from legislating in future on the issue of tariffs. Obviously it would prevent the UN from doing something about quotas and such like, but as we want to see free trade and we've already banned quotas I don't see the problem.
Please forgive us, since we are by no means well versed in the subject of economics, but it is not at all clear to us that a quota has an equivalent value in tariffs, never mind how to calculate such. Naively it would seem to us that the two have radically different effects in the balance between price and availability of a product. If we are incorrect, we would appreciate being briefly enlightened on the subject.

As for the NatSov aspect with this proposal nations still have the option of maintaining barriers to trade, even if some of the weapons to do so have been removed.
Given that tariffs are the only mechanism to be left to nations, we are not convinced that the plural is merited in your statement.

Please forgive us, since we are by no means well versed in the subject of economics, but it is not at all clear to us that a quota has an equivalent value in tariffs, never mind how to calculate such. Naively it would seem to us that the two have radically different effects in the balance between price and availability of a product. If we are incorrect, we would appreciate being briefly enlightened on the subject.

Of course. They have radically different direct effects (price and quantity as you say), but the outcome is ultimately the same: there is an increase in price. Clearly tariffs directly increase the price of product by adding a cost to the import price. Quotas work by restricting the amount that can be imported. Very basic economics tell us that if you restrict supply then price will increase. This is shown in this diagram here (http://en.wikipedia.org/wiki/Supply_and_demand#Supply_curve_shifts), if the natural equilibrium is Q2, restricting imports to Q1 has risen the price (shown on the y axis).

The equivalent value in tariffs could then be worked out as: whatever the market price is in the producers country, compared to the effect the quota has had on price in the importing country and the price increase between the two would then be the new tariff.

Given that tariffs are the only mechanism to be left to nations, we are not convinced that the plural is merited in your statement.

Yes you're right, english was never my strong point!

I take the other points; I slightly misjudged the intent of this proposal.
Nations tend to get more uppity about National Security, particularly wishing to keep manufacture of their own weapons in their country so they are not reliant on foreign producers which may share their secrets. I can't really see what would need to be continued to be produced domestically for "humanitarian concerns", could you perhaps provide an example?
That's not exactly what either of us meant. There might be no great reason to produce such items domestically, but there could be to impose quotas and discriminatory trade disincentives based on humanitarian concern. If a nation did not allow unionisation or certain workers' rights, or had policies that nations wished to protest, this resolution would seem to prohibit that (in fact, does it not completely prohibit embargoes?).

That's not exactly what either of us meant. There might be no great reason to produce such items domestically, but there could be to impose quotas and discriminatory trade disincentives based on humanitarian concern. If a nation did not allow unionisation or certain workers' rights, or had policies that nations wished to protest, this resolution would seem to prohibit that (in fact, does it not completely prohibit embargoes?).

Sorry, I see what you mean now. It similar to the US currently where the Democrats wish to include minimum workplace standards before signing trade agreements.

Perhaps the way round this would be to add to the first clause something like "or where a seperate preferential trade agreements have been reached". That way a country could charge a general tariff, but if a country meets the ethical/humanitarian concerns they could sign a preferential trade agreement which would lower tariffs between the two countries allowing nations to take into account such concerns. That would also allow Customs Unions and Free Trade areas to be formed which this legislation would actually prevent.

I suppose embargoes would be prohibited under this, if a war was being fought between countries then the National Security clause would allow embargoes, but I guess it wouldn't allow it on humanitarian grounds. The problem as I see it would be that if you allowed embargoes on humanitarian grounds it would become too arbitary: I think we agree something like genocide would merit an embargo, but if you get onto working conditions would the lack of laws governing the provisions of breaks and break rooms be reason to entirely suspend trade?

The first clause would allow the UN to legislate further in the area of how imports could be treated. So as in the case before where I've taken out the preferential access for developing nations, as this area could be legislated on later, so could the UN draft a humanitarian trade resolution in future - particularly as I think there is going to be problems defining the extent which acts are un-humanitarian. Plus lets not forget that the UN already does get involved in humanitarian issues like protecting unions, work place safety and so on.

As for the NatSov aspect with this proposal nations still have the option of maintaining barriers to trade, even if some of the weapons to do so have been removed.

Given that tariffs are the only mechanism to be left to nations, we are not convinced that the plural is merited in your statement.

Can't they still simply ban those imports altogether?

Perhaps the way round this would be to add to the first clause something like "or where a seperate preferential trade agreements have been reached". That way a country could charge a general tariff, but if a country meets the ethical/humanitarian concerns they could sign a preferential trade agreement which would lower tariffs between the two countries allowing nations to take into account such concerns. That would also allow Customs Unions and Free Trade areas to be formed which this legislation would actually prevent.
That would be a very agreeable addition: I hadn't looked at it that way, but you're right, this would seem to prevent, for example, regional free trade zones, which would be a dire shame.
The problem as I see it would be that if you allowed embargoes on humanitarian grounds it would become too arbitary: I think we agree something like genocide would merit an embargo, but if you get onto working conditions would the lack of laws governing the provisions of breaks and break rooms be reason to entirely suspend trade?
Alright, in terms of UN legislation, this is ok. The first clause does seem to allow the UN to establish/permit embargoes later on, so this doesn't block that completely. But in the meantime, it prevents individual nations from enacting embargoes - even in the case of genocide.

Can't they still simply ban those imports altogether?

Would that not directly violate article 1 by treating an import differently due to country of origin? Indeed, unless we are much mistaken this is the debate that the honoured representatives of the Quintessence of Dust and Leg-ends are having at this moment.

Would that not directly violate article 1 by treating an import differently due to country of origin? Indeed, unless we are much mistaken this is the debate that the honoured representatives of the Quintessence of Dust and Leg-ends are having at this moment.

If they just tried banning imports from a specific nation, yes it would... but shouldn't that still allow them to ban all imports of a particular type of goods, from all nations, whether to protect a local industry or for reasons of morality and/or public safety?

If they just tried banning imports from a specific nation, yes it would... but shouldn't that still allow them to ban all imports of a particular type of goods, from all nations, whether to protect a local industry or for reasons of morality and/or public safety?

If it were for protection, would it not fall foul of article 3 unless the ban consisted of an infeasibly high tariff? Even if it were not protection, a nation would likely have to be prepared to prove it wasn't in the face of irate exporters seeking to argue non-compliance.

Annoyingly, while we quite like this idea, we can't shake the unfortunate feeling that there are hidden issues we are insufficiently well-educated to spot.

If it were for protection, would it not fall foul of article 3 unless the ban consisted of an infeasibly high tariff? Even if it were not protection, a nation would likely have to be prepared to prove it wasn't in the face of irate exporters seeking to argue non-compliance.

Actually the resolution is not intented to stop infeasibly high tariffs, if your current trade arrangements mean that a huge tariff would have to be levied to keep imports to their current level then that is perfectly fine under article 3. Indeed if you currently allow no imports something like a $1m per item (for example) import tariff would be considered appropriate.

Going back to earlier I think I'd be against allowing embargoes (even for genocide) in this resolution - but I'd like the UN to tackle the issue in a future trade resolution as talked about earlier. There are probably a raft of reasons to impose an embargo, not just genocide, and if it was genocide you'd have to include a reference to the Eon convention on Genocide and it would take some time to actually prove genocide was going on. It is going to be harsh for a few weeks until a second resolution could be introduced but I think it'll make a better UN trade framework.

Actually the resolution is not intented to stop infeasibly high tariffs, if your current trade arrangements mean that a huge tariff would have to be levied to keep imports to their current level then that is perfectly fine under article 3. Indeed if you currently allow no imports something like a $1m per item (for example) import tariff would be considered appropriate.
Our concern is only that this feels immensely artificial; why not simply allow (justifiable) bans? The use of a sliding-scale measure to produce a binary result seems somewhat unsatisfactory.

There are a few problem with embargoes (which is what both of you seem to be objecting to now):

1) What if a country chooses to ban Panama Hats? Clearly there are alternative hats so this is more of an action against Panama (technically Ecuador) than the entire hat industry. Yes, you could put this through the UNFTC but it would be simpler if that was not the case.
2) Also, you have the issue of if you introduce embargoes but have that as the only form of quota you end up with an all or nothing situation: ultimately would nations pick the option of banning products or allowing free trade in the products? I would wager that nations would become more protectionist thus defeating the whole affect of the resolution.

Just having tariffs is the least worst system of protectionism, it makes everything clear for importers/exporters, they don't have to look at what other measures countries employ. The idea is to make things simple, so I'd like to keep things as simple as possible.

In addition, I think it is very difficult to come up with what is justifiable, like I said I'd rather come up with a detailed exemptions resolution dealing with developing countries and ethical concerns.

There are a few problem with embargoes (which is what both of you seem to be objecting to now):

1) What if a country chooses to ban Panama Hats? Clearly there are alternative hats so this is more of an action against Panama (technically Ecuador) than the entire hat industry. Yes, you could put this through the UNFTC but it would be simpler if that was not the case.
And yet placing a tariff of several billion ceiniogau per Panama Hat would still be entirely legal under this resolution, effectively creating an embargo.

2) Also, you have the issue of if you introduce embargoes but have that as the only form of quota you end up with an all or nothing situation: ultimately would nations pick the option of banning products or allowing free trade in the products? I would wager that nations would become more protectionist thus defeating the whole affect of the resolution.
We see this more as an argument for quotas to be included than for embargoes to be banned!

Just having tariffs is the least worst system of protectionism, it makes everything clear for importers/exporters, they don't have to look at what other measures countries employ. The idea is to make things simple, so I'd like to keep things as simple as possible.
Possibly it is because we have essentially no experience in person of import or export, but this does not seem simple to us. Surely they must look at what measures are employed in case? It seems also that most of the potentially desirable protectionist effects can be achieved, simply with vastly less precision and considerably less honesty. It is all well and good to say that tariffs are the least worst system of protectionism, but given that such equivalences as you have unfolded to us exist, then that assertion seems curious.

The more we consider this, the more uneasy we become.

And yet placing a tariff of several billion ceiniogau per Panama Hat would still be entirely legal under this resolution, effectively creating an embargo.

That's true, but we must apply the reasonable nation test- would a reasonable nation, in application of this writ, do such a thing?

No quips about the membership of the GA, please.

That's true, but we must apply the reasonable nation test- would a reasonable nation, in application of this writ, do such a thing?

No quips about the membership of the GA, please.
In an entirely quipless manner, we must say "Yes." We certainly would, if we thought the situation merited it, and we cannot believe that other nations well known in this chamber for their ingenuity would not do the same thing if they believed it to be in the best interests of their citizens.

Possibly it is because we have essentially no experience in person of import or export, but this does not seem simple to us. Surely they must look at what measures are employed in case? It seems also that most of the potentially desirable protectionist effects can be achieved, simply with vastly less precision and considerably less honesty. It is all well and good to say that tariffs are the least worst system of protectionism, but given that such equivalences as you have unfolded to us exist, then that assertion seems curious.

Because if you use a system of quotas that is open up to corruption. There is no monetary basis for it, instead you end up with bribery, favouritism - measures that damage trade. Likewise subsidies allow inefficient production techniques to survive - and punish workers through paying higher tax bills and does not allow trade on an equal footing.

Quotas are not desireable, I am torn on embaroges - as I said before we'll end up with an all or nothing situation, people could choose nothing and we'd not benefit trade which is the whole point of the resolution.