An New Trading System

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Jamie in Chile
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An New Trading System

Post by Jamie in Chile »

So one country (I'll call this "our"" country) could rate the other countries on how ethical they are on a scale of 1 to 5. 1 is the best. 5 is the worst. It doesn't have to be 5, it could be more or less levels. You could use a combination of factors, such as an Amnesty International report scoring countries on human rights, a list of carbon emissions per capita, how many terrorists the country had produced, whatever. You would need to find some way of quantifying all that. Admittedly subjective and difficult but I think possible.

Then the best countries you give free trade to, the fairly bad ones you tax them higher - this has two purposes you offset the bad of trading with them and use the taxes for good causes making it ethical to trade with otherwise borderline dubious countries that it's debatable if we should do business with. You also incentivise the countries to improve ethically. The good causes might be directly related to issues in the country - for example agreeing to trade with China if they agree that they will pay taxes to you to be used to help them replace coal plants with renewables in China so you're not responsible for causing global warming by trading with China. Alternatively, you might prefer to use the money raised to do other things like improve education or health in your own or third world countries.

Example system.

1. Ethically good country. These countries get to trade with our country pretty much exactly if they were located in our country. No additional taxes or regulations. Obviously, there would need to be exceptions to this general rule. Our government would promote this country and go and visit them with top politicians and business people to discuss trade opportunities and use this country as a good example ethically when meeting other countries.

2. Ethically OK country. These countries have to pay small import taxes just to help cover costs.

3. Ethically fairly bad country. These countries would be charged higher tarrifs/taxes and the taxes used for good causes to offset the bad of trading with them. These government would be asked to meet with our government to discuss ethical concerns (no meeting required if the trade was at a very low level, our government would just be meeting countries it has a significant amount of trade with), but this would be an optional meeting. Direct trade between the governments would be discouraged. Any of our country's larger trading partners with this company would be sent information to make sure they were aware of ethical issues with the country.

4. Ethically very bad country. Their government would be asked to meet with our government to discuss ethical concerns. If they refuse, all trade would be cut off over time. These countries would be charged very high tarrifs/taxes and the taxes use for good causes to offset the bad of trading with them. Our government would be banned from buying products from their country, and our companies would be banned from dealing with their government. Companies wishing to trade in that country above a certain level would be required to take a very short seminar to teach them about ethical issues, and they would be advised not to deal with anyone in the country, but that would be purely a suggestion. Companies headquartered in this country might be banned from advertising in our country.

5. Ethically terrible country: probably evil dictatorship or a country without even the most basic human rights. All trade would be forbidden by law with this country.

The rankings would be reviewed and could change over time. Countries that fell to 5 would have their trade steadily but sharply reduced over time rather than suddenly cut off while ships were on the way.

There is admittedly some argument about all of this. Some might argue that refusing to trade with an evil dictatorship does little to get at the dictator, but punishes the innocent supressed people. I don't buy that argument because I think ultimately in the long run refusing to trade has more positive effects not just with the country but with the message it sends elsewhere.

It does smack a bit of superiority complex, but I think when it really comes down it some countries are just more ethical than others, not just cultural differences. Besides our country would also invite all other countries to feel free to charge us whatever taxes they saw fit and feel free to rank us as well with whatever ranking they felt appropriate.

This is admittedly some doubt about all the details, but what are your thoughts on the general principles of the idea?
carnap
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Re: An New Trading System

Post by carnap »

This would spark a trade-war so you'd have to think of the ethical consequences of reduced economic output throughout the world and also possible wars. No single country holds sway over the world and I imagine "the good" countries would be mostly European but European power has been in decline for decades.

Also the west has used trade as a carrot/stick for ages and it hasn't typically worked well.
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Jamie in Chile
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Re: An New Trading System

Post by Jamie in Chile »

I can't see why this would spark a trade war or actual wars. At least no more than would exist under the current system. I mean, we seem to be having a bit or a trade war right now anyway!

It might cause offence which could be counter productive. We do already have something like this in place already with for example countries in the US I think being forbidden to trade with a few countries that are "Axis of Evil" countries and friendly countries getting preferntial deals so we could extend the system already in place steadily.

I don't think you would suddenly move to my system overnight. You could do it steadily over many years to avoid disruption and offence. Also for political reason you would probably not literally call the rankings like I did: 1 good 2 ok 3 bad 4 very bad 5 terrible you might change it to 1 excellent 2 good 3 ok 4 in need of support 5 bad.

And you wouldn't position it like I positioned it at all. You would say "We would love to deal with your country but unfortunately we are seeing some resistance at home and I am struggling to get an agreement because of concerns about your country's reduction in rainforest area. What I can suggest is that we charge you taxes of x and use that money to fund rainforest protection and the education on sustainable planting that your own minister proposed last year, then everyone will be happy. By the way, if the government ever ordered a stop to the logging or moved to a more sustainable system, I would be able to get rid of those taxes for you."

You might not publish your ranking either, at least not until the idea became more acceptable. I fact if you were steadily transitioning to my idea or testing it out you wouldn't even have such a 1,2,3,4,5 system to start.
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Jebus
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Re: An New Trading System

Post by Jebus »

This could only work if an impartial agency (such as the UN) with objective guidelines is the party making the value judgment.

Otherwise countries would simply retaliate by finding something unethical about the other country after being hit with a deduction in its ethical rating.
How to become vegan in 4.5 hours:
1.Watch Forks over Knives (Health)
2.Watch Cowspiracy (Environment)
3. Watch Earthlings (Ethics)
Congratulations, unless you are a complete idiot you are now a vegan.
Jamie in Chile
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Re: An New Trading System

Post by Jamie in Chile »

Maybe a good idea on the UN. Yeah, the countries would retaliate. No doubt about that.
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brimstoneSalad
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Re: An New Trading System

Post by brimstoneSalad »

It's not a good incentive, because countries move slowly.
You'd need to do it on a company-basis, not a country-basis. Also less likely to spark a trade war, although it would take more oversight.
Basically you tax imports from some companies more, and use that money to subsidize good companies from the same country so it's neutral.
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Jebus
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Re: An New Trading System

Post by Jebus »

brimstoneSalad wrote: Sat Mar 10, 2018 6:02 pm It's not a good incentive, because countries move slowly.
You'd need to do it on a company-basis, not a country-basis. Also less likely to spark a trade war, although it would take more oversight.
Basically you tax imports from some companies more, and use that money to subsidize good companies from the same country so it's neutral.
I think Jamie in Chile was proposing an improved manner of governments sanctioning other governments. Companies could only be punished for a few things, such as child labor, excessive pollution whereas governments could be punished for a wide range of environmental and human rights violations.

Governments targeting individual companies would be too messy, with companies changing names, using proxies, etc. etc.
How to become vegan in 4.5 hours:
1.Watch Forks over Knives (Health)
2.Watch Cowspiracy (Environment)
3. Watch Earthlings (Ethics)
Congratulations, unless you are a complete idiot you are now a vegan.
Jamie in Chile
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Re: An New Trading System

Post by Jamie in Chile »

If countries move slowly, then we can move to my system slowly.

Companies vs countries - hmm. Initial brainstorming. Haven't given a lot of time to reflect here:

Possible cons:
1. One issue I can see here is that if you said to, say, Apple or Samsung, you are unethical because of your use of child labour in the Congo and hence we are taxing you until you stop, they might stop, OR alternatively they might set aside $100 million to hire a spectacular legal team that might be enough to defeat even an initiative led by a major government. Whereas if you are cracking down on some dictatorship, they won't be able to challenge you effectively from a legal standpoint in your own country.

2. I also don't think in practice there is as much ethical difference between companies (at least operating out of a given country) as there is countries.

3. There are a lot of companies. If you deal with governments, you only have to deal with your top 20 trading partners. Whereas with companies you might have to deal with a hundred or more to get to the majority of your business.

4. There are probably already better ethical assessment of countries than companies. To really ethically assess companies there might be less info available. I think assessing the ethics of a company is harder - all sorts of factors throughout their supply chain which they may or may not have control of, and internal stuff like sexual discrimination that's hard to track. At least with governments it is fairly easy to know how much press freedom and human rights there is in the country broadly speaking, and use that as a good starting point at least.

Pros:
1. On the other hand addressing companies might be more directly effective since you are cutting out the middle man and making a more direct connection between profits and ethics. In the government case, you are going via a middle man (government) who has to get the companies to change, so it could be trickier.

2. Possibly it would be more effective to label a company immoral. If you label China immoral, they are just going to laugh at your puny country (assuming you're not the US) whereas if you label a company that sells to consumers in your country immoral, they might be more concerned about their reputation.
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brimstoneSalad
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Re: An New Trading System

Post by brimstoneSalad »

Jamie in Chile wrote: Sun Mar 11, 2018 11:01 am If countries move slowly, then we can move to my system slowly.
I don't really think that would help... countries still change slowly, incentives like this may not work period. Sanctions historically have a terrible track record AFAIK.
Jamie in Chile wrote: Sun Mar 11, 2018 11:01 am 2. I also don't think in practice there is as much ethical difference between companies (at least operating out of a given country) as there is countries.
Because there's little incentive.

If you provide an incentive, companies can change very quickly and compete with each other for the rewards.
In either case, the worst companies always get penalized in a country, and the best ones always get the reward thus creating competition among them.

There are logistical problems, sure, but it's also much more equitable to countries because no matter what they're getting trade, and an equal number of exports and being penalized and subsidized so it's neutral from a GNP standpoint. Nothing to start a trade war over.
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