Cartel Trade

Cartel Trade is the ability of a Merchant House to run a trading route on your behalf. A quick glossary of related terms:

Cartel Route: A trade route which a Merchant House is handling on behalf of an Open Nation.
Cartel Nation: The trading partner on a Cartel Route that is being directly represented by the Merchant House.
Non-Cartel Nation: The trading partner on a Cartel Route that is not being represented by the Merchant House.

The Benefits

1) No Trading Cap

Open Nations are limited on the amount of gold they can make via trade routes. Merchant Houses are not. It is a good idea to check your trade income figures every turn to make sure you are not limiting yourself.

First, check the "Trade Income" value at the top of your stat sheet (Under ECONOMIC INFORMATION). This is the actual amount of money you are making off of your trade routes.

Next, scroll down to your "TRADE ROUTES" section. Check the total figure listed under the "GP Made" value of each of your trade routes. This is your potential income from trade.

If your potential income is more than your actual income, then you currently have more trade income than you can effectively handle. You can either attempt to increase the actual amount of trade income (By increasing your Regional, City, Inter-City, and Public Works Income) or you can switch some of your routes to Cartel Routes.

2) Increased Route Value

A Merchant House will add its own Trade Value to the Trade Value of the trading partners. This has the effect of increasing the value of the trade route. In addition, the Merchant House replaces the National Market Value of the Cartel Nation with its own (better) rating. This further increases the value of your side of the trade route (but not your partner's).

3) Extended Network

A Merchant House can even carry trade to nations you cannot reach yourself. With the Merchant House's extended Trade Range and their ability to use Conduits, a Merchant House can span the globe. This means routes from West Africa to China can be enabled, and of course, as Cartel Trade, all such routes avoid the Trade Cap.

One thing to keep in mind - both parties must come to an agreement over the trade route, just like any other national agreement. An additional factor comes into play in that more than likely, only one trading partner will be able to add MSP to the route. This tends to make profits very one sided. It is more than reasonable that the non-Cartel partner may require additional compensation for the route. (A cut of the Cartel side profits, Technology Transfers, Agro Shipments, etc.) A Merchant House merely enables trade, it cannot force a nation to trade if it does not wish.

4) Port Capacity

A cartel route no longer uses your own port capacity. Instead, it uses the port capacity of the Merchant House. This leaves your own port space free for other routes, internal trade, or fishing fleets.

The Catch

1) My Cut

My basic rate is a 20% cut of the route income. If the trade route would normally make you 100 GP in income, then I keep 20 GP, and send you the remaining 80 GP. Keep in mind there is a further factor of the Years per Turn figure that all incomes are subject to. So, a 100 GP income route would only actually be worth (100 * 4 / 5) 80 GP during a 4 year turn. Thus, I would keep 16 GP, you would get 64 GP (Fractional GP will always be rounded in favor of the Nation).

There are also a few ways to lower the basic 20% rate.

When the Cartel Route is between two nations that can normally trade with each other, then only the Cartel Nation is liable. If, however, the two nations cannot trade with each other normally, then both partners are liable. Of course, the partners may end up having different percentage ratings.

2) Payment Delay

It takes one turn to transfer gold between nations. That means the first turn that you set up a Cartel Route, you won't immediately see a return. The profits will come through as a transfer, and you will see the gold the following turn in your saved resources. By the same token, the turn that you revert a Cartel Route to normal trading status, you will see double income. The income generated from the route itself, plus the delayed Cartel Payment as a transfer to saved.

3) Merchant Presence

To run Cartel Trade I need a Branch Office in port cities of both nations. Max Tax for the game is currently set at 1.85 - A Branch Office has a Tax Multiple of 0.3 - Keep that in mind. If you have no other Non-Open sites in the location, then only the 2.0 Tax Rate of your Homeland would be affected. But if you have multiple merchants, or a primacy also in a given location, you could start to see a loss in tax revenue.

4) Natural Technology Transfer

Normally when you have a trade route with a nation of a higher Tech Level than your own, you automatically gain 1 Tech Point per turn. You lose that gain if you are the Cartel Nation of a route, as the trade route technically counts as 'mine' for this purpose. On the flip side, because the trade route counts as 'mine' - the Non-Cartel Nation will still get that Tech Point per turn as long as their Tech Level is lower than my own (Currently 008). One should keep this fact in mind when negotiating extended Cartel Routes.

5) Bill Rakowski and the Chola Mandalam

Merchant Houses were originally established in the game by the theft of technology from India. In response, India's player, Bill, has declared that he will not trade with anyone who supports a Merchant House. Looking at the map, it is easy to see that India has the most port city levels in the game. This affords him the highest International Trade Value in the game. Thus, he is the single most lucrative player to establish a trade route with. So much so, that trade with India alone could in fact be more lucrative than using a Merchant House. Players unable to trade with India normally aren't really affected, but those that can should seriously consider this issue when determining their trade options.