Comparing Fair Trade And Free Trade

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When it comes to trade there are 2 main types; free trade and fair trade. Free trade focuses on reducing tariff barriers and policies in certain countries or industries. This means that countries can import and export goods without any restrictions. Fair trade, however, focuses on the rights of workers, improved working conditions and aims to get rid of pay differences from country to country. When an individual buys fair trade products, they know that the person or people who were responsible for making the products have been given suitable wages and suitable working conditions.

An advantage of fair trade is that it has led to economic advantages for producers and countries. Fair trade encourages farmers to work together to form stronger, more powerful communities and cooperatives, producing good quality products which have greater buying power. Economic gains also enable growers to invest in training to create better quality products. An example of this is Ben and Jerry’s ice-cream brand. In 2015, Ben and Jerry’s announced that all its tubs and mini cups of ice cream were made using fair trade ingredients. Another advantage of fair trade is its human impact. Fair trade promotes equality as the people who produce goods have more control over their crops since they work in suitable, secure and safe environments. The extra revenue that’s made from fair trade is used for community development that focus on areas like housing, healthcare, and education. This results in the improvement of the quality of life in many farming communities across the world, especially in rural areas where opportunities are limited.

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However, there are some disadvantages of fair trade such as the limited amount of product choices. The range of fair trade products are increasing, but there are still some products that are not covered by fair trade. For example, most markets are dominated by tea, coffee, and chocolate. Outside of this range, it’s much more difficult to find fair trade products that are widely available such as cosmetic products. A common problem with Fair Trade is that most customers will be more willing to buy fair Trade products but since these products tend to be more expensive, it may result in the decrease of these products being sold as there are much cheaper alternatives. Some fair trade products are likely to be less appealing to consumers on a budget, and some might simply be unaffordable. Another common disadvantage of fair trade is its cost. In order to become a certified Fair trade grower or cooperative, you have to pay fees. These fees can range from hundreds to thousands of dollars meaning this can’t be accessible to all farmers.

Alternatively, free trade can be seen as a better option when it comes to trading as it has dramatically Increased economic growth. For example the US International Trade Commission estimated that USMCA could increase US economic growth by 0.1% – 0.5% a year. As well as enabling lower prices for consumers, increasing exports, benefits from economies of scale and a greater choice of goods, free trade also allows countries to export high quantity of products due to no restrictions which boosts the economic growth and jobs of countries. Another advantage of free trade is that it makes use of any excess raw materials. For example, Middle Eastern countries such as Qatar are very rich in reserves of oil, but without trade, there would be not much benefit in having so much oil. Japan, on the other hand, has very few raw materials so without trade, it would have low GDP. This shows how Free trade is essential and very beneficial for today’s economy.

However, it can argued that free trade can harm the environment. There is some degradation of Natural Resources for example, emerging market countries often don’t have many environmental protections. This leads to the overuse of timber, minerals, and other natural resources. The act of Deforestation for building warehouses results in many jungles and fields becoming wastelands which effects the environment. Another disadvantage of Free Trade is that many small companies and businesses and potentially farmers cannot compete with companies in developed countries. This results in those companies and businesses closing and farmers lose their farms and jobs. Another common problem with free trade is the poor working conditions. This usually occurs when multi-national companies look for cheaper locations to make their products. These locations tend to have inadequate working conditions for the workers. This problem also results in women and children being subjected to working in factories in bad conditions.

In conclusion, I believe that fair trade is better than free trade because it values workers by providing them a suitable wage and customers by providing them with good quality products. Even though there are drawbacks of free trade, in most cases, the positives outweigh the negatives. This makes fair trade the best way to trade meaning it will continue to grow and flourish.

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