Fair Trade vs. Free Trade

So today I started wondering what’s up with fair trade vs. free trade. When I go to pick up more coffee at the grocery store I always try to buy the stuff that’s marked fair trade. But why?

Fair trade is “a global network of producers, traders, marketers, advocates and consumers focused on building equitable trading relationships between consumers and the world’s most economically disadvantaged artisans and farmers,” according to the Fair Trade Federation’s Annual Report. Fair trade organizations believe that, “fair trade practices alleviate poverty, enhance gender equity, improve working conditions, the environment, and distributive justice.” The World Fair Trade Organization also follows 10 Standards of Fair Trade. Sounds like a good thing, right? Because it is!

According to WFTO, fair trade has increased global awareness of social and environmental responsibilities. And now, “over a million small-scale producers and workers are organized in as many as 3,000 grassroots organizations… in over 50 countries in the South… products are sold in thousands of World-shops or Fair Trade shops, supermarkets and many other sales points in the North and … in the Southern hemisphere.”

So where can you get your hands on these socially and environmentally responsible goodies? Well surprisingly, most places. HEB carries fair trade coffees and teas, for instance. Ten Thousand Villages in Austin, TX (or online) has great home decor, jewelry, bags, and lots of other neat stuff like Relief Beads Darfur, that benefits children in the Sudan. I purchased one bracelet which = 2 months of schooling for a child. I also purchased a palewa stone candle-holder from Tara Projects, India. TARA or Trade Alternative Reform Action is a “fair trade program for community development in business.” They work in a 125 mile radius from Delhi and enable hundreds of artisans to sell their products internationally while providing the artisans with, “medical insurance, interest-free loans/advances, a savings program and skills training.”

Another great resource is World of Good, that sells eco-conscience and fair trade products online through E-Bay. Even companies like Nestle are turning a green leaf and making Kit Kats a fair trade product to the UK.

For more info on fair trade you can visit here.
Or to find out if your favorite ice cream, coffee, etc. is fair trade look here.

Now free trade is another story. So what is it?

In the simplest terms it is, “international trade free of government interference.” This includes reducing barriers to international trades like tariffs, in essence making it easier for all countries, More Developing and Least Developing Countries to trade on an even playing field.

Who created this form of economic policy? That would be the World Trade Organization (WTO) the, “primary international body to help promote free trade, by drawing up the rules of international trade.” (To understand the WTO better from their point of view.) In theory, the principles they claim to follow sound great but in reality things differ. For example, discrimination against different types of imports is prohibited. However, that means imports that could be potentially bad for a country’s health (like not being allowed to say no to genetically modified food) or for the environment (like trees felled from pristine rain forest) can not be discriminated against.

Our health and environment are not the only things effected by free trade, so are global economies. After the North American Free Trade Agreement (NAFTA), was signed in 1993 the U.S. experienced a large trade deficit with Canada and Mexico through 2002.

So whether or not free trade is fair from a global perspective really depends on who you ask. For example TTG Consultants is going to stand strong behind free trade because of their clientel, which include companies like Coca Cola. From my point of view, I don’t think it’s the most effective in terms of global prosperity due to the fact that free traders, “argue that in the long run markets will solve – that is, when permitted to come to equilibrium, both rich and poor nations will benefit. In this way, free traders hold that free trade is fair trade (MeryCorps).” I argue that free trade is not fair trade.

Free trade tends to mostly benefit large American corporations while exporting American jobs overseas where the cost of labor is cheap. Free trade promoters will argue that exporting jobs to lower wage countries is okay because their standard of living is lower which, in truth, only perpetuates and continues the vicious cycle most LDC’s are currently in. We fuel their poor economic cycle which keeps them at a lower standard of living. To learn more about what’s being done to prevent this inequality visit Global Exchange. They are a great resource for more details and ways to help.