Free Trade and Fair Trade

Free Trade and Fair Trade

Response to Classmate

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Hello, great post!! I agree that free trade would be fair in a perfect world. Unfortunately, there is always a winner and a loser in every compromise. While fair trade improves the lives of producers by ensuring they receive better pay for their work, the consumer pays a steeper price. The workers will, as you have mentioned, improve their lives and their health as well. A healthy worker will be more productive, resulting in higher income. Although Wheelan (2010), as you have cited, states that globalization brings about greater environmental degradation, fair trade seeks to curb the same. Fairtrade advocates for improved environmental and social standards. The ten principles of fair trade set by the World Fair Trade Organization (WFTO, 2019) include opportunities for disadvantaged producers; accountability and transparency; fair trade practices; no forced labor or child labor; freedom of association, gender equity, and no discrimination; good working conditions; capacity building, fair payment, promotion of fair trade, and respect for the environment. If these ten principles are practiced in both developed and developing countries, then globalization would act as a platform for the fair distribution of wealth and promote sustainable development by purchasing products manufactured from sustainable sources.

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References

Wheelan, C. (2010). Naked Economics: Undressing the Dismal Science. New York: W.W. Norton & Company.

World Fair Trade Organization (2019). 10 Principles of Fair Trade. https://wfto.com/fair-trade/10-principles-fair-trade

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Free Trade and Fair Trade

I would like respond to a fellow student’s post on the topic of Free Trade and Fair Trade. Thank you.

Fellow Student Post

What a difference

I had to look up the definitions because both were interchangeable in my mind (I don’t follow politics or law very closely). Fair trade and free trade are very different from each other. From everything I read this week trade is neither fair nor free most of the time. There will always be a give and take on one end of the rope. I was blown away by two things after the reading the “Taking Sides” and “Naked Economics” and the video assigned. 1. I hadn’t thought of how protesting the purchase of foreign goods can actually make things worse not better for laborers and 2. The correlation between health and income is critically significant!

Fair Trade Definition: “Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers.” (Sarcauga, 2018) In other words, making sure the trade is “fair” for all parties involved including the workers who produce the products being traded by parties they may never interact with in their lifetime.

Free Trade Definition: “Free trade, also called laissez-faire, a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports). The theoretical case for free trade is based on Adam Smith’s argument that the division of labour among countries leads to specialization, greater efficiency, and higher aggregate production.” (“Free Trade”, 2019) Every country cannot produce every product that it needs efficiently so trade is necessary in order for both/all countries to be profitable.

Going back to my “wow thought” on trade, the fair trade piece pulls at the heart strings and free trade pulls at the practical intellect. We need trade in order to become better producers and have a better standard of life but that trade could either make someone else’s life better or worse depending on how you look at it. The book talked about a girl who was working in what I would call deplorable conditions, but her thought process was she was fortunate to have a job like the one she had to provide a better life for her family. As the clip expressed: a better, healthier life leads to higher incomes and vis versa to higher incomes leads to healthier people. Regardless, according to the Bible verses in Deuteronomy and Leviticus we should pay our workers because they depend on it both physically and economically.

There is a downside to globalization, however because “higher rates of globalization were associated with higher rates of income inequality, corruption, and environmental degradation.” (Wheelan, p. 284) It goes back to greed and the love of money just as the Bible says. The more money being made the more a blind eye will be turned away from unfair labor treatment and situations that hurt people along the way. In a perfect world free trade would also be fair trade.

References

Free Trade. (2019, January 11). In Encyclopedia Britannica. Encyclopedia Britannica. Retrieved August 14, 2019, from https://www.britannica.com/topic/free-trade.

Sarcauga, M. (2018, November 16). DEFINITION OF FAIR TRADE. Retrieved August 14, 2019, from https://wfto.com/fair-trade/definition-fair-trade

Wheelan, C. (2010). Naked economics: Undressing the dismal science. New York: W.W. Norton &            Company.