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+--- Thread: What's the difference between free trade and fair trade? (/thread-43777.html)
What's the difference between free trade and fair trade? - . - 11-19-2012 02:33 AM
- ekonomix - 11-19-2012 02:41 AM
Free trade means being able to buy what you want at any price you can agree on, even if you know you will sell the same product you just bought for 20 times what you paid for it. There exist no reason - tariffs, quotas - to prevent you from doing so.
Basically you are free to exploit the seller's poverty to enrich yourself to the maximum.
Fair rade is where you decide that you could share some of your rofits and give the seller a better deal. However, even with fair trade there might be quotas and tariffs.
Some free trade is fair (just depends whether you give the seller a better deal, a farier deal) and some fair trade is not free (when you have to pay some tariffs when you are importing the goods).
Whether trade is free or not is determined by import and export regulations, but whether trade is fair is determined to some extent by conscience.
Note that in the long run, it is possible that fair trade is better for all parties; if the farmers you buy your wheat from are treated more fairly, they are more likely to want to and be healthier so they can deliver higher quality wheat, with less chemicals for example. So fair trade could be more profitable to you in the long run.
- Anjaree - 11-19-2012 02:41 AM
Free trade in economics mean trade liberalization, or trade with all nations without or with less trade barriers.
Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries obtain better conditions.
- janetcake - 11-19-2012 02:41 AM
Fair trade also encompasses a lot of things! It is a system that assists artisan groups by helping them year after year. Companies such as Ten Thousand Villages stay with their vendors so that they make a living. Some groups after being vendors for Ten Thousand Villages for many years, are now sending their children to college! Fair trade companies also emphasize sustainability for our earth. Recycling is encouraged not only because reuse is often inexpensive but it at the same time helps protect the environment in the country where the artisans live and breath. Fair trade tries to be fair and I believe, it is.