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Free trade

The unrestricted purchase and sale of

goods and services between countries

without the imposition of constraints such

as tariffs, duties and quotas (non-tariff

barriers). Free trade is a win-winproposition because it enables nations to

focus on their core competitive

advantage(s), thereby maximizingeconomic output and fostering income

growth for their citizens.

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Features of free trade

-Trade of goods without taxes, other trade barriers (e.g.

quotas on imports), or trade distorting policies like

subsidies that give some firms, households or factors of

production an advantage over others.

-Free access to market

-Free access to information

-Free movement of labor between and within countries

-Free movement of capital between and within countries.

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Fair trade

A movement which strives for fairtreatment for farmers. In a fair trade

agreement, farmers, who in other

situations might be more susceptible to

the will of the purchaser, will negotiate

with the purchasers in order to receive a

fair price for their products. Farmers who

engage in fair trade also aim to pay theirworkers a fair price, and engage in

environmentally-friendly practices.

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Features of fair trade

-Creating opportunities for economically disadvantaged producers

-Transparency and accountability

-Developing producers independence

-Fair pay to the producers, equal pay for, equal work by men and women

-Fair traders ensures prompt payment to their partners

-Gender equity: womens work is properly valued and rewarded

-Working conditions: safe and healthy working environment for producers,

labor. The participation of children (if any) does not affect adversely their well-

being, security, educational requirements and need for conforms to the UNConvention of the Right of the child as well as the laws and norms in the local

context

-Environment must be protected

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Similarity?

Both seek to help farmers and other

producers get access to the global market

and to improve wages for producers.

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Differences?

Say youre looking to buy a cup of

coffee, which should you buyfree or fair?

(Pros and cons of each?)

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Fair trade means you believe there are some rules in trade that

must be placed in order to provide for producers who have

disadvantages in a free market. If you buy a fair trade cup of

coffee, it means that the farmer who harvested the beans in adeveloping nation had some help getting his specific product to

you. Fair trade aims to help producers in developing countries

obtain better trading conditions and gives an extra boost to those

producers who promote sustainability (that is, eco-friendly

agriculture). Rather than leaving environmental standards andwages up to the market, fair trade actively pushes for higher price

for producers as well as social and environmental standards.

Opponents of fair trade say that any solution that favors one group

over another harms growth overall. Producers in developedcountries, for instance, resent having to compete with what they

call cheaper, lower-quality imports. The agreement, they say, is

unfair because developing nations often sell more of their product

but end up buying less from other countries.