Fair Trade Member Fair Trade vs. Free Trade
The Problem with Free Trade:
FREE TRADE agreements, as they now stand, do little to help the poorest people in the world. A variety of improvements are necessary, including:
1. Ending trade-distorting agricultural subsidies
Nearly three-fourths of all people living on less than $1 a day live in rural areas of developing countries and work primarily in farming. They need better opportunities to sell products at a fair price.
Industrialized countries, however, subsidize their own production of products like cotton, corn and wheat in ways that distort international trade. Producers in countries like the U.S., Canada and European countries receive significant government subsidies for their products and do not have to depend solely on the income from selling their goods. They can sell them at artificially low prices, forcing world prices down.
2. Removing barriers to the markets of industrialized countries.
Agricultural products are often the only source of export earnings for poor countries. Developing nations need greater access to markets in industrialized nations. One of the barriers is tariffs placed on goods to protect a country’s own producers by making imports more expensive. The highest tariffs in this country are on food and textiles.
It should be noted that farm subsidies reach only about one-third of all U.S. farmers. 70% of the subsidies go to 10% of the largest growers. 60% of U.S. farmers receive no subsidies at all. The system needs to be changed.
Why We Should Support Fair Trade:
FAIR TRADE agreements benefit the poorest producers, assisting in alleviating poverty and promoting economic justice. These include:
- Making sure the grower or producer receives a fair day’s wage in their economy
- Decent working conditions and opportunities for advancement
- The right to unionize
- No children working in sweat shops
- Prices for products that cover the cost of production, regardless of the world economy
- Environmental sustainability
- Long term commitment to the producers to insure economic stability
As consumers, we can choose to support with our purchases, the poor of the world by buying fairly traded coffee, teas, chocolate and other commodities. There is hope because more and more consumers are becoming aware of how important fair trade is and for the first time, developing nations are at the forefront of the current round of trade negotiations being conducted by the World Trade Organization (WTO).
Compiled from “Bread for the World Institute” paper - Feb/Mar. 2006 and “The No-Nonsense Guide to Fair Trade” by David Ransom