Fair Trade vs Free Trade
For more than 50 years, GATT tried to work out provisions to pave a way for easier and more volume of trade between countries of the world. General Agreement on Trade and Tariffs finally gave way to WTO (world Trade Organization) that has been working to reduce tariffs and quota systems to dismantle obstructions in the way of better trading conditions for all countries of the world. Free trade is a dream that conceives of level playing field for member nations so that no country suffers because of whims of another country, and no country denies another country a chance to trade and benefit. There is another phrase doing rounds these days and is called fair trade. By the looks of it, both free trade and fair trade appear to be similar concepts. But is it really so? Let us take a closer look.
Advocates of both free and fair trade have many goals in common. Though free trade advocates have a larger dream in eyes, they too try to improve the lot of poor farmers across the globe, which is the main objective of those who talk of fair trade. It is a fact that in all parts of the world, producers are a harried lot and do not get a fair price for all their efforts. Throughout the world, there are champions of free trade who seem to be doing all they can to lower tariffs in international trade. Though such efforts are always welcome, it has to be understood that the real beneficiaries of this fight are large producers, and even government that procures all the produce from small farmers, and not the poor farmers themselves. This is where fair trade champions come into picture as they are ones who are involved in a fight to get just compensation for the real manufacturers and growers of farm produce.
All along the movement that concentrated upon lowering tariffs and quotas among countries, there was no talk of the poor farmers, and even GATT, and now WTO thought all problems will be over with lowering of tariffs and elimination of quotas. No doubt preferential trade and restrictive quota systems have hurt economically weaker countries, and they have not been able to improve upon their volume of trade. With the aim of free trade in sight, GATT, and now WTO have been successful in a big way in lowering of tariffs among member countries, but all the benefit has gone to large multinationals and governments, and not poor farmers. But now, things are moving in a fast manner with champions of fair trade fighting for the rights of poor farmers. They are trying to get introduced provisions that would help poor farmers across the world a just compensation for all their hard work.
What’s the difference between Fair Trade and Free Trade?
• Free trade is a dream of international community as it aims to gradually eliminate all tariffs and quotas leading to more and better trade between countries of the world.
• However, free trade is going to benefit large multinational companies and governments, and not poor farmers.
• Champions of fair trade are trying to get a better price for all the efforts put in by poor farmers across the world.