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Freetradevsfairtrade.pptxFree trade vs fair trade
Free trade
Investopedia defines Free Trade as:
The economic policy of not discriminating against imports from and exports to foreign jurisdictions. Buyers and sellers from separate economies may voluntarily trade without the domestic government applying tariffs, quotas, subsidies or prohibitions on their goods and services.
Features of Free Trade
Trading of goods without taxes or other trade barriers
Trading services
Unregulated access to markets and market information
Trade agreements
Trade quotas - A government-imposed limit on the amount of product that can be imported in a certain period of time.
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Free trade
Opposition
Destroy infant industries in developing countries
Long-run economic development
Income inequality
Environmental degradation
Supporting child labour and sweat shops
Impacts domestically
Produces economic growth
Jobs are loss to developing countries, or outsourcing of jobs
Production moved to developing countries
Impacts globally
Working conditions are very poor, along with wages
Competition for contracts often lower the wage to be paid
Sweatshops - Factories in underdeveloped and developing countries in which employees work in unsafe environments, are treated unfairly, and have no chance to address those conditions.
Often employs children age 14
Paid very little with overtime pay cheated
Workers cannot take sick days, breaks, and work 12 hours a day
Hot environments and untrained workers make for dangerous work environments
Outsourcing: refers to using outside resources to perform activities
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Fair trade
Is a social movement whose stated goal is to help producers in developing countries achieve better trading conditions and to promote sustainability
Includes commodities and goods such as handicrafts, coffee, cocoa, wine, chocolate, textiles, diamonds and gold
Effects on growers
Benefits farmers in the global south
Growers are able to understand fair trade
Increases the wage of growers certified under fair trade practices
However, many growers are unaware about fair trade and its benefits
Positive effect on their lives and communities.
- Purpose of fair trade is to provide a fair and honest deal between all members of the supply chain
- Guarantees that the prices paid for products are adequate to cover the costs of sustainable production
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Fair trade
Social premiums where producers or producer-groups decide how their earnings is spent
Socioeconomic development
Privately invest in public goods lacking from infrastructure and government spending
Environmental initiatives, public schools, and water projects
Trade Agreements
The North American Free Trade Agreement (NAFTA)
Launched in January 1994 between Canada, the United States, and Mexico
Created world’s largest free trade area
Sets rules surrounding movement of goods, services, and investments across North America
Eliminates tariffs and other trade barriers, and promotes fair competition
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Ten Thousand Villages
Has retail stores that sell fair trade products throughout Canada and the Unites States
Sources handicrafts from artisans in underdeveloped countries and sells their products to consumers, ensuring that goods have been ethically purchased and created using sustainable resources
Prices are mutually agreed by Ten Thousand Villages and the artisans, and 50% is paid to the artisan when the order is placed and the remaining when the order is filled
