The Fair Trade Revolution

The Fair Trade Revolution

The principles that fair trade movement is why fair trade is better than the current practice of global trade. Fair trade does not only ensure that producers from developing get a fighting chance in the market but it also levels the playing field for producers from rich countries. Some believe the system of global trade is rigged so that producers from developing countries become trapped in poverty.

Take dumping for example. Dumping is the practice of rich countries exporting their surplus to the developing countries. This is rigged because farmers from rich countries get subsidies from their government thus ensuring that the prices of their products are kept low. These same countries also encourage overproduction which leads to them exporting it to other countries. Fair trade is better because by setting a minimum price, producers and farmers from developing countries can recover the cost of their production. Even if they forego the premium, the amount from the sale of the products would be enough to keep them stable for a time.

Market access is another example of how global trade favours rich countries. Though products from developing countries can be sold to rich countries, import tariffs make this less likely to happen. By imposing tariffs, the products of those coming from developing countries have higher prices which make them less competitive than the local products. The system of fair trade is better because even if the prices seem high, products carry a certification logo which makes it unique. Consumers buy the products because they know that it can help other people and not just because the price is reasonable.

Regional Trade Agreements (RTA) in theory is beneficial to two countries. However between a rich and poor country, the one with the stronger economy comes out on top. The aim of RTA is to remove all barriers inherent in trade and foreign investments. Thus in order to get competitive advantage, poor countries often band together in order to have a better bargaining power. The RTA however is made with respect to individual countries thus ensuring that strong countries continue to have the upper hand. Under fair trade, the importance is put on the certification. Thus if it is certified then it can be sold in any market.

These examples tell us that maybe it is time to change from a system of global trade to that under fair trade. The examples clearly show that fair trade is better since it helps both parties and does not favour one party only.