As the name suggests, free trade is the unrestricted flow of products, services, labor, and capital across the country's geographic borders without any government intervention on behalf of the economy or regulatory obstacles. The term 'free trade' is often contrasted with 'fair trade'. In the simplest sense, the term 'fair trade' refers to the buying and selling of goods and services that are paid to producers fairly and equitably. It is an international social movement made up of countless producers, companies, consumers and organizations whose purpose is to improve the environment and labor standards.
What Is Free Trade?
Free trade, as its name suggests, is to open trade barriers in the international market. Free trade involves bilateral agreements between countries that allow the import and export of goods without restrictions. Although free trade has improved the efficiency of the global market by promoting economic growth and lowering commodity prices, it also has its shortcomings. Due to certain business infractions, such as the use of cheap labor, products may become cheaper.
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What Is Fair Trade?
Fair Trade is a trade association based on dialogue, transparency and respect. Its main objective is to seek greater equity in international trade. Its purpose is to provide better business conditions and protect the rights of marginalized groups, provide better wages, standard working conditions and protect child labor. This type of trade attempts to regulate trade based on concerns about possible irregularities when trading with certain countries. Violations can be environmental conditions, human rights violations, and labor laws. Fair traders express their concerns through private actions, such as boycotting products produced by child labor and passing government regulations. This type of trade attempts to regulate trade based on concerns about possible irregularities when trading with certain countries. Violations can be environmental conditions, human rights violations, and labor laws. Fair traders express their concerns through private actions, such as boycotting products produced by child labor and passing government regulations.
Comparison of Free Trade and Fair Trade
- Objective: the main objective of free trade is to promote the development of a country, while the main objective of fair trade is to empower marginalized groups in the community.
- Economic theory: according to economists, the indirect costs of free trade are lower, so the prices of products are lower, due to strict working rules, fair trade prices for goods and services are high.
- Trade regulations: there are few regulations on free trade and cross-border exchange of goods and services, however, in fair trade, companies work hand in hand with marginalized groups.
- Beneficiaries: free trade is mainly beneficial to enterprises in the import and export industry, however, fair trade benefits small business owners in the community.
- Practice: free trade focuses on trade policies between countries, while fair trade focuses on trade between people and enterprises.
- Main participants: free trade mainly involves bilateral negotiations between countries, so the government is more involved in it, on the other hand, fair trade involves merchants and small business communities.
- Impact: free trade brings changes through the market and government policies, while fair trade brings changes through community improvements.
Free Trade or Fair Trade
In view of the above differences, fair trade is better than free trade. This is because fair trade aims to produce products that do not exploit labor and the environment. However, regardless of the mode of production, the goal of free trade is to generate more profits. Ideally, a prosperous economy can be achieved through the coexistence of free and fair trade. Fair trade helps poor farmers, artisans and producers with fair and reasonable prices that cover production costs. It also allows them to obtain interest-free loans or loans at nominal interest rates. It guarantees fair prices, safe working conditions, protection of natural resources and no forced child labor.
Conclusion
In general terms, free trade is an agreement that establishes that participating countries can import and export goods without tariffs or other non-tariff trade barriers. On the other hand, fair trade is equity for the labor community in terms of prices, working conditions, sustainability and terms of trade. Therefore, in all discussions, I prefer a fair trade system, which benefits small business owners and protects the rights of marginalized groups by providing better wages, standard conditions and protecting child labor issues.
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