Difference between Fair Trade and Conventional Trade
Free-trade is a theory that makes a lot of sense in paper. One group of people can make something more efficiently than another, and they will trade this for something they lack. However, in practice this theory doesn’t play out too well. This system would be fair if everyone playing in it had the same opportunities: access to credit, education, access to resources, access to information. Fair Trade aims to empower disadvantaged farmers and producers around the world so that they can participate in “free-trade”. However, there are more specific differences between the two systems.
The best way to showcase some of these differences has been done by Jacqueline DeCarlo, in her book “Fair Trade: A Beginners’ Guide”:
Secondly, we will give you a more detailed explanation of the differences according to the Fair Trade Resource Network :
“Free trade is a market model in which trade in goods and services between or within countries flow unhindered by government-imposed restrictions. Fair Trade is an organized social movement and market-based approach to alleviating global poverty and promoting sustainability. The Fair Trade movement promotes the payment of a fair price as well as social and environmental standards in areas related to the production of a wide variety of goods.”
“Fair Trade is not an attempt to erase all principles of Free Trade, or to reverse the global nature of the business environment today. A common misconception is that Fair Trade is the opposite of Free Trade, and the two are often confused. According to Paul Rice of TransFair USA, “Fair Trade makes globalization and ‘free trade’ work for the poor” (TransFair USA, 2005 Shareholder Report).”
Both systems can learn from each other and co-exist. However, how much one system is better than the other is up for debate. The only undeniable fact is that the current trading system is flawed and is hurting human lives and the environment. Fair Trade came along as a solution to these.