Free Trade VS Fair Trade: Pros and Cons

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“Fair trade is Essential”

Many people claim that everyone benefits from free trade. Others argue that fair trade is more important than free trade because it can lead to free trade. If we lived in an ideal world where all things were equal, free trade would be excellent. Unfortunately, nowadays, the market is unequal. The following essay takes a look at both sides of the argument between equal and free trade those submitted by Ngaire Woods from Oxford University, and Jagdish Bhagwati, professor of economics and law at Columbia University.

When it comes to the fair play debate, Ngaire Woods fights for fair trade. Wood argues that it is “important to prevent a political reaction against commerce itself. So, both the processes and results of commerce should be fairer. “He clarifies the reasoning for fair trade as a means to protect trading itself. Doing this would resolve trading goals with other important national goals such as environmental and social protection” (Woods, 2010). Therefore, fair trading is often criticized as protectionism. Protectionism means that a country has laws or other rules that make it easier for its own products and brands to sell by making goods from foreign countries more expensive or harder to get. The idea of protectionism is to stop imports. In other words, the use of protectionism could help the development of African countries and improves the lives of millions of people. In fact, destroying these protections and desires could make the African market uncontrollable and fee some high costs.

According to Jagdish Bhagwati, “If the demand for fair trade in the sense of demanding reciprocity in openness leads to others reducing their trade barriers, that is good. But if it leads to closing of one’s own, because others do not yield to such demands, that is bad”. In other words, free trade is good as long as we use some of the economic gains to make sure that those who are affected are provided for. The concern most people have with free commerce is, it can lead to a loss of jobs for the net importing country if the rise in net imports is not equalized by something such as a tax reduction. Basically, when you raise the amount of low-priced stuff that you are smuggling, you raise the amount that is for sale, but you don’t increase the buying control. The result is that the new imports are bought and only a serving of the original local production is bought (because there isn’t enough purchasing control to buy it all anymore). The unsold percentage of national production will eventually lead to local job cuts. Conflicting this if you are the importing country you should do things like cut taxes to upsurge the amount of money in consumers’ hands, so they can buy all those new imports plus what is being produced nationally.

In my opinion, fair trade is more important than free trade. I strongly believe that if something is fair such as trade it doesn’t need to be free. If you are in the trade business with another country trade should be fair. Let’s look at it this way when it comes to free trade, big corporations have higher power, which means trade can be free but not necessarily fair, leading to the rich becoming richer and the poor becoming poorer. The issue with Free Trade, it sometimes benefits one country more than the other, while it tends to benefit large corporations more.

Taking everything into account, fair trade allows everybody to operate on an even playing field. Foreign trade laws are required to give opportunities to all countries and prevent certain trade organizations from being profited from. If we are all playing on the same level, then everybody gets a fair share. Otherwise, certain countries with more money change their trading system.

References

Ngaire Woods, from “Fair Trade: The Proposer’s Opening Remarks,” The Economist (May 4, 2010)
Jagdish Bhagwati, from “Fair Trade: The Opposition’s Opening Remarks,” The Economist (May 4, 2010)

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Free Trade VS Fair Trade: Pros and Cons

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