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, and access to information. Fair Trade aims to empower disadvantaged producers and farmers 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”:

Fair Trade Conventional Trade
Concerned about people, planet & profit Driven only by profit & adding value to shares
Advanced credit plus other benefits Payment after production, IF they like the products
Artisans or farmers, being partners, are given technical assistance, training, education, advancement Workers are seen as assents, and are just given training for mundane, repetitive job
Women & ethnic minorities made partners Look for lowest cost labor, & exploit the workers if necessary (Minorities, women & children are often victims of exploitation)
Aim to educate the consumer about what is good for them, the planer and the producers Create shallow needs and wants

”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).”

”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.

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