Fair Trade or Free Trade?

With the United States (or is it only Trump?) removing their support for the TPP this question has come more frequently to mind. Is it a bad thing that the TPP will probably collapse without the support of the US?

New Zealand as a nation that exports a lot of primary products and probably wants to be able to export these products freely without restrictions. The only problem with this is that free trade goes both ways so many domestic industries oppose free trade as it will reduce their profits and market share reduced due to the lower prices for imported goods. Many other groups oppose free trade because it does not increase the economic freedom of the poor and quite frequently makes them poorer.

So what is the alternative? Fair Trade! A movement to protect producers in countries that are less economically well off to achieve better trading conditions and to promote sustainable farming. It also tends to protect the producer from exploitation by wealthier nations. From a trading perspective the fair trade movement is designed to promote greater equity in international trading partnerships.

The World Fair Trade Organisation (WFTO) has ten principles of Fair Trade:

  1. Creating Opportunities for Economically Disadvantaged Producer
  2. Transparency and Accountability
  3. Trade Relations
  4. Payment of a Fair Price
  5. Child Labour – respect the UN Convention on the Rights of the Child, as well as local laws and social norms in order to ensure that the participation of children in production processes of fairly traded articles (if any) does not adversely affect their well-being, security, educational requirements and need for play.
  6. Non-Discrimination, Gender Equity and Freedom of Association
  7. Working Conditions – a safe and healthy working environment for producers.
  8. Capacity Building developing producers’ independence.
  9. Promoting Fair Trade
  10. The Environment

To my untrained eye the principles of fair trade are in line with the internal New Zealand 1986 Act called the fair trading act whereas the TPP seems to be out of alignment with this Act. Is it OK to protect people within a country but not between countries?

In the interest of trying to present an unbiased view (is that even possible???) fair trade is not without problems as well. Many argue that the cost of certification means that the cost of sell is only enough to cover these costs and not produce a profit for the producer. There also seems to be an over welling number of poorer countries that are involved in the fair trade movement but what about producers from a wealthier nation like New Zealand is it assumed because our producers are wealthier and from a more financially stable, potentially less corrupt country they are automatically complying with the principles of fair trade? Why don’t our producers need to be certified under the fair trade banner as well?

I have come to the conclusion that I have more questions than answers around this subject! In the mean time I will continue to buy fair trade where applicable because it makes me feel like I am contributing to a better less exploitative world!


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