Comm 101 Free Trade Is Not Fair Trade

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“Free Trade is not Fair Trade”. Discuss. Free Trade is the unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas (Investopedia, 2012). Fair Trade is a trade in conformity with a fair-trade agreement and a movement whose goal is to help producers in developing countries to get a fair price for their products so as to reduce poverty, provide for the ethical treatment of workers and farmers, and promote environmentally sustainable practices (Merriam-Webster, 2013). It can be argued that free trade is not fair trade. This is because free trade eliminates tariffs. It gives the economic advantage not only to those producers that are more efficient production-wise (largely because they are more capitalized) but also to those industries blessed with governments capable of delivering massive subsidies. In other words, to the already industrialized and wealthy nations. When tariffs are eliminated, consumers will switch to imported goods and services. This will cause local companies and businesses in developing countries to suffer as they are no longer supported by their country and may have to compete with foreign companies while being poorly equipped. Thus, lead to pollution and other environmental problems as companies fail to include these costs in the price of goods in trying to compete with companies operating under weaker environmental legislation in some countries. Also, some local companies and businesses may have to force shut down, leading to a high unemployment rate within the country. Although free trade has weaknesses, there are benefits to it too. Free trade enables countries to specialise in the production of those commodities in which they have a comparative advantage. With specialisation, countries are able to take advantage of efficiencies generated from economies of

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