Fair Trade and Free Trade

Which is Better at Eradicating Hunger?

Kim RogersAgronomy 342Presentation

Free Trade

Trade without government interference i.e., taxes, tariffs, subsidies, and quotas only regulation supply and demand

Grew out of mercantilism in Europe in 1500s

Adam Smith’s “invisible hand of the market” in 1776

Current examples are WTO and NAFTA

Source: Moore 2004

Fair Trade Began with Mennonites in 1940s, became

movement in 1960-1970s in Europe Remains small, around 1% of global trade

Principles: trading partnership, based on dialogue, transparency, respect, greater equity in international trade, sustainable through better trade conditions, securing rights of marginalized producers, workers

Depends on consumers paying more Sources: Moore 2004

Free Trade or Fair Trade?:

The Ethics of Trade Ethics of Free trade

Utilitarianism: By removing government interferences, laws of supply and demand reward

all participants acting in self-interest.

Ethics of Fair trade

Justice: Restores equity to unfair global economic system

Which is Better for Eradicating Hunger in the Developing World?

Pros of Fair Trade Ensures living wage paid to workers

Protects environment of producers

Support against market fluctuations

Producer, Buyer enter long-term relationship

Which is Better for Eradicating Hunger in the Developing World?

Cons of Fair Trade

Small percentage of global economy

Depends on benevolence of consumers

Highly fragmented

Conflict of operating both in and outside of market

Can it work on economies of scale

Which is Better for Eradicating Hunger in the Developing World?

Pros of Free Trade

Can deal in economies of scale

As dominate global order all can access it

Lack of regulation prevents government corruption

Sustainable as based on natural economic order

Which is Better for Eradicating Hunger in the Developing World?

Cons of Free Trade

Hypocrisy of free trade—forced on developing countries, West doesn’t use it

Global economy race to bottom environmentally and economically unsustainable

No cushion against market fluctuations

So, is free trade or fair trade better for eradicating hunger in the developing world?

Fair Trade offers an economic alternative to protectionism and neoliberalism

Focus on cooperative trading relations, worker rights, sustainability

Fair Trade orgs need to unify

Source: Jaffe 2004

Works Cited

Text SourcesJaffee, Daniel. 2004. “Bringing the ‘Moral Charge’ Home: Fair Trade within the

North and Within the South. Rural Sociology 69 (2): 169-196.

Moore, Geoff. 2004. “The Fair Trade Movement: Parameters, Issues, and Future Research.” Journal of Business Ethics 53: 73-86.

ImagesSlide 1: Image available at http://www.kobos.com. Retrieved June 29, 2009.Slide 5: Image available at

http://lh6.ggpht.com/_D_tJ3jZ00WI/SIjJ3XTY49I/AAAAAAAAANk/AwKKCxfM1po/World+Food+Summit+Free+trade+%3D+hunger.jpg. Retrieved July 6, 2009.

Slide 7: Image available http://upload.wikimedia.org/wikipedia/en/thumb/6/61/EffectOfTariff.png/450px-EffectOfTariff.png. Retrieved on July 10, 2009.

Slide 9. Image available at http://images.google.com/imgres?imgurl.www.pcusa.org/hunger/images/cameroon-women.jpg. Retrieved on July 10, 2009.