Essay On Free Trade And Fair Trade

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According to two former parts, both free trade and fair trade perspectives expect to help developing countries overcome poverty. Free trade tends to promote industrializations and economic growth. Although free trade will bring technology and progress into developing countries and increase their economic growth but there are still have a number of poor people and an inequality problem between urban and rural areas. Opening markets of developing countries also affects domestic producers adversely because a competition with foreign nations will reduce prices of their products. Additionally, Yanke (2014) mentions that farmers in developing countries suffer a huge loss of revenues when market prices plummet since there are no government safety…show more content…
For developing countries, however, most producers are small and poor producers who lacks of potential to compete with powerful producers in the highly competitive international market and agriculture is their major exporting commodities, fair trade tends to gives more benefits than free trade. For developing countries, the way to get out of poverty is to gain benefits from trades not a short-term aid. As President Museveni of Uganda (Byers, 2003) mentions that trade is far more significant than assistance or debt relief for developing countries, for instance, five times of amount for aid obtained by African countries are equal to a rise in Africa 's share of world exports by just 1 percent. However, it is might be hard for developing countries to compete with egoist developed countries under free trade and it frequently results in being worse off. In contrast, fair trade does not only provide them money of aid as the Fair Trade premium, but also helps them can sell their products at guarantee prices with stable income form long-term contracts while they do not have to compete directly with larger producers. According to the research of Vásquez-Leó (2010), Manduvira cooperative is a small producer in Paraguay, one of vital producers of organic sugar in fair trade markets, have engaged in fair trade because they have no capability to compete with Brazil, which is the largest exporter of sugar in the world, in the international free market for selling conventional sugar. Fair trade helps Manduvira cooperative gain more benefits without directly competing with other large producers and become better off from stable and appropriate income by selling organic sugar through fair trade markets around the world. Moreover, they also receives the bonus from free
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