The concept of Fair Trade originated in the 1950s and developed for three decades with the intent of aiding the impoverished in developing countries (Gendron, Bisaillon and Rance, 2009). The debut of the Fair Trade label in 1988 was a prominent initiative to the Fair Trade campaign (Mohan, 2010). The (FLO) charges producers a certification fee in order to receive the Fair Trade label and benefits (Booth and Whetstone, 2007).
Fair trade is a social organisation with the purpose of assisting producers in developing countries to improve trading conditions and encourage sustainability (Hayes and Moore, 2005). It supports higher income to exporters as well as higher social and environmental standards. Attention is directed towards trade between developing countries and developed countries, most notably handicrafts, coffee, cocoa, tea, handicrafts, honey, preserves, spreads, perishable fruits and vegetables and processed products (Mohan, 2010).
In contrast, free trade is a trading system in the absence of government intervention regarding imports and exports. The European Union and the North American Free Trade Agreement embodies Free Trade by abolishing trade barriers among nations.
While Fair trade might have palpable benefits that would solve adversity faced by suppliers, it is disputable that free market mechanism of free trade will eventually make a greater contribution to suppliers’ well-being in the long run.
The Fair trade agreement constitutes price fixing for the producers so that a standard income is received regardless of fluctuating prices of the product due to demand and supply conditions (Booth and Whetstone, 2007). Products in discussion are of agricultural nature which tends to be affected by...
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...Fair Trade: a guide in plain English [online]. Newcastle Fairtrade Partnership. Available at:
Mohan, S., 2010. Fair Trade Without the Froth: A Dispassionate Economic Analysis of ‘Fair Trade’ [online]. London: Institute of Economic Affairs.
Sidwell, M., 2008. Unfair Trade. London: Adam Smith Institute.
Yanchus, D & Vanssay. 2003. The Myth of Fair Prices: A Graphical Analysis. The Journal of Economic Education, Vol. 34, No. 3 (Summer, 2003), pp. 235-240 Taylor & Francis, Ltd.
Gendron, Bisaillon & Rance., 2009. The Institutionalization of Fair Trade: More than Just a Degraded Form of Social Action. Journal of Business Ethics, Vol. 86, Supplement 1: Fair Trade (2009), pp. 63-79 Springer
Howley (2006), Absolution in Your Cup: the real meaning of fair trade coffee, Reason, March 2006, pp 41-48.
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