Globalization and International Commerce

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Introduction

Globalisation has been one of the most significant developments of the last half century, and issues such as trade and international commerce have become increasingly important. In consequence, problems such as poverty, unfair wages and poor working conditions in third world countries have been drawn to the attention of consumers (Hayes and Moore, 2007). This is a growing global issue which cannot be ignored by anyone concerned about the problems in developing countries. Free trade and Fair Trade have both been offered as solutions to these issues.

Fair Trade is considered as an alternative trading system, which aims to protect the economically disadvantaged producers, especially in developing countries. It provides transparency and respect in international trade (Gingrich and King, 2012). Besides, Fair Trade also contributes to sustainable development by offering better trading conditions for marginalised producers and workers and securing their rights (Mohan, 2010).
On the other hand, free trade not only gives primacy to market forces, it also reduces trade barriers such as tariffs and quotas and requires the harmonisation of trading rules (Hayes and Moore, 2007). It arises from the free choices of producers and consumers, which is why it is often believed that Fair Trade is derived from the system of free trade.
The term “suppliers” in this context refers to the farmers and producers in developing countries, often running small concerns with limited investment or capacity.

In the long run, despite the apparent advantages of Fair Trade and the opportunities it appears to offer small suppliers, free trade provides a more sustainable development for suppliers than Fair Trade. It is also more effective in incr...

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...C. & King, E.,2012. Journals of Cooperatives. [online]. Harrisonburg: Eastern Mennonite University. Available at:< URL:http://www.agecon.ksu.edu/accc/ncera210/JOC%20pdfs/V26/Gingrich.pdf. > [Accessed 20th Feb 2014].
Hayes, M. & Moore, G.,2005. The Economics of Fair Trade: a guide in plain English [online]. Newcastle Fairtrade Partnership. Available at: [Accessed 11th December 2013]

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. [online]. London: Adam Smith Institute. Available at [Accessed 17th Feb 2014].

Sloman, J & Wride, A (2012). Principles of Economics. 8th ed. Essex: Pearson Education Limited.

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