Free Trade Vs Fair Trade

The Buying and selling, importing and exporting of goods and services, between two or more countries that have no limits or quotas or barriers or unbalanced tariffs is the dictionary definition for a free trade agreement (FTA). There are both advantages and disadvantages attached to FTA’s which is shown in figure 8.0.

Between Hayek, Friedman, Keynes, and Smith, Smith has likely had the greatest positive impact on the U.S. free enterprise system. Although some point out that he did not include many original ideas, his book, Wealth of Nations, compiled many ideas into one cohesive work, and it popularized the specialization of labor- the natural movement of markets into efficiency by drawing on the self-interests of producers, rather than depending on their goodwill as might communism or socialism-as well as promoting free-trade between nations by arguing that both sides would benefit from that kind of trade. This argumentation in favor of free-trade led to its wide-spread adaptation around the world, making the modern integration of far-reaching markets

In his book, Wealth of Nations, Adam Smith makes arguments to support free-trade. These arguments range from having to do with war, all the way to the structure of social classes. In order to assess the morality of these arguments, David Hume’s definition of morality and Kant’s definition of morality can be used. These definitions, ultimately, serve as context for Smith’s arguments, so that there is a clearer idea of whether they are moral or not. From this, modern readers of Smith’s book can better determine the positive and negative qualities of Smith’s idea of free-trade.

The terms free and fair trade sometimes go hand-in-hand but there are distinct differences between the two. According to Wikipedia, free trade is a system of trade policy that allows traders to act and or transact without interference from the government. Free trade implies the trade of goods without taxes (tarrifs) or other trade barriers such as quotas, subsidies,

A Free Trade Agreements (here in referred to as FTA), is designed to reduce or remove any barriers of trade between two trading partners. These barriers can be in the form of tariffs and import quotas on some, or all goods traded between two countries. When negotiating a FTA, it is important for both countries to negotiate in favor of their comparative advantage/s, as it enables both countries to reap the most benefits out of the arrangement.

Trade opens up a whole new playing field of economic benefits and international relationships, and greatly impacts the marketplace. Lately, trade has taken a seat in the spotlight as the Trans-Pacific Partnership, a major free trade agreement spanning a dozen countries, was signed in February 2016 after seven years of negotiations. Implementation of the TPP agreement is not yet underway, but the impacts of such a deal have already created an insatiable buzz of debate. How will the TPP impact the United States economy, particularly when bearing in mind the $45.6 billion trade deficit we are already facing (Trading Economics)?

Fair trade is a label that businesses who follow certain criteria for environmental and labor standards can purchase. According to the network of Four Fair Trade organizations, ‘‘Fairtrade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of,

The sequence of this paper will be simply organized into the pros then cons of free trade, followed by my regard to its effectiveness in international relations.

Krugman, P.R. (1993). ‘The narrow and broad arguments for free trade.’ American Economic Review, 83(2): 362-366.

The economic systems free trade and fair trade in like manner apply Foucault’s triangle of power and totalitarian knowledge. Specifically, I will analyze what negative effects the lack of subjugated knowledge causes within these system 's foundations and their future betterment through Foucault’s lessons. As a rule, “most of the evil in this world is done by people with the best intentions” (T.S. Eliot). On October 1947, 23 nations in Geneva signed the General Agreement on Tariffs and Trade ‘GATT’. This liberated international trade and businesses to begin foreign production investing. The aforementioned agreement was tremendous for the economy. Numerous countries are Free Trade countries, including the U.S. Within free trade, goods, capital and services flow unhindered between nations, without barriers, which would hinder the speed of trading processes. There are no earning ceilings; citizens from free trade countries may secure as much money as they have the ability to earn, within the confines of the law. Max Havelaar founded the fair trade model in 1988 under the initiative of the Dutch development agency Solidaridad. And the current face of fair trade, Fairtrade Labelling Organizations International 'FLO ' established in Bonn, Germany with the intention to unite the national Fair trade organizations under one umbrella and to set worldwide standards and certification.

Fair trade is exactly how it sounds, fair! It 's a global trade model where products are made by people that are employed in developing countries. The workers are treated fairly, compensated fairly, and typically run their own business. (If a product is fair trade, it was NOT made in a sweatshop. So you can sleep soundly at night knowing you are not contributing to unfair business practices.) Through sustainable employment practices, these farmers, artisans, and crafters are being lifted out of poverty, permanently. They are able to build and create their own sustainable business, teaching them how to use the free market to their advatnage. So you can easily say that fair trade workers positively influence their communities.

The free trade agreement is a pact between two countries or areas in which they both agree to life most or all tariffs, special fees and taxes, and other barriers to trade between the entities. (White, 2015) The main purpose of the free trade agreement is to allow faster and more businesses between the two countries which is seen to benefit both of them.

Free trade is beneficial and grows economies due to the theory of Comparative advantage. This theory states that countries should specialize and produce the goods and services in which they are most efficient. This converts a theory in which people see free trade as zero sum game into a positive sum game in which all gain. David Ricardo was the first most to come out with the theory of comparative advantage and he did so almost 200 years ago. His theory was the basis for latter theories to come and it was based on the fact that countries should specialize in goods, which they are the best in producing and his model only accounted for labor as a factor of production (Feenstra, 2011). The Ricardian models basis is that instead of factor endowments trade is affected by the growth in technology and it says a country has a comparative advantage in producing a good when the country’s opportunity cost of producing the good is lower than the opportunity cost of producing the good in another county. This pattern of trade between countries is determined by comparative advantage. This means that even countries with poor technologies can export the goods in which they have a comparative advantage (Feenstra, 2011). This is good in the sense because countries that are less developed have a chance to export products that they are good at and boost the economy and GDP. They do not have to compete and make products in which they have poor technologies; these countries can simply import those

Free trade policies created a competition in the open market for continuous innovation leading to better products, new markets, increased savings and investments, and better-paying jobs. It gives consumers the opportunity to improve their standard of living. There is a consensus among economists that nations are better off with free trade than with policies restricting free trade. It provides better opportunities for entrepreneurship and investment. Economists believe that free trade can affect a nation’s income and its economic well-being through

In The Wealth of Nations, Adam Smith wrote, “to lay extraordinary restraints upon the those particular countries with which the importation of goods of almost all kinds from balance of trade is supposed to be disadvantageous, is the second expedient”. When saying this, he meant that free trade was necessary for a strong country. Countries should value other countries resources that they can buy and, other countries will benefit from one’s own nation’s resources. Adam smith also wrote, “The greatest