Free Trade Vs Fair Trade Essay

2369 words - 9 pages

Adam Smith, author of The Wealth of Nations, shows support for free trade and emphasises it as a trade policy which ought to be adopted. Krugman and Obstfeld back Smith's support by stating that the efficiency of trade is increased by free trade and accumulates the national income of countries. Free trade is a theory which suggests that each nation benefits in specialising in an economic activity from which it gains absolute advantage, enjoying absolute superiority over other nations in a specif economical activity (Peng). With free trade follows opportunity, replacing regulation and growth of economic activity. (Rugmann and Collinson).
Arguments for free trade
Trading Barriers
If nations adopted a free trading policy the total cost of tariffs, duty on imports, would be reduced; resulting in a cost efficient method of international trade. Alongside specialising in an economic activity within one nation, a reallocation of resources for more efficient nations allows trade to be fair and enhance the quality of resources.
The reduction of trade barriers enables the local prices of goods to reduce too, which will eventually lead to an enhancement in the economical welfare situation of nations by reducing the limitations of new entrants into the markets. The removal of barriers would mean a free and fair opportunity for all nations to gain impartial access into any market benefitting them with a fair chance in competition. Another beneficial outcome is that with new economic activities taking place in foreign subsidised countries will see an increase in employment for local potential workers, lower business costs and a circulation of the local finances enhancing the economy of the nation. However, a noteworthy point to mention is that the free flow of FDI does not necessarily mean that all social groups will see benefits.
McDonald and Burton clarify that infant industries can feel supported into growth (and sometimes beyond) by the trade policy of protectionism and tariff barriers. This form of strategic protectionism enables industries seeking to grow to enjoy the benefits of first mover advantages, a concept of specialising in producing and exporting only those goods and services which it can produce more efficiently (Investopedia) and the benefits of economies of scales. A prime example of this is Amazon, the first online bookstore. By gaining the first mover advantage into the markets, it has gained and maintained dominance over many firms. Firms have adopted the concepts and practices such as retailers like Barnes and Nobles. Professer Marvin Lieberman and David Montgomery, Stanford University, conclude that first mover advantage can be gained from technology leadership, control of resources and buyer switching costs after gaining the opportunity to access the pioneering stage of a concept.

Free Trading Areas
Free trade areas, FTA, are economic integration arrangements in which barriers to trade (e.g....

Find Another Essay On Free Trade Vs Fair Trade

Fair Trade Essay

1820 words - 7 pages , Jacqueline. Fair Trade A Beginner's Guide (Beginner's Guides). Minneapolis: Oneworld Publications, 2007. Print. "Fair trade -." Wikipedia, the free encyclopedia. Web. 01 Feb. 2010. . Jaffee, Daniel. Brewing Justice Fair Trade Coffee, Sustainability, and Survival. New York: University of California, 2007. Print. Peace Coffee. Web. 20 Oct. 2009. . Sick

fair trade Essay

1046 words - 5 pages This chapter of fair trade state background, management in an example of Canaan in the Middle East of Palestine area. Canaan manages to trade between globally and locally to improve unfair price of agriculture products including olive oil, unstable income, undeveloped community, and unpopular value of products in Palestine. Background of Canaan began to witness Palestine’s farmer situation by founder’s Nasser Abufarha. He knew to go back in

Fair trade

880 words - 4 pages A Critical Review of De Pelsmacker, P.; Janssens, W.; Mielants, C. (2005): Consumer Values and Fair-Trade Beliefs, Attitudes and Buying Behaviour. International Review on Public and Non Profit Marketing, vol. 2, n’2, pp. 50-69. By using the four Fair-trade dimensions of De Pelsmacker, P.; Janssens, W.; Mielants, C. (2003), a survey is conducted in Belgium by the three authors and focused on the consumer values and fair-trade beliefs, attitudes

Free Trade

1687 words - 7 pages decisions by comparing costs and benefits, they respond to incentives. Free trade is one of the few trades that is considered as a fair trade because it gives consumers the option to choice the best opportunities that will improve their standard of living. It fosters and encourages competition by prompting and urging companies to create and develop better products. It also encourage companies to bring more of their goods and services to market

Free Trade

1380 words - 6 pages information and steering them toward a better form of trade such as Fair Trade we could possible help those other counties that are dealing with the effects of free trade. When dealing with free trade the commercial benefits are hard to miss, more choices on cars and products, lower coasts on goods so consumers can by more products and live the good life. (p.68) However, digging deep in to the effects of free trade shows us that that it benefits few

Free Trade

1665 words - 7 pages , they still want the smaller countries to drop many, if not all; of the barriers they have against the stronger countries. Is this fair? Should the little gut have to do what the big guy says and wants? Where is the "free" trade if this happens?There are many arguments and criticisms of free trade. Though in theory it would be a great thing for the world, it will be a struggle to achieve. In fact, until countries start looking at the greater of

Free Trade

972 words - 4 pages Running head: FREE TRADE Free Trade Wheat_boy Clarion University When discussing world trade issues many concepts and ideas are debated among professional economists. In every economists head they have their own idea on how the concept of free trade affects the world?s economy and society. Bickering amongst each other they try to come up with contracts and regulations that will help improve world trade. They all have goals set that they will

Free trade

1084 words - 4 pages Free trade is a part of the geopolitical landscape today, but that was not always the case. In terms of free trade, the practice of reciprocal non-interference had been followed in the second period between 1934 and 1990, but there had also been very different results ("Civil," 1999). The period witnessed an expansion in terms of the scope of civil society, and a growing labor movement had become increasingly involved in the debate; this

Free Trade?

681 words - 3 pages In an economic age in which speedy transactions of imports and exports are essential, is free trade a necessity for aiding worldwide economic development? At least John F. Kennedy thought so, he being the initiator of removing tariffs and other limitations on U.S. imports. His hypothesis was that by doing that, other nations would follow America’s example and leadership. However, that never happened because the other nations were more concerned

Evolving Trade Policy: The Benefits of 'Fair Trade' Over 'Free Trade'

1204 words - 5 pages to compete due to the lack of materials and workspace. Gradually withdrawing from Free Trade and expanding the Fair Trade movement that has sparked up would ultimately provide all people with equal advantages. This policy would put workers and the environment first and would be focused on dealing with some of the main disadvantages that result from Free Trade. Essential issues that would be tackled include poverty, inequality and unethical

Fair Trade Labeling

756 words - 4 pages consequences. Both articles clarify the benefits of fair trade but the costs overweight the positives pushing me against free trade. I believe the points both authors have stated portray clear evidence of how free trade does not aid all of the farmers, especially the poorest ones. After this assignment my viewpoint of free trade has shifted, although I still think that free trade is beneficial in order to guarantee customers purchases are receive back to the producers.

Similar Essays

Is Free Trade Ever Fair Trade?

909 words - 4 pages Economics essay: Is free trade ever fair tradeEvery one of us has probably seen reports or heard something about demonstrations against globalization when international organizations like the WTO meet. One example was the G8 meeting in July 2001.So we have to ask us the question why there are some people who protest against globalization and also against the free trade the WTO stands for.The main complain and concern of these groups is

Free Trade Vs Protectionism Essay

3984 words - 16 pages Free Trade vs Protectionism One of the greatest international economic debates of all time has been the issue of free trade versus protectionism. Proponents of free trade believe in opening the global market, with as few restrictions on trade as possible. Proponents of protectionism believe in concentrating on the welfare of the domestic economy by limiting the open-market policy of the United States. However, what effects does this

Free Trade Vs Protectionism Essay

1335 words - 5 pages Free trade is a policy of imposing no restrictions on the movement of goods and services between countries. It will lead to the most efficient allocation of world resources and higher standards of living for all participating countries. Yet countries in the world see a need for protection. Protectionism is a policy of protecting home industries from foreign competition by the imposition of trade barriers on foreign goods and services. This is

Fair Trade Essay

560 words - 3 pages A Critical Review of Davenport & Low, 2013, From trust to compliance: accountability in the fair trade movement, Social Enterprise Journal, vol. 9, no. 1, pp 88-101. Davenport & Low (2013) conducted a study on the evolution of fair trade movement from trust-based relationships to standards-based systems. The research emphasized on the external and internal accountability approach adopted by Fair Trade Labelling Organization International (FLO