Since there is no direct governmental intervention, it would permit trading partners attain mutual gains from exchanging goods and services.
As it has been defined by International Fair Trade Association (IFAT), “fair trade 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, marginalized producers and workers, especially in the south”. (www.wfto.com).
Fair trade is of protectionist view which maintains a ‘people first’ policy and is backed by consumers through various non-profit organizations. Fair trade looks forward to achieve better justice in international trade by initiating reasonable changes in the current trade regulations. Its trading practices are entirely different from that of the conventional mode of trade. For instance, fair trade system works on the voluntary participation of producers, consumers, and companies based on a set of mutually accepted standards (Fair Trade Catholic Relief Services).
On the other hand, the most important focus of the free trade is profit which usually goes to corporate giants. Hence, in order to create competitive advantages free trade firms seek alternatives for reducing the operation costs by moving from one region to other cost-effective locations. Unlike free trade, fair trade organizations maintain maximum direct relationship with the producers perhaps by giving them free or low interest credit (ibid). The common goods exchanged through fair trade include coffee, chocolate, clothing, and jewelry.
Both fair trade and free trade have their own advantages and disadvantages. One of the major benefits of the fair trade is that it promotes eco-friendly farming practices and helps farmers and artisans gain opportunities for building their own business skills.
Obviously the notable benefit of the free trade is that it allows us both ...
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