Fair TradeThough rooted in time honoured precepts and principles of ethics and morality, Fair Trade in its modern avatar refers to equitable and non-exploitative business relations between marketers in developed countries and producers in developing ones. As an economic policy, Fair Trade serves well to lighten the plight of small scale farmers and artisans by providing them optimum wages for their work. The Fair Trade Federation (FTF) lists the following criteria for Fair Trade:
Payment of optimum wages, optimum being computed in accordance with their local context.
Providing employment opportunities for social and economic betterment.
Providing equal employment opportunities to all, particularly the weaker sections.
Encouraging and following environmentally sustainable practices.
Maintaining transparency and public accountability.
Creating long-term, inclusive business partnerships.
Sustaining a safe and healthy working environment throughout.
Imparting financial and technical aid to producers as and when possible.
Issues of Fair Trade
Market Access:
The existing trade policies of many developed countries indirectly discourage import of finished goods from developing countries by extracting high import taxes on these products. Consequently, developing countries more often than not export raw materials even though these bring lesser returns than finished goods. For example, Australia imports cotton and cacao at low rates, turns them into high end clothes and chocolates and then sells them at home as well as the world over to bring in high profits. The losers, obviously, are developing countries who’re forced to open their markets for importers in industrialised nations so as to not plunge their national economies into further crisis.
Commodity prices
Even though much of the raw material consumed by secondary and tertiary industries comes from developing countries, their prices are determined by multinationals based in developed countries in such a manner that exploits producers for the maximum possible quantity at minimum possible wages.
Labour rights
In order to maximize productivity, many multinational brands and fashion houses attempt to stretch working hours without either improving working conditions or wages. While companies rake in profits by selling cheap products at high rates, workers and producers – many of them women and, sometimes, even children – suffer from over work, exhaustion and poverty.
Patents
Patenting has been taken to such a level that many indigenous products produced locally in developing countries are now not available for marketing and consumption in those very countries. Patenting has further pushed up prices of some essential products like medicines, software, seeds, etc till they they’re no longer available at affordable prices to common people in developing countries.
Dumping & Subsidies
Even as many developed countries demand removal of subsidies in developing countries, they continue to heavily subsidise sensitive industries like farming and other tertiary industries. Goods produced by these industries are then further exported to developing countries at low prices in such a way that only hurts local industries and so ultimately puts their economy under more duress.
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