By Ben, Mark, Paddy, Tim

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Title Page
Fair Trade, Not Aid
By Ben, Mark, Paddy, Tim Tim
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Fair Trade Definition
Fair Trade
A commercial agreement under which distributors
sell products of a given class at no less than a
minimum price set by the manufacturer
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Aid Definition
Aid
Refers to any money or resources that are
transferred from one country to another without
expecting full repayment.
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Fair Trade
FAIR TRADE
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What is Fair Trade? And why should we implement
it? Not everyone benefits from international
trade. In less developed nations, the workforce
is often exploited by large multinationals under
low wages and long work hours whilst the company
makes abnormal profits from selling its
commodities overseas. Meanwhile, smaller domestic
firms in these countries find it hard to survive
as larger firms will often have most of the
market share. Also, MEDCs are prone to setting up
expensive trade barriers to prevent the dumping
of cheap goods from these domestic firms into
their country. This is known as protectionism and
makes it very hard for these domestic firms to
expand internationally. Fair Trade helps the
disadvantaged workforce and producers by
attempting to control development sustainably.
A coffee farm, Brazil

• The goals of fair trade are
• To improve market access, price rates, producer
  organizations and trade stability with these
  producers.
• To prevent the exploitation of child labor and
  open up greater benefits for less-skilled
  workers mainly women and indigenous people.
• To protect human / labor rights by promoting
  economic, social and environmental security.
• To raise awareness of the Fair Trade act,
  international trade ethics and the rules and
  ethics of conventional international trade.

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• The Fair Trade Foundation
• The Fair Trade Foundation is a UK originated
  organization set up by non-government
  organizations and alternative traders. It uses a
  labeling system, the Fair Trade mark, to depict
  which firms and commodities have been produced
  according to the Fair Trade guidelines it sets.
  Consumers will then be obliged to only purchase
  these goods to help prevent the exploitation of
  workforces and producers in these nations. A
  firm may apply for the Fair Trade mark if it
  meets with the following guidelines
• For factories or plantations reasonable working
  hours and conditions.
• For small farms or farming co-operatives a
  democratic structure.
• A price offered to the producers from the
  suppliers which pay for their total cost of
  production.
• Long term production planning and sustainable
  production practices.
• Additional social benefits for the producers.
• Partial payment to the producers in advance to
  help them prevent falling into debt.
• The Fair Trade Labeling Organizations Ltd.
• This organization sets the criteria for
  establishing and maintaining Fair Trade
  standards. Firms which meet these standards can
  apply to the FLO. All in all, there are 17 Fair
  Trade organizations in the world.

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Not Aid
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Why Get Aid?

• Economical Reasons
• Political Reasons
• Moral Reasons

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Economical Reasons

• The most important and the strongest reason why a
  country receives aid. Aid helps to
• Supplement the lack of domestic resources such as
  foreign exchange.
• Enables infrastructure changes to be made to the
  economy such as dams and roads .
• Contributes to the take-off phase in sustained
  economic growth.
• Increase the infrastructure, created by the
  foreign MNC, within the coutry

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Political Reasons

• Foreign Aid is often seen as a necessity for a
  country if it is to maintain power.
• Military goods is a good example.
• Maintains existing government
• Helps suppress the opposition
• Example Military goods helped maintain the power
  balance between NATO and the Soviet Union, in the
  continent of Africa.

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Moral Aid

• MEDCs feel that they have a responsibility for
  the development of LEDCs
• Is linked to basic humanitarian reasons
• Or after a colonial power has left the country
  after using most of its recourses.

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Set Backs or Problems

• Overseas companies may lend money to small
  entreprenuers, but the profit and comercial
  benefits created through banks will be less.
• Transfers of low interest grants interfere in the
  market determination of interest rates and
  exchange rates

• Aid can have set backs for LEDCs.
• The set backs are all to do with the three types
  of aid.
• Such problems are linked to private companies
  with the nation

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Winners and Losers

• Winners
• American Industry workers, farmers in less
  developed countries, Chile (who have recently
  struck a fair trade deal with the USA), Drug
  developers (as fair trade is now accepted in the
  pharmaceutical world) and customers will gain as
  prices on food will be cheaper.

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Losers

• European farmers are the major loser if free
  trade is to take place.
• Governments in developed countries may lose
  revenue from import taxes or tax from local
  companies.
• Multinationals may lose out because they will no
  longer be able to exploit developing countries as
  fair trade will allow these countries to
  hopefully develop.
• Companies such as Dale (banana producers will
  face an increase in competition from overseas.

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Conclusion

• Fair Trade is a good idea in theory but it may
  take along time for all developed nations to
  comply to this.
• Many people feel fair trade is better then aid.
  This is because it allows the economies of the
  undeveloped nations to develop.
• However many developed nations are against this
  as they will no longer be able to exploit the
  less developed nations. And it will enable these
  nations to break into all markets.

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Conclusion

• There is also a double edged sword as the
  undeveloped nations cant develop without
  sufficient food, however they cant develop with
  free food (aid).
• Fair trade will also lead to a price decrease as
  EU subsidies will have to be taken away so the EU
  farmers can compete with the farmers from Africa
  and Asia. Therefore many EU farmers will be out
  of business.

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Conclusion

• Some things are now traded freely around the
  world such as drugs to fight against Aids. These
  are now traded freely to African nations.