The open markets are filled with competitors trying to trade and sell their goods and services.
Fair Trade laws are enacted to provide an equal opportunity in the marketplace for developing countries and small producers of goods. To protect their financial economies, .governments intervene by placing huge taxes and quotas on exports, to restricting producers who try to flood the markets with their products. This intervention also helps those producers who are facing unfair trading practices. Companies who provide cheaper made products, can cause a deficit for any country by flooding their economy with these exports. Fair trade prevent this and provides developing countries with the opportunity to provide merchandise that is not readily provided to the consumer. Fair trade helps provides jobs in developing countries and protect them from the abuses of monopolization. To solve this problem, there must be a fair exchange for goods and services. If these practices are allowed to continue, we as the consumer, will be paying higher prices at the stores.
FAIR TRADE 3
Fair trade practices and legislation
Does it really help the markets remain fair?
Business in the domestic and global markets have become saturated with competition which laid claim from smaller producers of goods and services; that they were being left out of the markets for the reasons of competing prices. The concept of 'fair trade' was introduced to provide these individuals with a way to compete against the pressures of the big giants of producers of goods and have equal position to sell goods in the markets. This opportunity allows ...
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... of remaining fair with a collection of antitrust laws. The laws ensure that there is not monopolization of products, price fixing to destroy competitors and over charging the consumer.
The open market is filled with such competition that producers are unable to compete in the market against the larger companies and develop countries. Laws have been enacted to protect the small producers and the consumers from harm. To fix this dilemma, we must provide equal opportunity in the open markets. The unfair practices of monopolization, the continuous price fixing will keep our markets unequally attainable and high prices will keep the money of consumer in their pockets. If these practices are allowed to continue, turning our heads and ignoring the problem will not make it go away. It is all about fair trading in the markets and fair prices for the consumer.
Wright, L. T., & Heaton, S. (2006). Fair Trade marketing: an exploration through qualitative research. Journal of Strategic Marketing, 14(4), 411-426. doi:10.1080/09652540600948019
Apart from Antitrust laws, there are several other laws that promote fair business practices. The Robinson-Patman Act prohibits price discrimination. This act ...
The anti-trust laws were set in place to promote vigorous competition but also to protect the consumer from unfair mergers and business practices. The first antitrust law that was passed by Congress is called the Sherman Act and is a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” according to www.FTC.gov . Later in 1914 Congress passed two more laws, one creating the Federal Trade Commission Act (FTCA) and then the Clayton Act, which now create the three core federal antitrust laws that are still active currently. Although they have changed over the last hundred years, they still have the same concept: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” as stated by the FTC.gov website on The Antitrust Laws.
As Ian Fletcher pointed out in Free Trade Doesn’t Work: What Should Replace it And Why, nations need a well-chosen balance between openness and closure toward the larger world economy (Fletc...
Fair Trade will partner with corporations such as manufacturers, retailers and other companies who are associated with buying produce from producers in undeveloped c...
While free trade has certainly changed with advances in technology and the ability to create external economies, the concept seems to be the most benign way for countries to trade with one another. Factoring in that imperfect competition and increasing returns challenge the concept of comparative advantage in modern international trade markets, the resulting introduction of government policies to regulate trade seems to result in increased tensions between countries as individual nations seek to gain advantages at the cost of others. While classical trade optimism may be somewhat naïve, the alternatives are risky and potentially harmful.
Though fair trade is being increasingly affiliated with empowerment of the local and marginalised communities and acclaimed for offering an alternative formulation of trade relations and globalisation, the model is not without pitfalls. In this section, various challenges posing threat to the fair trade model – in theory and practice have been analysed.
Fair Trade coffee truly presents a difficult dilemma: through attempts to help farmers it sometimes backfires in certain areas and ends up hindering instead. Rules for the guaranteed market, guaranteed price floor, and opposition of child labor all originate from good-hearted desires to improve the lives of coffee farmers. Unfortunately, the situation many coffee farmers face cannot be so easily solved. The process of moving Fair Trade to the next level of functionality may not come quickly: it may take years, even decades. But that does not matter; rather, it matters much more that we ensure that the issues are addressed and thought over rather than simply swept under the carpet with the National Debt. With care and creativity Fair Trade can grow if we simply put forth the effort required to help it do so.
All nations can get the benefits of free trade by being specialized in producing goods they have a comparative advantage and then trade them with goods produced by other nations in the world. This is evidenced by comparative advantage theory. Trade depends on many factors, country's history, institution, size and. geographical position and many more. Also, the countries put trade barriers for the exchange of their goods and services with other nations in order to protect their own company from foreign competition, or to protect consumers from undesirable products, or sometimes it may be inadvertent.
Free trade is a form of economic policy which allows countries to import and export goods among each other with no government interference. In recent years there has been a general consensus in economist’s stance on free trade. They view free trade as an asset. Free trade allows for an abundance of goods with increased varieties and increased availability. The products become cheaper for consumers and no one company monopolizes an industry. The system of free trade has been highly controversial. While free trade benefits consumers it has the potential to hurt manufacturers and businesses thus creating a debate between supporters of free trade and those with antagonistic positions.
Free trade can be defined as the free access to the market by individuals without any restriction or any trade barriers that can obstruct the trade process such as taxes, tariffs and import quotas. Free trade in its own way unites and brings people together. Most individuals love the concept of free trade because it gives them the ability to move freely and interact with the market. The whole idea of free trade is that it lowers the price of goods and services by promoting competition. Domestic producers will no longer be able to rely on government law and other forms of assistance, including quotas, which essentially force citizens to buy from them.
“Fair trade is much more than a buying relationship,” Heyl said. “It’s about developing holistic communities and retaining wealth and talent and education in villages in India”. The model is especially significant for helping women. Heyl said in some communities, women aren’t allowed to leave the house without a man. Everything all at once.
In a perfectly competitive market, the goods are perfect substitutes. There are a large number of buyers and sellers, and each seller has a relatively small market share. Perfect competition has no barriers to information regarding prices and goods, meaning there is no risk-taking behaviour – sellers and buyers are rational. There is also a lack of barriers for entry and exit.
Globalization in short points to the whole effort towards making the world global community as one community. Goods that were only found in western countries can now be found throughout the globe. Now underdeveloped areas can enjoy the benefits of scientific advances and industrial progress available in developed countries for the development and growth of their areas.
There is increased competition- This is a consequence of capitalism. Increased competition leads to improvement in terms of quality and efficiency of production. It also leads to low prices of products in the market, as producers want to have a larger share of the consumer market. In a capitalistic perspective, businesses that produce high quality products at a low price enjoy a larger market share.