What Are The Pros And Cons Of Fair Trade

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TECHNICAL UNIVERSITAET BERGAKADEMIE, FREIBERG

Fair Trade & Eco-Labels

Submitted by-

Melvin Babu(59223)
Anurag Negi (59210)

5th June 2015

International Economics & Development
SS 2015
IMRE

Submitted to-
Prof. Dr. Dirk Rübbelke
(Allgemeine Volkswirtschaftslehre, insbesondere Rohstoffökonomik) Technische Universität Bergakademie Freiberg
Table of Contents

1. Introduction 1
2. Fair trade 2
i. Definition & Goals ii. Pros iii. Cons
3. Eco-Labels 3
i. Definition & Implementation ii. Objectives and Guiding Principles iii. Benefits iv. Challenges
4. Incentives for adopting Eco-Label schemes 5
5. Future Trends in Eco labelling 6
6. Conclusion 7
References
Introduction Today is an age of …show more content…

As defined by the Fair Trade Foundation, fair trade is a social movement which focuses on providing reasonable prices, sustainability in locality, friendly and decent working conditions, and equitable terms of trade for workers, farmers and other producers in the developing world. Fair trade started in early 1940s with a vision to provide equal rights for the producers of poverty-stricken communities around the globe. It started with some European and US organisations which sold their handicrafts and other goods at a fair price in developed countries which eventually lead to the formation of a fair trade labelling system started in 1990. Modern fair trade protects the farmers and producers of tropical commodities like coffee, palm oil, banana, tea, cocoa, etc. from the multinationals and the middlemen exploitations. Fair trade is about improving the position of producers within the poorest nations and also the nations which are developing so that they could sell their goods on a global market, which in fact would make their economy stronger and more vital.

“Fair Trade is a trading partnership, based on dialogue, transparency …show more content…

Despite of having many benefits, the consideration of economic incentives of companies mostly focuses on two most important things: increased profitability and increased predictability of future profitability. The most important constituent of profitability is price premia which should be considered in long term pricing and costs. It is to be noted that the long term profits will not necessarily be higher in eco-labelled markets as compared to normal market, but thing worth considering is that how procurement policies could help to make sustainable production more profitable than the unsustainable alternatives. Considering this, government can support eco-labelling by creating incentives for itself and by creating policies that encourage private bodies to encourage economic incentives as

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