Courtesy of Fair Trade Federation

Fair Trade vs. Free Trade

Rachel L. Spence

We continue to hear about “fair trade deals”for America from our president elect. He actually is not referring to fair trade the way we know and experience it. Our friends at the Fair Trade Federation explain the difference in this nice article, which includes an informative chart.

During this election season “free trade” and “fair trade” have become topics of interest and debate, both on the front pages and in the minds of voters and consumers. Due to the similarity of the phrases there is often confusion and misunderstanding about their meaning. It is common to hear the terms used interchangeably or to hear the phrase “fair trade” in contexts unrelated to the fair trade movement.

The objectives and approaches to free and fair trade are illustrated in the descriptions and chart below. We hope this information helps guide tricky conversations and combat ongoing misperceptions. (For a printable version, click here.)

Free Trade

Free trade has played a major role in countries’ trade policies and the international trading system for the past few decades. Free trade is guided by government policies and agreements, such as the divisive Trans-Pacific Partnership (TPP), a transnational trade agreement between 12 nations in the Asia-Pacific and Americas. Free trade and free trade agreements (FTAs) focus on lowering tariffs, quotas, and regulatory barriers to trade between countries. Free trade does not focus on the equitable distribution of wealth. Rather, free trade agreements often reduce preferential policies for specific countries and industries, with the stated goal of improving the overall economic growth of participating nations.

Fair Trade

The fair trade movement is an approach to development in which businesses partner with artisans and farmers to create more equitable trading relationships. Fair trade organizations are guided by overarching principles that seek to empower marginalized producers and improve the quality of their lives. The fair trade movement is driving change through ensuring living wages and safe working conditions in disadvantaged areas of the world as well as empowering the communities with long-term commitments and relationships. The Fair Trade Federation supports the 360° fair trade approach, in which our member companies focus on creating positive change – socially, environmentally, and economically – throughout their entire business.