Free Trade Vs. Fair Trade

Many economists and politicians speculate about the merits of free trade and fair trade. Although both approaches are focused on a comprehensive plan for commercial activity, they are founded by very different perspectives.

Free trade is focused on breaking down barriers between countries and removing preferential policies that favor specific countries or industries. Free traders believe that a business should succeed or fail based on its ability to respond to the open market, without government protection of the industry or workers. Most free traders advocate for the elimination of tariffs and subsidies, and oppose regulations that require companies to pay extra for doing business in foreign markets.

Fair trade is focused on the wages and working conditions of labor in developing markets. Fair traders suggest that companies and governments should regulate trade to ensure that workers receive a just level of compensation and a safe working environment. This specific trade sometimes refers to local farmers since they often cannot compete with price of large-scale farming industries.

Almost no governments take a purely free trade or fair trade approach to commercial policy. Instead, countries usually blend policies. For example, the United States, Mexico and Canada are members of the North American Free Trade Agreement, which slashed protectionist barriers among the three countries. However, the U.S. also supports certain fair trade policies. For example, the U.S. Trade Representative works with the United Nations to provide preferential access to business resources to women and minorities in markets around the world.

Watch a video on free trade vs. fair trade.


Gillikin, Jason. Free Trade Vs. Fair Trade. 2015.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s