Free Trade vs. Fair Trade

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So often we hear the phrases “free trade” and “fair trade”  intermingled with economic reform and world trade talks. Which is better and why? What do these terms mean for Africa? Our consumerism makes a very big impact on developing nations, whether we realize it or not. Read on to learn more about the kind of trade you should be supporting and what the consequences are for countries in Africa.

Why should we be concerned about trade?

As consumers in a global market, our purchasing decisions have the potential to affect the livelihood of small farmers, the rights of women, wages and working conditions, and the sustainability of communities or the environment in Africa. People of faith often refer to Jesus’ words, “I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me,” as a call to service of those in need. What is often overlooked is His teaching that directly proceeds those words about the way God’s gifts can be used. The king in Jesus’ parable rewards the servants who invested the talents that he entrusted to them; similarly, we are called by God to use what we have been given to carry out His work on earth. Whether or not we realize it, our choices as consumers have the power to greatly influence the lives of millions of individuals in developing nations by helping to restore just trading relationships. While the liberalization of worldwide markets is often presented as a solution to economic disparities, this approach causes and perpetuates many of the challenges that the developing world faces.

What is wrong with the free trade ideology?

Free trade calls for the opening up of all international markets, regardless of a nation’s stage in development, theoretically making all nations equal economic competitors, susceptible to the same periods of prosperity and struggle. Richer nations, however, are much better equipped to deal with the long-term evolution of and instant crises within the global economic and trade system. For most developed nations, a year that is financially difficult will not lead to the extreme suffering that the same economic issues would cause in the developing world.

African nations depend more heavily on trade than developed nations. Therefore, problems in the global economy would have disproportionately negative effects for economies that are already struggling. The developing nations’ governments especially rely on trade for their income; on average, one third of their tax revenues come from trade taxes. Taking away this source of income could have devastating effects on governments’ development efforts.

Liberalization of world trade markets also allows corporations to exploit African workers. To produce their products as cheaply as possibly, companies hire employees on temporary contracts, paying them low wages and exposing them to dangerous working conditions. Nevertheless, these terrible conditions still attract workers, shifting the focus of production away from sustainability and towards export, increasing dependability on unpredictable overseas markets. This shift also means that limited natural resources are used for export products instead of the local communities.

What other option exists?

Fair trade offers an alternative to free trade, providing equitable prices for both labor and products and working for the restoration of a just trading relationship between nations at all levels of development. Fair trade includes offering employees fair wages, opportunities for career advancement, equal opportunities for employment, and healthy and safe working conditions. It also means that production is geared towards environmental and community sustainability, and works towards the goal of long-term trade relationships.

Thanks to The US Interfaith Trade Justice Campaign for providing resources and information.

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