Transcript FreeAndFairTrade

Coffee, Clothes, and a Conundrum:
Poverty and Free and Fair Trade
By
Olivia Natan, Amanda Lordemann,
Leslie Hamachi, Sarah Rempel, Daniel
Khalessi, and Benjie Smith
What is the best way to address
International Poverty?
• Poverty: The inability to provide for one’s
basic needs and comforts
• Trade: Exchange of goods or services
• Tariff: A tax instated by a country on
imports
• [Economic] Globalization: The integration
of national economies into the international
economy
Free Trade
• Free Trade, aka Trade
Liberalization, aka
Lassiez-Faire Capitalism,
is a macroeconomic policy
that promotes multilateral
tariff reduction and the
removal of limits on
foreign investments.
Free Trade
Pro
Con
•Allows countries to
specialize, which can tap into
a niche market.
•In the long run, a “level
playing field” can prepare a
developing nation for global
competition.
•Specialization doesn’t allow
for diversification, and this can
lead to instability.
•Developing nations cannot
compete with developed
nations on a “level playing
field” because they lack the
resources, human capital, and
leverage.
•Job loss in the short term
•Job creation in the long
term
Fair Trade
• Fair Trade is where consumers
pay a premium on products to
support the welfare of the
producers.
• The goal is to create a just and
sustainable economic system
by setting price floors on
certain products from
developing nations.
• Fair Trade Organizations
designate and certify
producers to receive Fair
Trade status.
Fair Trade
Pro
•Promotes specialization, which
can tap into a small but lucrative
market.
Con
•Discourages diversification,
which can lead to instability when
a specific market shrinks.
•Has sway with its relation to
•Its status as a fad indicates that
activism; its label as “trendy”
the popularity of fair trade
allows the cause to gain sympathy products may not be lasting.
with consumers.
•Empowers individual producers
•Price floors and/or subsidies
provide false stability in the
market
Protectionism
• Protectionism describes economic policy
enacted by a nation to protect domestic
industry.
• Includes tariff escalation and the
implementation of restrictive quotas on
imports.
Protectionism
Pro
Con
•Preserves weak domestic
businesses.
•Reduces competition faced by
domestic industry.
•Temporarily stabilizes a
nation’s economy.
•Can lead to trade wars as trade
barriers are implemented in
retaliation.
•Regional integration schemes
create economic opportunities
for poor countries.
•Regional integration can cause
poor countries to subsidize
richer nations.
•The formation of a
conglomerate of poor nations
can isolate them in a swamp of
economic destitution.
If a = b, and b = c, then a = c.
•We have just talked about how free and
fair trade can affect the economy as a
whole.
•It is a generally accepted truth that the
economy affects poverty.
•Consequently free and fair trade policies
affect poverty.
How can these policies, which shape
macroeconomic trends, affect poverty?
• An unhealthy national economy can increase
unemployment and thereby decrease average income and
standard of living.
• A healthy national economy can increase job creation and
increase standard of living, but it can also increase the gap
between the rich and the poor.
Group Discussion
• What is the best way to reduce poverty around the
globe?
• Are the pitfalls of free trade avoidable?
• Is fair trade idealistic in that it relies on the
goodwill of the consumer?
• Are protectionist policies an efficient and
reasonable method of revitalizing domestic
industry?
• Which of these policies, free or fair trade, creates
a healthy national economy?
The Economic Spectrum
What is the best way to address global
poverty?