CFACT students at the University of Iowa recently posed an interesting question to their campus. What is better: free trade or fair trade? Often times businesses will tout the fact that they support “fair trade” because they claim it helps improve the lives of farmers. They also claim it is the morally correct thing to do because fair trade is “fair” to everyone.
CFACT students shared the facts, along with a hot cup of joe, with their fellow students, and many were surprised by what they learned. Many Iowa Hawkeyes were unaware of the darker side of the fair trade issue. Many were surprised to learn fair trade denies the poorest farmers from selling their product because they can’t afford to pay the money required to meet the standards imposed by the fair trade system. Students also didn’t realize how little transparency exists when it comes to fair trade.
Some students even have personal experience when it comes to the free trade vs. fair trade debate. One student said, “My farming co-op recently had a big debate about free trade versus fair trade. Fair trade seems like a racket to me.” Often times fair trade proves advantageous only to certain growers and inhibits competition. Without competition we often have to pay more for inferior products, which kind of is like a racket.