Globalization

Video: Fair Trade vs. Free Trade – http://www.bigpicture.tv/videos/watch/ca46c1b95
(In relation to previous article on the cost of free trade)

Response to the video – Fair trade vs. Free Trade

After watching the video, I have a better understanding of the difference between free trade, and fair trade. I agree with Paul Rice on the advantages of fair trade, versus free trade. Through economic globalization and free trade, people in developed countries, definitely benefit from free trade. However, those in the developing world do not benefit from free trade as much. Hence the phrase – the rich gets richer and the poor gets poorer.

Fair trade conversely helps make free trade work for the poor. Fair trade does not negate the advances that free trade that made. As its name suggests, it not only incorporates the advantages of a globalized economy, but it does not leave the developing countries behind.

It is also good to know that the World Trade Organization is increasingly looking into a fairer world trading system. This way it is possible for globalization to reduce poverty rates. It is quite appalling to know that there are still people around the world who are living in poverty.

For us in Singapore, we are hardly aware of the plight of the less fortunate in third world countries. After watching the video, I better understand why fair trade should be used over free trade, and the advantages that it brings. We should try our best to help the less fortunate in any way that we can, hence being able to progress as a whole world.

Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions. Such trade allows specialization in member states of free trade areas, and lowers costs. Within a free trade area there are no barriers, such as tariffs and quotas. These would seem as beneficial to us. But there are still some people who are against having free trade, and economic globalization. Why is this so?

• Free trade claims that it would create jobs and raise incomes, in reality, many jobs were instead lost.
o For example, in the North American Free Trade Agreement, there was a lost of 879, 280 jobs in the U.S.

• Free trade affects the environment.
o The pollution from the export of goods as well as the resource used throughout the life cycles of products, are all ways in which free trade can damage the environment.

• The plight of the developing world
o Developing nations do not enjoy similar benefits of free trade as the larger nations do. The relatively new industries of developing countries would struggle against international competition.

Are we actually paying for free trade, without knowing it? What are the costs of economic globalization? Think about it.

Bibliography
http://en.wikipedia.org/wiki/Free_trade
http://www.religion-online.org/showarticle.asp?title=255
http://www.epi.org/content.cfm/briefingpapers_bp147
http://twohandsworldshop.com/blog/tag/free-trade/
http://www.commondreams.org/views04/0108-10.htm
http://www.economicshelp.org/2007/06/advantages-and-disadvantages-of-wto.html