Fair Trade Schemes – Economics Revision – The Tutor Academy
Fair Trade Schemes – Economics Revision – The Tutor Academy
Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes
What are Fair Trade Schemes?
Fair trade schemes aim to help producers in developing countries achieve better trading conditions and promote sustainability.
The main principles of Fair Trade
1. Payment of a Fair Price
Fair Trade ensures that producers receive a reasonable price for their products, covering the cost of production and providing a living wage for workers
2. Long-term Partnerships
Free Trade encourages long term relationships between producers and buyers, instead of a one-off transaction
3. Capacity Building
To help improve their products and competitiveness, Fair Trade organisations provide support / training to producers
4. Gender Equity
Fair Trade opens up equal opportunities for men and women, as well as promotes gender equity
5. Child Labour
Fair Trade does not allow the use of child labour and instead ensures that children have access to education
6. Environmental Sustainability
Fair Trade promotes environmentally sustainable practices, such as the use of organic farming
Fair Trade Products
Independent Organisations – such as Fairtrade International – certify Fair Trade products, set standards for Fair Trade and oversee the certification process.
Fair Trade products will have a Fair Trade Certification label which consumers can look for when shopping
Advantages of Fair Trade Schemes
1. Improved Living Standards for producers
Living standards can be improved and poverty can be reduced as Fair Trade Schemes ensure that producers receive a fair price for their products
2. Capacity Building
Better products can be produced and competitiveness can increase as a result of the training and support producers receive from the Fair Trade Schemes
3. Improved Working Conditions
Fair Trade Schemes promote good working conditions and prohibit the use of child labour
4. Environmental Sustainability
The use of environmentally sustainable practices, such as organic farming, has become more common as a result of Fair Trade Schemes
Disadvantages of Fair Trade Schemes
1. Limited Impact
Although Fair Trade Schemes have some producers in developing countries, its overall impact in reducing poverty has been limited
2. Consumers are faced with Higher Prices
Producers are paid a higher price for their products which means that Fair Trade products may be more expensive for consumers
3. Limited Product Range
In comparison to the range of all products available on the market, the range of fair trade products is relatively small
4. Certification Costs
The process of obtaining Fair Trade Certification may act as a barrier to entry for small-scale producers due to the high costs involved
5. Criticisms of the Certification Process
Some critics have argued that the Certification Process may not always ensure that producers receive a fair price and it may not effectively address issues such as environmental sustainability
Quick Fire Questions – Knowledge Check
1. Define what a Fair Trade Scheme is (2 marks)
2. Identify and explain six principles of Free Trade (10 marks)
3. Identify how a consumer can spot whether a product is of Free Trade (2 marks)
4. Identify and explain four advantages of Free Trade Schemes (8 marks)
5. Identify and explain five disadvantages of Free Trade Schemes (10 marks)
Next Revision Topics
- World Trade Organisation
- Globalisation
- Trading Blocs
- Specialization & Trade
- The case against Protectionism
- Economic Growth
- Gross National Income
- Strategies to promote Growth & Development
- World Trade Organisation
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