Global trade has stimulated economic growth worldwide and increased trade to a magnitude never seen before. Trade activity has still yet to reach its pinnacle and is increasing drastically. However, most people only see trade with a positive point of view, without looking into the details and seeing its downsides. Global trade itself is innately flawed due to international policies, abusing and taking advantage of the developing countries to benefit the wealthy. Why are we allowing this? Is there any way to change it? There are several arguments for both questions, but first, what is allowing the exploitative trade system to continue. Much like the majority of world issues, whoever has most money, has most power, and those who have power, dominate international systems, including trade. The developed countries have rigged the policies of the over-lookers of international trade, the World Trade Organization, to benefit themselves. Although the World Trade Organization discourages tariffs and subsidies, there is no way it can be eliminated. Thus, when goods produced in both developing and developed countries, tariffs placed on developing countries’ goods plus the subsidies offered by the developed countries’ government, something the poor countries cannot afford, the impoverished farmers will not be able to sell their products on the international market. The US alone pumps billions of dollars subsidizing its agricultural industries, especially on corn, largely as food supply for cattle. These actions that large corporations, working alongside the wealthy farmers in the Mid-west, forced governments to commit to are destroying African nations. Their cheaper goods on the market are what consumers will ultimately decide to buy, disregarding the welfare of poor African farmers.
In addition to massive amounts of subsidies and additional tariffs placed on agricultural goods from other countries, developed states decide the prices of the manufactured products, in turn deciding the price of raw material produced in developing countries. A prime example would be coffee. Coffee prices are determined in New York and London. Manufactured coffee costs a substantial amount more than coffee beans themselves. However, collecting coffee beans with your bare hands is much more tiring than simply processing and selling the final manufactured goods. Yet, the international system dictates that the people with money and power decide international policies. Less than 30 cents go back to the farmers in Africa while large corporations suck in and keep most of the money.
So is there anything we can do to help end this dreadful vicious cycle? There are two different types of trade: free trade and fair trade. Both have their benefits, and both of their down sides, it’s a matter of maximizing the benefits and minimizing the downsides that follow. Free trade means that tariffs are reduced to nearly none and subsidies are eliminated, thus, this would lower the price of goods in general due to comparative advantage, the cheaper the price, the more will be sold. This means with decreasing prices, there will be a lower price for consumers, increasing consumption. The capital, or money, will start flowing into developing countries making this system one with positive sum gains, in which my gain is your gain. Fair trade, on the other hand, benefits the developing countries most. First, it means more equitable trading conditions to help the disadvantaged sides. In addition, fair trade would require the massive corporations that are not lacking money to give a larger portion of the profit back to the African farmers that actually do all the work.
Benefits of free and fair trade may be easy to identify, however, there are major negative aspects that come with them. Free trade is all based on competition. Thus, to decrease prices and maximize profit, large companies go to developing countries for cheaper labor. Here, many people are abused and minimum wages are below the amount needed for simple necessities. Free trade motivates this. In addition, environmental standards and other considerations are ignored in an attempt to maximize profit by decreasing cost structures. In addition, seeing as subsidies are discouraged, infant industries are incapable of rising. Without assistance, these companies are not able to grow. Fair trade also has its “fair” share of downsides. Even with fair trade, there is no way we can know where all the money ends up. Lack of oversight on NGOs allows these unmonitored organizations to take money from donations, etc. In addition, the system, despite having fair trade, still inherently benefits the rich. Even if African countries can have their goods sold, the majority of their profit goes to the manufacturers, the sales people, etc, not the farmers.
Therefore, is there anything that we can do to help the impoverished agricultural workers in developing countries? The answer is yes. Due to a lack of international regulation on goods such as coffee, its prices have hit a thirty year low. These farmers are not aware of the prices of coffee in developed countries. They are often 25 times more expensive. International policies must be created to help the poor African farmers, giving them a much larger portion of the profit. It may seem utopian, but an incentive may not be able to be offered to the large corporations. Much like how most international systems are ruled, by dominance, the appropriate method of approach towards this issue is through dominance. But as many people have pointed out, in many issues, governments are simply agents of multinational corporations, acting in their interests. Thus, like the civil rights movements of the 1960s, perhaps it is time for the African country to step up, on a much larger scale, and object to the ignorant countries in Europe and North America.
In addition to massive amounts of subsidies and additional tariffs placed on agricultural goods from other countries, developed states decide the prices of the manufactured products, in turn deciding the price of raw material produced in developing countries. A prime example would be coffee. Coffee prices are determined in New York and London. Manufactured coffee costs a substantial amount more than coffee beans themselves. However, collecting coffee beans with your bare hands is much more tiring than simply processing and selling the final manufactured goods. Yet, the international system dictates that the people with money and power decide international policies. Less than 30 cents go back to the farmers in Africa while large corporations suck in and keep most of the money.
So is there anything we can do to help end this dreadful vicious cycle? There are two different types of trade: free trade and fair trade. Both have their benefits, and both of their down sides, it’s a matter of maximizing the benefits and minimizing the downsides that follow. Free trade means that tariffs are reduced to nearly none and subsidies are eliminated, thus, this would lower the price of goods in general due to comparative advantage, the cheaper the price, the more will be sold. This means with decreasing prices, there will be a lower price for consumers, increasing consumption. The capital, or money, will start flowing into developing countries making this system one with positive sum gains, in which my gain is your gain. Fair trade, on the other hand, benefits the developing countries most. First, it means more equitable trading conditions to help the disadvantaged sides. In addition, fair trade would require the massive corporations that are not lacking money to give a larger portion of the profit back to the African farmers that actually do all the work.
Benefits of free and fair trade may be easy to identify, however, there are major negative aspects that come with them. Free trade is all based on competition. Thus, to decrease prices and maximize profit, large companies go to developing countries for cheaper labor. Here, many people are abused and minimum wages are below the amount needed for simple necessities. Free trade motivates this. In addition, environmental standards and other considerations are ignored in an attempt to maximize profit by decreasing cost structures. In addition, seeing as subsidies are discouraged, infant industries are incapable of rising. Without assistance, these companies are not able to grow. Fair trade also has its “fair” share of downsides. Even with fair trade, there is no way we can know where all the money ends up. Lack of oversight on NGOs allows these unmonitored organizations to take money from donations, etc. In addition, the system, despite having fair trade, still inherently benefits the rich. Even if African countries can have their goods sold, the majority of their profit goes to the manufacturers, the sales people, etc, not the farmers.
Therefore, is there anything that we can do to help the impoverished agricultural workers in developing countries? The answer is yes. Due to a lack of international regulation on goods such as coffee, its prices have hit a thirty year low. These farmers are not aware of the prices of coffee in developed countries. They are often 25 times more expensive. International policies must be created to help the poor African farmers, giving them a much larger portion of the profit. It may seem utopian, but an incentive may not be able to be offered to the large corporations. Much like how most international systems are ruled, by dominance, the appropriate method of approach towards this issue is through dominance. But as many people have pointed out, in many issues, governments are simply agents of multinational corporations, acting in their interests. Thus, like the civil rights movements of the 1960s, perhaps it is time for the African country to step up, on a much larger scale, and object to the ignorant countries in Europe and North America.