Which do you feel is a better approach, free or fair trade, and why?
Free trade is the better approach to trade than fair trade. Gillikin (n.d) makes it clear that trade should involve different players being in a position to compete effectively in a market where everyone has a chance for success. With government intervention, such common opportunities are eliminated. For instance, the North American Free Trade Agreement led the United States, Mexico and Canada to reducing their barriers to trade, and eventually leading to increased volume of trade by the nationals within the different countries. Economic blocs are one of the most significant avenues using which different countries promote free trade. Most recently, the United Kingdom voted to leave the European Union, but logic dictates that it will seek a relationship with the European Union in the future, or at least some countries with the union, in an effort to find a market for British workers in the different countries. The ability of different people to provide labor services wherever they wish and sell a particular product wherever they feel they would fetch an appropriate price forms the principle upon which free trade is based. Therefore, such limited control of movement of products and the factors of production is likely to increase economic growth and development significantly.
Given the concept of comparative advantage, should we even be discussing free versus fair trade?
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The comparative advantage assumes that there is no free movement of factors of production, and a country ought to produce only the products for which it is endowed with enough resources. Therefore, with the concept of comparative advantage, focus should be on free and not fair trade. Since one country only produces some particular products, it should be in a position to sell the product to any market where the price is good enough. With regulations present, a country may not receive supply of the said product. Since there are limited suppliers and the country with trade barriers has no resources to produce it, then it would be in its best interests to do away with the barriers and promote free trade. Once the different countries involved in production on a competitive advantage basis adopt the removal of the said barriers to trade, then the trade volume would increase. Consequently, free trade is applicable in diverse economic conditions, which makes it an appropriate way for any economy to enhance its level of economic growth.
References
Gillikin, J. (n.d). Free Trade Vs. Fair Trade
