Adult discussion about the Fair Trade movement

[blackheart]

We need to withdraw from NAFTA, the World Trade Orginization, and other corporate-managed trade agreements. I would use a system of tariffs for free trade.

How would having tariffs equal to being "free" trade?

 

[GeorgeOP]

For instance, if you want to sell, say shoes, in the US, place a tariff on imported goods equivalent to an improved/living wage. Yes, I realize consumers would pay more, but I have no objection. Labor costs typically are a fraction of the retail cost of the item.

So, if you have a critique, let's hear it.

Ok, so USA puts a tariff on imported sneakers. China doesn't like that, since it will sell less shoes that way. So they respond by putting a tariff on some American import. Both countries go back and forth that way. Eventually one of the products will also be an import of another country, so that country starts levelling tariffs. Soon, every imported item is tariffed. What happens next actually hurts the workers, instead of helping them. Trade slows down because of all the tariffs, causing the economy to go down, causing people to lose their jobs.

 

[Paalikles]

We need to withdraw from NAFTA, the World Trade Orginization, and other corporate-managed trade agreements. I would use a system of tariffs for free trade.

Tariffs = trade obstacle = protectionism = not free trade

Tariffs creates artificially higher prices than what the price mechanism would generate otherwise. Which would hurt you as a consumer, as firms would benefit.

When I say the WTO is not a good thing, that is because there are too many interests working against free trade (as defined by economists, and not by populists).

When a tariff is imposed on the market. Goods produced abroad become more expensive than goods produced domestically. Which means consumers will probably shift their demand over to goods produced domestically.

Which means your argument is flawed, as the tariff you suggest will work as way for corporations to increase their producer surplus, while consumer surplus decreases.

All in all, with tariffs, you buy goods for more than you could have if there were no tariffs. Which makes you worse off than if there was free trade.

And I don't think that was your intention.

edit: since I don't know where you are from, I have removed U.S, and left firms and consumers - since this reply is general, and not limited to the case of the USofA

 

[.Shane.]

Trade slows down because of all the tariffs, causing the economy to go down, causing people to lose their jobs.

Or, conversely, they raise the wage and the tariff is reduced and the price of sneakers increases much less than you'd think. If they fail to improve the wage, then guess what, someone decides to make the sneakers in the US.

 

[blackheart]

Or, conversely, they raise the wage and the tariff is reduced and the price of sneakers increases much less than you'd think. If they fail to improve the wage, then guess what, someone decides to make the sneakers in the US.

How much would they have to raise it by for the tariff to be reduced? And who would control this, the government?

 

[tomsnowman123]

How would having tariffs equal to being "free" trade?

I hope you don't mind if I quote the Green Party on this. In a dream situation, we would all live in ecovillages under a green-anarchy, so this kind of global economy wouldn't exist. Since that won't happen over night, here is the Green Party, and I strongly support this view.

Establish an internationalist social tariff system that equalizes trade by accounting for the differences among countries in wages, social benefits, environmental conditions, and political rights. Tariff revenues to a democratic, international fund for ecological production and democratic development in poor countries in order to level up social and environmental conditions to a high common standard.

Source

 

[allhailIndia]

I think free trade is fair trade because the barriers to the enjoyment of the benefits of free trade are, ironically enough, being imposed by democratic politicians seeking to protect a small number of producers while harming the interests of the consumers and producers elsewhere. We have yet to see the full benefits of free trade before deciding it should be replaced by 'fair trade'.

 

[JerichoHill]

We need to withdraw from NAFTA, the World Trade Orginization, and other corporate-managed trade agreements. I would use a system of tariffs for free trade.

If you have tariffs, you do not have free trade
Free trade implies no barriers at all

 

[JerichoHill]

Or, conversely, they raise the wage and the tariff is reduced and the price of sneakers increases much less than you'd think. If they fail to improve the wage, then guess what, someone decides to make the sneakers in the US.

While idealistic, that is not how tariffs work in reality. Nor Wages.

We cannot impose our views on wage rates onto other countries with different production capabilities, educational capital, and different institutions. It is the same type of ignorance that the world charges against America for its imposition of democracy in other countries of recent history

 

[Panzeh]

The US and European Gov'ts do not really need farmers. Farm subsidies hurt farmers in the Third World because it pretty much takes away their big advantage. 'social tariffs' are nonsense and keep less developed countries from exporting raw materials, their strength.

 

[Desmond Hawkins]

I think our trade laws are messed up as is. To me, fair trade is free trade. But even with NAFTA and FTAAS, we don't know what free trade is.

Oh come on, you have just given us a teaser.

Can you elaborate?

The US and European Gov'ts do not really need farmers. Farm subsidies hurt farmers in the Third World because it pretty much takes away their big advantage.

It is true that farm subsidies are generally bad, but it would be awfully wasteful to end farming on much of the most productive land in the world.

 

[luiz]

Fair trade would be achieved if everyone dropped subsidies and tariffs. There is no need to artifcially raise the prices to supposedely pay more for the producers.

 

[Che Guava]

Fair trade would be achieved if everyone dropped subsidies and tariffs. There is no need to artifcially raise the prices to supposedely pay more for the producers.

Absolutely. But wouldn't it be even nicer if there were a set of minimum standards on how to produce said products so that we don't end up in a race-to-the-bottom to see how cheaply a country can produce a commodity by ripping off thier own labor force?

 

[allhailIndia]

Absolutely. But wouldn't it be even nicer if there were a set of minimum standards on how to produce said products so that we don't end up in a race-to-the-bottom to see how cheaply a country can produce a commodity by ripping off thier own labor force?

The 'standards' themselves are a very tricky issue and one uniform, implementable global standard has proved to be too difficult to try. The only one perhaps can be no slavery, but then again the definition of what is and what is not slavery is also subject to a heated debate..

The EU and US fight over GM crops is an illustration of how culturally linked the idea of standards is...

 

[tomsnowman123]

If you have tariffs, you do not have free trade
Free trade implies no barriers at all

That should say fair trade. I am a proponent of fair trade. I don't necessarily believe the freer the market the freer the people.

 

[Paalikles]

tom - if you impose tariffs, then you waste more resources than you would otherwise do (as I explained above)

you = the world, or society. The effect of tarrifs is negative for everyone but the few who benefit from tariffs.

Let me try to explain again:

Let us assume the world consists of 2 countries, and that 1 good is produced in both countries.

Firm A produces in developed country 1 at a price X
Firm B produces in undeveloped country 2 at a price Y.
Y<X

Consumers generally want the most goods for their money, so they will consume more of the product that is supplied the cheapest

Then someone adds a tariff to the price Y -> Y+T
Now if (Y+T)=X, then consumers are indifferent about which one they will buy.
If (Y+T)<X, then the tariff does not change anything - consumers still purchase the cheapest
If (Y+T)>X, then consumers would demand more of the product produced in country 1. Which is NOT what you intended

In the last case, Firm A benefits because you have made the product more expensive.

In all the cases, you, the consumer have to spend more than you otherwise would have. It might give you a better feeling, but it is nevertheless a waste - as you create an artificial price for the good.

 

[JerichoHill]

As we have learned in America, you cannot transpose one set of cultural values onto another culture

This includes wages and prices