Fair trade

• Explanation 1:

  Richer countries benefit more from world trade than poorer countries, which explains why in some cases the development gap is widening.
• Rich countries protect their trade using:

  • tariffs (taxes) paid on imports, making imported goods more expensive and less attractive than home-produced goods
  • Quotas liming the quantity of goods that can be imported
  • Subsidies: governments grant to less competitive sectors, such as agriculture, making their products cheaper than those produced by poorer countries.
• Explanation 2:

  Fairtrade is an international movement that sets standards for trade and environmentally friendly production. It helps to invest in local development projects and encourages participation in community cooperatives to ensure that farmers in LICs get a fair price for their produce.
• example

  Trading groups (the EU) are countries which have grouped to increase trade between them by cutting tariffs and discouraging trade with non-members.