Fair Trade was created with the aim of better trading conditions and promotion of sustainability as it main objectives. Organizations and companies who work under the agreement of Fair Trade, ensure to have gender equality, stop child layout and promote safe and healthy working environment for the producers, which in our case are the developing countries. To a great degree most of the above seem to be established.
However, Fair Trade is basically a subsidy to the poor and when evaluating its effect on the developing countries we must take into account the consequences and the fairness of subsidies. According to economics, subsidies, which usually come along with fees, government taxes and farming expenses, have as a consequence overproduction and inefficient resource allocation. This means that more producers remain in the market of coffee or more producers join an inefficient market. Many argue that in addition to the benefits discussed above, what really profits the producers of the developing countries is the greater amount of money that they get. How try is that though? As you read the following article, you will see that that is not often the case due to great costs of production. But even if it was the case, producers learn to rely on short term money while producing products of lesser quality because they do not have an incentive to improve anymore. So me have argued that Fair Trade is a form of free trade condoled by economically powerful countries with the consequence of preventing third world people from liberating themselves from the bondage of poverty and dependence.