Literature Review

The topic on the Fair Trade is the most discussable today. That is why a large amount of research have been done. Only some of them was used in this academic paper and differ by the points of view of the authors. Fair Trade and Globalization are linked to each other and can be good for everyone, but under the current conditions it does not perform as well as could be (Nicholls & Opal, 2005). Stiglitz gives numerous examples of how richer states exploit developed countries and their resources. The author is angry about the participants in discussions at the World Trade Organization, because there are a lot of issues that should be considered about environment and employment policy, but only trade negotiators are allowed to participate in discussions. Stiglitz is angered by the direction in which globalization is going (Stiglitz, 2002.) His concluding paragraph says: "We can make globalization work, not just for the rich and powerful, but for all people, including those in the poorest countries" (Stiglitz, 2006). Globalization induces countries to negotiate, especially those developed and developing (Lee & Vihinen, 2005). Trade policies allow developing countries to enter into the world market and benefit from their participation (Zaccai, 2008). Assuming that trade is good for development, Stiglitz and Charlton talk about liberalization and privatization of markets that leads to instability and inequality (Stiglitz & Charlton, 2005). Liberalization is based on such variables like full employment and perfect competition, that do not exist in reality (Love & Lattimore, 2009).

To provide an example of the market with reduced tariffs, Stiglitz in his book describing Latin America's import substitution and East Asia's export oriented strategies, pointing out the lack of credit and insurance markets and an undersupply of public goods (Stiglitz, & Charlton, 2005).. The authors say that any trade agreement should be responsible for their negative impact on development. Fair Trade for All stands up for transparency in fair trade agreements result. Developing countries have to make their choice about entering in agreements such as WTO voluntary, and without fear (Stiglitz, & Charlton, 2005).

Unfortunately fair trade does little for the poorest in the agricultural sector. It is difficult for poor farmers to survive on the competitive market. An example is the world coffee trade (Lee & Vihinen, 2005), which is dominated by five huge multinational firms (like Nestle) and a few more smallish ones (like Starbucks) (Taylor, 2005). These firms are supported by various direct and indirect subsidies, and get various other special favors. Jaffee argues that we need much more fair trade in coffee. He gives a number of very valuable and practical recommendations, including protection of the term "fair trade" (Jaffee, 2007). According to Sidwell, however, fair trade is not an answer to poverty, it operates to keep those who are poor on their places (Sidwell, 2008). The goal of the fair trade movement is against free trade. Fair Trade is unfair (Sidwell, 2008), because it seeks to reduce voluntary exchange and pushes poor farmers under governmental control Fair trade exists as a response to various political and social issues (Nicholls and Opal, 2005). Stiglitz and Charlton propose that all WTO members should provide free market access to all goods from developing countries, open access for any country with smaller GDP. The proposal is intended to create transparent system of market access that would provide trade opportunities for developing countries (Lee & Vihinen, 2005), (Stiglitz, & Charlton, 2005). Fair Trade for All suggests for developed counties to eliminate agricultural subsidies in order to provide competitiveness for developing countries' agricultural sectors. Stiglitz and Charlton consider an approach to agricultural liberalization and reduction on subsidies to favor the least developed countries by recommending a reduction on tariffs for goods produced and consumed in developing countries (Stiglitz, & Charlton, 2005). Accordingly, they propose the WTO focus on liberalizing the commodities in which increasing in price makes better off both producers and consumers (Stoll & Wolfrum, 2006). The role of the consumer is a central theme of Zaccai's "Sustainable Consumption, Ecology and Fair Trade." Fair Trade product consumers are member of developmental or environmental associations in greater proportion than ordinary consumers. This is because, beyond the different forms that this responsible consumption can take in terms of ecological or Fair Trade products. Those consumers want to be aware about the products they buy (Zaccai, 2008). Today decisions of consumers are based not only on price and quality of the product but on sustainability of technologies used for food production, their environmental and health impacts (Walton, 2012). Those factors force most people to "buy-local," to support "fair-trade," and follow "certified organic" trends. Farmers are more interested now in using greener technologies in their production. Boye claims, that more than 90% of population do not know where their food comes from or how it was made (Boye and Arcand, 2012).

In connection with consumers, consumption and fair trade, the book "50 reasons to buy Fair Trade" invites consumers to make simple choices in the way they shop, choose fair trade products, and thus help disadvantaged farmers and workers get a better deal from trade, help end exploitative child labour, and persuade companies and governments change the way they do business. It presents fair trade as the “success story of our time”, with an increasing number of fairly traded products available in an increasing number of places, in a way that “everybody can be part of the fair trade revolution”. Consumers can encourage the poor, paying a fairer price, helping rebuild lives and livelihoods, or by 47 other reasons (Litvinoff and Madeley, 2006).