In the current configuration of an increasingly globalized world, the volume of global trade transactions is continuously increasing. Furthermore, it can be argued that the current international trade regime has its roots in the specific neoliberal attributes of globalization. Indeed, institutions such as the International Monetary Fund, the World Bank and the World Trade Organization have been very determined to promote neoliberal values ​​in the implementation of economic and trade regulations. However, these promotions of the implementation of neoliberal trade policies have yet to bear fruit in most developing countries. Rather, there is growing concern about an international trade regime deemed unequal or “unfair”. Therefore, this essay will focus on serious specific issues related to the current trade regime (which is free), namely the issue of unequal provisions in the current free trade regime experienced by many developing and underdeveloped countries. Solutions for greater state intervention in the market within the framework of fair trade will then be exposed. Finally, case studies will be provided as final proof of why fair trade would undoubtedly be more preferable than free trade in the contemporary international trade regime. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Free trade, in its narrowest sense, refers to the minimization of trade barriers to create a level playing field between countries on the international stage. Furthermore, Jagdish Bhagwati postulated that "...we know what free trade means - by it we mean the absence of price or quantity interventions in trade which prevent the conversion of world prices into domestic prices...". This would imply that a free trade condition is also fair (because countries do not impose specific protectionist measures to distort competition in the market), is usually taken for granted. Indeed, one of the main economic principles that define the idea of ​​“free and fair” trade is based on the famous principle of comparative advantage proposed by David Ricardo. It is believed that even in the condition in which one country has a higher rate of efficiency in the production of all products than another country, the fact that inequality exists in the forms of different rates of labor productivity implies that a sum game positive could be achieved when those countries decide to engage in free trade, specializing in a specific product and engaging in exporting the product in which that country has a comparative advantage and importing the other products. This argument in turn materializes in the WTO's attempt to reduce artificial trade barriers (tariffs or quotas) through negotiations and agreements sanctioned within the WTO and binding on its member states (Stiglitz, 2006). Supporters of free trade have argued that this principle would lead to a more efficient reallocation of resources, and therefore would be beneficial to all parties involved in free trade (Krauss, 1997:5). However, there is an inherent flaw in this argument that leads to the current international trade regime being unfair and unbalanced, especially between the first and third worlds. According to Stiglitz (2006), trade liberalizations could only be beneficial to both sides if the economies and employment climate of both sides are already mature. This condition, however, is not applicable formany developing and underdeveloped countries. Furthermore, the fact that international institutions such as the World Bank and the International Monetary Fund impose certain conditions (trade and economic liberalizations together with a decrease in state intervention in the market) as prerequisites for providing aid to many developing countries further aggravates this problem. Indeed, trade liberalization has had a devastating impact on the economic development of these countries. According to Oxfam in 2002, an international organization focused on promoting social justice and eliminating poverty, "97% of the income generated by international trade benefits middle-income and wealthy nations, leaving only 3% for nations poor". To better illustrate the issue of inequality of current trade regimes and the potential exacerbating impact of trade liberalizations on developing countries, a case study on Ghana is provided in more detail. The case of Ghana has shown that trade liberalizations have had a major impact on failure, and in fact increases the rate of poverty and inequality, as well as the decline of the local poultry industry. The three phases of the liberalization process, from 1957 to 2012, led to an overall decrease in average tariff rates from around 44% in the early 1980s to a stable rate of around 13% throughout the 2000s. This implies that the prices of products imported into Ghana have been steadily declining due to the fall in tariffs applied to these products. In 1995, 42.7% of Ghana's total GDP came from the agricultural sector. This, combined with the relatively cheap labor in the country, was expected to give Ghana a comparative advantage in terms of the production of agricultural products compared to the United States and other EU countries. However, the growth and specialization predicted by the model of the principle of comparative advantage have not produced results. Indeed, the Uruguay Round of the GATT (General Agreement on Tariffs and Trade), which led to the Agreements on Agriculture for Ghana, proved particularly ruinous for the country (ibid.). This is due to the various flaws of the agreements signed in the Uruguay Round, whose loopholes have effectively allowed many developed countries to maintain their protectionist measures (including heavily subsidizing agricultural products to compete in the global market), while at the same time at the same time to open up local Ghanaian markets to be flooded with these heavily subsidized products, resulting in an unequal price comparison between local Ghanaian products and imported ones. From this case study it is clear that more control over the current free trade regime is needed to address the current trade regime which is disadvantageous towards less developed countries. Creating an international trade regime that is fairer and does not tilt favor towards developed countries is important in trying to address this problem. This is why fair trade is necessary, i.e. a liberalization of trade that does not discriminate against developing countries and is asymmetrical with respect to its current configuration. In this context, fair trade could be seen as a regime system aimed at increasing the level of fairness within current international trade frameworks. This could be implemented within the framework of state interventionism firmly promoted by Stiglitz in his book Fair Trade for All: How Trade Can Promote Development (2005). He argued that due to the imperfect nature of the market, especially in developing countries, it is important for government to play a stronger role in promoting economic development.The East Asian Economic Tiger (composed of Japan, Taiwan, China and South Korea) could be seen as an example of how trade liberalizations combined with active interventionist measures could lead to massive economic growth and developments (Stiglitz and Charlton , 2005). A specific case study to support this would be the state regulations implemented by China regarding its current currency market system. The Chinese government has actively intervened in the appreciation of the RMB, especially against the dollar, which has resulted in cheaper exports of Chinese products and more expensive imports of foreign products. While some might argue that this creates an unfair condition in which China could actually export at lower costs, thus resulting in a net surplus in its trade accounts relative to the United States due to its “false” exchange rate, a trade regime fairer would undoubtedly involve the need for developed economies to make compromises for the sole purpose of bringing a greater level of fairness to the current trading system. A more expensive import would also leverage local Chinese technology products, considered one of the crucial infant industries in contemporary China, and this in turn contributed to China's thriving IT industry. Furthermore, the benefits of implementing fair trade policies are not isolated to East Asian countries. Ruben (2009) noted that, based on the various impact analyzes he carried out, focusing mainly on the agricultural sector of Latin American countries (Peru, Costa Rica and Ecuador), it is clear that a general trend of improvements in the means of small-scale subsistence Large-scale, albeit modest, farmers can still be seen. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay The question of what fairness entails is one of the major ongoing debates in promoting fair trade. As stated by Stiglitz and Charlton (2005), "... because the circumstances of different countries are different, any agreement that applies 'fairly' or 'uniformly' to all countries can still have large differential effects...". However, it is still clear that fair trade offers an alternative path of trade globalization whereby developing and underdeveloped countries could have a level playing field in the international trading system. Free trade with its neoliberal market principles has failed to address this problem, because the market alone is apparently incapable of “fixing” itself in the absence of checks and balances enforced by other entities (which in this case, that entity would be the State). Extensive research has also been conducted, which has generally demonstrated that fairer trade regimes, implemented within the framework of state interventionism, could to some extent succeed in improving the level of fairness within the current international trade regime. ReferencesBBC News, (2002). Oxfam calls for an end to "unfair" trade. [online] Available at: http://news.bbc.co.uk/2/hi/business/1923986.stm [Accessed 13 November 2014].Krauss, M. (1997). How nations get rich. New York: Oxford University Press. [online] Available at: http://site.ebrary.com/lib/unnc/docDetail.action?docID=10246239&p00=free+trade+fair+trade [Accessed 14 November 2014].Linton, A. (2012 ). Fair trade from the bottom up. Seattle: University of Washington Press. [online] Available at: http://site.ebrary.com/lib/unnc/docDetail.action?docID=10597830&p00=free+trade+fair+trade [Accessed 14 November 2014].Lyon, S. and. 2014].