• There is an organisation called the World Trade Organisation (WTO) which makes rules about international trade.
  
  
• The World Trade Organisation has a huge rule book about 30,000 pages long.
  
  
• The WTO aims to increase incomes and promote peace through trade.
  
  
• The World Trade Organisation is made up of 146 member-countries, who discuss and agree on such things as tariffs.
  
  
• Members account for over 97% of world trade.
  
  
• The WTO attempts to make trading between countries fair. It has negotiated to reduce trade barriers such as tariffs, subsidies and quotas. The WTO also settles arguments between countries.
  
  
• Many people and organisations still believe that trade between countries is not fair.
  
  

• The campaign to make trade rules fairer says that the rules governed by the WTO are made to favour the rich countries and the big organisations, rather than small farmers and producers of goods.

What are the problems with tariffs?

• Rich countries often place higher tariffs on manufactured goods imported from poor countries, than goods from other rich countries. On average, it's twice as much (world bank).

What are the problems with subsidies?

• Because farmers in the richer countries get extra money to help them, they often produce more than they need (a surplus). If they produce more, the value of the product goes down. This means two things.
  
  
• Poor countries that produce the same thing, wheat for example, have to sell their wheat at a lower price than it is really worth in order to compete.
  
  
• The surplus is 'dumped' on poorer countries at a very cheap price, undercutting home produced goods. Eventually, the home producers could go out of business.
  
  

Poor Working Conditions

• People against the international trading system claim that often the big companies making, for example, trainers, treat their workers in poor countries badly

• Commodities are just things!
  
  
• Usually they are raw materials which haven't been processed.
  
  
• Commodity producers often have little control over the price they sell their produce for because that is determined by the global market. Primary commodities tend to be produced in poorer countries.

What are the main commodities in the world trade system?

Coffee

• Coffee is one of the few internationally traded commodities that is still mainly produced not on large plantations but on smallholdings farmed by peasant households.

Sugar

• Sugar prices are protected by tariffs and quotas in the EU, Japan and US. Producers in these countries receive about double the world market price for the sugar they grow.
• Producers in the richer countries are subsidised at $6.4billion per year, an amount nearly equal to ALL developing country exports.
• These subsidies encourage people to grow sugar beet in cold countries and for sugar processors to reduce the amount of sugar they import from cane-producing countries such as the West Indies.

Cotton

• US subsidies to cotton growers is $3.7billion which is three times the amount it gives as foreign aid to Africa. This means prices become lower and producers in Africa, Asia have to sell their cotton at a reduced price.

Why is Fair Trade needed?

• Fair trade campaigners say that small farmers in poor countries don't get the right price for produce such as tea, coffee, sugar and chocolate. Campaigners claim that manufacturers, importers, distributors and supermarkets take most of the profit.
  
  
• Many poor countries only have one main product to export, such as bananas, chocolate, coffee, cotton or sugar. But prices for these commodities have been falling, so their incomes are reduced. Prices of most other goods, on the other hand, have risen.
  
  
• Often only 1% of the price of a jar of the average instant coffee goes to the producer.
  
  

How does Fair Trade benefit poorer countries?

• Fair Trade charities try to make sure the farmers get the best price for their crops in the poorer parts of the world.
  
  
• Some companies now sell coffee in supermarkets which is guaranteed to be fairly traded.
  
  
• Commodities are bought directly from the producer. This makes sure that the farmer gets a fair price for their goods.
  
  
• Currently, more than 90 coffee, tea, banana, chocolate, cocoa, juice, sugar and honey products carry the Fairtrade Mark.
  
  
• The fair trade movement also makes sure that producers have good working conditions.
  
  
• The Fair Trade movement says that if trade was fairer, global poverty could be reduced.