What’s the difference? Fair trade vs free trade and why it matters

Two terms that often get confused are fair trade and free trade. While fair trade and free trade sound similar, they are polar opposites. There’s much more accountability and transparency when it comes to products that are made in a fair trade setting than traditional factories and sweatshops. Here are some of the key differences between fair trade versus free trade:

1. Wages

With fair trade products, the people who make them are fairly paid adults. Artisan partners are typically paid half of the invoice upfront which allows them to buy the materials they need and pay people. At Fair Anita, we pay our artisans at least 2-3 times the minimum wage in their country. Artisans receive health insurance and education stipends. There are also restrictions in place for how many hours people are allowed to work. For more information about the artisans we work with check out our artisan page. In traditional factory and sweatshop settings, workers are paid dramatically less than a livable wage, often pennies an hour and they often work 12+ hours per day without breaks and often employ children. In free trade zones, factories can ignore the legal minimum wages, so brands compete to pay the lowest price.

2. Working Conditions

In a fair trade setting, the working conditions keep people safe. In the US, we take it for granted that organizations like OSHA create standards for safe working environments. We recently visited our partners in Cambodia who make our bags and clutch wallets and toured several workshops. Each space was filled with light and was well-ventilated. Traditional factories and sweatshops are notorious for being dark, dust-filled and dangerous. Read more about the Rana Plaza tragedy that resulted in the deaths of over one thousand sweatshop workers in Bangladesh.

3. Women's Rights

Fair trade products are often made by women because providing opportunities to women is a key principle of fair trade. Fair trade organizations often provide more flexibility so that women are able to juggle childcare and housework. Many of the artisans who make our scarves in Vietnam are also farmers. They have giant looms in their homes so that they’re able to weave scarves in between all of their other duties.

4. Environment

Respect for the environment is another way that fair trade products differ from products made in traditional factories or sweatshops. About 90% of the materials that our artisan partners use are recycled or upcycled, meaning the piece is given a new life. Our artisan partners in India and Vietnam get horn and bone from their local butcher shops and make beautiful jewelry from it. Our artisans in Ethiopia repurpose bullet shell casings leftover from the Ethiopian-Eritrean war that took place twenty years ago. In traditional factories, it’s all about making things cheap and quickly, so tons of material is wasted, and either sits as “dead stock” in warehouses or landfills, or is burned.

5. Job stability

Creating reliable, long-term trade agreements with artisan partners is another area that sets fair trade workshops apart from sweatshops. At Fair Anita, we provide consistent orders with our artisan partners so that they always have work. Traditional factory workers can be let go with no notice, so they are always fearing for the stability of their job.


Learn more about why we chose to become verified members of the Fair Trade Federation.