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Posts Tagged ‘fair trade’

I will say at the outset that my expertise on this topic is limited. Nonetheless, this recent report by Marc Sidwell at the Adam Smith Institute arguing that Fair trade is far from fair and is, on the contrary, detrimental to farmers and costly to developing countries requires response. For a far more thorough response, see the UK’s FairTrade Foundation website.

If you have not seen the report, here are some of the highlights from the Executive summary:

  • Fair trade is unfair. It offers only a very small number of farmers a higher, fixed price for their goods. These higher prices come at the expense of the great majority of farmers, who – unable to qualify for Fairtrade certification – are left even worse off…
  • Fair trade does not aid economic development. It operates to keep the poor in their place, sustaining uncompetitive farmers on their land and holding back diversification, mechanization, and moves up the value chain. This denies future generations the chance of a better life…
  • Fair trade only helps landowners, not the agricultural labourers who suffer the severest poverty. Indeed, Fairtrade rules deny labourers the opportunity of permanent, full-time employment…
  • Just 10% of the premium consumers pay for Fairtrade actually goes to the producer. Retailers pocket the rest…
  • Free trade is the most effective poverty reduction strategy the world has ever seen. If we really want to aid international development we should abolish barriers to trade in the rich world, and persuade the developing world to do the same. The evidence is clear: fair trade is unfair, but free trade makes you rich.

I realize, as do most scholars who research this subject, that there are certainly problems and pitfalls associated with establishing fair trade systems to ensure they truly benefit those they are meant to help. Nonetheless, I don’t think these complexities undermine the value of efforts to move toward fair trade.

What I find most maddening about this report is the claim that free trade is fair (this claim is, in fact, the title of chapter 4). Especially in the case of agriculture, it seems almost absurd to consider trade “free” given the range and reach of government agricultural programs and regulations throughout the world. Leaving that nagging question aside, it is still fairly obvious that what passes for “free” trade can hardly be considered fair. That is, unless you view a system that reproduces extreme inequality, leaving billions in poverty and food insecure, fair. (more…)

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