Why Fair Trade?
LONDON – Historically, the term “fair trade” has meant many things. The Fair Trade League was founded in Britain in 1881 to restrict imports from foreign countries. In the United States, businesses and labor unions use “fair trade” laws to construct what economist Joseph Stiglitz calls “barbed-wire barriers to imports.” These so called “anti-dumping” laws allow a company that suspects a foreign rival of selling a product below cost to request that the government impose special tariffs to protect it from “unfair” competition.
Such dark protectionist thoughts are far from the minds of the benevolent organizers of the United Kingdom’s annual “Fairtrade Fortnight,” during which I just bought two bars of fair-trade chocolate and a jar of fair-trade chunky peanut butter. Their worthy aim is to raise the price paid to developing-country farmers for their produce by excluding the inflated profits of the middlemen on whom they depend for getting their goods to distant markets. Fair-trade products like cocoa, coffee, tea, and bananas do not compete with domestic European production, and therefore do not have a protectionist motive.
This is how it works: In exchange for being paid a guaranteed price and meeting “agreed labor and environmental standards” (minimum wages, no pesticides), poor-country farming cooperatives receive a FAIRTRADE mark for their products, issued by the FAIRTRADE Labeling Organization. This certification enables supermarkets and other retailers to sell the products at a premium. Third-world farmers get a boost to their income, while first-world consumers get to feel virtuous: a marriage made in heaven.