The fair trade movement, also known as the trade justices movement, promotes international labour, environment and social standards for the production of traded goods and services. The movement focuses in particular on exports from the Third and Second Worlds to the First World. Standards may be voluntarily adhered to by importing firms, or enforced by governments through a combination of employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the commonly adhered to prohibition of goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with fairtrade labelling requirements.
Implicit and often explicit in these approaches is a criticism of the current organisation of international trade as being "unfair". When developing countries export to rich country markets, they face tariff barriers that can be as much as four times higher than those encountered by rich countries. Poverty advocates claim that those barriers cost poor countries $100bn a year - twice as much as they receive in aid. Advocates of fair trade practices also hold that the fluctuation of commodity prices does not guarantee a living wage for many producers in developing countries, forcing many into crippling debt. Market prices may not properly reflect the true costs associated with producing the product due to economic externalities such as environmental and social costs. Although critics of so-called fairer trading practices charge that proposals for reform simply amount to protectionism, campaigners maintain that it is rich countries such as the United States and the European Union which operate expansive programmes that subsidise their domestic producers.
Michael Stipe of REM is splashed with milk to publicise the Make Trade Fair campaign: "Every cow in Europe gets $2 a day in subsidies. This is more money than half the world's population get to live on each day"
"Fair trade" was originally used by those supporting social justice and the alleviation of the intense poverty found in many developing nations. They contrasted "fair trade" with 'unfair' international trade practices. It is associated particularly with labour unions and environmentalists, in their criticism of disparities between the protections for capital versus those for labour and the environment. The use of the term has expanded beyond campaigns to reform current trading practices, and major institutions such as the World Trade Organization which embody them. Now it has become a movement to allow consumers to choose not to participate in these practices. Fairtrade labelling or "Fairtrade certification" allows consumers to identify goods especially commodities such as coffee, that meet certain agreed standards of fairness.
Advocates of fair trade argue that growing inequity and serious gaps in social justice, and the global export of terrorism, are symptoms of an economic system that permits harms to be exported to other countries, while importing their goods. They point to extinction, deforestation, social unrest, as consequences of globalisation, and in particular of an unfair globalisation. The international trade system, critics say, not only pits David against Goliath - as free trade inevitably will - but blindfolds David.
In the past, the responses sought by critics of the international trade system included various penalties on "unfair" goods. This argument generally made little headway against the long-term movement towards free trade; imposition of penalties for "dumping" was sometimes motivated by domestic political reasons such as the United States imposition of steel tariffs in 2001).
Today, the fair trade movement concentrates more on the abolition of agricultural subsidies and dumping, and to a much lesser extent on offsetting penalties on "unfair" goods. Indeed, although there are many who are still critical of free trade in general, there is a trend towards campaigning against what is seen as hypocrisy by developed countries in using protectionism against the poorest countries, especially in agricultural products, while requiring them to leave their own producers without protection.
Fair trade and politics
The Federation of European Green Parties is, unlike most of its counterparts outside Europe, strongly represented in the European Parliament and is firmly in the fair trade camp. Caroline Lucas, a British Green MEP, argues that:
A major focus for the Greens is land reform that respects natural ecologies and traditional cultures, while other groups focus more clearly on equity.
The World Bank has taken a positive stance on fair trade. According to the Bank comments in their 2003 study of sustainable coffee markets, sustainable coffees (both fair trade and organic) "can provide such benefits as improved natural resource management; fewer agrochemicals used in production, which decreases costs and health risks; and increased use of rural labour, which provides more jobs for those in desperate need." The definition of fair trade here does not involve government-mandated additional taxes, or generic foreign aid.
The European Commission stated in 2002 that they will support fair trade plans in the private sector.
Fair trade has also become a more prominent issue in politics in the United States as well. In the early 90s, as The New Democrat policy makers of the Clinton administration began to pursue a policy of free trade, particularly in the promotion of the North American Free Trade Agreement (NAFTA), which would provide for largely unfettered trade between Canada, the United States, and Mexico. Union workers and liberals criticized the treaty, and surmised that the low wages and environmental standards would destroy US manufacturing, while promoting worker abuse. Despite fierce resistance, NAFTA was approved with considerable support from New Democrats.
Throughout the mid-90s, many of the fears of NAFTA critics seemed to come to fruition, with many manufacturing firms closing plants in the US and relocating their operations to Mexico. Furthermore, many of the promises of NAFTA proponents, such as economic prosperity in Mexico and expanded US exports, seemed to fall well short of predictions. As a result, the Clinton administration began to add more and more prerequisites to its trade agreements to head off some of the failings of NAFTA. For example, when efforts were made in 2000 to give China permanent special trading status, commissions were formed to investigate labor policies in China, and reforms were urged in China's policies.
Even these policies seemed to fall well short, with China still being cited for excessively low working conditions by international trade monitors like the World Trade Organization. Many also blame unfettered trade for the continuous outsourcing of jobs and a growing trade deficit. As a result, former free trade enthusiasts, especially in the Democratic party, have grown more apprehensive, and have encouraged harsher measures to ensure compliance with higher, fairer stands between trading partners. CAFTA, a treaty which would create a free trade zone between the US and Central America, was nearly defeated in congress on the grounds that the labor and environmental standards set by the treaty were too low, and did not provide for means of enforcing them. The treaty received only limited support among Democrats, with many former free trade enthusiasts having become more apprehensive about the prospect of free trade without applicable standards. "The Schumer Bill", which was meant as a means of countering the much criticized currency manipulation practiced by the government of China, called for the removal of the practice as being unfair, and threatened stringent tariffs on imports from China if the currency was not allowed to float. The Bill overcame an attempt by Republican leadership in the senate to table the bill, and it seemed very likely of passing with a large majority before China revalued its currency in July of 2005 (potentially fearing the affects of such an action), effectively making the bill needless.
Fair Trade has often been confused with outright protectionism, however, with critics in particular often labeling it "New Protectionism". Furthermore, trade policies have often received only marginal attention in US politics, with only two questions being asked on the issue in the 2004 presidential debate focusing on domestic policy.
Fair trade versus free trade
In the past, suggestions that "unfair" goods be taxed, or that standards such as those of the ILO be required in order for countries to participate in international trade, have led to heavy criticism by advocates of free trade. Although many organisations and individuals involved in fair trade campaigns are still uneasy about unfettered free trade, they are now generally more cautious about arguing for protectionism or coordinated international intervention. There is a greater awareness that there is no single perspective from which trade is "fair".
However, there are also "fair trade" demands that come from the perspective of developing country producers - today the emphasis is on the lack of free trade caused by the protectionism, including agricultural subsidies, of the developed world. Without such rich-country protectionism, it is argued poor countries might stand a chance of seriously alleviating poverty; yet reducing it will lead to some producers in the developed world losing out. One reason for the increasing popularity of fairtrade labelling is that it avoids these issues of government intervention and complex and drawn-out negotiations between governments, allowing consumers to voluntarily help disadvantaged producers in poor countries.
Free Trade is fair trade
Free Trade advocates such as Brink Lindsey and Milton Friedman have argued that free trade is already fair trade because free trade involves voluntary transactions which in turn implies no coercion resulting from those transactions. They further argue that Fair Trade, if mandated by governments rather than implemented voluntarily, would result in high prices in the first world and slowed growth rates and higher unemployment in the developing world.
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