TOPIC GUIDE: Fair Trade

"Fair trade holds back the developing world"

PUBLISHED: 31 Jan 2011

AUTHOR: David Bowden

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INTRODUCTION

One of the few areas of the UK economy to buck the recession has been the ethical goods and services market, which in 2009 was worth £43.2 billion, an increase of 18% in two years [Ref: Guardian]. By far the highest profile sector is Fair Trade, an initiative made famous through the Fairtrade Foundation, which seeks to pay farmers and producers in the developing world a minimum ‘fair’ price for their goods, enabling them to maintain a basic standard of living while working their way out of poverty. Its supporters argue this is vital, as subsistence workers in the developing world are routinely exploited by wealthy corporations, and that the development model of the prices being fixed through the market – or free trade – works only in the interests of already developed nations. There are a number of campaigners who would like the Fair Trade approach to be extended to all the goods sold in the UK but manufactured abroad. However, Fair Trade is viewed as controversial from a number of different viewpoints.  Opponents suggest that Fair Trade does more harm than good to the developing world, as it traps producers into an artificial system of low pay and hampers development, as free markets would force greater efficiency, diversification and innovation (as they did when Western countries were developing). Frequently, it is suggested, Fair Trade acts as a modern form of imperialism, where those living in abject poverty are forced to adopt the moral fads of wealthy Westerners, which may not be in their own best interests. Overall, the Fair Trade debate reflects conflicting contemporary attitudes to consumerism, globalisation and international development which need to be unpacked.

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Fair Trade DEBATE IN CONTEXT

This section provides a summary of the key issues in the debate, set in the context of recent discussions and the competing positions that have been adopted.

The ‘fair’ choice…
For its supporters, fair trade offers a straightforward moral decision: most of those involved in producing goods for the developed world are forced to live below the poverty line, often in extremely dangerous and unhealthy conditions, to provide cheap goods for already comfortable Westerners and extremely large profits for multinational corporations. The Fairtrade Foundation offers to pay a set premium, above the market price, in return for improved working conditions and sustainable practices [Ref: Fairtrade Foundation]. Although this cost is passed on to consumers, the continued growth of the ethical market even after the financial crisis, and the willingness of scandal-hit companies to sign up to Fair Trade policies highlight the desire among consumers to make moral choices about the goods they buy. Fair Trade, it is claimed, is also a pragmatic economic choice as it offers an opportunity for the developing world to work its way out of poverty [Ref: Independent], thus avoiding an often destructive reliance on foreign aid, whilst creating a level playing field for poor farmers who struggle to compete with heavily-subsidised Western producers [Ref: Financial Times]. 

...or fair delusion?
Opponents of Fair Trade maintain that they are just as passionate in their opposition to poverty, but argue that variations on the current free trade model provide the best way forward. Fair Trade may sound good in principle, it is argued, but the reality does not match up: the economic benefits to developing world farmers for coffee and cocoa are negligible and do little to improve their material conditions, and in some instances can actually make things worse. Some argue that it holds back the developing world, since it acts as a subsidy to continue outdated and economically unviable agricultural methods and, in some cases, actively discourages mechanisation and modernisation in favour of a small-scale ‘rural idyll’ [Ref: Guardian]. Part of the problem, it is argued, is that ‘ethical consumption’ is more about Western consumers feeling good about themselves rather than confronting the complex and conflicting political issues inherent in development. As such, any benefit from fair trade tends to get channelled into fashionable causes favoured by those in the developed world. Even with regard to the heated issue of sweatshops,  some argue that those with more comfortable lives in the West fail to understand the economic realities of people living in developing countries for whom such labour can offer better opportunities than what else is on offer [Ref: New York Times]. Furthermore, some suggest, making ‘ethical’ consumer choices can actually distract from politically challenging the Western trade barriers which do the most harm [Ref: ConservativeHome].

The problems of development
The high profile Fairtrade Foundation has been at the centre of particular criticism for offering little more than a drop in the ocean to farmers in terms of premium payments, whilst saddling them with high certification charges that only farmers in middle income countries can afford [Ref: Yorkshire Post]. However, it is important to recognise that the Fairtrade Foundation – regardless of its individual successes or failings - is only the most recognisable of numerous organisations which promote a form of fair, or ethical, trade [Ref: Economist]. This debate takes place within the context of an ongoing ambivalence towards the benefits of international aid for the developing world, which some economists argue is often counterproductive and creates only further cycles of dependence [Ref: Foreign Affairs]. Advocates maintain that fair trade offers the opportunity for poverty-stricken nations to build sustainable economies and develop infrastructure, and that encouraging ethical consumption in the developed world adds a moral dimension to the marketplace. But critics counter that low prices are the result of overproduction, and so fair trade can hinder producers from responding appropriately to market signals. Moreover, they argue that free-market reforms in countries such as Brazil have led to mechanisation and vast improvements in productivity that act as a spur to economic growth and point to the best way forward. Similarly, some argue that companies benefit society simply by going about their normal business and what developing countries need is more companies and economic activity, not more corporate social responsibility initiatives and regulations [Ref: Economist]. Finally,  some argue that fair and ethical trade offers consumers one of the few ways of making moral choices in a consumerist society [Ref: Guardian], whilst others question whether the anti-consumerist moralism being promoted is really something to celebrate.

ESSENTIAL READING

It is crucial for debaters to have read the articles in this section, which provide essential information and arguments for and against the debate motion. Students will be expected to have additional evidence and examples derived from independent research, but they can expect to be criticised if they lack a basic familiarity with the issues raised in the essential reading.

Fair Trade does not help the poorest, report says

Henry Wallop Telegraph 4 November 2010

The great KitKat debate: is it fair?

Independent 28 January 2010

Q&A: Fair trade for all

Caspar van Vark Guardian 27 February 2008

FOR

Bitter truth about Fair Trade versus free trade

Nick Hayns Yorkshire Post 9 November 2010

Not so fair trade

Andrew Chambers Guardian 12 December 2009

Sorry, but fair trade is a political issue

Patrick Hayes spiked 5 August 2009

The poverty of Fairtrade coffee

Alex Singleton Telegraph 23 February 2008

AGAINST

Let’s be fair to Fairtrade – it can reduce poverty

Martin Hickman Independent 6 November 2010

Finding fairer ways to trade

John Hilary Guardian 1 March 2010

My Fairtrade Lady

Paul Kendall Telegraph 19 February 2010

The appeal of Fairtrade is growing on every continent

Roland Gribben Telegraph 18 February 2009

IN DEPTH

Free trade, not fair trade, will pull poor people out of poverty

Philip Booth ConservativeHome 2 December 2010

No markets were hurt in making this coffee

Michael Skapinker Financial Times 8 November 2010

Smart Samaritans

Michael A Clemens Foreign Affairs September 2010

This year’s must have fashion: pity for Indians

Daniel Ben-Ami spiked 24 June 2008

Free doesn’t mean unfair

Julian Baggini Guardian 5 March 2007

In Praise of the Maligned Sweatshop

Nicholas D. Kristof New York Times 6 June 2006

KEY TERMS

Definitions of key concepts that are crucial for understanding the topic. Students should be familiar with these terms and the different ways in which they are used and interpreted and should be prepared to explain their significance.

BACKGROUNDERS

Useful websites and materials that provide a good starting point for research.

HARDtalk with Harriet Lamb

BBC News 17 January 2011

Companies aren’t charities

Economist 21 October 2010

The benefits of Fairtrade chocolate

BBC News 31 August 2010

The Great Cotton Stitch-Up

Fairtrade Foundation Report 2010

Fair Trade Without The Froth

Sushil Mohan Institute of Economic Affairs 2010

Half A Cheer for Fair Trade

Philip Booth and Linda Whetstone Institute of Economic Affairs 2007

Voting with your trolley

Economist 7 December 2006

The Bitter Aftertaste

WORLDWrite 2004

ORGANISATIONS

Links to organisations, campaign groups and official bodies who are referenced within the Topic Guide or which will be of use in providing additional research information.

IN THE NEWS

Relevant recent news stories from a variety of sources, which ensure students have an up to date awareness of the state of the debate.

AUDIO/VISUAL

HARDtalk with Harriet Lamb

BBC News 17 January 2011

The benefits of Fairtrade chocolate

BBC News 31 August 2010

The Bitter Aftertaste

WORLDWrite 2004

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