Fair trade - Wikipedia

Fair trade is a term used broadly by social justice, peace movement, ecology movement, and Green Movement groups, including most notably the European Green Parties[?], to contrast with "free trade" as implemented by the World Trade Organization and NAFTA.

Fair as opposed to "free" trade is, according to its supporters, able to guarantee not just low prices, but some adherence to principles of ethical purchasing and tax, trade, tariff rules that apply some significant offsetting penalties to imported goods that do not satisfy the local concept of fairness. According to its opponents, the term in practice is primarily intended to protect inefficient industries and that fair trade as conceived of by its proponents would do little to help and indeed would aggravate problems of global poverty and social injustice.

Although the history of such movements spans the 20th century and includes the move to mark textiles "union made[?]" and indicate country of origin on labels, some Italian consumer organizations are credited with the origination of the modern fair trade concept. They proposed in the 1980s that goods that were imported to Italy should be taxed inversely proportionately to the degree to which social and ecological standards of the exporter matched those of Italy - in other words, lower standards meant a higher offsetting tariff. The money so collected would presumably be spent on foreign aid[?] to bring the exporting nation up to Italian standards - thus, all purchasing in Italy would be normalized as moral purchasing within ethics prevailing in Italy.

Although few modern fair trade proposals go so far, they all include varying degrees of reliance on mandatory labels[?], moral purchasing and use of tax, trade, and tariff law to guarantee that truly "unfair" products cannot compete with those produced locally.

An extreme version of fair trade is the Community-Based Economics[?] also promoted by worldwide green parties, which establishes a local currency for trade only in locally produced goods and services. Presumably, since each purchaser and producer are part of the same community sharing some risk of bodily harm due to infrastructure lacks or failures of emergency response or policing or government, there is an implicit and common standard of fairness assumed in all such local trade. Trade outside the borders of the community is at higher tax rates, with more complex trade rules including labels, and at higher tariff rates, to pay for the difficulties of assessing and equalizing the risks borne by the community for its involvement in remote production and (potentially) exploitation.

In response, advocates of fair trade argue that growing inequity and serious gaps in social justice, and the global export of terrorism, are simply 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 globalization, and as proof that fair trade strategies would generally have worked better.

One response to this argument is that, regardless of the struggles of poor nations, to have foreigners tax one's goods to spend foreign aid as they see fit in your land is no more than colonialism in yet another well-meaning disguise. Another is that there is no reason to believe that money raised from tariffs would actually go to foreign aid. That, ultimately, these nations need to follow the same difficult development path to political and economic maturity as developed nations did - and cannot simply have a more advanced political economy imposed on them, setting a higher price on ecology and on life, one that is beyond their capacity to support given local conditions. No amount of foreign aid, they argue, even if locally spent, would offset the lost markets and the ability to export what is most readily sold without any tariffs under free trade.

The Federation of European Green Parties[?], who unlike most counterparts outside Europe are usually represented in some numbers in the European Parliament, are strongly in the fair trade camp. Caroline Lucas[?], an MEP from the UK, argues that "many developing countries called for a study to examine the effects of tariff reductions on local industries and jobs, before being required to open their markets further. Local industries, they say, have already collapsed in most African and least developed countries as a result of previous tariff cuts."

According to Lucas, "The choice is not between global trade rules and chaos: rather, it is between trade rules that undermine sustainability and favour the rich, and trade rules that support sustainability and equity." A major focus of Greens is land reform that respects natural ecologies, and traditional cultures, while other groups focus more clearly on equity.

Fair trade is also to be distinguished from safe trade which is more narrowly focused on preservation of biodiversity, biosafety, and biosecurity, and preventing serious global climate change. Although both are often advocated by the worldwide green parties or global NGOs[?] like Greenpeace, the two concerns are usually discussed separately at different diplomatic conferences, and historically have resulted in different treaties entirely. Supporters of safe trade see it as the foundation for fair trade, since ecological damage is implicated in social problems as well.

Critics of fair trade argue that the protectionism some fair traders advocate benefits producers at the expense of consumers, since consumers are forced to pay higher prices for imports as a result of tariffs, quotas, "red tape", etc.

External links:

Fairtrade Labeling Organizations International (http://www.fairtrade.net)
"The Ill Winds of Trade", Guardian, UK, Nov. 2001 (http://www.guardian.co.uk/globalisation/story/0,7369,602596,00.html)
"Fair Trade is Better than Free Trade", Guardian (http://www.guardian.co.uk/globalisation/story/0,7369,549977,00.html)
"The Myth of Fair Trade", Cato Institute (http://www.cato.org/pubs/pas/pa-164.html)