Unfair Trade
UNFAIR TRADE by Marc Sidwell
Adam Smith Institute London 2008
Bibliographical information The Adam Smith Institute has an open access policy. Copyright remains with the copyright holder, but users may download, save, and distribute this work in any format provided: (1) that the Adam Smith Institute is cited; (2) that the web address adamsmith.org is published together with a prominent copy of this notice; (3) the text is used in full without amendment [extracts may be used for criticism or review]; (4) the work is not re–sold; (5) the link for any online use is sent to info@adamsmith.org . The views expressed in this report are those of the author and do not necessarily reflect any views held by the publisher or copyright owner. They are published as a contribution to public debate. © Adam Smith Research Trust 2007 Published in the UK by ASI (Research) Ltd. ISBN: 1–902737–55–5 Some rights reserved. Printed in England.
1
Contents
Executive Summary Definitions 1. Introduction 2. Fairtrade: seeking a moral monopoly 3. ‘Fair’ Trade: discriminating against success 4. Free trade is fair trade 5. Fairer options for development assistance 6. Conclusion
3 4 6 9 13 18 24 28
2
Executive Summary
• Fairtrade Fortnight is a marketing exercise intended to maintain the Fairtrade mark’s predominance in an increasingly competitive marketplace for ethically-branded products. The hype is necessary, because there is every reason for the shrewd consumer to make other choices. 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. Most of the farmers helped by Fairtrade are in Mexico, a relatively developed country, and not in places like Ethiopia. Fair trade does not aid economic development. It operates to keep the poor in their place, sustaining
Adam Smith Institute London 2008
Bibliographical information The Adam Smith Institute has an open access policy. Copyright remains with the copyright holder, but users may download, save, and distribute this work in any format provided: (1) that the Adam Smith Institute is cited; (2) that the web address adamsmith.org is published together with a prominent copy of this notice; (3) the text is used in full without amendment [extracts may be used for criticism or review]; (4) the work is not re–sold; (5) the link for any online use is sent to info@adamsmith.org . The views expressed in this report are those of the author and do not necessarily reflect any views held by the publisher or copyright owner. They are published as a contribution to public debate. © Adam Smith Research Trust 2007 Published in the UK by ASI (Research) Ltd. ISBN: 1–902737–55–5 Some rights reserved. Printed in England.
1
Contents
Executive Summary Definitions 1. Introduction 2. Fairtrade: seeking a moral monopoly 3. ‘Fair’ Trade: discriminating against success 4. Free trade is fair trade 5. Fairer options for development assistance 6. Conclusion
3 4 6 9 13 18 24 28
2
Executive Summary
• Fairtrade Fortnight is a marketing exercise intended to maintain the Fairtrade mark’s predominance in an increasingly competitive marketplace for ethically-branded products. The hype is necessary, because there is every reason for the shrewd consumer to make other choices. 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. Most of the farmers helped by Fairtrade are in Mexico, a relatively developed country, and not in places like Ethiopia. Fair trade does not aid economic development. It operates to keep the poor in their place, sustaining