Positives & Negatives of Fair Trade

Written by ollie wright
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Positives & Negatives of Fair Trade
Coffee is one of the products that can be fair-trade certified. (Jupiterimages/Brand X Pictures/Getty Images)

The fair-trade movement has grown in response to the idea that poorer countries are unable to trade their way out of poverty if the balance of the trade is allowed to unfairly favour richer, more powerful countries. Not all commentators agree with the ideals of fair trade, but the rise of the ethical consumer is undoubtedly a modern phenomenon worthy of analysis.

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What Is Fair Trade?

Fair trade attempts to improve the deal for producers from poorer nations to help them develop sustainably. The Fairtrade Mark, awarded by the non-profit organisation Fairtrade International, is carried by products such as coffee, chocolate and sugar that meet its criteria. These criteria cover how the workers employed to produce the goods are treated and ensures that they receive "decent wages," the right to unionise and their health and safety are protected. Fairtrade-certified goods are protected by a minimum price.

The Fairtrade Premium

Fairtrade International also distributes a fund called the Fairtrade Premium to producers of certified goods. The money is intended to help farmers and workers to live better lives, and the producers themselves are given the opportunity to decide how it is spent. Fairtrade International says that the funds, which have been used to finance projects from health care to business infrastructure, benefit not just the producers themselves, but also the wider community.

Benefits of Fair Trade

The obvious benefit of fair trade is that it supports less economically developed nations by offering them a guaranteed minimum price for their goods. It also ensures, through the Fairtrade standards, that the economic benefits are shared with the workers and farmers, not just the shareholders of a multinational corporation. Larger companies such as Cadbury, Nestle and Starbucks have joined the fair-trade movement in at least some part in recent years, stating that the process strengthens the producers' position in world markets, as well as giving "peace of mind" to ethically motivated consumers.

Criticism of Fair Trade

Exponents of an unregulated free market are against the fair trade movement, which they say is unrealistic and unnecessary. In the opinion of the free marketeers, the way to make trade fairer is to "remove tariffs, stop trying to rig the market and remove bureaucracy," according to a BBC report. Using the Fairtrade system, in the opinion of the Adam Smith Institute, creates "a kind of human zoo," wherein the sale of the Fairtrade-certified goods actually stunts the development of poorer countries and "shackles people ... to traditional roles and traditional methods of production."

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