Unfair Trade

The Fair-Trade Movement Does More Harm Than Good

Fair-trade coffee beans dry in the sun in Nicaragua, 2004. (William Neuheisel / Flickr)

Last month, the Fairtrade Foundation staged a march on the British Parliament, a campaign featuring various celebrities and more than 13,000 petitioners, urging UK Prime Minister David Cameron to put issues of ethical consumerism at the center of the upcoming G-8 summit. At first glance, the decision by self-proclaimed ethical consumers to buy fair-trade products seems harmless. What could possibly be wrong if individuals, exercising their right as consumers, choose to promote certain niche markets? Quite a bit, as it turns out.

Although the concept of ethical trade has existed for a long time, the institutionalization of the fair-trade movement did not begin in earnest until the late 1980s. In 1989, the World Fair Trade Organization was founded, and in the years that followed, various fair-trade certification and labeling processes emerged. A product is granted a fair-trade label once its producers have met a list of social, economic, and environmental requirements. The stated purpose of the fair-trade movement is to give economic security to producers in developing countries -- often of unprocessed commodities such as fruits, live animals, and minerals -- by requiring companies and consumers to pay a premium on the market price.

Until now, any questioning of the fair-trade movement has been limited to the micro level. The movement has faced repeated criticisms, for example, for the relatively expensive fees that producers must pay to get a fair-trade label, which make it ineffective for many poor farmers. Another

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