More on fair trade/free trade

A friend posted to Facebook a review by the IEA of studies about the effectiveness of 'fair trade': Half a cheer for fair trade, Booth and Whetstone, IEA, 2007 (pdf).

Abstract: The fair trade movement claims that the products it provides are sourced “justly” and that purchasing fair trade products brings economic benefits for the poor. Whilst it is clear that fair trade might bring some benefits to particular groups, whether it brings significant net benefits to the poor in general is questionable. Moreover, the claim that fair trade transactions are more “just” cannot be substantiated. Customers also might be surprised to learn that the majority of the Fairtrade Foundation’s income is spent on promoting its own brand.

That last point is something I had not realised: the Fairtrade Labelling Organisation has a large 'education' budget, but spends a lot of it on promoting the Fairtrade brand and comparatively little on genuine education. If a for-profit commercial organisation tried to pass off advertising its brand as 'education' they would be a laughing-stock. Moreover, the FLO's most recent academic studies, which truly are educational work, make arguments and claims which are now out-of-date. The FLO's attempt to gain a moral monopoly can be seen in their attempts to get public institutions and whole communities to declare themselves 'fair trade'; such monopolising is inherently dangerous.

The main message of the review, of course, is that free trade is what helps poor countries grow their way out of difficulties—a point lost on our Prime Minister—and therefore we need to do what we can to press that agenda. Allow me to quote from the conclusion:

The desire to help others is a wonderful and important part of civil society but if we genuinely want to help people, all people, escape from grinding poverty we really must not ignore the facts. Fair trade may be fashionable and give people a nice warm feeling but only free trade backed up by the rule of law and the protection of private property have actually lifted entire populations out of poverty for the long term.

Western barriers to trade, both tariff and non-tariff (such as unnecessarily high food standards), are the real culprits in this story.

Tear down tariffs, and scrap the CAP!