Saturday, March 24, 2007

Free trade is the only fair trade

I don't like fair trade. I realise that might be an unfashionable thing to say these days, but the way I see it the only fair trade is free trade. The only reason so-called fair trade products even exist is simply because we restrict trade and impose tariffs. The result of tariffs is that producers need to charge more for their products to cover the tariff but buyers refuse to purchase at the increased prices.

Of course, in this "ethical" world, we're all led to believe that its the buyers who are at fault for not paying people enough for their products, but the truth is the buyers find themselves in that position as a direct result of the tariffs.

Thus, a buyer in Britain wanting to import goods from Africa finds the purchase subject to import tariffs. The cost of the tariffs means they have to drive down the cost of their source purchase price to satisfy their business objectives. Its true they have the advantage of knowing that the people they are buying off of have no choice, but it is still the market that dictates where they purchase.

So to fill the gap and make us think that people like Tesco and Sainsbury are the bogeymen, we have the growth of fair trade. But fair trade schemes are run by middle men. True, the far end vendor gets a better price - fair is not the right term as its totally subjective - but the middle men running the schemes are making a profit on the top.

What you actually have with fair trade is a scheme that helps the guilt-ridden soft Left middle classes think they've been ethical, when in fact they're engaging in a con driven by middle men that are exploiting their guilt to create a new marketplace. The true irony of fair trade is that its driven by a capitalist-suspicious political wing, but relies entirely on capitalism for its existence and continuance.

Perhaps, just maybe, it would make more sense to break down the barriers of tariffs and make global trade truly free again? Mind you, in the case of the EU and USA this would mean their farmers would have to deal with competition, and that means its a vote loser.

Hence we have the fair trade market instead which patronises growers whilst simultaneously taking the piss out of middle class Guardian readers without them even realising it. I guess the latter point could be seen as quite a good thing though.


Anonymous said...

Spot on. And then politicians feel good about themselves by pledging aid to the same countries they discriminate against with tariffs.

Anonymous said...

"the only fair trade is free trade"

Absolutely agree. Compete on price, or quality. When you try to bring guilt into the equation everyone loses.

My local church has a 'fair trade' stall once a month, last week things got a little weirder. In the middle of the service they ran a hard-sell 'fair trade' video. IN THE MIDDLE OF THE SERVICE.

I hear the Archbishop of Canterbury is spending today walking around London in chains, apologising for being british. Strange days.

Anonymous said...

Dizzy there is another problem and that is that the tariff charged depends on how finished the goods are. So for example tea is tariff a, but finished boxed teabags is two or three times the tariff.

It is not just farmers who are protected by this practice.

It also means that coffee growers can't make any more money by producing a more finished product.

I do agree free trade is better than fair trade but in the mean time I do buy fair trade.

Chris Paul said...

Fair Trade is the new Free Trade, discuss.

Free of excess exploitation, excess profits (which all good markets seek to drive out), free of monoculture of cash crops, as workers starve and crop pests or frosts can destroy everything (vide Potato Famine), free of wage slavery, free of stored up unhappiness, revolution and terror.

Free of the overriding (and very stupid) desire of mega capitalists to keep the world poor down, or at least keep their rise so slow that their markets are conquered before their own value-added IS added.

Fair trade is the new free trade, discuss.

Anonymous said...

Interesting thoughts...

I've reposted this blog posting on the Coalition's NewsFeed,

Elizabeth Gilhuly
Washington DC Fair Trade Coalition