Wednesday, March 15, 2006

Fair trade hypocrisy

Alex Singleton has an excellent editorial in this week’s The Business about "fair trade" and free trade:
When efficient producers start to win trade, vested interests cry wolf and say it is "unfair". This is what is happening in textiles, where more affluent developing countries have combined in an unholy alliance with French and Italian producers to complain about cheap Chinese textiles. Poverty relief would be much better served by pursuing a free trade agenda, instead of the "fair trade" policies supported by the European trade commissioner Peter Mandelson and an assortment of ethical consumer activists. Such policies, whether government enforced or done through consumer schemes, encourage more affluent producers to stay in the market. This kicks away the ladder from the poorest producers who have no choice but to stay in the market. A quarter of "fair trade" coffee comes from Mexico, a relatively affluent developing country, where only 18% of the workforce is employed in agriculture. Mexico is a country which, if it so chose, could easily exit the coffee market. Because of the incentive of "fair trade", many producers have decided to stay producing coffee, even expanding production. This is a disaster for the poorest coffee producers, such as in Ethiopia, where drinking coffee was invented.
Do read the whole thing.

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