Prof Philip Booth writes for the Daily Telegraph
In many ways, fair trade is part of the great liberal system of private enterprise. Some would also see it as a manifestation of David Cameron’s Big Society project. At its best, fair trade is a private labelling system that gives consumers confidence that particular benefits will flow to producers from their purchases. In today’s world, where big government has crowded out private regulation, these certification schemes are welcome. Fair trade proponents also argue that they develop commercial infrastructure and trade credit systems in countries where they are largely absent.
Fair trade would probably not have come under the microscope had its advocates not regularly traduced traditional free trade channels and pursued “fair trade absolutism”. We should therefore be asking whether fair trade achieves what it claims to achieve, and whether it should put itself on a moral pedestal, while being extraordinarily sensitive to even the mildest criticism – responding with anecdotes and not evidence.
There are genuine questions about what fair trade achieves. Researchers sympathetic to fair trade have suggested that only 25 per cent of the extra price paid by consumers finds its way back to producers. The Fairtrade Foundation responds that retailers often no longer charge a price premium, citing, for example, Sainsbury’s marketing of fair trade bananas. This is naive at best. It is true that the price premium on fair trade products is often not visible because labelled products and non-labelled products are not comparable. But if the foundation is arguing that fair trade is coming for free, they are mistaken.
Read the rest of the article on the Daily Telegraph website.