Critics of free trade want it to be fairer, while proponents of free trade think making it fairer places an undue burden on governments. The Economist recently had an online debate about making free trade fairer. But what exactly is fair trade, anyway? Deborah James, in her book Fair Trade, Not Free Trade defines it as “an approach to trade policies that benefit workers, communities and the environment, rather than multinational corporations.” James says fair trade “approach demands change of the existing multilateral structures and agreements.”
Fair trade involves certain principles, according to Global Exchange:
- Producers receive a fair price – a living wage. For commodities, farmers receive a stable, minimum price.
- Forced labor and exploitative child labor are not allowed
- Buyers and producers trade under direct long-term relationships
- Producers have access to financial and technical assistance
- Sustainable production techniques are encouraged
- Working conditions are healthy and safe
- Equal employment opportunities are provided for all
- All aspects of trade and production are open to public accountability
Ngaire Woods, director of the Global Economic Governance Program at University College, Oxford says of free trade that it is “the dream of textbook-wielding economists.” Woods thinks fairer trade “is about addressing both outcomes and processes of trade.” Woods thinks that “trade needs saving…but freer trade will not do the trick.” Fairer trade, according to Woods, “would bolster public support, allow a better reconciliation with national priorities such as environment and development, and could offer a more level playing field to ensure more open and vibrant competition.”
Martin Vander Weyer asked in a 2005 article for the New Statemen, “But what of free trade and fair trade? Do they go hand in hand, or is one the enemy of the other?” At the end of the article, Weyer answered his question by stating that “in principle, free trade and fair trade can go hand in hand, and offer the best chance of a slice of the pizza of prosperity.”
How can free trade be made fairer? A 2007 Washington Post editorial stated that “altering the rules of the World Trade Organization (WTO) would be a good place to start.” But is altering the WTO really a good place to start? Walden Bello, executive director of Focus on the Global South and professor of sociology and public administration at the University of the Philippines, thinks the WTO needs to shrink in order to make trade fairer for the developing world. Bello says:
…what developing countries and international civil society should aim at is not to reform the WTO but, through a combination of passive and active measures, to radically reduce its power and to make it simply another international insitution coexisting with and being checked by other international organizations, agreements, and regional groupings.
What do you think? Can free trade be made fairer? Should the WTO be reformed or should it be decentralized?