Fair trade will not beat poverty. Free trade will (The Times)

By Stephen Pollard
October 12, 2009

I have a piece in The Times on the government's £12 million grant to the Fairtrade Foundation:

In the past three years, the amount spent by British consumers on fair trade
goods has leapt from £286 million in 2006 to £712 million last year. Clearly
there is an ever-growing appetite — as there is for online gambling, which
shot up last year to a total spend of £876 million.

So it’s good to see the Government handing over £12 million of our taxes to
help to expand the reach of online gambling. As the International
Development Secretary, Douglas Alexander, put it: “It’s going to help to get
a more effective online gambling system around the world, with stronger and
more direct impact from those smaller operators that benefit. Secondly, we
want to broaden the scope of online gambling products to other areas.”

It was also important, he said, to try to replicate British success
internationally, because the UK online gambling market was the most advanced
in the world.

He didn’t, of course. The very idea is ridiculous. What he did do was announce
a £12 million subsidy to the Fairtrade Foundation, using the words except
with “fair trade” instead of “online gambling”.

The concept of fair trade is now treated as so inherently morally superior
that all rational thought is suspended in its shadow, and the Government
sees no problem with spending our money to intervene in the market to
promote one form of branded goods over every other.

“Fair trade” is simply a label attached to certain products (mainly coffee and
chocolate) that are sold at a premium because a specific price has been
negotiated, and they meet criteria about reinvesting the profits. Consumers
are presented with these goods in competition with others. Lots pay a little
bit more because they like the idea behind the label.

And the idea that trade is the answer to poverty is bang on. The problem,
however, is when fair trade is regarded as more likely to alleviate it than
free trade. Because it is nothing but a short-term diversion. The real cause
of poverty in the developing world is tariff barriers, both those which
supposedly protect producers but make things worse by keeping resources in
low-return activities such as farming; and those imposed on the developing
world by large trading blocs, of which the worst, by far, is the EU.

There is nothing wrong with buying fair trade goods. But there is nothing
especially right about it either. Anyone really interested in alleviating
global poverty would be much better employed demanding of MPs and MEPs that
the EU’s tariff walls are torn down, than scouring supermarkets for fair
trade goods.



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