Fair Trade

Pros and Cons

Make your decision after hearing both sides of the argument. 

written by Keri Lien

There is no small amount of controversy swirling about the topic of Fair trade, and this article aims to enumerate both the virtues and concerns regarding it. Since these lists are not exhaustive, you can use this article as a jumping off point to start your own research! Hit the books (or the keyboard) and find out where you stand, or just learn more about each side of the debate.

What are the pros and cons of fair trade? Is fair trade really good? Does fair trade work? Is fair trade a scam?

First, here are the arguments in support of Fair Trade. Since many of the virtues are listed in the previous article on Fair Trade, this is a much more abbreviated list:

  1. Fair trade has as its main priority the fair treatment and payment of the local producers, and refuses to engage in child labor, or forced labor of any kind.

  2. Fair trade aims to create working and manufacturing environments which are healthy and safe for the workers.

  3. Products are manufactured in a way that is conscious of the environment, and seeks to regulate and prevent harmful emissions.

  4. Fair trade brings into the world market products and manufacturers which would otherwise not be included in the discussion of international trade.

  5. It also seeks to develop within local communities in developing nations the ability for self-reliance, as well as to establish a thriving system of local commerce to the benefit of the community.

What are the pros and cons of fair trade? Is fair trade really good? Does fair trade work? Is fair trade a scam?

Now, here are some of the main arguments against supporting fair trade:

  1. In order to be classified as fair trade, producers are required to pay certain certification, inspection, and marketing fees. These fees are necessary to ensure compliance with governmental regulations, and increase regardless of the producers' revenue. A large portion of product revenue is used to cover these costs.

  2. It targets farmers and producers who are financially secure enough to pay such fees as have been mentioned, and thereby excludes the poorest farmers who would perhaps benefit the most from certification as Fair Trade.

  3. While fair trade minimum prices and wages ensure fair payment of fair trade farmers, non-fair trade farmers are left at a considerable disadvantage. When the prices of crops and products fall in the world market, it is the non-fair trade farmers who suffer.

  4. The issue of corruption presents itself at a variety of levels from the monitoring of retailer profits (or lack thereof) to misleading local volunteers. Corruption often exists in the governmental systems in many developing nations, and so poses an issue to the efficiency and integrity of fair trade systems.

  5. The in-store prices and profits of retailers are not monitored by the Fair Trade Foundation, and thus, the producers receive only a small fraction of the revenue from retail mark-ups.

  6. Because of their status as fair trade, many charities and NGOs pull their financial support from other non-fair trade producers in order to support fair trade farmers. This leaves the poorest farmers without aid, and perpetuates socio-economic disparity in local markets of developing nations.

  7. There is little empirical evidence that indicates the impact (whether positive or negative) of fair trade. Fair trade items are typically priced higher than non-fair trade products, which mainly draw consumers with greater financial means, and exclude those with less disposable income. Some are concerned that buying fair trade products is our attempt to feel as though we are making a difference in developing nations, regardless of the validity of that assumption. This leaves many people wondering if the higher prices truly make a difference, or if it is only a façade; our consumerism masquerading as altruism.

Thanks for reading.

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