Trade is the oldest and most important economic nexus among nations. Robert Gilpin, a scholar of international political economy, suggests that there seems to be nothing wrong with the idea of free trade. On the contrary, removing trade barriers, such as quotas, which limit the volume of imports into a country, frees the exchange of goods, binds the world together, and makes it possible to have competition from all over the world on our tables.
However, on their long journey from far off places, these goods change hands many times over which affects their price, thus becoming more expensive for the end user. At the same time, producers of these goods at the other end of the long chain end up with very little income. It is enough to recall reports of frustrated farmers throwing away their produce, because it is cheaper to import the same goods from distant regions. To give their farmers a better chance in a world of competition, many EU countries provide them with more than generous subsidies, to the dismay of others who see this as an unfair advantage.
Such subsidies give farmers in the developed world a definite advantage, but on the other hand, result in driving down prices in other world markets. In a practice known as dumping, produce is exported to other countries at an artificially low price, which makes farmers’ labour in poor countries even less profitable.
This is where the concept of fair trade enters the scene. While sipping their morning coffee, many conscious Westerners want to feel that they are doing something good for the world at the same time. This feeling is the strongest weapon in the hands of the fair trade movement. By buying products labelled as Fair Trade, these very same Westerners can alleviate their guilty conscience, knowing that a portion of the higher price they readily paid will be used to finance projects improving the standard of living in the poor areas their coffee comes from, as well as ensure that local producers keep their businesses running.
