Fair trade fantasies

Kevin Watkins
Senior Policy Advisor

In a thought-provoking polemic Kevin Watkins puts the cat among the pigeons (and a menagerie of other animals) and challenges some basic assumptions about fair trade.

These are heady times for fair trade activists. The feelgood factor is running at an all-time high. As we put another dollop of that fairly traded Swaziland chutney on our Friday night Biryani, pour that ethical chocolate over our organic Windward Island bananas, sip our Caf├ędirect and bed down beneath our decent development duvets, we can nod off certain in the knowledge that we have made the world a better place.

Across Europe and North America, fair trade is the growth industry for harry potter londres. As we approach the new millennium, you can shop until you drop with a conscience. It was Margaret Thatcher who elevated the principle of consumer sovereignty in the market into the equivalent of the divine right of kings. Now development agencies have developed a soft and cuddly version. Fair trade labels make an appeal to consumers altruism, seeking to displace the pursuit of self-interest and market barbarism as a guide to conduct. And as the market shares grow from the irrelevant to the minuscule, the mood of self-congratulation expands apace.

Apologies in advance for offended sensibilities, but it's wake-up time. While we produce ever more glossy pamphlets for our Disney World of fair-trade goodies, linking kindly consumers with smiling, happy producers, the rules of international trade are being re-written. The right of consumers to exercise market choices which correspond to their ethical values is under threat - along with the entire fair trade industry which that right underpins. At the same time, apparently unnoticed by some of the more enthusiastic fair traders, old structures of North-South domination are being reinforced, and new ones are emerging. The combined effect is that the gains offered by fair trade, important as they are to a handful of winners, are being swamped by the losses suffered by the vast majority.

Next time you sit down with that mug of fairly traded tea consider the following fact. At the World Trade Organisation in Geneva, the very principle that products should be labelled in a way that enables consumers to make informed choices is under systematic attack. The battleground concerns a rule which says that importers cannot distinguish between products on the basis of how they are produced, or production and processing methods (PPMs) in WTO-speak.

The Canadian, Malaysian and Indonesian governments, amongst others, have openly challenged the right of timber importing countries to differentiate between products on the basis of how they are produced. This is a wedge issue for a concerted assault on the use of 'eco-labels' aimed at diverting consumer demand into sustainable products.

Far fetched? Have you wondered why the genetically modified Soya organisms in the bread, ice-creams, pies and margarine you are eating are not labelled? Answer: because the US company Monsanto, which gave us the first biotechnological Soya bean, has threatened to take the EU to the WTO if it attempts to distinguish between genetically engineered and standard Soya beans. Nobody doubts that it would win the case on the basis of the WTO's PPM rule.

Then there is the great fur debate. For years campaigners in Europe fought for a ban on fur imports from countries using leg-traps. The EU is now about the withdraw the ban in the face of a Canadian threat to take the issue to the WTO. Leg traps, after all, are just another way of producing fur, so why should consumers be given a choice to exercise their moral judgement?

Incidentally, do you take milk with that fair trade tea. If so, do you prefer it with or without growth hormones? Hopefully with, because you don't have any choice. Why? Because Monsanto (the same) has successfully challenged an EU ban on the use of Bovine Somatatropin - a growth hormone on which it holds the monopoly. In this case, the threat of action was based on the fact that the WTO does not acknowledge the right of governments to ban imports on consumer health grounds unless there is an international agreement on the health risk involved. Since there are no agreed standards, consumers should have no choice.

Taken together, what is happening at the WTO is a profound assault on the right of consumers to make informed choices. Not since the force feeding of Jemima Selwyn Gummer in the interests of the British mad cow industry has consumer choice been so flagrantly violated. And with a real and effective choice, one of the most powerful instruments for political change in areas as diverse as development, consumer health and environmental sustainability will be lost.

Each of the cases mentioned above has aroused consumer anger and given rise to huge protest movements. In Germany, a threatened consumer boycott forced the big supermarket chains to agree to labelling rules which identify products containing biotech Soya. In Britain, animal rights activists are taking up the leg trap issues. Organisations like Greenpeace and WWF are leading the resistance, pointing to the need for trade rules which place principles about environmental sustainability and social justice above free market dictates.

And where are the fair -trade development activists? In short, nowhere to be seen. This is despite the fact that the right of retailers and importers to label the very products on which their industry depends is under mortal threat.

Perhaps they think this is all green hype - and boring to boot. After all, reading the first page of a WTO dispute settlement panel judgement would be enough to ensure even the worst insomniac of a good nights sleep. But this is the same WTO which, by ruling on the side of three US transnational companies against the right of the EU to maintain trade preferences for banana producers in the Caribbean, has just signed the death certificate for the livelihoods of around 100,000 banana producers. True, we can salvage a few livelihoods by importing a few organic bananas, but this amounts to a pitiful gesture of defiance after the event. What we need is a concerted response to a fundamental attack on basic development principles.

Slowly, quietly and behind a dense fog of jargon, the rules of world trade are being redesigned around the interests of powerful transnational companies (TNCs). Today, around 350 corporations account for over half of world trade flows, most of it on an intra-company basis. They also account for over 80 per cent of foreign investment and control most of the technologies needed for successful participation in international trade. Their power is enormous. General Motors is a bigger economic entity that Indonesia, and IBM has a bigger turnover than the combined GDP of Vietnam and Ghana - and with power comes influence.

In recent years, TNCs have redrafted international trade rules to restrict the right of governments to control foreign investment, protect strategic sectors of their economies such as banking and finance, and repatriate profit. In agriculture, they were instrumental in devising trade rules under the Uruguay Round agreement which require developing countries to open their agricultural system to competition from imports from the US and the EU. Never mind that both parties massively subsidise their own farmers, free trade is good for the TNCs who control world cereals markets, so it must be good for developing countries. Unless of course you happen to be among the estimate six million Mexican and Filipino households set to lose their livelihoods as a result of competition from US maize imports. Then again, perhaps they can all go and produce doll, straw hats, and colourful rugs to brighten up and enlarge our fair trade catalogues. Personally, I would like to see more investment in averting the disaster.

None of this is intended to get you turning to that fairly traded chocolate. But on the subject of chocolate you might want to reflect on the following. Over the past fifteen years, sub-Saharan Africa has lost the equivalent of around 8 per cent of its national income as a direct consequence of deteriorating prices for primary commodities such as cocoa and coffee. Fair trade schemes help a few. But international action to stabilise prices at remunerative levels through a combination of supply management and price support is urgently needed. Sadly, serious reflection and advocacy on this issue stopped about ten years ago - and in the fair trade movement is has not yet started.

OK I admit it. Yes, I buy fair trade products. But I'm a political dinosaur. Of course, personal behaviour is important. How we treat others and how we collectively treat the poor and live up to our international responsibilities matters. It matters a lot. But I've never managed to shake of the idea that genuine change requires fundamental shifts in power structures, and the creation of new international rules built on the foundations of social justice. Wasn't this in embryo what the new international economic order of the 1970s was supposed to be about? And doesn't any agenda for change need to be built on the twin legs of personal behavioural change and structural change?

Today, of course, we have a new order, but not the one we wanted. It is an order built on the shifting sands of focus group discussions, cosy dialogue with corporations, consumer-driven initiatives, and consensus politics. Restructuring international relations to shift power away from transnational corporations, to restore the primacy of the public interest over the pursuit of corporate profit in multilateral trade rules, and to provide the consumer with genuine choices, are off the agenda.

Speaking on behalf of the dinosaur fraternity, I find fair trade consumers a breath of fresh air. It appeals to social values and ideas about morality and social justice which have survived the twin assault of neo-liberal economics and new social democratic gobbledegook. The fair trade client group, to use that ghastly phrase, is committed, caring and a powerful vehicle for change. It deserves better and more radical leadership than it is getting. A good starting point would be the more active involvement of fair trade groups in alliances with the consumer and environmental movements.

More immediately, the ostrich-in-crisis tendency to ignore corporate machinations aimed at restricting choice, reducing the self-reliance of developing countries, and pursuing corporate profit without regard for the livelihoods of vulnerable communities is not helpful. To paraphrase Bob Marley: "wake up, get up, stand up for rights."

Clarification: Oxfam UK & Ireland (along with Kevin Watkins) remains committed to its fair trade programme. Further details are available on the Oxfam UK & Ireland web site.


Multilateral Agreement on Investment (MAI)
The MAI is a new investment treaty being negotiated between the world's industrialised countries in the OECD. An Oxfam briefing paper argues that the draft MAI falls far short of establishing a fair framework of rules governing international inves

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