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The Fair Trade Scandal

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The Fair Trade Scandal

Marketing Poverty to Benefit the Rich

Ohio University Press,

15 min read
10 take-aways
Text available

What's inside?

Is fair trade really fair?

Editorial Rating

7

Qualities

  • Innovative

Recommendation

Development economist Ndongo S. Sylla studied fair trade’s place in the international trade universe. He reports that fair trade, which began with high ethical hopes, has made the lives of poor workers worse. Neoliberalism, “tariffication,” supply chain pressures, and labeling and brand confusion have diluted the fair trade movement’s intended impact. Sylla focuses on the least developed countries (LDCs) and details the free market’s destructive role in deepening the divide between North and South. The author’s understandable frustration does not compromise his incisive analysis, which comes through despite the book’s often-dense prose. getAbstract recommends his perspectives to executives, policy makers, activists and enlightened consumers searching for insights into the problems of the South’s economies.

Summary

An Unfair “International Trade System”

The international trade deck is stacked against the least developed countries (LDCs). The United Nations defines LDCs as nations with inadequate income, food quality, education and health care, and as being vulnerable to man-made and natural shocks. Most LDCs are located in sub-Saharan Africa. They are generally rural and dependent on agriculture. Half of all inhabitants of LDCs live on less than the established poverty level of $1.25 daily.

In theory, countries involved in international commerce specialize in their strengths. For LDCs, this is labor. Open trade allows them to export goods, but only those exporting manufactured products have seen trade increase to their benefit. Since the 1960s, Africa’s part of global merchandise exports has sunk from 6% to 3.4%. Insufficient diversification is one reason – most notably, its reliance on agricultural products like coffee and cotton, with few exports of manufactured items. In addition, agricultural prices have dropped 2% yearly from 1961 to 2001.

LDC economies operate at the mercy of pressures to reduce “upstream” costs and improve “downstream” earnings. The growing power...

About the Author

Ndongo S. Sylla, a PhD in development economics, is a researcher at the Rosa Luxemburg Foundation office in Dakar, Senegal.

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