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Fair Trade V. Free Trade

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by Scott TessFree Trade and Fair trade are both market based economic system

Free Trade and Fair trade are both market based economic systems. Both rely on a market place where producers may bring products for sale and consumers may choose just what they want when they want provided they can pay for it. The similarities end there though. Examining who organizes and benefits from each rubric goes a long way to explain the modes of each system.

Free Trade is organized at trade conferences and negotiations, many of which are conducted in secret. That fact is suggestive for reasons that should be obvious. Where these proceedings are more or less open, they are attended by the political elite. Presidents and ambassadors who have varying degrees of accountability to the publics they represent. These proceedings are heavily influenced by the play of power, regardless of the intentions of the participants therein. States with great militaries or strategic resources have great influence over others. One might say diplomacy is practiced, but not democracy. Other loci of Free Trade organization and planning are the secret meetings and judicial proceedings of global organizations such as the World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank. While these organizations have had a great degree of secrecy from their inception, secrecy has become even more important since their meetings attract protest crowds numbering in the thousands. The “Battle in Seattle” is the most significant US example. In these secret meetings corporate and political elites decide how to dismantle tariffs, price supports, social spending, subsidies, and other “barriers to trade.” What is usually unstated is how they decide NOT to dismantle these modes. While all preach the “neoliberal free trade” gospel, the most radical free trade ideology, those that sing the loudest are often the most hypocritical. For instance, the US and to a lesser degree Europe, still maintain many tariffs and subsidies on steel and agricultural products. This fact exposes these proceedings as little more than the imposition of power, not principles.

The organization of the Fair Trade rubric is derived from completely different sources serving different interests. Fair Trade is organized by consumers and producers working through non-profit organizations. Non-profit and stakeholder organizations such as Transfair and Fair Trade Labeling Organizations International (FLO) establish environmental, labor, and democracy standards which producers may choose to meet to receive the Fair Trade Certified label. The certification provides the producers with minimum price guarantees and help with global marketing. It also allows consumers to choose products made under the conditions just stated and avoid supporting slave labor, child labor, sweatshop labor, and environmental harm. While consumers have a role in the labeling organizations, their most crucial role lye in the decentralized, networked advocacy groups who promote Fair Trade as a consumer option and work to establish Fair Trade purchasing policies in their popular institutions like governments, schools, churches, and social clubs. The multiplicity of networked voluntary associations working to organize Fair Trade demonstrates a far more democratic mode of economic activity.

The resulting values of the Free Trade and Fair Trade rubrics are determined by the organization modes previously noted. Free Trade, organized by the Corporate and Political elite, values ever increasing profits. The profit seeking compulsion will suffer no borders and so must expand world wide, often with the assistance of state violence threatened or realized. Free Trade also values oligarchic political-economic decision-making. Recall that you don’t get a vote, a delegate, or even a representative at secret meetings. Free Trade values investor and corporate rights. NAFTA is mostly an investor’s rights agreement. Unless you are willing to consider GM moving a car from a GM factory in Mexico to a GM factory in the US trade, NAFTA has not and was not designed to increase trade. It simply allowed the previously mentioned action to be conducted with more ease to the detriment of workers in both the US and Mexico since, under the new rules, high paying union jobs in Michigan could be outsourced to union busting countries such as Mexico. Finally, Free Trade values commodification. Commodification is the process of turning something not previously considered in economic terms into another product to be bought and sold under free market conditions. Nothing is sacred. Everything from genes to workers are commodified and therefore subject to the demands of the most powerful players in the market. Traditions and rights have no place here unless they can be put on a t-shirt and sold.

From Fair Trade flows a wholly different set of values. Traditional knowledge and creativity are given an opportunity to flourish in the world market. Human rights such as the right to organize labor unions are part of the Fair Trade rubric. While solidarity at the loci of production is valued, a new kind of solidarity is developed by Fair Trade. Solidarity between the producers and the consumers. Producers and Consumers in the global market under conditions of Free Trade are narrowly concerned only in one’s profit and the other’s price. The Fair Trade rubric develops mutual concern for the interests of both producer and consumer. While the international union movements have encouraged concern between union producers in one country and union consumers in another, the expansion of this global solidarity outside of union circles maybe a novel development in human affairs. Environmental protection and sustainable development as well as democratically organized workplaces are values specific required by Fair Trade Certification. Many Fair Trade producers also contribute to community development. Producers are encouraged to set aside some income for education, transportation, housing, and health care.

The different values realized under Fair Trade conditions and the democratic organizational forms that give rise to these values and are desiderata themselves are the reason Fair Trade sales, like certified organic sales, continue to rise rapidly. The embrace of these values and the global solidarity built outside of the working class labor movments signifies a new era of civilizing tendencies that is both product and accelerant, a positive feedback loop.


Mr. Tess is an organizer with Fair Trade for a Greater Orlando Coalition and the Orlando Area Green Party.


Written by jackofspades83

February 27, 2008 at 5:02 pm

4 Responses

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  1. Well written Scott. I run a small coffee roasting company in Seattle. We are one hundred percent Fair Trade. If it weren’t for the third party audit trail that Fair Trade provides, small companies like ours could not be sure that the supply chain is fair, descent and humane for everyone involved. Not only do I rely on Fair Trade as a conscientious consumer, but if it were not for Fair Trade, I would not be in the coffee business. Thanks for the Article. — Rick

    Rick Riehle

    February 28, 2008 at 5:56 am

  2. Thanks for your support Rick. Please keep an eye on for big things to come in the Fair Trade movement in Orlando.


    February 28, 2008 at 11:04 pm

  3. thanks for the article. I was sty in Indonesia, and i’m not fluently in writing english. In my country the free trade will be realease in 2010 for ASEAN (it’s as an issues). I think it must preapre for all. The labour, education degree an infrastucture for the economic rule. I thik the free trade for the developing country is not ready to realese. The consumtif habbit is just for the rich people how about the poor? However i prefer with the fair trade. The trade must fair for all people.



    March 10, 2008 at 4:46 am

  4. Thank you for your comments Franky. I encourage you to get involved in the Fair Trade movement and other movements there. Positive social change usually comes from these movements.


    March 10, 2008 at 9:40 pm

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