Many fair trade advocates willingly contribute to a fairer world for disadvantaged producers. But where does fair trade fit in the larger notion of alternative trade?
In this dense-but-approachable short text, Gavin Fridell, the Canada research chair in international development studies at Saint Mary’s University, examines the concept of alternative trade and how it could provide insight into the growing movement for fair trade. Fridell loosely defines alternative trade as a model that offers three potential components: state power, social welfare, and favour toward poorer groups.
Fridell is compelling when he dismantles the arguments that support, what he calls, the “free trade package,” which refers to the broad political, economic, and ideological forces behind free trade policies. From a social perspective, free trade has left many millions trapped in a vicious cycle of poverty. It has failed to contribute to the well-being of many societies, yet it is still heavily promoted as the only viable route to economic growth and development.
Using three case studies, he shows how alternative trade offers a framework for development beyond the free trade package.
In his first case study, Fridell describes how the International Coffee Agreement (ICA) generated prices for conventional coffee between 1963 and 1989 that were equal to, and in some years, twice today’s fair trade price. As well, the ICA reached all the world’s coffee producers. Fair trade certification currently reaches only 3 percent.
Canadian wheat farmers, his second example, are susceptible to conditions similar to those encountered by producers in developing nations; they are highly vulnerable to global market and climatic forces. The Canadian Wheat Board (CWB) was established in the 1930s to offer stable prices to western Canadian farmers and became one of the most successful and longest-lasting state-run trading enterprises in modern times.
The third case study shows the “protected access” example of the European Union–Caribbean banana regime. It operated a successful quota system that enabled smallholder banana farmers to compete with the giant plantations of Latin America.
Fridell argues these alternative trade examples succeed because they target the needs of relatively poorer producers, and thus have had success in maximizing social welfare tied to their respective industries. In other words, social regulation is a key component of alternative trade. But rather than being socialist alternatives, they actually “promoted the expansion of capitalist social relations and the further integration of peasant and small-scale farmers into a world trading system increasingly dominated by transnational companies.”
The strength, and the imperative, of alternative trade is that through the process of production and exchange it offers a broader distribution of wealth. This is converse to free trade, which purports to provide trickle down benefits—a highly debated effect that often sees wealth accumulate “in the hands of the rich… expecting they will choose to compensate society after the fact.”
Fridell does point to flaws in his alternative trade examples, such as the lack of democratic control, but he observes similar problems with the free trade package that overwhelmingly favours rich and powerful nations (e.g., free trade agreements, the World Trade Organization). Proponents of the free trade package are also prone to what Fridell calls “historical amnesia,” where the problems of free trade are often overlooked.
Fair trade is a voluntary and market-driven approach compatible with broader free trade reforms, but Fridell suggests that it won’t be a long-term solution in its present form, and will need to evolve—a process that could benefit by examining the successful models of alternative trade described in the book.
For the relatively new fair trade movement, which has seen ongoing flux, the book gives fair trade advocates pause for thought in envisioning its future and its role within a broader vision of trade.
“Alternative Trade” was originally published in the
Written by: Gavin Fridell
Fernwood Publishing, 2013
178 pages, $24.95 • ISBN: 9781552665879