The Possibility of Fair Trade in Global Development Policy

Abstract

Fair Trade is a growing field both in terms of numbers and ideas. The principles of Fair Trade were introduced by the Fair Trade Organizations in 1940s. Since then they have been putted into practice and, nowadays, they have a worldwide following. The Fair Trade movement seeks to alter conventional trade relations through a system of social and environmental standards, certification, and labels designed to help shorten the social distance and to link between consumers in the North and producers in the South. This paper explores the possibility of Fair Trade as a context of Global Development Policy. The approach of the World Bank towards combating poverty in agriculture sector, as Kydd and Dorward (2001) called Washington Consensus in agriculture, has three problems; Investment Dilemma, Green Revolution and Governance. The Alternative development approaches for those circumstances would be to increase the productivity of tradable goods or non-tradable goods. As the variety of farms in developing countries is so wide, the best way to combat poverty in farms are uncertain. Our research definitely shows there is a possibility for Fair Trade to be an alternative development tool to root out poverty, in some areas where the productivity and potential of tradable goods are high. The conditions imposed on Fair Trade is as follows; (1)maximize the productivity of South Community, (2)protect the structure of community, (3)no more productive Tradable Goods in the community and (4)low potential of Non-tradable Goods in the community. If these conditions are hold, Fair Trade would be a strong and desirable tool to be substitute for Washington Consensus in Agriculture. Another problem on this context is the demand in developed world. Although Fair Trade is getting more and more popular, the markets are still niche. To be an alternative tool to root out poverty, Fair Trade shall search for the possibility of coexistence with conventional retailers and companies. The essential point of my argument is that the results of Fair Trade movement since 1940s are now facing challenge to be mainstreamed. The coexistence with profits and Fair Trade under unclear ethical consumer market is still big issue.