A few weeks ago, the IEA published an in-depth study of Fair Trade, Fair Trade Without the Froth. The Hilton/Cameron-rebranded Conservative Party likes Fair Trade and there are good reasons why it might.
Fair trade products are freely bought by customers – there has been double digit growth in the sales of Fair Trade products in recent years. It is a private labelling and certification system. Private regulation is generally crowded out by government regulation whereas in this field it isn’t. No doubt, David Cameron would describe Fair Trade as the Big Society at work – I would describe it as the free market at work.
The fact that we might like the idea of private certification schemes in principle does not mean that every scheme works in practice. There are genuine questions about what Fair Trade achieves. Even researchers sympathetic to Fair Trade have suggested that only about 25% of the price premium finds its way back to the suppliers in poor countries.
Read the rest of the article on the ConservativeHome website.