Free Trade

Poor Substitutes

Trade is the way out of poverty


Cancun—Naked bodies on the beach as a protest against the World Trade Organization greeted me on the front pages of the local papers when I arrived in Cancun. That was the lighter side of the "globalphobics,." as people here in Cancun call the anti-WTO protestors.. Today matters got serious. Poor people, small farmers, campesinos, peasants, and traditional fishers from all over the world were gathered together in a downtown gymnasium this morning to listen to fiery speeches by anti-globalization leaders. They were told by speaker after speaker that the world's trade ministers were colluding only miles away with giant transnational corporations to steal their livelihoods and make them even poorer.

"La lucha sigue sigue, Zapata vive vive," cried the crowd periodically in a the age-old activist call and response ritual.

Of course, the protestors were angry, and you would be too, if you were in their shoes and believed what the speakers were telling them. The protestors, adorned with green scarves reading "WTO out of food and agriculture" clearly felt terribly wronged by the developed world and developed world corporations.

But could they be wrong? Perhaps their passions are misdirected and their would-be leaders in the NGOs are at best mistaken, and, at worst, are cynically using the hopes and frustrations of the poor to propel themselves into political power.

Today, the poor gathered in Cancun mainly at the behest of NGOs from the rich countries did storm barricades. Atleast one protestor died: a Korean who committed suicide to bring attention to the injustices that he believed are being wrought by the developed world and the WTO. It is horrible and sad to think that he died believing that his sacrifice might help the world's poor people to live better lives.

Meanwhile, on the other side of the barricades, in the quiet air-conditioned hotel meeting rooms of Cancun, NGO leaders mainly from the rich developed countries claimed to be devising ways to improve the lot of the world's poor. While protestors yelled and fought and died at the barricades three miles away, rich NGOs were holding a symposium on "Fair Trade."

These groups explained how they had created private certification systems aimed at letting consumers know how the products they buy are produced. "Usually product labels tell consumers about the quality of products; how nutritious they are or if they meet certain safety standards," said Pierre Johnson, head of a fair trade alliance. "But you do not know how these products are made. Are they made with child labor, by well paid producers or are they made in ways that either protect or harm the environment?"

Fair trade activists aim to change that and get the story of how goods are made to consumers. So they certify foods as "organic" or "fairly traded" and forests as "sustainably managed." It turns out that most "fairly traded" items are low value commodities like coffee, tea, cocoa, and sugar.

In theory, there is nothing wrong with enticing consumers with such information, so long as such certifications are private and voluntary. But positive claims that a product is fairly traded can easily be interpreted as saying that competing products are unfairly traded. And what subjective standards should apply? For example, should purchasers be allowed to discriminate in favor of products "Made in America" on the basis that US labor laws are allegedly better than those of Russia or Brazil?

Furthermore, the fair traders may not be content leave their standards as voluntary. In fact, they are already thinking of ways to change their "voluntary" systems into mandatory "systems" and thus incorporate their subjective standards and values into the trading rules of the WTO. Chantal Harvard, who works with the Canadian certification group Transfair suggested that the goal of the fair traders would be to incorporate environmental and social standards into the WTO trading rules eventually.

Currently, the WTO rules apply to the objective qualities of products and forbid countries to discriminate against products based on the processes of how they are made. Thus WTO trading rules should mean that countries ought to give the same tariff and non-tariff treatment to steel imports whether they were produced in China or Japan. Or to orange juice, whether it was grown in Brazil or Florida. But the real question is whether the rich country certifiers are misleading the poor people who make the goods that are supposedly "fairly traded."

"Canadian consumers we surveyed told us that they are willing to buy fair trade goods, but that they are not necessarily willing to pay more," said Chantal Harvard. This seems particularly clueless. The low prices in the market place are signaling to the poor producers that they should get out of growing low value commodities and produce something more valuable. The fair traders are also telling the poor producers that they can maintain their traditional ways of life. Given the pace of economic and technological change sweeping the world, this is a misleading promise. Fair trade may temporarily boost the incomes of a small number of the world's poor, but it definitely will not lift hundreds of millions out of the desperate poverty in which they live.

One must also wonder about the agendas of many of the rich country environmental groups such as Greenpeace and Friends of the Earth. They apparently fear that economic growth and prosperity for the poor will destroy the natural world they are anxious to preserve. Consequently, they devise schemes aimed at persuading the poor to continue low-tech communal farming and small scale production; they want the poor to stay out of the world trading system. These schemes fly in the face of the clear evidence that shows that it is precisely in the richest countries that the natural environment is improving, that the air is clearing, the rivers run cleaner, and the forests are expanding. Economic growth and environmental improvement are not opposites; they go hand in hand.

The conclusion is inescapable that incorporating environmental and social standards in WTO trading rules would in fact delay the day when prosperity reaches the world's poorest people. Here is the question for those of us who know that to be true: How can we persuade the passionate but misled poor that free trade, rather than be resisted, is a goal worth fighting for?