World needs fairer trade, not less trade

Though globalization has fallen from glory and some leaders have embraced protectionist policies, discussions about whether we need more or less trade are misplaced.

Though globalization has fallen from glory and some leaders have embraced protectionist policies, discussions about whether we need more or less trade are misplaced, UNCTAD Deputy Secretary-General Isabelle Durant has said.
“What the world truly needs is not less trade, but more fair trade.”
Durant added that in terms of income inequality, trade growth over the past four decades has been both a blessing and a bane.
A study by researchers from Oxford University and the United Nations University World Institute for Development Economics has shown that “relative” income inequality – as measured by the Gini coefficient – decreased from 0.74 1975 to 0.63 in 2010.
But during the same period “absolute” income inequality increased, meaning that as the divide between nations shrunk, the gap between rich and poor within most countries widened.
“Trade has helped to make the economic pie bigger.  But some people weren’t invited to the dinner table.”

Another economic model

UNCTAD and the fair trade movement share a common conviction that the gains from trade should lead to prosperity for all.
“For trade to be a force for good, everyone must get a fair deal.  This is a vision that we share with fair trade advocates.”
And as the strong growth in sales of fair trade-certified goods, such as coffee, cacao and bananas shows, consumers across the globe increasingly share this vision.
In 2017, global sales climbed 8% to €8.5 billion (US$9.74 billion), according to Fairtrade International’s annual report.  This growth put an extra €178 million ($204 million) in the hands of 1.6 million farmers and workers.
“We are a movement, we promote an idea, a fair idea. We advocate for a new vision,” World Fair Trade Organization chief Enrich Sahan said.  “In a normal business, 70% of the profits go to the shareholders.  In 90% of our businesses, 0% goes to the shareholders.  This is another economic model altogether.”

Time to innovate

Labels like Fairtrade and the associated standards have the power to push production and consumption patterns towards more sustainable pathways.  But to truly rewrite the rules of trade, Durant said, the movement must innovate.
“When we think about Fair Trade, we generally think of food products, clothing or utensils produced in a traditional and artisanal way.”
While this has satisfied consumer expectations in developed countries, it limits the impact to workers in a number of sectors.  Durant therefore urged the movement to cross new frontiers, citing the example of mobile phones.
“Everyone has a mobile phone.  And if we look closely at the process of manufacturing, most of them are made from minerals extracted under deplorable environmental and social conditions and are often assembled in factories with equally deplorable conditions.”
“There is a clear void that I’m convinced fair trade can fill, by making this sector more equitable and sustainable.”
She also called for more attention on the climate crisis, which risks to unfairly affect communities in developing countries that have barely contributed to global warming.
Small island developing states, for example, emit less than 1% of global greenhouse gas emissions yet are bearing the brunt of stronger, more frequent hurricanes.  Dorian’s recent devastation of parts of the Bahamas was a stark reminder.
“The climate emergency leaves us no other choice but to embrace the sustainable road.  For trade to truly be fair, it must also treat our planet with dignity.”

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