FAIR TRADE: ITS REAL IMPACT ON THE WORKING POOR

Fair trade gains popularity, while free trade is undergoing more and more criticism. Since international free trade supposedly pollutes the environment, promotes the utilization of sweatshops, exploits child labor, and impoverishes developing countries, fair trade is a preferable alternative (World Fair Trade Organization, 2011). By reviewing empirical studies and examining regulations concerning fair trade practices, this paper provides a comparative analysis of both free and fair trade in light of its impact on the working poor. We argue that the benefits of fair trade are concentrated among interest groups—mainly retailers and regulating organizations—while its costs are widely spread across the global economy. We also show that the distributive politics of fair trade violate conventional trade, and that fair trade, unlike free trade, inhibits economic progress rather than stimulating it.