Fair trade is counterproductive - and unfair

Abstract

Fair trade – paying a price premium for commodities based not on quality but on employment and other conditions – is counterproductive and unfair. It results in consumers getting a lower-quality product. Much of the gain from the price premium goes to the fair-trade bureaucracy rather than to the producer. Fair trade may even, if effective, destroy the banana industry. A better solution for consumers and third-world producers is to abolish all remaining trade barriers.