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Definition: fair trade from Dictionary of Accounting

An international business system where countries agree not to charge import duties on some items imported from their trading partners


Summary Article: fair trade
from The Dictionary of Human Geography

The demand that producers from poorer countries should not be denied the legitimate maximum rewards from their sales by the actions of richer countries or other powerful agents. Fair trade campaigns go back a long way and embrace several related issues. Indian nationalists complained about a system of Imperial Preferences and asked for a measure of protection to help set up infant industries in areas such as iron and steel. In the 1950s, Oxfam took a lead in promoting fair trade ideas under the slogan ‘Helping by Selling’. Similar ideas were taken up in the 1960s, when many African countries demanded ‘trade not aid’. This slogan became the motif of the first UN Conference on Trade and Development, held in Geneva in 1964. Other trade justice campaigns have complained about export dumping by richer countries. Still others worry about pressures being placed on developing countries to liberalise their own markets too quickly. Ha-Joon Chang (2002) has charged that almost all of today’s advanced industrial economies benefited from protection. Now, however, they and their representatives in the international monetary fund (imf) and world trade organization (wto) want to kick away that ladder to success in the developing world (see neo-liberalism).

Campaigns to ensure more open and equitable access to richer markets for developing world producers continue to be important in the fair trade pantheon. Developing countries pressed for liberalization of agricultural markets in the European Union and North America during the World Trade Organization talks held in Hong Kong in 2005 (Stiglitz and Chorlton, 2006). The fair trade issue was also pushed strongly by the Make Poverty History campaign. Sugar producers in West Africa or the Caribbean will not receive a fair return for their crop when countries in the richer world offer large subsidies to domestic producers of sugar cane or beet. More recently, fair trade campaigners have put the spotlight on trade negotiations that link small producers to some of the world’s largest or most powerful companies. Take the case of coffee. How are small producers in Central America meant to strike fair deals with giant coffee purchasers when those same companies can use their immense purchasing power to strike better deals for themselves with producers in Brazil or Vietnam? The answer, in part, is for small producers to form co-operatives. They can then work with campaigning groups to persuade Starbucks and other coffee giants of the commercial value of selling ‘fair trade’ brands in their outlets. At this point, fair trade campaigns rub shoulders with calls for ethical consumption (Nicholls and Opal, 2005).

Questions of market access and fair trade also take shape within poorer countries. Many small producers in the developing world are hurt by governments that saddle them with paperwork. It has been reported that some banana growers in the Central African Republic take over 110 days to get their bananas on a ship to Europe, and need more than 35 signatures to get them on board. Each signature creates an opportunity for corruption, or rent-seeking behaviour. Trading structures remain distorted, rather than open or developmental, and primary producers continue to lose out.

Suggested reading

Full bibliography is available here.

Stiglitz and Charlton (2006). See also www.makepovertyhistory.org

Stuart Corbridge
Professor of Development Studies
London School of Economics, UK
© 2009 by Blackwell Publishing Ltd except for editorial material and organization, © 2009 Derek Gregory, Ron Johnston, Geraldine Pratt, Michael J. Watts, and Sarah Whatmore

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