11 July, 2018

What Trump means by Free and Fair Trade

Donald Trump
by Helen Dennis

Donald Trump is in the UK this week. This will no doubt mean a lot of things to a lot of people, but when it comes to “fair trade”, what does he mean?

What does Fair Trade mean to Donald Trump?

For some time the US President has vocalised his support on and off-line for “Fair Trade”, including in a simple CAPITALISED! two-word tweet earlier this year. But Trump’s version really has very little to do with Fairtrade as we know it – his emphasis has been on domestic jobs (no bad thing in itself) but he’s no fan of worker’s rights, nor of action on climate change. Rather, Trump’s fair trade, is a re-articulation of ‘America First’ and one that risks undermining the internationalism inherent in Fairtrade, which prioritises workers and producers whatever their nationality.

What does Fair Trade mean to UK Trade Secretary Liam Fox?

Trump isn’t the only one who has been at it. The UK Trade Secretary, Liam Fox, has taken to talking about “free and fair trade” when articulating his ambition for post-Brexit UK trade policy. And whilst he may still have appetite for a free trade deal with the United States, the Fox and Trump visions are poles apart. When Liam Fox speaks about ‘fair trade’, he is stating his support for the global system – for the World Trade Organisation and the managed process towards greater trade liberalisation.

What do we mean when we say Fairtrade?

Scales

Then we have Fairtrade (*waves*) and the wider Fair Trade movement, which exist to deliver a better deal for the people around the world who produce the food we eat and make the clothes that we wear. Fairtrade, as most of our readers will know, has a very specific meaning. It describes a system or a ‘way of doing trade’ that insists on meeting certain minimum standards and providing a monetary ‘premium’ to boost the incomes and living standards of producers. Fair Trade (two words) refers to ethical trade more broadly, articulated in the ten principles set out by the World Fair Trade Organisation. 

When talking about the global trading system, those of us in Fairtrade and the Fair Trade movement have tended to talk about Trade Justice. This has helped distinguish our work on supply chains and unfair trading practices from important debates about tariffs and trade deals. A Trade Justice lens puts questions of development, human rights and power, front and centre, and recognises that not all trading partners start on an equal footing. Some countries will have an historical or geographical advantage, some may have more or less power within trade negotiations, and more or less capacity to bring challenges to the WTO.

Trump's vision is dangerous 

For Trade Justice advocates, neither Donald Trump’s nor Liam Fox’s versions of “fair trade” really cuts the mustard, and Trump’s is particularly dangerous. The Trumpian vision of fair trade, ignores the place and power of America in the world. It portrays the US as a victim of the global system and punitive tariffs, when in reality, the United States, more than any other country, has helped to shape the existing rules, often to the detriment of smaller, less powerful nations. Cotton is an obvious example. The US is the world’s third largest cotton producer and the industry has long been subsidised, suppressing the global price for cotton, to the detriment of developing country cotton farmers in countries like Senegal and Mali. Whilst the US has reformed its regime following a WTO challenge brought by Brazil, subsidies are under debate again with the passage of a new and contentious US Farm Bill.

The negative impacts of trade liberalisation on poorer countries

Fairtrade banana farmer Marcial in Panama

And the Fox vision, shared by many global leaders, can end up prioritising investors over producers (the inclusion of corporate courts in trade deals like NAFTA is evidence of this). In pursuit of an ‘ideal’ free-trading system, it may also too easily disregard the negative impacts of trade liberalisation on particular countries or sectors, especially if the process is poorly managed. The so-called ‘banana wars’ illustrate this point. Our banana consumption is currently overseen by a rather complex arrangement of trade preferences and quotas, which aims to protect the most vulnerable exporters – small-island states in the Caribbean – whilst enabling their more competitive Latin American neighbours (dominated by US multinationals) to have greater access to the EU market over time. This ‘managed’ arrangement has arisen from WTO rulings which initially decimated the banana industry in countries like St Lucia. With support from schemes like Fairtrade, the industry has somewhat rebounded, but as the EU tariffs for Latin American countries decrease, the situation for the banana farmers in the Caribbean remains precarious.

Language can be very slippery, and with all of these different versions of ‘fair trade’, we wouldn't blame anyone for being confused! So next time you hear a politician talk about ‘fair trade’, ask the following question: Are they making a case for trade that works for all producers and workers, especially those in the world’s poorest countries? If not, then file under ‘could do better’, and maybe give @FairtradeUK a retweet!

Read more about Trump's isolationist agenda on Fairtrade America's blog

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Image of Donald Trump by Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0]via Wikimedia Commons.

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