#FairTradeFacts 2- Fair Trade does not aid economic development. It holds back diversification and moves up the value chain

Fair trade does not aid economic development. It operates to keep the poor in their place, sustaining uncompetitive farmers on their land and holding back diversification, mechanization, and moves up the value
chain. This denies future generations the chance of a better life.

Free trade relies on free individuals voluntarily seizing market opportunities, rather than attempting to manage production and restrict the marketplace. In contrast to Fair Trade, free trade relies on the absence of the price-fixing arrangements and tariff barriers that restrict international trade.

By incentivising unsustainable (...) practises, Fairtrade encourages oversupply where it will do most damage: among marginal producers, who should be helped to diversify and develop economically, not subsidized to stay poor.

At the end of the Second World War, Hong Kong was poorer than many African countries. Advocates of ‘fair’ trade argued for boycotts of items produced in Hong Kong ‘sweatshops’. Yet by working with the free market – abandoning tariffs and resisting regulation – Hong Kong’s economy soon
outstripped not just the African economies it once lagged behind, but overtook the UK within thirty years.

source:
Unfair Trade by Marc Sidwell, Adam Smith Institute