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Love Had Three Different Definitions – Why Not Trade?

In ancient Greece there were three definitions for the word love:

• Agápē (αγάπη) – general affection;
• Érōs (ερως) – passionate love, with sensual desire and longing; and
• Philia (φιλία) – dispassionate virtuous love, friendship.

stone structureThis was, presumably, developed to add clarity and precision to the forms of expression that people used to express an emotion. This must have been a cultural adaptation to confusion that arose in situations where a single word or expression was not sufficient to convey the range of emotions that could be expressed in this state of mind.

In this day and age we have a similar problem with the term “fair trade.” It is being used in a multitude of different settings and contexts that all have very different connotations. For example, it is being used within the context of formal trade negotiations connoting public policy formulations between sovereign nations such as preferential treatment regimes, tariff schedules, and arguments for the rolling back of non-tariff barriers. This same formal use is applied within the context of World Trade Organization (WTO) dispute resolution processes.

At the same time, it is being used to indicate the multitude of informal grass-roots commercial transactions taking place with the sale of cottage-industry crafts and artesian goods, certain commodities like coffee and select timber products. A civil society infrastructure not unlike the formal government structure that promotes “fair trade” has emerged that advocates 10 principals of fair trade, labeling for alerting consumers, and other techniques for product differentiation.

Recently a new configuration of the term has been proposed by Venezuela’s President Hugo Chavez and Cuba’s President Fidel Castro. Their proposal, known as the Bolivarian Alternative for the Americas (ALBA) is seen by some in Latin America as an alternative to the Washington Consensus type model that has informed the North American Free Trade Agreement (NAFTA) and its offshoot, the Free Trade of the Americas Agreement (FTAA).

New Terms

I’m proposing a new set of terms to help users differentiate between the 3 different types of so-called fair trade. These are:
1. Formal trade which is rules-based, as trade subject to WTO and the various bilateral free trade agreement (FTA) regimes;
2. Fair trade which is built on the principles developed and promoted by the World Fair Trade Organization (WFTO); and
3. Socialized trade which reflects the attempts at reconciliation of theoretical constructs between social welfare objectives espoused by neosocialists and economic profit objectives espoused by neoliberals.

It is my sense that a great deal of confusion has arisen in the voting and the consuming public because there is a lack of clarity in the use of the term “fair trade.” It is used as an advocacy signpost by those seeking to redress imbalances in macroeconomic trade patterns (Formal trade) and, at the same time, by those who are seeking social justice and a reasoned approach to a more equitable distribution of the benefits of a free trade regime (Fair trade).

The socialized trade model of Chavez/Castro incorporates elements of both and is seen by neoliberal analysts as more of a reactionary treatment than a legitimate model of trade. This is because the ALBA approach does not take into account either the distorting effects of non-tariff barriers as part of its theoretical basis, nor does it acknowledge the potential for political abuse due to the lack of transparency in the governance models used in the two sponsors’ countries.

The time has come for greater clarity in our use of the term “fair trade” just as it must have come in ancient Greece when the word for love was defined through all of its nuisances and colors of expression.

Many thanks to Nick Panayotopoulos for key inputs into this post!  See his Blog at:  http://npanayotopoulos.blogspot.com/

  • HI Jane,

    You raise an interesting set of propositions in your post. I agree that it is very important to be as precise as possible when referring to the concept of ‘fair trade’…

    I am however, one of the 75% of voters in your poll who went for option 4… in that it is my understanding that the most common conceptualizations of ‘fair trade’ as it is being currently promoted and practiced have nothing really to do with the concepts of ‘free trade’.

    From my limited understanding ‘fair trade’ at a general level is most often identified as a ‘trade or market-based strategy for social change’.

    As I understand it, the key qualification debates within this general identification are those between ideas of ‘fair trade’ as a movement, participating in a specific program of trade reform…and ideas of ‘fairtrade’ as a market, involving a product certification scheme and the promotion of conscious consumerism…shopping for a better world.

    So I am sorry but I struggle to make the connections with your understandings of meaning differences and mine.

    Hey but isn’t that your very point???

  • npanayotopoulos

    Great article Jane, idea and execution; thanks for the mention. In this day and age it is indeed important to be as precise as possible when we refer to types of trade and your articles and 3 proposed types of “fair” offer good insight into trade related definitions.