Fair Trade: Reform and Realities in the International Trading System

by Michael Barratt Brown

London and New Jersey: Zed Books, 1993. Paperback, 226 pp., $21.95.

Reviewed by David McRobert

"Just remember every time you swallow a cup of coffee made from the beans purchased for pennies by those multinational food conglomerates you are drinking the blood of the peasants of Central and South America."  In the 1980s I would offer this assertion as a lead-in to my argument for purchasing "politically-correct" (PC) Bridgehead coffee and engaging in fairer trade with developing countries.  It was an argument that I foisted on fellow law students, captive students in seminars and lectures I taught, and other environmentalists on a regular basis in a modest attempt to jolt them out of their complacency about unfair trade.

Usually my assertion would grab the attention of some people for at least a few minutes.  I would then proceed to attempt to support my assertion drawing on the writings of E.F. Schumacher, bioregionalists and marxist development theorists. 

In retrospect, I am confident that my comments about fair and unfair trade generated as much confusion as they did understanding; it is too bad I didn't have a book like this to help me make my arguments.  Indeed, I believe that Michael Barratt Brown has written a definitive account of the rise of the modern world trading system and the problems it generates for the Third World.

One of Barrat Brown's key goals in writing this book is to inform readers about the benefits of alternative trading systems and the trade cooperatives that promote more equitable exchange between trading nations.  His theory is simple, and eloquently stated in the Introduction: "if we know more about the problems involved in trading and in achieving fairer trade relations, we can make more informed decisions for ourselves."

Barratt Brown is well-positioned to write such an important book. Since 1985, he has been Chair of the Third World Information Network (TWIN) and Twin Trading Ltd., both of which have helped pioneer alternative trading links between North and South.  A lecturer and tutor at several universities in the United Kingdom, he is the author of After Imperialism (1963), What Economics is About (1970), Essays on Imperialism (1972), Resources and the Environment (1976) and European Union: Fortress or Democracy? (1991).  His 1984 guide to the arguments in political economy, Models in Political Economy, is used in many university courses across Canada and was one of the first texts to discuss the political economy of the German Greens.

The book is divided into two parts.  Part 1 analyzes the roots of unfair trade while Part 2 describes how to make trade between developed and devloping nations fairer.

To explore the roots of unfair trade, Barratt Brown begins with an historical analysis as to why some countries are poor and weak and others are rich and powerful.  As he suggests, the decline of mercantilism beginning in the eighteenth century presented new challenges to growing nation-states seeking to maintain or extend power over former colonies and/or regions of the world.  He contends that in the 19th century colonialism was transformed into imperialism, a term used to describe the carving of the globe into "spheres of influence" by the European powers.  Under this system, colonies in Asia and Africa supplied cheap labour, raw materials, and ready markets for European manufacturing, and helped spur on by the industrial revolution by providing ready markets for European and American manufactured products.  These spheres of influence also enhanced the image of European powers; much of France's empire, for example, was "assembled" after its defeat by Germany in 1870.   In the Western Hemisphere, much of Latin America came under the sway of commercial and financial interests in the United States.

The weakening of the European imperial powers during World War II brought about the end of formal colonialism in Africa and Asia.  Local elites sought to take power into their own hands and succeeded in doing so after political struggle and revolution that was sometimes, as in Algeria and Indochina, quite prolonged and bloody.  The new states all wanted to industrialize and looked to other countries to furnish the necessary technology.  Until the crumbling of the Berlin Wall in 1989, the United States and the Soviet Union offered large‑scale economic assistance.  Some former colonial powers also extended aid.  The new relationship between the developing countries and those providing aid meant a degree of continued dependence even though the old political bonds had been severed.  Sometimes aid was accompanied by strong political and military influence, a state of affairs often referred to as neocolonialism, usually by left‑wing groups in the former colonies.  Barratt Brown argues that this type of expansionism was an attempt of the capitalist classes in industrial nations to achieve economic gain.

Barratt Brown goes on to explore the economic theories and ideas that have informed the rise of the modern world trading system.  Developed by economists such as David Ricardo in reaction against mercantilism, the theory of "free trade" refers to commerce that is relatively unrestricted and unaided by government intervention, such as tariffs, quotas, and subsidies.

Barratt Brown contends that "free trade" in pure form does not exist and never has; what is usually described as "free trade" by economists is always managed or manipulated trade.  For example, tariffs always have played a role in controlling trade between nations, and have been used primarily to protect domestic industries from lower‑priced foreign competition.   Despite the praise heaped on "freer trade" by Ricardo and other economists, Britain developed its infant industries in the late 18th and early nineteenth centuries behind a high wall of tariffs and a tight technical embargo on the export of blueprints for textile machinery.

As Barratt Brown shows, an increased desire for "freer trade" was reflected in the Bretton Woods Conference in 1944.  This event led to the most important watershed in terms of the growth of managed trade in this century, development of the General Agreement on Tariffs and Trade (GATT) after World War II to oversee and limit the use of tariffs and other trade control measures by trading nations.

Administered by a secretariat at the World Trade Organization in Geneva, GATT lays down a code of conduct for international trade, based on the principles that trade should be conducted without discrimination (ie. the most-favoured-nation principle);  that domestic industry should be protected only through customs tariffs and not through quantitative restrictions or other measures;  that tariffs should be reduced through multilateral negotiations;  and that member countries should consult together to overcome trade problems.  In 1964 GATT also established the International Trade Center, operated jointly with the United Nations Conference on Trade and Development, to assist developing nations in the promotion of their export trade.

As Barratt Brown shows, the growth of trade between nations and regions in the past few decades is undeniable and has many positive aspects.  What is at issue is how the supposed benefits of increased trade are shared.  In Fair Trade  Barratt Brown makes the case that citizen groups and non-government organizations must begin to bring producers and consumers together within expanding networks of alternative trade that could ensure a framework for fair trade between the North and South.  Otherwise North-South trade is likely to remain unfair and exploitive.

Why is all of this so important?  As Harold Innis and many more recent political economists have shown, trade has enormous implications for the development of social and technical systems.  Transportation and communications systems often are reoriented by trade relations. 

One of the strongest features of the book is its excellent writing.  Barratt Brown has an ability to crystalize key ideas in a few telling sentences.  Another positive quality is the use tables, graphs and charts to support arguments, provide compelling evidence and elaborate on key ideas.  Moreover, some of the best descriptions of alternative trading networks I have ever seen are presented in this book.  This book also contains an excellent glossary, a competent index and a good list of Alternative Trading Networks.

Barratt Brown fails to discuss the latest GATT round which began in September 1986 with a ministerial conference at Punta Del Este, Uruguay, and ended in late 1993.  One of the important developments in the latest round of negotiations was the decision to discuss reducing barriers to service industries such as banking, insurance, and telecommunications.  The delegates also agreed to consider a gradual lowering of export subsidies for agricultural products and to discuss barriers to foreign investment and "piracy" of intellectual property.  While Barratt Brown probably chose not comment in any detail on the Uruguay Round since this book went to press in late 1992, I would contend that the new GATT is likely to present an enormous barrier to development of these alternative trade networks.

In sum, this is one of those books that deserves the attention of Canadian environmentalists who are genuinely interested in learning how they can begin to promote more environmentally-balanced trading relations.  If you are interested in the political economy of free trade, go buy it.  And have a cup of PC coffee to celebrate your new awareness of trade issues.

David McRobert is an environmental lawyer who works for the Workplace Health and Safety Agency in Toronto.

Book review submitted to Alternatives, Oct. 1994.