Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Making the trade system fairer

By Clive Hamilton and Richard Denniss - posted Friday, 15 November 2002

Opponents of the fair trade movement believe that ‘free trade’ is somehow pure and untouched by the dirty hand of regulation. Nothing could be further from the truth.

All transactions, whether they are between customers and retailers or multinationals and nation-states are governed by rules. Without rigidly enforced property rights, dispute settlement procedures and boundaries for what is tradeable and what is not, there could be no effective system of trade.

It is ironic that many of those politicians and commentators most willing to criticise the notion of fair trade are some of the staunchest opponents to the importation of illicit drugs. Tougher penalties and more resources for customs are the typical solutions to the social and economic ills associated with illicit drug importation and use. But that sounds like a trade barrier, one that most people happily accept.


While trade restrictions (in the form of a total import ban) are promoted as the solution to protecting Australians from the adverse consequences of illicit drugs, apparently no such action is justified to protect Australians, and foreign citizens, from the impact of child labour, slave labour, and dangerous, environmentally destructive, production techniques.

Although its supporters claim that free trade represents the ideal and that proposals for fair trade are a deviation from that ideal, the trade system is not neutral. The rules and institutions that govern trade can be designed to protect human rights and the environment, or to ignore them.

The existing trade rules already reflect a small number of human rights. These rights must be expanded if all countries are to benefit from trade. For example, it is legal under the existing trade rules for a country to discriminate against goods produced using prison labour, even though prisons may be able to produce goods more cheaply than wage labour.

What then is fair trade? It is important to separate two sets of arguments in favour of ‘fair trade’. The first focuses on the differences between countries in environmental and labour standards and the way that free trade may see these standards weakened. The second focuses on the promotion of domestic firms through various forms of ‘industry policy’. This essay focuses on the first set of issues.

Advocates of fair trade argue that free trade encourages (or at least ignores) violations of human rights, exploitative labour conditions and environmentally destructive activities. Producers in countries that permit sweat-shops, suppression of trade unions, child labour and dangerous or polluting production processes can often undercut competitors that must abide by better standards.

Fair trade policies would involve changes to the international trade rules to allow countries to discriminate against products made by firms that exploit workers or despoil the environment.


At present, with few exceptions, the GATT rules prevent countries from discriminating against imports of ‘like products’ so that goods produced using environmentally damaging process (such as indiscriminate logging or fish caught by dynamiting coral reefs) cannot be banned. This was established in the famous Tuna-Dolphin case.

The Tuna-Dolphin dispute between the US and Mexico led to two successive GATT dispute panels that have been the subject of considerable controversy. The US attempted to restrict imports of yellow fin tuna caught by Mexican fishing boats because too many dolphins were being killed in the process. Mexico challenged the US under the GATT rules.

US laws have ensured that US fishing fleets reduce the risks of killing dolphins by using better fishing methods. The Marine Mammals Protection Act also prohibits the import of tuna from countries where the level of dolphin deaths associated with tuna fishing is significantly higher than in the US. This prohibition was the cause of the dispute before the GATT.

  1. Pages:
  2. Page 1
  3. 2
  4. All

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Authors

Clive Hamilton is professor of public ethics at the Centre for Applied Philosophy and Public Ethics.

Dr Richard Denniss is Executive Director of The Australia Institute and an adjunct associate professor at the Crawford School of Economics and Government, Australian National University.

Other articles by these Authors

All articles by Clive Hamilton
All articles by Richard Denniss
Related Links
The Australia Institute
Article Tools
Comment Comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy