From a theoretical viewpoint, free trade, that is, the unrestricted exchange of goods and services is advocated as the most efficient mechanism to produce and distribute welfare among economic agents. While economists tend to agree that this may be true over the long term, short-term evidence of significant improvements in the situation of the Poor due to trade liberalization is rare. Free trade of agricultural and agro industrial products, for instance, remains more a rhetorical stance than a reality, a standpoint that has little impact on the current situation of the rural poor (Madeley, 2004; Ravallion, 2004).

Fair Trade, alternatively, is a concept that embeds the idea of justice in the exchange process. Because the terms of trade between developed and less developed countries are biased in favour of the more developed ones, Fair Trade proponents argue that actions should be taken to counteract uneven exchange. For instance, coffee growers receive 80 cents of the dollar per pound of coffee sold at 4 to 11 dollars in the USA, but could get up to 1.25 dollars per pound through Fair Trade (The Fair Trade Federation, 2000). As such counteraction involves not only the less developed countries that produce goods but also the developed countries that consume these goods; Fair Trade builds upon different trade relations. It is not aid but a way to provide people with earnings, to live decently, from the goods or services they produce, they sell or from the labour they put into the production of these goods.

Fair Trade by definition intends to benefit rural poor populations. It is reported to reach US$ 400 million sales per year, with yearly growth of 30 per cent (Fair Trade Federation, 2000), and benefit 800,000 farmers (Global Exchange, 2004). However, it inherently has features that limit its wider application as a pervasive poverty alleviation mechanism for almost one billion rural poor in Asia and the Pacific, namely the products concerned, the size of the market and access barriers.

A limited range of products: Coffee, and to a smaller extent bananas, cocoa and tea are the only agricultural products exchanged under the Fair Trade principles (Reynolds, 2002). There is no Fair Trade for soybean, cassava, sweet potato or mungbean. Therefore, the room for rural poor populations living off agriculture is very limited since the commodities they produce are not in demand by the Fair Trade and other similar alternative networks' consumers.

The size of the market: The number of people in developed countries who are willing to contribute to the Fair Trade system limits the market. Fair Trade accounts for 0.01 per cent of the total value of goods globally exchanged. Handicrafts, jewellery, papermaking, pottery etc. are the most traded items, but they all compete for the same markets and clientele looking for exotic items. With the noticeable exception of coffee, traded items do not belong to the group of mass consumption items and therefore prospects are limited to some niche markets, at least on the short term.

Access Barriers: There is evidence, based on the large and long experience with Fair Trade coffee that educational levels (including speaking the requisite language, literacy), capital and labour resources influence the success of producers in establishing and maintaining connections to Fair Trade coffee networks (Reynolds, 2002). This indicates that the institution of Fair Trade agreements may create barriers that marginal populations who have limited education, no land or capital and a small labour force cannot overcome. Though Fair Trade wants to involve "the world's most economically disadvantaged artisans and farmers", these disadvantages may foreclose the poorest rural segments from its benefits.

Given these constraints, there is little hope that Fair Trade would significantly improve the livelihood of most rural poor people. However, some basic "fair" principles that make up the backbone of Fair Trade remain valid such as fair wages, fair cost of land access, and fair share of margins. Fair policies implemented by fair policy-makers and enforced by a fair justice system could also fare well. The issue is to determine what is "fair", and this has to be negotiated with the poor, so above all else, "fair sharing of decisions" should not be overlooked.

Written by Dr. Robin Bourgeois, lS/DB Programme Leader, UNESCAP-CAPSA, Bogor, Indonesia.
(References available upon request)