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The Roman Catholic Diocese of Arundel and Brighton in the UK is striving to become a “fair trade” diocese and expects to accomplish this by early next year. In the last few weeks, parishioners at a typical church in the diocese will have been asked to sign petitions to parliament, join marches of protest and buy fair trade products. Parishioners would do well to question how their faith in fact relates to the fair trade agenda.

The agenda is pushed right down the age groups and through into connected church groups. At his Beaver Scouts meeting recently, my six year old was instructed that fair trade paid a “fair” price for farmer's produce as opposed to the “market” price farmers receive from multinationals. Analysis of the circumstances in which there is a distinction between a “fair” price and a “market” price has kept minds better than those of the Beaver Scouts awake at night: St. Thomas Aquinas and a whole school of Spanish theologians in the sixteenth and seventeenth centuries struggled with these concepts.

Diocesan schools will,no doubt, soon be brought into the campaign. Having listened to fair trade principles being explained to classes, it is clear to me that its proponents have no understanding that the set of issues being treated can be debated and an alternative viewpoint offered. There is too much political posturing and insufficient serious reflection.

There are two strands to the fair trade movement: the political agenda, often represented by the trade justice movement, and the retail fair trade operations. The Arundel and Brighton diocese is explicitly encouraging both. The political fair trade agenda, in particular, has the potential to do great harm. Its basic proposition is that free trade rules are dictated by rich nations who pander to their agricultural lobbies and impose unreasonable obligations on developing nations.It argues that developing nations ought to be able to practice various forms of protectionism.

It is certainly true that developed country agricultural, food, and textiles protectionism is an outrage that does nobody any good. There can be broad agreement between free traders and fair traders here.

But, the rest of the fair trade political agenda could cause serious harm. The main obstacle to prosperity in developing nations is internal governance. Such countries need free economies with governments that operate under the rule of law and enforce the law justly. If such a situation existed, multinationals would operate in a more competitive economic environment and they would pay workers and producers more for their produce. Workers and producers would be more productive too and everybody would be better off. It is true to say that multinationals sometimes work hand-in-hand with corrupt governments to entrench their market positions. Small companies and indigenous companies often cannot compete in this environment--particularly in the environment of the absence of free trade in food and textiles.

How do we proceed in this imperfect world?

Fair traders look a tthis situation, the behavior of some multinationals and the plight of the poor,and campaign for “fair trade” regulations. Such regulations would allow poor countries to impose restrictions on trade to assist their own industries and regulate the activities of multinationals more heavily. Insofar as such regulations burden the few competitors there are for labor and produce in these countries, they can make life worse. The employment and trading opportunities in developing countries do seem pitiful by western standards but they may be better than the next best alternative.

The second, and much greater, problem of such an approach, is that the rules that the fair trade movement would like to change would give more power to the governments that abuse power in the first place. Even if such governments used those powers to regulate trade reasonably, they would probably do harm: the protection of domestic industry is no way to help a developing economy. But they are unlikely to use their powers reasonably. Africa's history is one of continent-wide government intervention in domestic economies and external trade that is largely responsible for its present dire situation. In matters of economics,the law of unintended consequences is ignored at one's peril!

We have had trade regulation before – up to the early 1990s in the coffee industry, for example. The results were predictable. The gainers were government functionaries, bureaucrats, bribe-takers, and major corporations. Farmers from the poorest countries were excluded from markets.

The diocese of Arundel and Brighton is not acting in a vacuum. The bishops of England and Wales have produced policy documents on fair trade. Sadly, clichés are often preferred to rigor. It is often the poorest who lose from trade liberalization, they say.This ignores the remarkable progress of East Asia in the last few decades. Many poor people are getting richer through trade; the most impoverished are getting poorer, not because trade is “free” rather than “fair,” but because of their dysfunctional governments and their lack of access to trade.

The fair trade agenda also encompasses the issue of retail fair trade products. One can certainly understand the motivation of those who support retail fair trade. It is understandable too why some urge the Church to provide the opportunity for retail fair trade.

Even here there are issues worth deeper thought. Retail fair trade organizations tend to fix the price they pay their farmers so that the farmer receives a price that does not vary directly with the world price of their produce. But if there is a fall in world demand or rise in supply then some producers must suffer. If some are protected, others suffer more. This does not lead to an objection to the fair trade companies, since they assist the people they are in business to help. I was, however, taken aback when a priest of the Arundel and Brighton diocese said in the monthly diocesan newspaper, words to the effect of, “when we buy fair trade products we are making a very deliberate and informed choice to help the poor and when we choose not to do so we are making the opposite choice”.This kind of admonition should be reserved for matters on which the Church's moral teaching is clear; it should be not be used in a case in which the economic effect (and therefore moral character) of an act is open to debate.

Facilitating those who wish to promote retail fair trade products is something that the parish or diocese might reasonably do. It would be churlish to object. But to promote retail fair trade by “badging” the diocese a “fair trade diocese” is absurd, and it is made worse by the inclusion of the political agenda, as in Arundel and Brighton.

A diocese is the home of all the people of God, whatever their political views. Some political views are incompatible with Catholicism, but believing in free trade and believing that the fair trade agenda will do more harm than good are not. Bishops should not adopt a slogan for the diocese that is used by political campaigners seeking to achieve wider political ends. That political agenda is not within the bishops' control. Indeed, it is controlled by people who do not have the mission of the Church at heart.

Professor Philip Booth is Editorial and Programme Director at the Institute of Economic Affairs in London.