The Fair Trade Challenge to Embedded Liberalism Sean D. Ehrlich Florida State University

I.Intro II.What is Embedded Liberalism? III.What is Fair Trade? IV.Who would support Fair Trade if it is protectionism in disguise? V.Who would support Fair Trade if it is support for labor and environmental standard? VI.Data and methods VII.Results VIII.Conclusions

Embedded Liberalism Classically liberal policies of free trade are embedded within welfare and insurance policies. (Ruggie, 1982) Unemployment insurance and job retraining programs compensate workers for increased risk. These policies increase support for free trade among those most likely to be harmed by trade. (Hays, Ehrlich, and Peinhardt, 2005) Depends upon opposition to trade being generated by employment concerns

What is Fair Trade? Concerns about the effect of trade on labor and environmental standards at home or abroad. Product labeling: “Fair Trade Coffee” at Starbucks Call for “Ecodumping duties” at World Trade Organization Limits on trade from countries that violate standards Opposition to FTAs, such as NAFTA, by environmental and labor groups Labor and environmental side-agreements

Views on Fair Trade “The demand for linkage between trading rights and observance of standards with respect to environment or labor would seem to arise largely from protectionist motives.” Srinivasan, 1995 “Protectionists see great value in invoking ‘unfairness’ of trade as an argument for getting protection: it is likely to be more successful than simply claiming that you cannot hack it and therefore need protection.” Bhagwati, 1995 “Because almost any trade barrier can be advocated on grounds of fairness to some group, however, special interests can easily hijack” fair trade. Drezner, 2006

Trade Policy Orientations Oppose Protection Support Protection Oppose Fair Trade I Free Traders II Economic Protectionists Support Fair Trade III Fair Traders IV General Protectionists

Determinants of Policy Orientation Support Support for ProtectionSupport for Fair Trade + Union Unemployed Age Female Married - Income Education Conservativism + Income Education Union - Conservativism Unemployed Age Female Married

Expectations if Preferences are Sincere I. Free Traders Conservative Union II.Econ. Protectionist Conservative Income Unemployed Education Age Union Female Married III. Fair TradersIV. General Protectionist Conservative Income Unemployed Education Age Union Female Married

I. Free Traders Union Income Unemployed Education Age Conservatism Female Married II.Econ. Protectionist No differences III. Fair TradersIV. General Protectionist No Differences Expectations if Preferences are Insincere

Survey Question Wording How much do you agree or disagree with each of the following statements? The United States should limit the imports of foreign products in order to protect the U.S. national economy. The United States should limit the imports of foreign products made with low labor standards in order to protect the rights of foreign workers.

Consumer Preference Survey Question Wording Some products from developing countries carry a “fair trade” label. This label guarantees that the products have been produced under fair working conditions and with respect for the environment. Would you be willing to buy the fair trade products if they were 10% more expensive than comparable products?

Conclusions Support for fair trade driven by support for labor and environmental standards Compensation policies of embedded liberalism will be unable to address this opposition to free trade Can protectionist interest groups and policymakers capture fair traders and change dynamic of trade debate? Can free trade policymakers implement new policies that can mitigate fair trade concerns?

I. Free Traders 31.4% (N=307) II.Econ. Protectionist 7.6% (N=74) III. Fair Traders 30.3% (N=297) IV. General Protectionist 30.7% (N=301)