During the 1990s a controversy emerged over incorporating labour and human rights and environmental protections in the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA) and other trade agreements. Trade economists were universally opposed to ‘fair trade’ measures, arguing that international differences in labour and environmental standards represented another natural source of comparative advantage. Today there is much greater concern among economists about the adverse impacts of free trade, and increasing openness to the idea of fair trade. This chapter explores the theoretical aspects of the debate, changing sentiments in the economics profession regarding fair trade, and various fair-trade measures that deserve economists’ attention.
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