Professor’s article on free trade and Fair Trade wins award

Publish Date: Friday, April 10, 2009

Paulette Stenzel, Professor of International Business Law at The Broad School, submitted a paper that was selected as the Best Paper in Proceedings 2009 by the Midwest Academy of Legal Studies in Business.  

Her article, Why Fair Trade is Essential for the Triple Bottom line, Sustainability and Free Trade: Seeking Equilibrium as the Eagle Meets the Condor, examined how the principles of Fair Trade could be integrated into free trade to promote sustainable development.

“If we do free trade, let’s do it right,” Stenzel said. “Let’s do it in ways that respect people and their environment and distribute benefits to people from across all economic strata, not just to multinational corporations.”

Stenzel traveled extensively to Mexico, Nicaragua and Ecuador studying how free trade has affected these countries. She interviewed people in remote mountain villages who produced hand crafted Fair Trade items in small traditional homes. She also traveled to factories called maquiladoras, which were built in free trade zones created under NAFTA and CAFTA.

In the maquiladora system, raw materials or partially manufactured good are sent from a home country to a twin plant, a maquiladora, in a host country where they are completed. Then, completed goods are returned to the home country for sale or shipment elsewhere.

She found that free trade ignores the larger picture:  the interrelationship among economy, social equity and environment. Free trade promotes economic development by generating profits, but those profits are not evenly distributed through society.  This overreliance on profits for some, with harm to social equity and environment, has created severe imbalances in the United States and its trade partners.

To address the imbalances created by free trade, Stenzel proposed integrating the concepts behind Fair Trade into free trade. Rethinking how free trade works meant measuring success in a different way. She proposed using a measure called the Triple Bottom Line.

The Triple Bottom Line, a concept developed by sustainability activist John Elkington, takes a broader look at what it means to be successful by looking at three interrelated components –economy, social equity and the environment— instead of the narrow monetary bottom line. This new look provides a more inclusive framework that enhances free trade, instead of replacing it.

“This is what it comes down to,” Stenzel said. “Short term profits compared to long term economic investment and that means we inevitably have to take care of the Earth and take care of the human beings who make our products; that is what sustainability is all about.”

Stenzel also teaches classes in the Broad School and directs a study abroad program in Mexico, Honors Business and Environment in the Yucatán, where students learn about free trade in Mexico and its environmental consequences. She is part of the Residential Initiative on the Study of the Environment and advises the MSU Students for Fair Trade. 

More information can be found at her website: http://www.tradeandsustainability.com/

Written by Gordon Shetler, Graduate Assistant at Global Initiatives.