For most people fair trade is a relatively new concept. In the U.S. however there was a time a thing such as fair trade law was enacted. The major difference of this fair trade law with what we know about it today is that it mainly deals only on the issue of pricing. This was also not just one law but a set of allows that in general allowed manufactures to fix the minimum resale price of their goods by the resellers. Some have actually claimed that the terminology is misleading considering that what the manufacturers wanted was in reality, a price maintenance.
Monopolies on Fair Trade
In the U.S., such laws were later found to be in violation of the Fair Trade Sherman Anti-Trust Act of 1890 since manufacturers now acted like monopolies. Thus while the practice remained limited in the U.S., fair trade law became widespread in other countries like the U.K. due to the Great Depression, the U.S. enacted more laws in order to protect independent and small retailers from the price-cutting practices made by the large chain stores. Thus loss of employment was prevented. All this changed in the 1960s when marketing channels became more complex and enforcing such agreements was seen as impractical, it came to a point that some of the fair trade law enacted was eventually repealed.
What this story tells us is that even then government policy makers were already aware of how pricing played an important role in the supply and distribution of goods. The reason for its failure was that it focused solely on the pricing scheme of the goods. Thus it came as no surprise that policy makers saw it as disadvantageous.
Why Fair Trade works today
This is likely why fair trade today works because it not only focuses on the economic aspects of the product but includes the environmental and social aspects. For example because part of the selling price, through the premium, is to be invested to enhance the quality of life of the farmers, then it becomes more acceptable. Though the prices of products may seem higher than those compared with mainstream products, consumers are aware of where their money will go. Thus even with a higher price, consumers will continue to buy the products knowing that such an act will go a long way to helping others.
Thus while fair trade law may seem to be minimal in some countries still, this can be balanced by the fact that the fair trade movement has started to become the norm for more and more astute consumers who want to make a difference with their purchases.