Chocolate was a consequence of free trade

Chocolate started in the Yucatan peninsula of Mexico, near Cancun, where the World Trade Organisation (WTO) meeting was held. The history of chocolate, like the history of most trade and globalisation, illustrates the virtues of free trade and the manner in which it benefits the world, especially the developing world.

Mayans were the world’s first producers of cocoa, which, when mixed with sugar, became chocolate. That made cocoa and sugar so popular in the developed world that First World producers invested in producing and importing these commodities from the undeveloped world, turning both products into primary sources of agriculture, investment, production, jobs, exports and revenue for many third world countries.

Through trade and early forms of globalisation, Aztecs were introduced to Mayan cocoa. Since they could not produce it in their northerly territories, they imported it from the Mayans and, in due course, others in the Mesoamerican tropics. From there it was introduced and sold to the Spanish, who in turn introduced the cocoa drink to Europe. It was the Europeans who invented chocolate by adding sugar to cocoa powder.

The anti-free-trade Spanish government imposed import duties on cocoa, which reduced demand, curtailed development in the less developed countries and priced chocolate out of reach of ordinary Spaniards.

However, England and France allowed free trade and demand from their consumers increased massively during the eighteenth century. Chocolate was so popular and affordable by the masses that demand for cocoa and sugar soon exceeded what South America and Mediterranean Europe could supply.

To avoid Spanish trade barriers, early English and French multinationals started producing cocoa in the West African countries of Cote d’Ivoire, Ghana, Nigeria and Cameroon and importing it from them. They also produced sugar in many other countries, from Brazil, Mexico and Cuba in South America, to Mauritius and South Africa in Africa, India and Australia in the east, and Kazakhstan in the north.

Thanks to free trade and globalisation, cocoa moved from the Mayans who lived where the WTO met recently, to the Aztecs, to Spain, to the rest of Europe, and then to Africa. Africa now produces two-thirds of the world’s cocoa. If anti-globalisers were consistent, they would not see First World production of chocolate as a problem; they would demand prohibition of cocoa imports from developing countries. They would not complain about the fact that Third World producers (Brazil, Ecuador and West Africa) don’t process the cocoa they produce; they would object to them having cocoa at all.

And Spain? The country that brought chocolate from the new to the old world? Ever heard of Spanish chocolate? Maybe, but it’s obscure. This is a classic example of a country that destroyed its potential by imposing barriers to trade. European countries to which it introduced cocoa are now famous for their chocolate. Third World countries that had free trade with the developed world now benefit from cocoa and sugar production. Were they to improve their domestic investment climate through liberalisation, low taxes and free trade, they would progress from beneficial production and export of cocoa and sugar, to production and export of chocolate and countless other products.

Imagine a world in which all countries and people insulate themselves from each other. Such a world would be infinitely poorer in so many ways. If isolationism started early enough we would not now have chocolate. Modern day isolationism seeks to deprive consumers of more than this delectable confectionery – it seeks to deprive them of all goods produced outside their countries. Consumers of the world, including poor consumers, should therefore implacably oppose all anti-free-trade agendas. Barriers to trade would cut off their access to the best products at the best prices available worldwide. It would definitely jeopardise their access to reasonably-priced good-quality chocolates.

Author: Leon Louw is the Executive Director of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.

FMF Article of the Week\23 September 2003