[x] Close ad

FAIR TRADE

For other uses, see Fair trade (disambiguation).

Fair Trade is a organised movement which promotes equitable standards for international labour, environmentalism, and social policy in areas related to the production of labelled and unlabelled goods, which may range from handcrafts to agricultural commodities. The movement focuses in particular on exports from developing countries to developed countries.

The most widely recognized definition of fair trade was created by FINE, an informal Association of the four main Fair Trade networks (Fairtrade Labelling Organizations International, International Fair Trade Association, Network of European Worldshops and European Fair Trade Association):[1]

“Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the South. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade. Fair Trade's strategic intent is:
  • deliberately to work with marginalised producers and workers in order to help them move from a position of vulnerability to security and economic self-sufficiency
  • to empower producers and workers as stakeholders in their own organisations
  • to actively to play a wider role in the global arena to achieve greater equity in international trade.”

Implicit and often explicit in fair trade is a criticism of the current organisation of international trade as being "unfair". When developing countries export to Northern markets, they often face tariff barriers that can be as much as four times higher than those encountered by Northern countries. Poverty advocates claim that those barriers cost poor countries $100 billion a year - twice as much as they receive in aid.[2] Advocates of fair trade practices also hold that the fluctuation of commodity prices does not guarantee a living wage for many producers in developing countries, forcing many into crippling debt.[3] Market prices may not properly reflect the true costs associated with producing the product due to economic externalities such as environmental and social costs.

Contents

History

Origins

The first attempts to commercialize fair trade goods in Northern markets were initiated in the 1940s and 1950s by religious groups and various politically-oriented non-governmental organizations (NGOs). The Mennonite Central Committee (MCC) and the Church of the Brethren were the first, in 1946 and 1949 respectively, to develop fair trade supply chains in Third World countries.[4] The products, almost exclusively handicrafts ranging from jute goods to cross-stitch work, were mostly sold in World Shops. The goods themselves had often no other function than to indicate that a donation had been made.[5]

Solidarity trade

The Fair Trade movement as we know today was however shaped in Europe in the 1960s. Fair trade during that period was often seen as a political gesture against neo-imperialism: radical student movements began targeting multinational corporations and concerns that traditional business models were fundamentally flawed started to emerge. The global free market economic model came under attack during that period and fair trade ideals, built on a post-Keynesian approach to economics where price is directly linked to the actual production costs and where all producers are given fair and equal access to the markets, gained in popularity.[6] The slogan at the time, “Trade not Aid”, gained international recognition in 1968 when it was adopted by the UNCTAD (United Nations Conference on Trade and Development) to put the emphasis on the establishment of fair trade relations with the developing world.[7]

The 1960s saw the creation of the first Alternative Trading Organization (ATO) in the Netherlands. The ATO, called “S.O.S. Wereldhandel” (“Wereldhandel” means “world trade”, and S.O.S. initially stood for “Support Underdeveloped Regions”), was set up as a non-profit importer of handicrafts from organized poor producers in the Southern hemisphere.

In 1969, the first World Shop opened its doors, as retailer of goods produced in those “underdeveloped regions”. It was run by volunteers and was so successful that dozens of similar shops soon went into business in the Benelux countries, Germany and in other Western European countries. It is worth mentioning however that the overwhelming majority of fair trade goods sold at the time in World Shops remained handicrafts.

Throughout the 1960s and 1970s, important segments of the Fair Trade movement worked to find markets for products from countries that were excluded from the mainstream trading channels for political reasons. Thousands of volunteers sold coffee from Angola and Nicaragua in World Shops, in the back of churches, from their homes and from stands in public places, using the products as a vehicle to deliver their message: give disadvantaged producers in developing countries a fair chance on the world’s market, and you support their self-determined sustainable development. The alternative trade movement blossomed, if not in sales, then at least in terms of dozens of ATOs being established on both sides of the Atlantic, of scores of World Shops being set up, and of well-organized actions and campaigns attacking exploitation and foreign domination, and promoting the ideals of Nelson Mandela, Julius Nyerere and the Nicaraguan Sandinistas: the right to independence and self-determination, to equitable access to the world’s markets and consumers.

Handcrafts vs. agricultural goods

In the early 1980s, alternative trading organizations faced a major challenge: the novelty of their fair trade products started wearing off, demand reached a plateau and the handicrafts began to look “tired and old fashioned” in the marketplace.[8] The decline of the handicrafts market forced fair trade supporters to rethink their business model and find innovative remedies to the ongoing crisis in the industry.

Agricultural commodities provided alternative trading organizations the perfect substitute to the declining handicrafts market: they offered a renewable source of income while being easily marketable as virtually every single consumer can become a potential buyer. The first traded agricultural products were tea and coffee, quickly followed by dried fruits, cocoa, sugar, fruit juices, rice, spices and nuts. Coffee quickly became the main growth engine behind Fair Trade: between 25 to 50 % of the total alternative trading organization turnover in 2005 came from coffee sales.[9]

Rise of labelling initiatives

Sales of fair trade products however only really took off with the arrival of the first Fairtrade labelling initiatives. Although buoyed by ever growing sales, fair trade had been generally contained to relatively small World shops scattered across Europe and to a lesser extent, North America. Many felt that these shops were too disconnected from the rhythm and the lifestyle of contemporary developed societies. The inconvenience of going to them to buy only a product or two was too high even for the most militant customers. The only way to increase sale opportunities was to start offering fair trade products where consumers normally shop, in large distribution channels.[10] The problem was to find a way to expand distribution without compromising consumer trust in fair trade products and in their origins. Following long debates within Fair Trade circles, the first Fairtrade label, Max Havelaar, was created in 1988 by the Dutch ATO Solidaridad. The independent certification allowed the goods to be sold outside the World shops and into the mainstream, reaching a larger consumer segment and boosting fair trade sales significantly. The labeling initiative also allowed customers and distributors alike to track the origin of the goods to confirm that the products were really benefiting the farmers at the end of the supply chain.[11]

The concept caught on: in the ensuing years, similar non-profit Fairtrade labelling organizations were set up in other European countries and North America, called “Max Havelaar” (in Belgium, Switzerland, Luxemburg, Denmark, Norway and France), “Transfair” (in Germany, Austria, Italy, the United States, Canada and Japan), or carrying a national name: “Fairtrade Mark” in the UK and Ireland, “Rättvisemärkt” in Sweden, and Reilu Kauppan in Finland. Initially, the Max Havelaars and the Transfairs each had their own Fairtrade standards, product committees and monitoring systems. In 1994, a process of convergence among the labelling organizations – or “LIs” (for “Labelling Initiatives”) – started with the establishment of a TransMax working group, culminating in 1997 in the creation of Fairtrade Labelling Organizations International. FLO is an umbrella organization whose mission is to set the Fairtrade standards, support, inspect and certify disadvantaged producers and harmonize the Fairtrade message across the movement.

In 2002, FLO launched a new International Fairtrade Certification Mark. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, convey a dynamic, forward-looking image for Fairtrade, facilitate cross border trade and simplify procedures for importers.

Fair trade today

Global Fair Trade sales have boomed over the past decade. FINE estimated that in 2000, sales of Fair Trade products (labelled and non-labelled) in Europe amounted to approximately €260 million; in 2005, the figure was estimated at €660 million, a 154% jump, representing a sustained annual increase of about 20% a year.[12] Similar sales patterns have emerged in the Americas and the Pacific Rim, as Fair Trade sales in both regions have jumped from $291 million in 2003 to $376 million in 2004.[13]

Key fairtrade principles

Fairtrade advocates generally support the following principles and practices in trading relationships:[14]

Creating opportunities for economically disadvantaged producers
Fair trade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers who have been economically disadvantaged or marginalized by the conventional trading system.
Transparency and accountability
Fair trade involves transparent management and commercial relations to deal fairly and respectfully with trading partners.
Capacity building
Fair trade is a means to develop producers’ independence. Fairtrade relationships provide continuity, during which producers and their marketing organizations can improve their management skills and their access to new markets.
Payment of a fair price
A fair price in the regional or local context is one that has been agreed through dialogue and participation. It covers not only the costs of production but enables production which is socially just and environmentally sound. It provides fair pay to the producers and takes into account the principle of equal pay for equal work by women and men. Fairtraders ensure prompt payment to their partners and, whenever possible, help producers with access to pre-harvest or pre-production financing.
Gender equity
Fair trade means that women’s work is properly valued and rewarded. Women are always paid for their contribution to the production process and are empowered in their organizations.
Working conditions
Fair trade means a safe and healthy working environment for producers. The participation of children (if any) does not adversely affect their well-being, security, educational requirements and need for play and conforms to the UN Convention on the Rights of the Child as well as the law and norms in the local context.
Environment
Fair trade actively encourages better environmental practices and the application of responsible methods of production.

Fairtrade certification and labelling

Main article: Fairtrade Labelling

Note: Customary spelling of Fairtrade is one word when referring to product labelling

Fairtrade labelling (usually simply Fairtrade or Fair Trade Certified) is a Certification system designed to allow consumers to identify goods which meet agreed standards. Overseen by an international umbrella organisation, the Fairtrade Labelling Organizations International (FLO), the system involves independent auditing of producers to ensure the agreed standards are met.

For a product to carry the International Fairtrade Certification Mark, it must come from FLO inspected and certified producer organizations. The crops must be grown and harvested in accordance with the International Fairtrade standards set by FLO e.V. The supply chain is monitored by FLO-Cert to ensure the integrity of labelled products.

Fairtrade certification guarantees not only fair prices, but also the principles of ethical purchasing. These principles include adherence to ILO agreements such as those banning child and slave labour, guaranteeing a safe workplace and the right to unionise, adherence to the United Nations charter of human rights, a fair price that covers the cost of production and facilitates social development, and protection and conservation of the environment. The Fairtrade certification system also promotes long-term business relationships between buyers and sellers, and greater transparency throughout the supply chain.

The FLO Fairtrade certification system covers a growing range of products, including bananas, honey, coffee, oranges, cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea and wine. Companies offering products that meet the Fairtrade standards may apply for licences to use the International Fairtrade Certification Mark for those products.

The current international Fairtrade Mark was launched in 2002 by FLO. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, convey a dynamic, forward-looking image for Fairtrade, facilitate cross border trade and simplify procedures for importers and traders. The Fairtrade Certification Mark harmonization process is still under way – as of August 2006, all but three Labelling Initiatives (namely Transfair USA, Transfair Canada and Max Havelaar Switzerland) have adopted the new International Fairtrade Certification Mark. Full transition to the new Mark should become reality as it gradually replaces the old Certification Marks at various speeds in various countries.[15] The Mark is currently used in over 16 countries: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Spain, Sweden and the United Kingdom.

In 2005, FLO labelled Fairtrade sales amounted to approximately €1.1 billion worldwide, a 37 % year-to-year increase. As per December 2005, 508 certified producer organizations in 58 developing countries were Fairtrade certified.[16]

Fair trade impact studies

Several independent studies have recently measured the impact of Fair trade on disadvantaged farmers and workers.

In 2002, Loraine Ronchi of the Poverty Research Unit at the University of Sussex studied the impact of Fair Trade on the Coocafe cooperative in Costa Rica. Ronchi found that Fair Trade strengthened producer organizations and concluded that "in light of the coffee crisis of the early 1990s, Fair Trade can be said to have accomplished its goal of improving the returns to small producers and positively affecting their quality of life and the health of the organisations that represent them locally, nationally and beyond".[17]

In 2003, the Fair Trade Research Group at Colorado State University conducted seven case studies of Latin American Fairtrade coffee producers (UCIRI, CEPCO, Majomut, Las Colinas & El Sincuyo La Selva, Tzotzilotic and La Voz) and concluded that Fair Trade has "in a short time greatly improved the well-being of small-scale coffee farmers and their families"[18] The various case studies most notably found that producers had under Fair Trade greater access to credit and external development funding.[19] The studies also found that Fair Trade producers had, compared to conventional coffee producers, greater access to training and enhanced ability to improve the quality of their coffee.[20]. Families of Fair Trade producers were also said to be more stable and children had better access to education than in families growing conventional coffee.[21]

A case study of Bolivian coffee Fair Trade producers published by Nicolas Eberhart for French NGO Agronomes et Vétérinaires sans frontières in 2005 concluded that Fair Trade certification has had in the Yungas a positive impact on local coffee prices, thus economically benefiting all coffee producers (Fairtrade certified or not). Fair Trade was also said to have strengthened producer organizations and increased their political influence.[22]

Fair trade and politics

European politics

In June 2006, Green MEP Frithjof Schmidt submitted the report Fair Trade and Development to the European Parliament Development Committee.

The report stresses that the most significant part of the increase in Fair Trade sales has been achieved with respect to labelled products and that Fair Trade labelling initiatives have been developed in most European countries. The Report was followed by a resolution which urged the Commission to issue a Recommendation on Fair Trade recognising its role in the pursuit of the EU's Development and Trade policy. The resolution also recommended to set up minimum criteria a certain product needs to comply with in order to be considered 'Fair Trade', in order to reduce the risk of abuse.[23]

"This resolution responds to the impressive growth of Fair Trade, showing the increasing interest of European consumers in responsible purchasing," said Green MEP Frithjof Schmidt during the plenary debate. Peter Mandelson, EU Commissioner for External Trade, responded that the resolution will be well-received at the Commission. "Fair Trade makes the consumers think and therefore it is even more valuable. We need to develop a coherent policy framework and this resolution will help us."[24]

The resolution was unanimously adopted on July 6, 2006.

World Bank

The World Bank has taken a positive stance on fair trade. According to the Bank's 2003 Study of Sustainable Coffee Markets, sustainable coffees (both fair trade and organic) "can provide such benefits as improved natural resource management; fewer agrochemicals used in production, which decreases costs and health risks; and increased use of rural labour, which provides more jobs for those in desperate need."[25].

See also

Wikimedia Commons has media related to:

References

  1. ^ European Fair Trade Association. (2006). Definition of Fair Trade URL accessed on August 2, 2006.
  2. ^ Oxfam International. (n.d.) Rigged Rules and Double Standards URL accessed on August 2, 2006.
  3. ^ The Fairtrade Foundation. (n.d.) What is Fairtrade? URL accessed on August 2, 2006.
  4. ^ International Fair Trade Association. (2005).Crafts and Food. URL accessed on August 2, 2006.
  5. ^ Hockerts, K. (2005). The Fair Trade Story. p1
  6. ^ Redfern A. & Snedker P. (2002) Creating Market Opportunities for Small Enterprises: Experiences of the Fair Trade Movement. International Labor Office. p4
  7. ^ International Fair Trade Association. (2005). Where did it all begin? URL accessed on August 2, 2006.
  8. ^ Redfern A. & Snedker P. (2002) Creating Market Opportunities for Small Enterprises: Experiences of the Fair Trade Movement. International Labor Office. p6
  9. ^ International Fair Trade Association. (2005). Market Access and Fair Trade Labeling. URL accessed on August 2, 2006.
  10. ^ Renard, M.-C., (2003). Fair Trade: quality, market and conventions. Journal of Rural Studies, 19, 87-96.
  11. ^ Redfern A. & Snedker P. (2002) Creating Market Opportunities for Small Enterprises: Experiences of the Fair Trade Movement. International Labor Office. p7
  12. ^ FINE. (2005) Fair Trade in Europe 2005: Facts and Figures on Fair Trade in 25 European countries. Brussels: Fair Trade Advocacy Office. p7
  13. ^ Fair Trade Federation. (2005). Fair Trade Trends in the Americas and the Pacific Rim. p2.
  14. ^ International Fair Trade Association (2006). Key Principles of Fair Trade URL accessed on August 2, 2006.
  15. ^ Fairtrade Labelling Organizations International (2006). About Fair Trade URL accessed on August 4, 2006.
  16. ^ Fairtrade Labelling Organizations International. (2005) FLO Annual Report 2005. URL accessed on August 4, 2006.
  17. ^ Ronchi, L. (2002). The Impact of Fair Trade on Producers and their Organizations: A Case Study with Coocafe in Costa Rica. University of Sussex. p25-26.
  18. ^ Murray D., Raynolds L. & Taylor P. (2003). One Cup at a time: Poverty Alleviation and Fair Trade coffee in Latin America. Colorado State University, p28
  19. ^ Taylor, Pete Leigh (2002). Poverty Alleviation Through Participation in Fair Trade Coffee Networks, Colorado State University, p18.
  20. ^ Murray D., Raynolds L. & Taylor P. (2003). One Cup at a time: Poverty Alleviation and Fair Trade coffee in Latin America. Colorado State University, p8
  21. ^ Murray D., Raynolds L. & Taylor P. (2003). One Cup at a time: Poverty Alleviation and Fair Trade coffee in Latin America. Colorado State University, p10-11
  22. ^ Eberhart, N. (2005). Synthèse de l'étude d'impact du commerce équitable sur les organisations et familles paysannes et leurs territoires dans la filière café des Yungas de Bolivie. Agronomes et Vétérinaires sans frontières, p29.
  23. ^ European Parliament (2006). Fair Trade and Development - call for the Commission to act. URL accessed on August 5, 2006.
  24. ^ Frithjof Schmidt MEP (2006). Parliament in support of Fair Trade URL accessed on August 2, 2006.
  25. ^ The World Bank Group. (2003). The State of Sustainable Coffee: A Study of Twelve Major Markets

Bibliography

External links

Fairtrade advocacy

International fairtrade organisations

Fairtrade labelling organisations

Alternative trade organisations (ATOs)

Fairtrade networks

Films