The fair trade movement promotes the use of labour, environmental and social standards for commodities, particularly those exported from poor countries to the industrialised West. Proposed and actually employed standards vary widely, from prohibition of goods made using slave labour to minimum price support schemes. Standards may be voluntary or enforced by governments or international bodies; Fairtrade labelling bridges the gap by allowing companies to offer consumers the choice of buying goods meeting certain standards, which are monitored by independent organisations. Standards may be general (such as a prohibition on the use of slave labour, which most countries have signed up to) or specific to certain industries (such as the arrangements supporting coffee prices in the 1980s).
Implicit (and often explicit) in these approaches is a criticism of free trade as being "unfair" for a variety of reasons, most generally that prices do not properly reflect the externalities (environmental costs, social costs, etc.) associated with producing the product. Fair trade arguments may support (or be treated as supporting) protectionism, but this is only true of some of the positions within the quite disparate fair trade movement. (See protectionism for further discussion of related issues.)
"Fair trade" was originally used by those supporting social justice and the alleviation of the intense poverty found in many developing nations. They contrasted "fair trade" with 'unfair' international trade practices. It is associated particularly with labour unions and environmentalists, in their criticism of disparities between the protections for capital versus those for labour and the environment. The use of the term has expanded beyond campaigns to reform current trading practices (and major institutions such as the World Trade Organization which embody them), there is a movement to allow consumers to choose not to participate in these practices. Fairtrade labelling (or Fairtrade certification) allows consumers to identify goods (especially commodities such as coffee) that meet certain agreed standards of fairness.
Advocates of fair trade argue that growing inequity and serious gaps in social justice, and the global export of terrorism, are symptoms of an economic system that permits harms to be exported to other countries, while importing their goods. They point to extinction, deforestation, social unrest, as consequences of globalisation, and in particular of an unfair globalisation. The international trade system, critics say, not only pits David against Goliath - as free trade inevitably will - but blindfolds David.
In the past, the responses sought by critics of the international trade system included various penalties on "unfair" goods. This argument generally made little headway against the long-term movement towards free trade; imposition of penalties for "dumping" was sometimes motivated by domestic political reasons (such as U.S. imposition of steel tariffs in 2001).
Today, the fair trade movement concentrates more on the abolition of agricultural subsidies and dumping, and to a much lesser extent on offsetting penalties on "unfair" goods. Indeed, although there are many who are still critical of free trade in general, there is a trend towards campaigning against what is seen as hypocrisy by developed countries in using protectionism against the poorest countries (especially in agricultural products), whilst requiring them to leave their own producers without protection.
In addition, the fair trade movement has built on long-standing attempts to allow consumers to choose to give producers in poor countries a better deal, and developed the fairtrade labelling system. This makes use of the market in order to help achieve social justice principles.
Main article: Fairtrade labelling
"Fair trade" or "Fairtrade" aims to guarantee not just fair prices, but adherence to principles of ethical purchasing. These principles include adherence to ILO agreements (mainly banning child labour 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 will at least cover the cost of production and facilitate social development, and especially in agriculture, protection and conservation of the environment. Fair trade also aims for long-term business relationships that are transparent throughout the chain. For the consumers, fair trade seeks to guarantee high quality. The adherence to these principles is indicated to the consumer with a fair trade label or brand.
Fair trade is also to be distinguished from safe trade which is more narrowly focused on preservation of biodiversity, biosafety, and biosecurity, and preventing serious global climate change. Although both are often advocated by the worldwide green parties or global NGOs like Greenpeace and Rainforest Alliance , the two concerns are usually discussed separately at different diplomatic conferences, and historically have resulted in different treaties entirely. Supporters of safe trade see it as the foundation for fair trade, since ecological damage is implicated in social problems as well.
Currently the most common definition of fair trade is that of the FINE group of organisations (Fairtrade Labelling Organizations International, International Fair Trade Association, Network of European Worldshops and European Fair Trade Association). The FINE definition does not require or imply offsetting penalties which have been one of the main sources of arguments against fair trade, and reads as follows: "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, marginalised 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."
The labelling of fair trade products began at the initiative of Mexican coffee farmers in 1988, together with Dutch development agency Solidaridad. Coffee that was imported to the Netherlands under the fair trade principles was labelled by Solidaridad under the name of Max Havelaar. This fair trade labelling system is today known as "Fairtrade" or "Fair Trade Certified", includes the Max Havelaar and TransFair labels, and is controlled by Fairtrade Labelling Organisations International (FLO).
The history of fairtrade movements spans the 20th century; it is fairtrade labelling which is the relatively recent innovation which has allowed its principles to be adopted by any company or organisation, and brought the concept into the mainstream. Previous initiatives include "goodwill selling " that was practised in the United States from the 1950s until 1970s, the Worldshop movement that was begun in 1959 by Oxfam, and alternative trading organisations (ATOs) that operated primarily in the U.S. and Europe from the 1960s until today.
Fair trade and politics
The Federation of European Green Parties, who unlike most counterparts outside Europe are usually represented in some numbers in the European Parliament, are strongly in the fair trade camp. One of their MEPs, Caroline Lucas from the UK, argues that "many developing countries called for a study to examine the effects of tariff reductions on local industries and jobs, before being required to open their markets further. Local industries, they say, have already collapsed in most African and least developed countries as a result of previous tariff cuts."
According to Lucas, "The choice is not between global trade rules and chaos: rather, it is between trade rules that undermine sustainability and favour the rich, and trade rules that support sustainability and equity." A major focus of Greens is land reform that respects natural ecologies, and traditional cultures, while other groups focus more clearly on equity.
The World Bank has taken a positive stance at fair trade. According to World Bank's comments on their 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." It should be noted that the definition of fair trade here does not involve government-mandated additional taxes or generic foreign aid.
The European Commission has stated in 2002 that they will support fair trade plans of the private sector.
Fair trade versus free trade
In the past, suggestions that "unfair" goods be taxed, or that standards such as ILO standards be required of countries in order to participate in international trade, have led to heavy criticism by advocates of free trade. (See free trade for discussion.) In general, although many organisations and individuals involved in fair trade campaigns are still uneasy about unfettered free trade, they are more cautious about arguing for protectionism or coordinated international intervention. Today, the emphasis is on the lack of free trade, caused by the protectionism (including agricultural subsidies) of the developed world. Without such rich-country protectionism, it is argued poor countries might stand a chance of seriously alleviating poverty. (See trade and development.)
Some Italian consumer organisations proposed in the 1980s that goods that were imported to Italy should be taxed inversely proportionately to the degree to which social and ecological standards of the exporter matched those of Italy - in other words, lower standards meant a higher offsetting tariff. The money so collected would presumably be spent on foreign aid to bring the exporting nation up to Italian standards - thus, all purchasing in Italy would be normalised as moral purchasing within ethics prevailing in Italy.
Articles and papers
"Coffee Markets: New Paradigms in Global Supply and Demand", World Bank, March 2004
"The State of Sustainable Coffee: A Study of Twelve Major Markets", World Bank, July 2003
"Coffee & Codes: Overview of codes of conduct and ethical trade initiatives in the coffee sector", SOMO, December 2003
"The Myth of Fair Trade", Cato Institute, November 1991
Special Report on "Fair Trade", Guardian (archive of articles)
"Creating Market Opportunities for Small Enterprises: Experiences of the Fair Trade Movement", International Labour Office, Geneva, 2002
"Grounds for Complaint?", Adam Smith Institute, 2004
History of alternative/fair trading, Church Times, 2003
Yellowikis is collecting contact details of companies and organizations granted Fair Trader status. Help grow the database, visit the Fair trade "to do" list.
Last updated: 06-02-2005 12:55:05