A] What is fair trade ?
B] History of Fair Trade
C] Fair Trade Standards
D] Who benefits?
E] Logos and Labels
F] FAQ
What is fair trade?
Fair Trade is a trading method that attempts to empower producers who are disadvantaged by
the exploitation in supply chains of conventional trading system. It seeks to reduce poverty, by
trading specifically with poor or marginalized producers in developing countries. Fair Trade is
the response of the Northern civil society to manipulations in international trade that adversely
affect primary producers in Southern countries. Fair Trade is open to public scrutiny, building
long term trade relationships and providing healthy and safe working conditions to producers
whenever possible.
The fundamental characteristic of Fair Trade is that of partnership and respect –
partnership between the producers and buyers i.e. importers, Fair Trade shops, labelling
organization and consumers. Fair Trade “humanizes” the trade process – making the
producer-consumer chain as short as possible so that consumers become aware of the cultural,
identity and conditions in which producers live.
The parameters of Fair Trade include:
1. Paying fair price that includes all input costs and reasonable surplus.
2. Paying a fair wage in the local content
3. Providing healthy and safe working condition
4. Engaging in environmentally sustainable practices.
5. Providing financial and technical assistance to producers wherever possible.
6. Transparency in supply chain.
History of Fair Trade :
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 SERRV International were the
first, in 1946 and 1949 respectively, to develop fair trade supply chains in Developing
countries. The products, almost exclusively handicrafts ranging from jute goods to cross-stitch
work, were mostly sold in Worldshops. The goods themselves had often no other function than to
indicate that a donation had been made.
The current fair trade movement was 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 economics 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. 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.
The year 1965 saw the creation of the first Alternative Trading Organization (ATO). That year, a
British NGO Oxfam launched, "Helping-by-Selling", program which later developed into Bridge. The
scheme sold imported handicrafts in Oxfam stores in the UK and from mail-order catalogues with a
circulation of almost 100,000 copies. The program was created to support the work of cooperatives
and community enterprises in the developing world. The program was highly successful: it remained
one of the largest and most influential in the sector until it was shut down in 2002.
In 1969, the first Worldshop opened its doors in the Netherlands. The initiative aimed at
bringing the principles of fair trade to the retail sector by selling almost exclusively goods
produced under fair trade terms in “underdeveloped regions”. The first shop 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 Worldshops 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 Worldshops,
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 Worldshops 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.
From the mid 70s, the Fair Trade Organizations worldwide began to meet informally every couple of
years in conference. By the mid 80s there was a desire to come together more formally and the end
of the decade saw the foundation of EFTA (the European Fair Trade Association – in 1987) and IFAT
(the International Association for Fair Trade – in 1989). They are two very different types of
organization: EFTA an association of the 11 largest importing organizations in Europe; IFAT a
global network of 250 organizations (and growing!) aiming to improve the livelihoods of
disadvantaged people through trade, and providing a forum for the exchange of information and
ideas.
Networking between Fair Trade Organizations is crucial to its success. All over the world,
networks have been established, such as the Asia Fair Trade Forum, Ecota Fair Trade Forum in
Bangladesh, Fair Trade Group Nepal, Associated Partners for Fairer Trade Philippines, Fair Trade
Forum India, and Kenya Federation for Alternative Trade (KEFAT), Coordinadora in Latin America,
etc. FLO, IFAT, NEWS and EFTA started to meet in 1998 and, when they work together, are known by
their acronym, FINE. The aim of FINE is to enable these networks and their members to cooperate
on important areas of work, such as advocacy and campaigning, standards and monitoring of Fair
Trade.
The Fair Trade movement today is a global movement. Over a million small-scale producers and
workers are organized in as many as 3,000 grassroots organizations and their umbrella structures
in over 50 countries in the South. Their products are sold in thousands of World-shops or Fair
Trade shops, supermarkets and many other sales points in the North and, increasingly, in sales
outlets in the Southern hemisphere. The movement is engaged in debates with political
decision-makers in the European institutions and international foray on making international
trade fairer. And Fair Trade has made mainstream business more aware of its social and
environmental responsibility. In short: Fair Trade is becoming increasingly successful.
Fair Trade
standards :
Meeting fair trade standards means making fair trade principles, a part of the business. A
buyer/alternative trade organization (ATO) or monitoring organization will usually expect to meet
certain basic requirements in most areas, and will then work in partnership to make more progress
in all areas. ‘Basic’ standards are:
a) Commitment to the goals of fair trade
b) Fair wages and prices are paid
c) No forced labour
d) No child labour
e) Transparency and openness
f) Environmental protection
g) Capacity Building of producers
h) Monitoring and compliance
Who
benefits???
Producers: Producers are guaranteed a fair price and decide themselves how the
extra premium paid by Fair Trade buyer should be distributed in the best interests of their
communities. Many use it for education, health care, housing, and other social obligations.
Long-term, stable trading relationships, which are transparent and honest, support the producer
in developing responsible practice for their business and meeting fair trade standards. The
sustainability of production and hence of income, and the guaranteed of a long term relationship
is a major benefit to the producers and allows them to make some provision for the
future.
Consumers: Fair Trade Certification enables consumers to “vote with their money”
by providing an independent guarantee that products were produced and traded fairly.
Industry: Fair Trade Certification enables companies to meet growing consumer
demand for sustainable products and thereby please their customers, increase profits, and ensure
quality supply for years to come. That’s why more and more companies are choosing to participate
in Fair Trade every day. Fair Trade harnesses the power of the market to make a positive
difference for the world’s most disadvantaged producers.
The Earth: The Fair Trade Certification system strictly prohibits the use of
genetically modified organisms (GMOs), promotes integrated farm management systems that improve
soil fertility, and limits the use of harmful chemical pesticides and herbicides. Fair Trade
encourages and rewards environmentally sustainable farming practices that protect farmers’ health
and preserve valuable ecosystems for future generations.
Logos and Labels
:
The FTO Mark: Launched in 2004 at the World Social Forum in Mumbai, India, the FTO Mark
identifies registered Fair Trade Organizations worldwide. Over 150 organizations have already
registered, including Oxfam, PeopleTree, the Network of European World Shops and Cafédirect. The
FTO Mark shows that an organization belongs to the global network of Fair Trade Organizations. It
serves as a common voice for solidarity amongst all Fair Trade Organizations in the North and
South.
The FTO Mark is available to all IFAT members who meet the requirements of the IFAT
Standards and Monitoring System. IFAT's Registration Sub-Committee oversees this procedure and
makes its recommendations to the IFAT Executive Committee. Registered organisations are able to
use the FTO Mark on headed paper, websites, posters and other promotional material.
The FTO Mark is not a product label. It has not been designed as a label for handicrafts. It is a
mark to identify Fair Trade Organizations. . It sets organizations apart from other commercial
businesses, making recognisable mission driven organizations whose core activity is Fair Trade.
FTO Mark is a quality mark. It is also a commitment and means standards are being
implemented regarding working conditions, wages, child labour and the environment. These
standards are verified by self-assessment, mutual reviews and external verification. It
demonstrates that an organization's trading activity committed to continual improvement.
The other is issued by FLO (the Fairtrade Labelling Organisation) and is called
the Fairtrade Label. It is used to identify Fair Trade certified products. After the successful
launch of the Max Havelaar Label in 1988, a number of independent Fair Trade certification
bodies were created, however, since 1997 the fairly traded labels have been united under the
umbrella NGO, Fair Trade Labelling Organization International (FLO-I), in a single fair trade
market. In 2002, the national Labels of the different countries merged into the international
Fair Trade Certification Mark with the USA, Canada & Switzerland, currently swtill retaining
their label. For further information you can visit the FLO website, www.fairtrade.net
FAQ’s
:
1. What does Fairtrade mean for third world producers?
For 500,000 workers and farmers in the developing world, Fairtrade means better terms of trade
and decent production conditions. The Fairtrade Foundation, with its partners, maintains these
standards by regularly inspecting third world suppliers, and checking contracts and trade terms.
Fair Trade would ensure that the producers:
- Can look forward to receiving a fair price for their skill and effort and the crops they
produce without being exploited
- Can get access to credit at reasonable rates
- Can look forward to a long-term relationship that is a real partnership on both sides, taking
into account their interests, not just the interests of those buying their products. That means
they know they can plan for the future.
2. What is the difference between fair trade and ethical trading?
Ethical trading means companies are involved in a process of trying to ensure that the basic
labour rights of the employees of their third world suppliers are respected. The FAIRTRADE Mark,
which applies to products rather than companies, aims to give disadvantaged small producers more
control over their own lives. It addresses the injustice of low prices by guaranteeing that
producers receive fair terms of trade and fair prices – however unfair the conventional market
is.
3. How big is the Fairtrade market globally?
In 2005, Fairtrade sales amounted to approximately €1.1 billion worldwide, a 37 % year-to-year
increase over 2004. As per December 2005, 508 Certified Producer Organizations in 58 developing
countries were Fairtrade Certified. That represents more than one million producers and five
million people, including dependents, benefiting directly from Fairtrade.
4. Are Fair trade Products also organic?
Not necessarily. Fairtrade criteria however require sustainable farming techniques, and offer a
higher price for organic products. Moreover, Fairtrade Premiums are often used to train producers
in organic and sustainable techniques like composting and integrating recycled materials.
5. What is the difference between Organic and Fairtrade?
Organic standards aim to produce high quality food with minimum environmental impact, but they do
not stipulate any particular social forms of production. They do not seek to empower producers,
or guarantee special prices, although they do aim to ensure those who live and work on the land
have good working conditions and a decent quality of life.
Fairtrade is concerned with improving the position of the individual producers. It is not limited
to small or subsistence farmers and the Fairtrade label can be applied to products from
plantations where worker conditions meet international standards and where workers can
participate in decisions that affect their future.
Organic standards are applied all over the world to large farms and small, but Fairtrade applies
to third world products, where workers need most support.
The two systems are complementary and many producers will benefit from both. But Fairtrade
products are not always organic, even though environmental aspects are important. And organic
products are not always Fairtrade, even though the social aspects are important.
In both cases, look for the independent labels, which guarantee the standards.
