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Fair trade

From Ekopedia

Fair trade (equitable trade) is a term used broadly by social justice, peace movementand ecology movement groups, to contrast with 'unfair' trade practices, and sometimes with free trade as promoted by the World Trade Organization and NAFTA. Fairtrade is also a trademark of Fairtrade Labelling Organizations International, an organization which exists to promote products which are produced and sold in accordance with its definition of fair trade. Respectively, Fair Trade Certified is a trademark of TransFair USA.

Fair trade is sometimes, albeit much more rarely, used to refer to corporate governance and reforming anti-competitive trade principles (such as antitrust issues). Sometimes these issues are pursued by organisations that are often called Fair Trade/Trading Commissions. Organisations with this name exist at least in Korea and Japan.

Fair trade is also sometimes used to refer to consumer rights and fair contracts. Office of Fair Trading is a common name for an organisation that typically aims to protect these interests and/or to facilitate a fair and ethical marketplace. Governmental and non-governmental organisations with this name exist, for example, in the UK and Australia.

This article is about the first definition of the term (fair trade to contrast with 'unfair' trade).

1 Overview
2 History
3 Fair trade and politics
4 Fairtrade Labelling Organizations International
5 External links
- 5.1 Organisations
- 5.2 Articles and papers

[edit] Overview

Fair, as opposed to 'unfair', trade aims to guarantee not just low prices, but some adherence to principles of ethical purchasing and tax, trade, tariff rules that apply some significant offsetting penalties to imported goods that do not satisfy the local concept of fairness, goals that are sometimes, but not necessarily, contrasting with free trade. 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.

The main argument against fair trade is that the term in practice is primarily intended to protect inefficient industries and that fair trade as conceived of by its proponents would do little to help as fair trade still remains a niche and indeed would aggravate problems of global poverty and social injustice, as not everyone can get a fair trade certification.

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.

[edit] History

The history of such movements spans the 20th century. Initiatives include "goodwill selling" that was practiced in the United States from the 1950s until 1970s, the Worldshop movement that was begun in 1959 by Oxfam, and alternative trading organizations (ATOs) that operated primarily in the U.S. and Europe from the 1960s until today.

Some Italian consumer organizations 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 normalized as moral purchasing within ethics prevailing in Italy.

An extreme version of fair trade is the Community-Based Economics also promoted by worldwide green parties, which establishes a local currency for trade only in locally produced goods and services. Presumably, since each purchaser and producer are part of the same community sharing some risk of bodily harm due to infrastructure lacks or failures of emergency response or policing or government, there is an implicit and common standard of fairness assumed in all such local trade. Trade outside the borders of the community is at higher tax rates, with more complex trade rules including labels, and at higher tariff rates, to pay for the difficulties of assessing and equalizing the risks borne by the community for its involvement in remote production and (potentially) exploitation.

However, the current fair trade movement concentrates more on a fairer price on fair trade goods, and abolition of agricultural subsidies and dumping, and to a much lesser extent on offsetting penalties on "unfair" goods. Fair trade is therefore best known for the fair trade labelling plan, which gives the consumers a tool or brand which they can recognise, should they wish to take part in the process.

The labelling of fair trade products began at the initiative of Mexican coffee farmers in 1988. Coffee that was imported to the Netherlands under the fair trade principles was labelled 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. One of the main principles of the current Fairtrade labelling system is independent auditing of producers and a fair trade premium which is used for enhancing social wellbeing (schooling, healthcare, etc.)

[edit] 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 labor, 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.

[edit] Fairtrade Labelling Organizations International

The fair trade labelling system (the Fairtrade[tm] label and the Fair Trade Certified[tm] label) is governed by Fairtrade Labelling Organizations International (FLO). This is an umbrella organisation that operates nationally through their national initiatives, as follows: