There is increasing concern for the way in which some trade operates in developing countries. We have all heard of children labouring in appalling conditions for little, if any, monetary compensation, or of producers of goods, either agricultural or handmade goods, who are paid so little for their products they are forced to live in poverty. Traders who economically exploit these craft producers are the cause of this intolerable situation. Although the exploitation is often reported in the media there are far more traders who make the rights and wellbeing of artisans and producers central to their business operation. This kind of trade can generate wealth and elevate people out of poverty.
The use of the term Fair Trade can be confusing. If both words are in ‘title case’ it refers to the accreditation given by a Fair Trade Association. Sometimes this is also referred to as Fairtrade. To add to the confusion some Fair Trade writers refer to Fair Trade as ‘Fair trade’ or fair trade. Alternately fair trade (without any capitals) is also simply a description of trade that is fair to all concerned.
Fair Trade is an organised social movement that arose out of the concern for the impacts of unfair trading practices. The Fair Trade Association of Australia & New Zealand describes Fair Trade as follows:
“Fairtrade is about better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world. By requiring companies to pay sustainable prices, Fair Trade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers. It enables them to improve their position and have more control over their lives.”
There is no disputing the soundness of the underlying principle of Fair Trade, there is however strong argument about its current effectiveness and in fact about its damaging effects to the poor in developing countries.
Firstly there is the assumption that if a business does not have Fair Trade status it is ‘un fair’. Many ethical business do not have the financial resources to apply for Fair Trade status, it is not cheap. Oftentimes businesses without Fair Trade status are operating much more fairly than some that have status, yet are discriminated against in the international marketplace. The system of Fair Trade is seen to subsidise those business with FT status to the detriment of other equally or more ‘fair trade’ businesses.
The system of certification and minimum pricing that characterises Fair Trade were designed initially for commodity products. It is technically difficult to adapt this model of standardised minimum pricing to handicrafts and other products made by small-scale artisans, which are unique, made of varied materials and have highly varied production processes and costs. Also the price of certification is prohibitive for small-scale artisans. The only way they can trade under the Fair Trade certification is when they are a member of a cooperative. This is not an available option for a vast number of artisans.
Because it is difficult to monitor businesses with Fair Trade status, there have been instances of Fair Trade businesses that do not respect the rights of workers and do not provide decent working conditions or fair pay and in some cases use child labour.
Some consider the term ‘fair trade’ to be relative. It is not regulated by international trade laws. There are no fixed standards or gauges to measure the progress of fair trade.
There is an argument that Fair Trade is not improving the lives of those it aims to help, and could be inadvertently hindering economic growth in some areas.
In 2008 the Adam Smith Institute (www.adamsmith.org) claimed Fair Trade has had little effect on the decreasing percentage of final sale value ending up with the producers, as only a fraction of Fair Trade premiums reach producers.
The Fair Trade organisations spend considerable money on awareness raising and marketing and on operational costs, leaving little to pass on to the producers.
The concept of Fair Trade (certification) needs some definite changes for it to meet its goals of poverty alleviation and social responsibility. Consumers now have a wide variety of ethical alternatives to Fair Trade many of which represent more effective ways to fight poverty, increase the standard of living of those currently living in poverty, and aid economic development.
The most important thing is to make sure goods are fairly traded and the basic principles of Fair Trade are followed. These principles are:
At Green Damselfly we stand behind these principles.
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