Is Fair Trade the solution?

Fair trade is a social movement which promotes standards for international labour, environmentalism, and social policy in areas related to the production of Fairtrade labelled and unlabelled goods.

Fair Trade has grown over the last few years; and many fair trade products such as coffee and chocolate have become more widely available. Yet, this movement based on consumer trust is in danger of being seriously undermined.

Fair trade is focused on exports from developing countries to developed countries and their strategy is to achieve equity in international trade.

Some of the key fair trade principles are:

Create opportunities for economically disadvantaged producers; to help producers to move from a position of vulnerability to security and economic self-sufficiency.
Transparency and accountability; to deal fairly and respectfully with trading system.
Capacity building; to develop producers’ independence; providing help to improve their management skills and their access to new markets.
Payment of a fair price; taking into account the principle of equal pay for equal work by women and men.
Gender equity; ensuring that women’s work is properly valued and rewarded.
Working conditions; a safe and healthy working environment for producers
Environment; to encourage better environment practices.

The Fair Trade Labeling Organization (FLO) , the de facto international body for Fair Trade, sets the standards for world certification. Working with national organisations, such as Fair Trade Canada, they monitor and certify the manufacturing, pricing and trading standards; allowing customers and distributors to know the origin of the good to confirm that the products were really benefiting the producers.

However, other products like household goods and clothes offered by organisations such as Oxfam, Traidcraft and People Tree do not yet carry the FAIR TRADE mark and the Fair Trade Foundation is working closely with international partners to develop standards for these products.

Some critics of Fair Trade usually recognize that the idea was based on "the best of intentions", but argue that it might in fact, "make things worse".

Different arguments are used by those who favour and by those who oppose fair trade, or feel that stricter standards and higher fair trade prices are needed.

For instance, the mainstream argument criticises the fair trade movement for working within multinational corporations rather than establishing a new fairer, fully autonomous trading system.

Also, the price distortion argument criticises fair trade for attempting to set a price floor for a product that is, in many cases, above the market price and therefore encourages existing producers to produce more and new producers to enter the market, leading to excess supply. Through the laws of supply and demand, excess supply can lead to lower prices in the non-Fair Trade market.

However, it is very much worth a small increase in price, considering the benefits of fair trade, because it is right that fair wages and treatment should be the norm.

Some have criticised fair trade as it has adverse effects on other farmers; fair trade usually limits supply so may serve to stabilise prices.

So far, fair trade production is not a large proportion of farmers (less than 2%) and its impact is not huge. However, farmers can see the benefits of fair trade and more want to be part of it. By increasing consumption of fair trade produts we are increasing demand, so giving more farmers the chance to participate in fair-trade programmes.

Fair trade is about justice, and by supporting it we are promoting an alternative way of doing business that is fairer and beneficial to the producers.

If you want to know more, come along to our discussion evening about the pro and cons of Fair Trade at BPEC on Thursday 8th March at 19:30!