Fair trade: what does it mean?

This week on Wednesday it’s the beginning of Fair trade Week.

Fair trade has become one of those ‘good’ words related to food, much like organic or local. But, just like those, most of us don’t really know what fair trade really means. It’s generally regarded as a beneficial thing, but what is it exactly?

What does fair trade mean?

Even though the concepts of alternative trade and fair trade have been in use for a long time, it was only in 2001 that fair trade was formally defined.

Notice that the definition doesn’t mention specific products. Fair trade goes beyond food and includes toiletries, clothes and homewares among others.

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 Organizations (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.

That all sounds really nice, but it’s not very concrete. Also it mentions fair trade organisations, which takes us to…

The WFTO, World Fair Trade Organization

There are a lot of fair trade organisations. Many countries have their own, most of those have more than one. And as it usually happens the rules of each organisation are different.

As a way to make it easier for everyone involved the WFTO came to be as an international grouping of these smaller organisations.

The WFTO has a defined set of rules and standards that all organisations that belong to it have to follow. The actual regulations can be somewhat complex and they can change regularly, but they follow 10 basic principles of fair trade.

Along with the WFTO, there’s also the FLO (fair trade labelling organisations), which mostly handles labelling.

The 10 principles of fair trade

Creating opportunities for economically disadvantaged producers.

Transparency and accountability.

Fair trade practices.

Payment of a fair price.

Ensuring no child labour and forced labour.

Commitment to non-discrimination, gender equity and women’s economic empowerment, and freedom of association.

Ensuring good working conditions.

Providing capacity building.

Promoting fair trade.

Respect for the environment.

Criticisms

The main criticism of fair trade is the generally higher price of products for consumers, which in many cases is a lot higher than what the producer receives. Fair trade labelling is used by many companies as a sign of prestige and as an excuse to bump up prices and therefore their financial gains, above that of the actually producers.

The WFTO doesn’t currently deal with issues affecting consumers, only those affecting producers. Some think that fair trade organisations should consider consumers, while others some don’t. For now, they don’t.

The other big criticism against fair trade is that it has a negative impact on those producers who are not part of fair trade practices. Fair trade produces receive support that usually result in better production, which saturates the market and brings prices down. They still get paid a fair trade price, but their competitors end up losing money and become poorer. Some argue that fair trade goes against market freedom, others that fair trade should be the norm for everyone and then no one would lose.

So, is fair trade a good or a bad thing?

As with most things in life there’s really no clear black and white answer.

It really depends in where everyone’s priorities fall and our own personal code of ethics.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s