The 411 on Fair Trade

411 on fair trade 02 The 411 on Fair Trade

In order to be able to contribute intellectually at dinner parties, you need to be informed on important topics. This is where the third installment in my 411 series comes in handy. Together with its predecessors – Darfur and Global Warming – the premise is simple, really: know the facts before you open your mouth (or in this case, before you buy things that don’t fall under the criteria below).

What is fair trade?

It’s a social movement, an environmental standard and an alternative way of doing business. Mostly applicable to exports from developing countries to developed countries, fair trade primarily refers to the paying of a fair price to producers of certain commodities.

411 on fair trade 01 The 411 on Fair Trade

What fair trade products are out there?

What started off primarily with items like home wares, jewelry and textiles has expanded to cover tea, coffee, dried fruit, cocoa, sugar, rice, spices. Nowadays you can buy everything from fair trade bananas to cotton to footballs.

What are the basic principles involved?

There are six in total: First and foremost, the payment of a fair price, equivalent to at least that country’s minimum wage with an additional premium for organic. Secondly, fair labor conditions with freedom of association and a keen eye on safety. Obviously no child labor here. Thirdly, direct trade with importers, i.e., no more greedy middle man. Point four — that eco buzzword du jour, transparency, meaning fair trade farmers democratically decide how to invest revenues. Point five, community development, some of the proceeds go to business and social development projects. And last but certainly not least, environmentally sustainable farming methods that protect workers’ health and preserve ecosystems for future generations.

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Who says its fair trade?

To help consumers get accurate information on the origin of products, various labeling initiatives began cropping up in the mid-‘90s. However, things really took off when the Fairtrade Labeling Organizations International (FLO) launched the International Fairtrade Certification Mark in 2002. This system represents around one million farmers, is used in 50 different countries on dozens of products. As a rule, commodities receive better labeling than handicrafts. So, if you’re on the lookout for a fair trade handicraft, you’re kinda of your own.

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As well as FLO, other Fair Trade organizations include: International Fair Trade Assocation (IFTA), which identifies registered fair trade organizations as opposed to products; Network of European Worldshops (NEWS); and European Fair Trade Association (EFTA).

Together they create FINE, “an informal association whose goal is to harmonize fair trade standards and guidelines, increase the quality and efficiency of fair trade monitoring systems and advocate fair trade politically”. A fine thing indeed.

411 on fair trade 03 The 411 on Fair Trade

You’re using both “fair trade” and “fairtrade” – which is correct?

Both are commonly used. But it’s the principles that are important, not the spelling.

Fair trade justifications

This is twofold and involves the joys of economics.

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Market failure: Adam Smith’s free trade principles collapse when it comes to agriculture because of a lack of perfect information, access to markets and credit and the ability to switch production techniques (oh, the joys of economics). This means it’s unfair to producers in developing countries who we want to lift out of poverty.

Commodity crisis: The ‘70s and ‘80s saw a huge crash in commodity prices as government opted out of a more interventionist stance. As basic agriculture affects developing countries more than the developed ones, these countries are unfairly disadvantaged.

Criticisms of fair trade

Finally, I get to use my undergraduate degree, in all its paradoxical glory.

411 on fair trade 08 The 411 on Fair Trade

Price distortion: Adam Smith again. Critics argue fair trade “encourages market inefficiencies and overproduction”.

Mainstreaming argument: Others argue that fair trade isn’t strict enough. That we need to do more to help developing countries create a level playing field.

So, there you have it my friend. The 411 on Fair Trade. Now go and impress your fellow diners. Just don’t be too smug about it.



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