What is FAIR TRADE?

(Approx. reading time 2 mins 11 secs)

Fair trade has become one of those ‘good’ words associated to food, much like organic or local. But, just like those, most of us don’t really understand what fair trade really means. It is usually seen as a beneficial thing, even something we should prioritise when shopping, but what is it exactly?

What does fair trade mean?

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

The definition doesn’t mention specific food products. That’s because fair trade goes beyond food and includes toiletries, clothes, and homewares among other products.

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, and many countries 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 now acts 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 regulations.

The 10 principles of fair trade

  1. Creating opportunities for economically disadvantaged producers.
  2. Transparency and accountability.
  3. Fair trade practices.
  4. Payment of a fair price.
  5. Ensuring no child labour and forced labour.
  6. Commitment to non-discrimination, gender equity and women’s economic empowerment, and freedom of association.
  7. Ensuring good working conditions.
  8. Providing capacity building.
  9. Promoting fair trade.
  10. 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 actual producers.

The WFTO doesn’t currently deal with issues affecting consumers, only those affecting producers. Some experts in fair trade think that fair trade organisations should consider consumers, while others don’t. For now, organisations only regulate the origin of products, not the sales to end-consumers.

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 producers receive support that usually results 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 depends on where our individual priorities fall and our own personal code of ethics.

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