Defining Fair Trade

Since we’re getting closer to the gift-giving holidays, I thought I would post some information on a couple of different shops that offer fair trade items that could make wonderful presents. I’m currently working on this, and it will be posted under Responsible Shopping soon (hopefully next week). When I started looking at all of these shops, I realized that while I knew some aspects of what defined fair trade, I didn’t feel confident that I could accurately explain it to someone else. So I decided to do some research to teach myself.

To best do this, I read a lot of different websites with similar definitions, including the World Fair Trade Organization, Fair Trade USA, Fair Trade International, and Fair Trade Federation. They all defined fair trade using similar terms, but each website also added a little more information regarding either the overall approach, or theirs in particular. Their definitions are below.

World Fair Trade Organization: “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, marginalized producers and workers – especially in the South.

Fair Trade organizations have a clear commitment to Fair Trade as the principal core of their mission. They, 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.” They can be recognised by the WFTO logo.

Fair Trade is more than just trading:

• It proves that greater justice in world trade is possible.
• It highlights the need for change in the rules and practice of conventional trade and shows how a successful business can also put people first.
• It is a tangible contribution to the fight against poverty, climate change and economic crisis.

The World Fair Trade Organization website also lists the 10 principles of Fair Trade. They’re quite long so I didn’t provide all of the information, but here are the titles.

• Principle One: Creating Opportunities for Economically Disadvantaged Producers
• Principle Two: Transparency and Accountability
• Principle Three: Fair Trading Practices
• Principle Four: Payment of a Fair Price
• Principle Five: Ensuring no Child Labor and Forced Labor
• Principle Six: Commitment to Non Discrimination, Gender Equity and Women’s Economic Empowerment and Freedom of Association
• Principle Seven: Ensuring Good Working Conditions
• Principle Eight: Providing Capacity Building
• Principle Nine: Promoting Fair Trade
• Principle Ten: Respect for the Environment

FairTrade International: Fairtrade is an alternative approach to conventional trade and is based on a partnership between producers and consumers. When farmers can sell on Fairtrade terms, it provides them with a better deal and improved terms of trade. This allows them the opportunity to improve their lives and plan for their future. Fairtrade offers consumers a powerful way to reduce poverty through their every day shopping. When a product carries the FAIRTRADE Mark it means the producers and traders have met Fairtrade Standards. The Fairtrade Standards are designed to address the imbalance of power in trading relationships, unstable markets and the injustices of conventional trade.

FairTrade Interanional and the World Fair Trade Organization created and adopted the Charter of Fair Trade Principles in 2009. This document includes their shared vision, definition of fair trade, and the principles and approaches to fair trade (the principles are listed above).

FairTrade International has something called “The Fairtrade Premium” which is an additional sum of money given to farmers that goes to a “communal fund for workers and farmers to use to improve their social, economic, and environmental conditions. The Premium is invested in education and healthcare, farm improvements to increase yield and quality, or processing facilities to increase income.”

Fair Trade Federation: Fair trade is an approach to business and to development based on dialogue, transparency, and respect that seeks to create greater equity in the international trading system. Fair trade supports farmers and craftspeople in developing countries who are socially and economically marginalized. These producers lack economic opportunity and often face steep hurdles in finding markets and customers for their goods. Fair trade is much more than just trade. At the core of the fair trade model is a direct, cooperative, and in-depth relationship between buyers and sellers that keeps all of the principles of fair trade at the forefront.

On the Fair Trade Federation’s website, they list a number of myths surrounding fair trade and the actuality of the statement. I think most of them all relevant, and help better explain fair trade by telling you what it’s not, so I’ve provided some of them below.

Myth: Fair Trade is about paying developed world wages in the developing world.Reality: Wages are designed to provide fair compensation based on the true cost of production, and are not based on North American wage standards. Fair wages are determined by a number of factors, including:

• The amount of time, skill, and effort involved in production
• Minimum and living wages where products are made
• The purchasing power in a community or area
• Other costs of living in the local context community or costs of living in the local context

Myth: Fair Trade is anti-globalization.Reality: International exchange lies at the heart of fair trade. Fair trade organizations seek to maximize the positive elements of globalization that connect people, communities, and cultures through products and ideas. At the same time, they seek to minimize the negative elements that result in lower labor, social, and environmental standards which hide the true costs of production.Myth: Fair Trade is a form of charity.Reality: Fair trade promotes positive and long-term change through trade-based relationships which build self-sufficiency. Its success depends on independent, successfully-run organizations and businesses–not on handouts. While many fair trade organizations support charitable projects in addition to their work in trade, the exchange of goods remains the key element of their work.Myth: Fair Trade results in more expensive goods for the consumer.Reality: Most fair trade products are competitively priced in relation to their conventional counterparts. Fair trade organizations work directly with producers, cutting out middlemen, so they can keep products affordable for consumers and return a greater percentage of the price to the producers.Myth: Fair trade refers only to coffee and chocolate.Reality: Fair trade encompasses a wide variety of agricultural and handcrafted goods, including baskets, clothing, cotton, home and kitchen decor, jewelry, rice, soap, tea, toys, and wine. While coffee was the first agricultural product to be certified fair trade in 1988, fair trade handcrafts have been sold since 1946.

FairTrade USA: Fair Trade goods are just that. Fair. From far-away farms to your shopping cart, products that bear our logo come from farmers and workers who are justly compensated. We help farmers in developing countries build sustainable businesses that positively influence their communities. We’re a nonprofit, but we don’t do charity. Instead, we teach disadvantaged communities how to use the free market to their advantage. With Fair Trade USA, the money you spend on day-to-day goods can improve an entire community’s day-to-day lives.

FairTrade USA lists the following fair trade principles:Fair prices and credit: Democratically organized farming groups receive a guaranteed minimum floor price (or the market price if it’s higher) and an additional premium for certified organic products. Farming organizations are also eligible for pre-harvest credit.Fair labor conditions: Workers on Fair Trade farms enjoy freedom of association, safe working conditions and sustainable wages. Forced child and slave labor are strictly prohibited.Direct trade: With Fair Trade, importers purchase from Fair Trade producer groups as directly as possible to eliminate unnecessary middlemen and empower farmers to develop the business capacity necessary to compete in the global marketplace.Democratic and transparent organizations: Fair Trade farmers and workers decide democratically how to invest Fair Trade premiums, which are funds for community development.Community development: Fair Trade farmers and farm workers invest Fair Trade premiums in social and business development projects like scholarships, schools, quality improvement and leadership training, and organic certification.Environmental sustainability: Harmful agrochemicals and GMOs are strictly prohibited in favor of environmentally sustainable farming methods that protect farmers’ health and preserve valuable ecosystems for future generations.