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What is Fair Trade?

‘Fair Trade’ is a political movement that started in response to the inequalities in global trade. Producers and producer countries have very little power and often have to sell their goods and products at prices below the cost of production, keeping them trapped in poverty. The situation is unfair because while we insist that poorer countries do not protect their products or their farmers, we in the rich countries are always protecting our products and restricting imports of their products, and while giving subsidies to our farmers and protecting the market for their products. Many people felt that trade, not aid, would be the best way for poorer countries to prosper.

The ideals of Fair Trade are achieved through long term, cooperative relationships between Fair Trade producers on the one hand and Fair Trade buyers on the other. The buyers agree to pay a fair wage/price, insist on good working conditions, and work with the producer organization to improve their products and to achieve the social standards of Fair Trade.

Is there a difference between Fair Trade and Fairtrade?

Yes. There are two main branches of Fair Trade. One, called Fairtrade deals with commodities, products that have a world price, and are certified by the Fair Trade Labelling Organizations International (FLO). The Fairtrade logo is registered and can only be used by products that are certified through FLO. The other type of Fair Trade is related to any product that is made or manufactured, such as handicrafts, items from wood, handmade paper, etc. These are made by organizations that are registered with the World Fair Trade Organization (WFTO). We should not forget that there is much work and capacity building with producer organizations that needs to happen before they are ready to be certified (FLO) or registered (WFTO). This is often work that is undertaken by the Fair Trade buyer and Fair Trade assistance organizations in producer countries.

What does a business have to do in order to be certified as Fairtrade, or registered as Fair Trade?

All Fair Trade organizations most abide by the principles of Fair Trade. FLO has six standards and WFTO has 10 standards which cover such topics as the fair wage/price, working conditions, impact on the environment, and gender equity. Producer businesses have to send their accounts, be open to visits, and in other ways ensure that they are following the standards (see People Tree). However, we should remember that Fair Trade is a process – often businesses are trying to improve and as they get more orders and more income they can invest more in their businesses in order to meet every increasing standard.

There are many studies on the impact of Fair Trade. The European Fair Trade Association (EFTA) has a site full of information, with links to many impact studies. In addition, Academics are also involved in research on Fair Trade. Fairness UK is a website where many articles and studies are made available, and where practitioners and academics can learn from each other.

Are Fair Trade businesses involved in other activities?

Yes, there is a lot of work that goes into making a company socially responsible. For example, many Fair Trade buyers now produce social accounts as well as their financial accounts (see Traidcraft). The idea is that they pay attention to a range of stakeholders, like their producers, consumers, staff and the environment. There is also educational and promotional work that is undertaken, so people are aware of the problems and what is being achieved. Oxfam is very active in promoting fairer trade, and the Fair Trade Foundation (FTF), the UK branch of FLO, is also very active. For example they produce a range of educational materials and provide help to teachers who want to teach about fairer trade in primary and secondary schools. There is also the Fairtrade Town Movement which has encouraged many more people to buy fairtrade goods and products.

How fair is Fairtrade/ Fair Trade and could it be fairer?

Fair Trade is not perfect, and things can go wrong. Sometimes businesses do not do well, or a cooperative is badly managed. Sometimes products are not up to European standards. However, the thing which is different is that people involved in Fair Trade businesses are committed to making things better – they will work together to solve the problem. If working conditions have deteriorated, then they want to find ways to improve them. If the environment is suffering then they try to find solutions. Sometimes such actions put additional costs onto products – this is why Fairtrade goods can be more expensive. On the other hand, by working to get rid of corruption and unnecessary charges in the supply chain, there are also processes which can make the products cheaper.

Are all the organizations involved in trading Fair Trade goods also Fair Trade organizations?

No, and this can be a source of problems. For example Fairtrade bananas may be sold by a supermarket, which is not a Fairtrade organization. They may decide to sell the Fairtrade bananas at a very high price – more than is necessary – because they think people will pay. Fair Trade retailers, such as Traidcraft and People Tree will sell at a price that makes a profit, but not an excessive profit. There are many aspects of trade, such as wholesalers and transport operators that are not fair trade and may be unsympathetic to providing their service at a reasonable price.

What is meant by mainstreaming?

Originally, Fair Trade producers and buyers tried to work only with each other – to be a kind of alternative trade. This worked well, and it was a good way of building the movement and maintaining standards. But, it tended to only sell to people who already agreed with the movement. Increasingly it was seen that Fair Trade goods would have to reach wider markets and not stay as a niche market. Thus there is a move now to get Fair Trade products sold in all retailers, such as supermarkets, and also to have other companies (such as Nestle and supermarket own brands) buy from Fairtrade producers. These companies have to abide by the same Fairtrade standards, agree to pay the fair wage/price and to have good working conditions. Mainstreaming has meant that the sale of Fairtrade goods is greatly increased and that more people know about the principles of Fair Trade.

What benefits does Fair Trade bring to women working in the Bangladesh organizations?

My research showed that women handicraft workers involved in Fair Trade had many advantageous. First, they received a higher income than they could have made from any other available paid work opportunities. Women who made handicrafts for the non-Fair Trade market were very exploited – their wage was low and they received no benefits. The Fair Trade women are organised into groups where they received additional training and educational activities. Some of the women went to Production Centres and these were seen as respectful and secure places because the Fair Trade employers made sure they were comfortable places for women to be and strange men could not come and bother them. They also felt they were treated with ‘respect’. Because of the income, the social skills learnt in the group, and the new experiences, most women felt their status had improved and they had more confidence and improved abilities to deal with their problems.

What would the women in Bangladesh be doing if they weren’t making the Fair Trade goods?

There are few opportunities for paid work for women in rural areas – mostly day field labourers or housemaids. In the city women sometimes work in the garment factories, or as cleaners or cooks. There is also non- Fair Trade handicraft production, which I found to be very poorly paid.

How do the lives of the women producing the Fair Trade crafts differ from those around them who work in other sectors?

One of the most important differences is that they feel part of a group (a Fair Trade producer group) and this gives then a social network that they can draw on. They learn social skills, they plan and discuss, and share their problems with other women. Women who work in the fields, or as housemaids are isolated and do not have such opportunities. Also the women who made products for commercial handicraft organizations were just given the work, and then it was collected – they had no sense of working with other people.

Has being involved in Fair Trade projects helped to empower the women?

Yes, being involved in Fair Trade has contributed to an enabling environment for the women. Many said that as a result of having an income and learning more, they now wee more involved in family decisions, they had the courage to travel more, and relationships with their family had often improved. Such confidence and courage means they can take advantage of other services, such as going to a clinic or hospital, travelling to the city, or arranging to visit their own relatives. In Bangladesh, women are still limited by the norms of purdah and few take part in community activities or go in public without a male relative.

What happens when demand falls for the Fair Trade crafts?

This is a very difficult question, and it is something that many people worry about. Many handmade items can be bought very cheaply and people have to be constantly reminded of the benefits to the producer to pay a bit more for a fair traded item. There are many producers who would like to join Fair Trade groups, and with increased demand this would be possible. Hopefully, Fair Trade will encourage positive cycles, where other employers will start to pay better wages, and people will continually be encouraged to think about what they buy. If it is cheap, there is reason. Consumers need to be aware of the way things are made and what people are paid in order that Fair Trade can succeed and grow.

Ann was interviewed in November 2010.

Dr Ann Le Mare’s biography

Dr Ann Le Mare is a Lecturer in the Department of Geography at Durham University.

Her research and academic interests focus on various aspects of the geographies of development, including such topics as poverty and inequality, gender, the environment, livelihood transformations, and development in the context of conflict and reconstruction. She is particularly interested in alternative trades, encompassing Fair and Ethical Trade, and their links with developmental goals. Dr Le Mare is currently involved in research projects in Bangladesh looking at rural development, household issues and gender as they intersect with Fair Trade employment, and in Tanzania on health and rural development issues. A new area of research she is working on is a project considering changing livelihoods over three generations in Vietnam.

Ann is the winner of the 2010 ESRC Michael Young Prize for excellence in social science research and research findings that have the potential for impact beyond academia.