esme

Fair trade has become such a common term in the world of consumer ethics — even big producers and manufacturers are queuing up to display their ethical credentials by means of a fair trade label. But what does 'fair trade' actually mean? Is fair trade really fair? Or should we regard it merely as a cynical sales ploy?

Our view is that whilst we could argue forever about what constitutes 'fair', the fair trade movement provides a much-needed and growing counter-force to the grim injustices that prevail in the poorer producer regions, at same time raising consumer awareness of unacceptable conditions and practices. This is, of course, only one part of the campaign to eliminate global poverty and workplace injustice, but it is serious and effective, and we should definitely not be cynical about it. A healthy dose of scepticism, however, is always a good thing — as we shall see.

• What is fair trade?
• Fair trade labels
• Issues and criticisms

There is no single definition of fair trade — there isn't even a single way of writing it. At Esme, we use 'fair trade' when we are talking about the concept in general, and 'Fair Trade' (with capitals) when we are referring to some example of fair trade which has official certification — with one important exception: the term 'Fairtrade' (as one word) is a trademark of the Fairtrade Foundation and its international partners, and should only be used for products or organizations that have been certified by them.

The three fair trade designations seen most commonly in this country are:

• Fairtrade (trademark of the Fairtrade Foundation)
• WFTO (World Fair Trade Organzation)
• BAFTS (British Association of Fair Trade Shops)

They all mean different things, and we provide a brief description of each further down the page. Despite this variety, however, all fair trade tends to converge on certain common issues, and these can be briefly stated as:

• Pay and conditions: not only pay, but also provisions on working hours, gender equality, sick leave, child labour and health & safety. Look at some of the standards documents used by the Fairtrade Foundation and its partners here to get a feel for the comprehensive frameworks that have been developed.
• Structural poverty: the very concept of fair trade only makes sense against a backdrop of poverty. It is not so much about deciding what is a fair wage for a fair day's work, but about working to improve conditions in regions where the conditions are manifestly unfair — not only because of local exploitation, but because of the imbalance in global trading relationships. A list of countries covered by Fairtrade guidelines can be downloaded here. Note that Europe is entirely absent, despite the presence there of large areas of endemic poverty.
• Social premiums: a very common feature of arrangements termed 'fair trade' is the payment of a social premium to be used in the interests of the local community. This may range from local infrastructure development, such as improvement in water supplies, to medical facilities, child care or even a local insurance scheme. The equitable and transparent administration of such premiums is a key aspect of any fair trade agreement which includes them.

In addition to these, fair trade arrangements often include provisions designed to offset the vagaries of Western market trends — for example by concentrating on garments with a long 'shelf-life' rather than ones which will be deemed out of date within weeks of having been produced, and by partial pre-financing of orders in order to reduce the pressure on cash-strapped producers and reduce the risks associated with post-delivery payment. Environmental factors are also increasingly taken into account.

The Fairtrade Mark, like the word 'Fairtrade' itself, is a registered trade mark of the Fairtrade Foundation and its parent organization, the Fairtrade Labelling Organizations International (FLO) which represents more than 20 national labelling organizations around the world. Some of these organizations use the name Max Havelaar and some Transfair, but the label design is now universal. he Fairtrade Foundation and FLO have enjoyed spectacular success in recent years in raising awareness of fair trade, encouraging people to look for Fairtrade (and Fair Trade) products and achieving almost universal recognition of their label.

The Fairtrade Mark is fundamentally a product label. Originally for food crops, then cotton and other non-food crops such as rubber, and increasingly also for finished manufactured products, the Fairtrade Mark certifies that the product in question was produced under conditions which meet Fairtrade Standards relevant to the product in question.

The Fairtrade Foundation's own website lists chocolate, ice cream, cereal bars and even sports balls amongst the finished or composite products that have been certified as Fairtrade. Certification is currently being extended to the area of cosmetics and toiletries.

Organizations, from schools to local authorities, which are classsed as 'Fairtrade Organizations' should not be confused with the 'Fair Trade Organizations' who are members of the WFTO (see below). The Fairtrade Mark, applied to an organization, indicates that the body in question supports Fairtrade and uses or stocks a certain amount of Fairtrade products. It is thus a means by which the 'Fairtrade message' is spread. Rather more is required of organizations seeking meembership of the WFTO.

The WFTO represents a different approach to Fair Trade certification. Instead of certifying products, it certifies organizations, which may become full members of the WFTO or carry some other status. For an organization to become a member of the WFTO it needs to demonstrate its commitment to Fair Trade, whether as a manufacturer, a trader, a campaigning organization or any other capacity with the potential to promote the fair trade cause.

The recent massive increase in recognition of the Fairtrade Mark (see above) has put the WFTO somewhat in the shade, yet the WFTO is no less a driving force behind the fair trade movement, and is concerned with the whole supply chain, from production to sale (something which is now also largely true of the Fairtrade Foundation). Membership is not restricted to any single type of organization. What is required is that organizations "demonstrate a 100% Fair Trade commitment and apply its 10 Principles of Fair Trade". You can read more about this on the WFTO website (opens in a separate window).

Our clothing and accessories supplier Bishopston Trading, which has a long-standing, pioneering, fair trade partnership with the village of K. V. Kuppam in Southern India, is a member of the WFTO. The Zoe Project in Peru, responsible for much of the jewellery that we sell, is en route to becoming a member, and is being supported in ita application by the Fair Trade importer Just Trade. Just Trade is certified by a third organization, BAFTS (see below).

Yet another Fair Trade mark which is commonly seen, particularly on websites and in advertisements placed by fair trade retailers is the BAFTS logo. The British Association for Fair Trade Shops is open to retailers, wholesalers and importers who deal primarily in Fair Trade products (provided there is a good reason for them dealing in any products which are not Fair Trade).

For the purposes of retailer membership, eligible goods are those which are covered by either the Fairtrade Mark or WTFO cerification, or which have been purchased from a BAFTS-registered importer. In granting BAFTS membership to importers, the Association invokes the same '10 Principles of Fair Trade' operated by the WFTO, of which BAFTS itself is a member organization.

This places BAFTS importers in the position of being effectively a third force in fair trade 'certification'. Sourcing their products often from businesses which are too small or poor even to contemplate certification by FLO or WFTO, a BAFTS importer has the obligation to deal ethically with producers (in accordance with the 10 priciples), and to assure retailers and consumers produced and traded. BAFTS itself has the task of ensuring that its accredited importers are meeting this obligation.

BAFTS accreditation is not easy for an importer to obtain, and can be viewed with a degree of confidence. The system is generally very effective and serves to provide a cost-effective way for ethically minded producers and importers to gain the trust from consumers that is essential to the fair trade movement.

The Going Rate versus a Living Wage: because the Fairtrade Foundation's standards require that wages be at least the local average, it is often objected that this is a low hurdle, and that where the 'going rate' does not constitute a living wage, it is disingenuous to talk about 'fair' trade. This is certainly a serious criticism, but by and large probably a misplaced one. Any idea that all a producer has to do to gain Fairtrade certification is pay their workers the local average wage is wide of the mark, as the provisions are so much wider than simply the level of pay. In practice, Fairtrade status would not be granted were it not the case that workers were able to feed their families and allow their children to receive an education.

Lack of enforcement: sadly there have been documented cases of producers failing to meet their Fair Trade obligations, sometimes with the connivance of corrupt local auditors. The view of the Fair Trade organizations, and Esme agrees, is that whilst such cases will arise, and inevitably undermine confidence in the whole fair trade idea, the solution is to work harder to eliminate malpractice, not surrender to it. Any idea that the the Fair Trade organizations are powerless to prevent or even learn about corrupt practices is, in our view, not supported by the facts.

Corporate opportunism: it is inevitable that if big business thinks there is money to be made from fair trade, then it will move in — and this is already happening. The question as to whether this is a good or bad thing is not a simple one to answer, however. On the one hand, it is galling to see a large chocolate manufacturer celebrating its conversion to Fairtrade with a lavish commercial portraying the life of a cocoa plantation worker as nothing but fun and games. On the other hand, that same company's decision to source all its cocoa from Fairtrade suppliers was undoubtedly good news for the small cocoa producers that tend to benefit when sources of Fairtade cocoa are sought. And the conversion of a large mainstream product range such as sugar or chocolate to Fairtrade is good because it is done 'within the price', that is, without artificially turning Fair Trade into a luxury lifestyle commodity.

This contrasts with the action of another major manufacturer recently announcing that its most famous brand would from now on be made with Fairtrade chocolate. This generated millions of pounds' worth of free promotion for them in the form of news coverage, but the fact that they continue with non-Fairtrade ingredients for all their other products would seem to suggest not only that their intentions were purely commercial, but (more importantly) that the impact of their move will be strictly limited. In a way, this opportunism is reflected cross the whole market: 'going Fair Trade' often adds very little to the costs of a large manufacturer in terms of the total price — certainly nowhere near the level of the large price hike that typically differentiates the Fair Trade product from its standard counterpart. Such profiteering unfortunately does lead to cynicism, but this is probably inevitable until more companies are persuaded to make their products Fair Trade across the board.

Dilution of the ethical brand: it has been argued, particularly in relation to Fair Trade and Organic labelling, that success and the involvement of big business leads to a lowering of standards. This is clearly always a risk, particularly if the relevant standards fall under the control of the large companies, though there is no real sign of this happening with the Fair Trade organizations. However, it is as well to remember that small, independent, ethically driven suppliers may be a better bet when it comes to ensuring ethical standards right along the supply chain — and across the whole list of ingredients!

A different issue concerns the increasingly wide scope for application of the Fairtrade Mark. Originally (and fundamentally) a product label, the fact that the Fairtrade mark is now awarded to organizations — even counties! — which demonstrate support for these products does wonders for the promotion of the label and the products which bear it, but undoubtedly risks creating confusion about what a fair trade organization really is. The vast majority of 'Fairtrade Organizations' couldn't possibly be considered as 'Fair Trade Organizations' in the WFTO sense.