This article was originally written for The eCo Times, the cutting edge online magazine brought to you by eConsciousMarket.com.
With the beginning of October comes the official kick off to Fair Trade Month, a month-long celebration and promotion of Fair Trade certified products. Indeed, the Fair Trade movement has a lot to celebrate this year. According to the Fair Trade Labelling Organization International (FLO), consumers around the world spent more than $3 billion on Fair Trade certified items in 2007, a whopping increase of 47% from the previous year! An increasing amount of diverse products are also entering the Fair Trade market, thus expanding consumers’ options from the traditionally known Fair Trade items such as crafts, coffee, and chocolate to include fruits, wine, flowers and even soccer balls and shoes. This means, that now over 1.5 million producers and workers in approximately 58 developing countries can benefit from increased business due to Fair Trade sales.
It’s been commonly understood that Fair Trade is a preferable, more moral way of conducting business than the conventional ‘top down’ approach of major, multi-national corporations in which sweatshops tend to thrive and the workers on the lowest levels are squeezed. The underlying principles of Fair Trade are to deliver more than just a financial package to the workers, in order to not only guarantee that they are paid a fair rate/wage but also to create a system in which a long-term, sustainable relationship is developed between the buyer and third world producers that will ultimately empower these workers and their community to thrive and succeed in the global marketplace.
In recent months, however, some organizations have doubted the true benefit of Fair Trade and have started to question the validity and impact of the movement. On February 25, Britain’s economic think tank The Adam Smith Institute, a self-proclaimed leading innovator of free-market economic and social policies, published a report by Marc Sidwell entitled “Unfair Trade”. Mr. Sidwell argues that Fair Trade is actually anything but fair and while Fair Trade and its supporters may have positive intentions, it actually does more harm than good.
Sidwell writes that Fair Trade distorts local markets by fixing a high price of goods for only a small percentage of producers (thus hurting the majority of the other farmers producing the same goods at lower costs who are allegedly excluded from Fair Trade business practices). He also argues that Fair Trade is “irrelevant” to large scale poverty relief and does not aid economic development properly, rather it prevents the poor from gaining the proper tools to successfully improve their financial outlook. He goes on to claim that Fair Trade actually prevents farmers from advancing their technologies and efficiencies and the opportunity for diversification, and are thus actually stuck in an unsustainable practice.
Sidwell furthermore asserts that Fair Trade is merely a marketing scheme that rewards inefficient farmers who produce poor quality goods, thus also being unfair to the consumer who allegedly has a wealth of ethical purchasing options available to them without even knowing it due to the overwhelming monopoly of Fair Trade certified goods.
As would be expected, the release of this report caused a backlash of responses from the Fair Trade community and ethical bloggers alike, including a lengthy, evidence-driven press release from The Fairtrade Foundation attempting to discredit Sidwell’s arguments. They angrily write, “Two billion people work extremely hard to earn a living but still earn less than $2 per day and the FAIRTRADE Mark enables consumers to choose products that help address this injustice. As no-one is forced to join a fair trade producer organisation, or to buy Fairtrade products, you would think that free market economists like the Adam Smith Institute would be pleased at the way the public has taken our voluntary label to its heart…”
So how is Fair Trade really affecting the workers of the world and is its global impact truly innovative and revolutionary, or merely smoke and mirrors as Mr. Sidwell points out?
After spending 17 solid pages tearing the Fair Trade mission into pieces, Sidwell’s only suggestion for a viable alternative is to follow the global path of Free Trade. He uses China and India as two examples of how Free Trade has lifted traditionally poverty-stricken countries into more solid financial positions where they very recently have been successfully lobbying for global economic leadership positions. While Sidwell’s examples may offer some element of truth, it certainly does not account for the long list of human rights abuses and exploits both countries have added to their economic repertoires.
With a debate like this, we have to stop and ask ourselves…is the explosive growth of China and India truly having a proper ‘trickle down’ effect? That is, are the workers of the world, the people at the lowest level, the people that bear the grunt of globalization on their backs really feeling any kind of financial relief or reward from the macro economic improvements of their nations? And what about the workers living in countries that are not advantageously growing with globalization, such as Peru, Argentina, Ethiopia, Haiti…the list goes on? Do they have no opportunity for growth…or can the Fair Trade market act as an outlet for these workers to exit the fringes and become active players in the global marketplace? Perhaps what the world needs is a harmonious balance between Free and Fair Trade in which poor nations on a macro level and lower class workers on a micro level can all flourish together. After all, with a happy, healthy workforce comes increased loyalty, ownership and productivity which ultimately trickles up to the overall economic growth of the nation as a whole.
Regardless of anyone’s argument, I can tell you that after personally experiencing close contact with real people in the developing world, doing business under Fair Trade principles is a rewarding and effective method of trade. It provides wonderful opportunity to meet, get to know, and partner directly with the people that are actually making our products. I see firsthand how our business effects and improves their lives, the lives of their families and their community. And I hear the passion, excitement and pride in their voices when they receive a new order. Maybe I missed something…but to us, this is what Fair Trade is all about.