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What Is Fair Trade?

Fair Trade in Europe started as a grassroots movement over 40 years ago. The aim was to alleviate poverty in the 'South' - Africa, Asia, Latin America and the Caribbean - by building direct, sustainable relationships with disadvantaged producers and providing fair access to markets in the 'North'. The roots of the Fair Trade movement in the U.S. stretches back to the late 1940s when churches began selling handicrafts made by refugees in Europe after World War II.

The Fair Trade movement has developed into a powerful force, symbolized by a high level of co-operation and supported by many Fair Trade organizations like the Fair Trade Labelling Organization (FLO). The FLO has affiliates in seventeen countries, TransFair Canada being one of them.

The term Fairtrade is used to describe the certification and labelling system governed by FLO. The corresponding certification logo is designed to allow consumers to identify goods produced under agreed FLO labour and environmental standards.

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[Fair Trade Goals] [Why is Fair trade important?] [Shocking facts]

The goals of Fair Trade

• Improve the livelihoods and well being of producers by improving market access, strengthening producer organizations, paying a better price and providing continuity in the trading relationship.
• Promote development opportunities for disadvantaged producers, especially women and indigenous people, and to protect children from exploitation in the production process.
• Raise awareness among consumers of the negative effects on producers of international trade so that they exercise their purchasing power positively.
• Set an example of partnership in trade through dialogue, transparency and respect.
• Campaign for changes in the rules and practice of conventional international trade.
• Protect human rights by promoting social justice, sound environmental practices and economic security.

Why is Fair Trade important?

• Economic globalization and free trade agreements (e.g. NAFTA, APEC, FTAA, WTO) promote corporate profits by bypassing or eliminating measures that protect worker rights and the environment.
• As barriers to entering local markets are removed, large-scale manufacturers edge small businesses and local cooperative enterprises out of the market. Local economies also suffer when these firms' profits are channelled out of the country rather than being reinvested locally.
• The bulk of exports from developing countries tend to be in primary product commodities such as sugar, cocoa, coffee, etc., whose prices are highly unstable and tend to fall against the price of imports, increasing the deterioration of the terms of trade.
• This degradation reached 9.9 percent for the year 1998 in Africa or translated in real income this loss represented 2.6 per cent. (New Internationalist 322, April 2000, pp. 19).
• Many poor countries are trapped into selling cheap raw materials and basic commodities.
• In many cases, the world market price for commodities such as coffee and cocoa falls below the cost of production, forcing farmers to sustain huge losses, and in many cases to loose their land.
• Between 1985 and 1993 the real prices of primary commodities fell 30%.

(http://www.fairtradefederation.com/ab_whyft.html)

And some more shocking facts about the current state of world trade

• Developing countries are losing up to $700 billion in annual export earnings as a result of trade barriers. (Source UNCTAD 1999 Trade and Development Report).
• Export earnings of developing countries could increase by $127 billion a year, if developed countries opened up their markets to textiles and clothing imports alone. (OI)
• Six corporations control approx 70% of world agricultural trade. On the other side agriculture supports the livelihoods of 70 to 80% of people living in low-income countries. (OI,CCIC)
• In 1998 total agricultural support in the OECD countries amounted to $353 billion.
• The world's major trading powers (US, EU, Japan, Canada) jointly account for around 60% of world trade, whereas the 48 least developed countries account for less than 0.5%. (OI)
• Since 1975, GDP per capita has increased by 50% in industrialized countries. In the world's least developed countries, it has fallen by 15%. (CCIC)
• Over the past 20 years, the least developed countries (representing 20% of the world's population), have suffered a 50% decline in their share of world trade. (CCIC)
• The gap between the rich and poor has increased by 250% since 1960. (CCIC)
• Twenty years ago Africa produced a surplus of food, today it has a food deficit. (CCIC)
• Throughout the 1990s the real cost of production for small coffee farmers varied between 75 and 91 cents a pound. The price they were able to get for their product went as low as 28 cents a pound. (CCIC)

In face of the giant multinationals concerned only about their profit margins, supported by their governments, Fair Trade organizations offer a crucial alternative trade route for the poor small-scale producers in the South.

OI - Oxfam International(www.oxfam.org/)
CCIC - Canadian Council for International Co-operation (www.ccic.ca)
UNCTAD - United Nations Conference on Trade and Development (www.unctad.org)