Mitch Teberg, MA Associate Member

Journey for Fair Trade:

What is Fair Trade and Why is it Important?
In every developing country that has embraced the free market economy and entered the World Trade Organization (WTO), the first hit and hardest hit by the changes that follow are the rural communities. Changes result from economic restructuring policies required to join the WTO which emphasize the removal of state protections and safeguards of local industry and agricultural sectors parallel to the privatization of government sponsored social services. The result has been detrimental to rural communities around the world. One of the most notable ways in which rural communities are harmed in entering the free market economy is the removal of state protections of the agricultural sector and state sponsored industries. When the state protections of a sector are removed a community suddenly finds itself facing challenges it never faced before. Instead of a community working together for a common goal of sustainable local livelihoods with an ability to maintain natural resources for the collective good, individuals are pitched against each other in an attempt to get ahead for private gains. Privatization of publicly owned or operated sectors encourages competition against one another rather than working together for the common good. Frequently this leads to an unfair advantage and favoritism for those who are politically connected or have access to finances in order to own and cash-in on what were once community resources. This quickly depletes natural resources of a community with complete disregard for the environmental, communal and social consequences, just to name a few. A prime example of area adversely affected by the removal of state protections is in handicraft villages throughout Asia. Households find themselves competing to produce more crafts and accept lower and lower payment for their labors because they are now competing against each other rather than working together. This trend leads to the impoverishment of entire handicraft-centered communities the cultural gems of countries like Vietnam and Thailand.

Mitch Teberg, MA Associate Member Here is how it works: the low prices crafts-persons receive for handicraft products are dictated by outside agents and there is no room for negotiation in the take-it-or-leave-it offer presented to a household. Like the coffee farmers around the world, there are multiple layers of middlemen between the crafts-person and the exporter, all of whom are squeezing a profit out of their labors while the laborer lives at a subsistence level. In my work in Vietnam, I found 7 - 12 layers of middlemen between the producer and the exporter. Simply stated, at the lowest level in the value chain if they dont accept what is offered they may lose their only income opportunity. Again, these moves only divide communities and destroy what were once sustainable community livelihoods; and handicraft villages are amongst the most vulnerable. Furthermore, there is frequently a gender-based discrimination that exists in much of the handicraft production. Most of the labor in processing and preparation of materials to make a handicraft goes unrecognized and unpaid because these are considered the labors of women in a household. Simply stated, it becomes a gender role. Just as housework and child rearing is all-too-often not regarded as "labor" despite the demands faced, a woman's work in support of craftsman frequently goes unpaid. Forming a local co-operative or community association based on Fair Trade principles addresses these gender disparities and unites a community of craftsmen and craftswomen from being disadvantaged in the local and global marketplace.

Whose Trade Organization by Lori Wallach and Patrick Woodall

Fair Trade presents a social awareness not seen in the neo-liberal theories of trade emphasized in the World Trade Organization (WTO) or in the economic reform packages forced on developing nations in the Structural Adjustment Programs of the IMF and World Bank. There is

Mitch Teberg, MA Associate Member much to be said about the disastrous effects of narrowly focused vested interests of international bankers in developing nations with development projects that primarily benefit the established elite. However, Fair Trade Advocates also need to understand the equally destructive World Trade Organization (WTO). A highly recommended and reasonably priced resource is Whose Trade Organization by Lori Wallach and Patrick Woodall. This publication by Public Citizen (http://www.citizen.org/) is a well researched, comprehensive analysis of the organization, its function, and the secretive closed-door court system which enforces international trade policies formed by Western governments in collaboration with the MultiNational Corporatocracy. The World Fair Trade Organization (WFTO) with a global network of Fair Trade Organizations with members in over 70 countries has established ten principle standards a Fair Trade organization must follow. In addition, a Fair Trade Organization is required to contribute to their communities in a manner that addresses their specific social needs.

10 Principles of Fair Trade - Updated June, 2011

Principle One: Creating Opportunities for Economically Disadvantaged Producers
Poverty reduction through trade forms a key part of the organization's aims. The organization supports marginalized small producers, whether these are independent family businesses, or grouped in associations or co-operatives. It seeks to enable them to move from income insecurity and poverty to economic self-sufficiency and ownership. The organization has a plan of action to carry this out.

Mitch Teberg, MA Associate Member

Principle Two: Transparency and Accountability

The organization is transparent in its management and commercial relations. It is accountable to all its stakeholders and respects the sensitivity and confidentiality of commercial information supplied. The organization finds appropriate, participatory ways to involve employees, members and producers in its decision-making processes. It ensures that relevant information is provided to all its trading partners. The communication channels are good and open at all levels of the supply chain.

Principle Three: Fair Trading Practices

The organization trades with concern for the social, economic and environmental well-being of marginalized small producers and does not maximize profit at their expense. It is responsible and professional in meeting its commitments in a timely manner. Suppliers respect contracts and deliver products on time and to the desired quality and specifications. Fair Trade buyers, recognizing the financial disadvantages producers and suppliers face, ensure orders are paid on receipt of documents and according to the attached guidelines. A pre payment of at least 50% is made if requested. Where southern Fair Trade suppliers receive a pre payment from buyers, they ensure that this payment is passed on to the producers or farmers who make or grow their Fair Trade products. Buyers consult with suppliers before canceling or rejecting orders. Where orders are cancelled through no fault of producers or suppliers, adequate compensation is guaranteed for work already done. Suppliers and producers consult with buyers if there is a problem with delivery, and ensure compensation is provided when delivered quantities and qualities do not match those invoiced.

Mitch Teberg, MA Associate Member The organization maintains long term relationships based on solidarity, trust and mutual respect that contribute to the promotion and growth of Fair Trade. It maintains effective communication with its trading partners. Parties involved in a trading relationship seek to increase the volume of the trade between them and the value and diversity of their product offer as a means of growing Fair Trade for the producers in order to increase their incomes. The organization works cooperatively with the other Fair Trade Organizations in country and avoids unfair competition. It avoids duplicating the designs of patterns of other organizations without permission. Fair Trade recognizes, promotes and protects the cultural identity and traditional skills of small producers as reflected in their craft designs, food products and other related services.

Principle Four: Payment of a Fair Price

A fair price is one that has been mutually agreed by all through dialogue and participation, which provides fair pay to the producers and can also be sustained by the market. Where Fair Trade pricing structures exist, these are used as a minimum. Fair pay means provision of socially acceptable remuneration (in the local context) considered by producers themselves to be fair and which takes into account the principle of equal pay for equal work by women and men. Fair Trade marketing and importing organizations support capacity building as required to producers, to enable them to set a fair price.

Principle Five: Ensuring no Child Labour and Forced Labour

The organization adheres to the UN Convention on the Rights of the Child, and national / local law on the employment of children. The organization ensures that there is no forced labour in its workforce and / or members or homeworkers. Organizations who buy Fair Trade products from producer groups either directly or through intermediaries ensure that no forced labour is used in production and the producer complies with the UN Convention on the Rights of the Child, and national / local law on the employment of children. Any involvement of children in the production of Fair Trade products (including learning a traditional art or craft) is always disclosed and monitored and does not adversely affect the children's well-being, security, educational requirements and need for play.

Mitch Teberg, MA Associate Member

Principle Six: Commitment to Non Discrimination, Gender Equity and Freedom of Association
The organization does not discriminate in hiring, remuneration, access to training, promotion, termination or retirement based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, HIV/Aids status or age. The organization provides opportunities for women and men to develop their skills and actively promotes applications from women for job vacancies and for leadership positions in the organization. The organization takes into account the special health and safety needs of pregnant women and breast-feeding mothers. Women fully participate in decisions concerning the use of benefits accruing from the production process. The organization respects the right of all employees to form and join trade unions of their choice and to bargain collectively. Where the right to join trade unions and bargain collectively are restricted by law and/or political environment, the organization will enable means of independent and free association and bargaining for employees. The organization ensures that representatives of employees are not subject to discrimination in the workplace. Organizations working directly with producers ensure that women are always paid for their contribution to the production process, and when women do the same work as men they are paid at the same rates as men. Organizations also seek to ensure that in production situations where women's work is valued less highly than men's work, women's work is revalued to equalize pay rates and women are allowed to undertake work according to their capacities.

Mitch Teberg, MA Associate Member

Principle Seven: Ensuring Good Working Conditions

The organization provides a safe and healthy working environment for employees and / or members. It complies, at a minimum, with national and local laws and ILO conventions on health and safety. Working hours and conditions for employees and / or members (and any homeworkers) comply with conditions established by national and local laws and ILO conventions. Fair Trade Organizations are aware of the health and safety conditions in the producer groups they buy from. They seek, on an ongoing basis, to raise awareness of health and safety issues and improve health and safety practices in producer groups.

Principle Eight: Providing Capacity Building

The organization seeks to increase positive developmental impacts for small, marginalized producers through Fair Trade. The organization develops the skills and capabilities of its own employees or members. Organizations working directly with small producers develop specific activities to help these producers improve their management skills, production capabilities and access to markets - local / regional / international / Fair Trade and mainstream as appropriate. Organizations which buy Fair Trade products through Fair Trade intermediaries in the South assist these organizations to develop their capacity to support the marginalized producer groups that they work with.

Mitch Teberg, MA Associate Member

Principle Nine: Promoting Fair Trade

The organization raises awareness of the aim of Fair Trade and of the need for greater justice in world trade through Fair Trade. It advocates for the objectives and activities of Fair Trade according to the scope of the organization. The organization provides its customers with information about itself, the products it markets, and the producer organizations or members that make or harvest the products. Honest advertising and marketing techniques are always used.

Principle Ten: Respect for the Environment

Organizations which produce Fair Trade products maximize the use of raw materials from sustainably managed sources in their ranges, buying locally when possible. They use production technologies that seek to reduce energy consumption and where possible use renewable energy technologies that minimize greenhouse gas emissions. They seek to minimize the impact of their waste stream on the environment. Fair Trade agricultural commodity producers minimize their environmental impacts, by using organic or low pesticide use production methods wherever possible. Buyers and importers of Fair Trade products give priority to buying products made from raw materials that originate from sustainably managed sources, and have the least overall impact on the environment. All organizations use recycled or easily biodegradable materials for packing to the extent possible, and goods are dispatched by sea wherever possible.

Mitch Teberg, MA Associate Member

What does the Fair Trade look like at the local level?
Local Fair Trade Organizations in "developing nations" each have a unique shape and serve in a variety of functions. No two are identical. Organizations, co-operatives, and producers work together and benefit in ways that differ from others according to their particular community needs. Each Fair Trade Organization is unique! Some Fair Trade Organizations focus on community development programs, the empowerment of the people through skills training and programs designed to enhance local integration and participation Other Fair Trade Organizations simply act as marketers for handicrafts they collect from villages to free producers of the hassle of finding buyers and markets, and allow them to focus on their primary sources of income, such as agriculture. Some Fair Trade organizations have producers who depend 100% on the revenues they generate from the sale of their products Most organizations use the income generated from handicraft and textile production to supplement other forms of income generation

Local Fair Trade Organizations are formed according to the needs of the community it serves. In order to ensure social sustainability, the community must work together to form the unique aspects of the organization. Success of a local co-operative or community association depends on the direct involvement of community members in the forming stages. With appropriate facilitation and orchestration with various stakeholders, it is possible to create a communitybased farmers co-operative or association of craftsmen and craftswomen to address many of the economic and social challenges the community currently face and the prepare for the unforeseen challenges in the years to come.

How does Fair Trade Address the Real Needs of a Community?

A few examples of where Fair Trade Organizations step in to address the social and livelihood needs of a community are:
Utilizing the proceeds from the co-operative to provide adequate education for their children by sponsoring schools or school programs Developing community centers, womens health care clinics, training centers or libraries

Mitch Teberg, MA Associate Member Addressing social issues such as o supporting a community-based childcare center o providing for healthy school lunches and after school child development programs o support a home for victims of domestic abuse o or as one cooperative in India addresses the cultural issue surrounding the payment of an expensive dowry for a young bride, the organization provides the dowry for the daughters born to cooperative members who may otherwise abort the female fetus out of future economic concerns Providing an economic opportunity in a refugee camp where opportunities are few and outright physical or sexual exploitation is the only other opportunity afforded them outside the camp where they face great risk of deportation if captured by the immigration authorities As a community, intervening in market fluctuations of raw material availability and prices by purchasing in bulk at fair prices In communities too poor to borrow from banks, they establish community savings plans and provide low interest micro-finance programs for their members. In cases of emergency, they provide 0% interest funds for families in need

Essentially local Fair Trade Organizations are made of community members who define their community needs and identify the means to address those needs, by creating development projects and supporting local activities to better their community. Mitch Teberg, MA 2007, 2009, 2011 International Consultant Sustainable Development / Fair Trade Researcher / Trainer / Consultant www.journeyforfairtrade.blogspot.com Posted on: http://journeyforfairtrade.blogspot.com/p/what-is-fair-trade-and-why-is-it.html