Fair Trade: A Solution with an Issue
December 8, 2020
Fair trade, as a concept, has been discussed a lot in the past few years around the world and it is getting a fairly popular form of trade as consumers are getting more conscious about their shopping and food habits. Even though many government agencies have been working their diplomacy to implement standardized regulations globally, corporations have been lenient towards traditional free trade system. Big corporations e.g. Starbucks have tried to run private programs for fair-trade products but have not been able to commit to their fullest, frequently having a combination of conflicting fair and free trade products under the same roof often misleading their consumers unintentionally or intentionally (Huish & Fridell, 2019). The Global Development Primer podcast Dr. Gavin Fridell and Robert Huish talks about the issues in the fair-trade system, and Dr. Fridell’s experience in the field. While free trade has a significant role in developing a globalized and unified community by removing restrictions from imports or exports between nations, it fails to develop a socially responsible trade policy that can ensure basic worker rights and equity. Even though the concept of free trade is not an issue by itself, the use of free trade for decades as a tool to favor some countries or industries over others has created an unsustainable market in the underdeveloped nations. Fair trade is an excellent alternative to this system which cares for worker rights and local markets. However, it has been increasingly difficult to make and maintain a set of standardized rules that could make fair trade possible and beneficial for everyone. Implementation of proper fair-trade system is necessary in the current globalized market because it can offer an equitable route towards sustainable development globally and remove the unfair discrepancies that exist today.
Before the talk, it is important to understand what the subject matter actually means, and in what way it is different. For starters, Dr. Andrew Walton; a professor of politics and international studies at University of Warwick believes that there is no settled understanding as to what fair trade actually means. He elaborates, “in order to develop a complete and valuable understanding of fair trade, this shortcoming must be rectified, and it can be argued that fair trade is most appropriately conceptualised as an attempt to establish interim global market justice in a non-ideal world” (Walton, 2010). The origin of fair-trade movement can be traced back to the development of co-operative societies in the late nineteenth century (Moore, 2004). Although nowadays it has different extents to its regulatory process, there are a number of national initiatives recognizing and working to standardize the system. Different initiatives have different guidelines as to what can be labelled as fairly traded product. But in general, a fair-trade product is something that is produced in a place that cares about local and collective economy, their workers’ living standards, and one that values corporate social responsibility. While the definition could seem like a common sense, it gets very hard as a consumer to decide between products including so many variables. Which is why, consumers rely heavily on the labels certified by valid concerned agency. Canada has its own certification named Fair Trade Canada, which is said to have one of the best standards among its peers (Huish & Fridell, 2019).
Although fair-trade, and free trade have some similarities, both of the systems come with issues that need to be resolved. With the free-trade system it is often observed that workers are not paid with livable wages. While big foreign corporations make massive revenue every year, the farmers of global south stay on the frozen earnings. The discrepancy is sometimes so massive that the farmers overwork for the supply of their fresh produce coffee beans but gets no extra renumeration for it. Free trade may seem like a curse or straight up exploitation scheme to many casual observers, and there are hundreds of reasons why the speculations may be true. Free trade, in that sense, seems like a savior for the exploited farmers in this industry. Again, it totally can be, but the current condition of the regulations makes it vulnerable. Dr. Fridell mentions that there are only a handful of countries which have strict regulation on the fair-trade labels, provided that that regulations for fair trade exist in the first place. Dr. Fridell also mentions, while the current fair-trade models work on some specific products e.g. coffee perfectly, it may not bring the same output for many products like bananas, milk etc. According to his experience while it comes to products like banana, a lot of controversy exists. While working at the Caribbean for many years, he observed that many of the projects were getting bankrupt because of the underestimated demand/supply ratio. The massive production while having similar buying partners from a very small list pushed the families toward bankruptcy. Presence of only major corporations dealing with the bananas and lack of local organizations to buy/sell those led them towards a surplus that would soon be rotten. One of the major principles of fair-trade is to have the option for competition. In the unproportionate case, fair-trade system just did not work out for the bananas (Huish & Fridell, 2019).
So, what are the current regulations authorizing the fair-trade label? According to Fair Trade Canada, there is a set of common principles one must adhere to. The core principles include socio-economic and environmental development, prohibition of forced and child labor (Fairtrade International, 2020). The organization also looks at scale of production, level of democracy, and strong progression plans to further classification of the fair-trade label. It is reported that many organizations make their own labels which use the word fair trade but comes in a different logo. Hence, Fair Trade Canada has strictly specified a formal fair trade logo that should be used only by certified organizations that meet all the requirements of the agency (Fairtrade International, 2020). Currently, there is no law prohibiting the use of the label with different designs. Because of this reason, a huge portion of consumers are misled every day. The only way to resolve this issue according to Dr. Fridell, is to take actions at the government level and embedding official regulations through cooperation between governments (Huish & Fridell, 2019). Unfortunately, this path involves taking resisting governments to the court, but governments tend to avoid taking one another to the courts due to the concerns of an unstable diplomatic relation.
In the podcast, Dr. Fridell also talks about how the countries in the global south have been exploited for centuries with free trade, and non-existent corporate social responsibility. While the cycle of exploitation is still far from over, some companies e.g. Just Us! coffee in Nova Scotia have been examples of success stories. Just Us! coffee is a fair-trade practising company that claims to be the first company to unionize Canada (CQ-Roll Call, 2013). Just Us! is an employee owned cooperative society that aims to bring justice for the south American coffee farmers by paying them fair-trade wages and subsidies for a better lifestyle. It was the first fair-trade certified cooperative society in Nova Scotia. Dr. Fridell believes this establishment adheres to the fair-trade principles, and even exceeds the expectations from time to time. While Dr. Fridell praises on the success of fair-trade certification on this particular brand, he believes that the private initiative by Starbucks could have been significantly better, and not misleading with a mixture of fair-trade and non fair-trade products in the same store (Huish & Fridell, 2019).
Sustainable regulation and clear definition of fair-trade system is necessary to prevent ongoing global issues e.g. child labor, unhealthy and inhumane working conditions, gender inequality etc. That way, fair-trade certification initiatives can ensure fair minimum wage, proper working and living conditions for involved workers and cruelty-free products by certifying businesses that adhere the practices of corporate social responsibility onshore and offshore. The process can involve legal intervention at the international level, and it is essential to cooperate in order to establish the system and eradiate the global issues in this field.
CQ-Roll Call, Inc. (2013). Just Us! Coffee shop says it’s first to unionize in Canada. In the Canadian Broadcasting Corporation (CBC). CQ-Roll Call, Inc.
Fairtrade International. (2020). Fairtrade International. https://www.fairtrade.net/standard/aims
Huish, R., & Fridell, G. (2019, November 6). GDP - The Global Development Primer • A podcast on Anchor. Anchor. https://anchor.fm/robert-huish
Moore, G. (2004). The Fair-Trade Movement: Parameters, Issues and Future Research. Journal of Business Ethics, 53(1/2), 73–86. https://doi.org/10.1023/b:busi.0000039400.57827.c3
Walton, A. (2010). What is Fair Trade? Third World Quarterly, 31(3), 431–447. https://doi.org/10.1080/01436597.2010.488474