New Internationalist

Laboratory for change

Issue 388

What can the fair trade movement teach the WTO?

ERIC ST-PIERRE / STILL PICTURES / WWW.STILLPICTURES.COM
Putting the producer back at the centre: fair trade cocoa is harvested in the Dominican Republic. ERIC ST-PIERRE / STILL PICTURES / WWW.STILLPICTURES.COM

Every now and again a weary delegate escapes from the trade summit for a breath of air and a touch of reality.

If they take a side exit from one of the elevated walkways they may find themselves in a building where a different kind of event is taking place – it’s a ‘Fair Trade Fair and Symposium’.

Fair trade is an incredible story. When it emerged, four decades ago, few could have imagined it would ever be more than a form of charity, aimed at a dedicated few – not an idea that could ever reach a mass market.

Today one in five cups of coffee drunk in Britain is fairly traded; so are half the bananas eaten in Switzerland. Five million producers in Africa, Latin America and Asia benefit from fair trade terms. In the West it’s the fastest growing retail area – expanding by 20-30 per cent a year since 2000.

Still, reservations exist – with reason. It remains a drop in the ocean of world trade; it is caricatured as a niche market for middle-class consumers in rich countries. And recently the thorny issue of certification – that is, who can use the ‘Fair Trade’ mark – has provoked fierce controversy.

Blushes rose and hearts fell when the Fairtrade Foundation in Britain gave the mark to Nestlé – a transnational notorious both for its dismal labour record in the South and its persistently irresponsible marketing of babymilk. Fair trade and dead babies don’t go well together.

‘Is fair trade a way in which Nestlé can sanitize its image? Or is it serious? How do we know? Only 0.02 per cent of its production is fair trade,’ says Philippines-based Claribel David of the International Fair Trade Association, one of the main international bodies.

‘Our concern is that standards are becoming diluted, that consumers will become confused and fair trade has a tarnished image.’

Briefly, those standards are that fair traders should: support the poorest producers; deal fairly and openly with trading partners; develop the skills of producers and create opportunities for trading; and ensure that producers get a fair price.

They should also: inform customers as to where their goods came from; provide equal pay and opportunities for women and men; and ensure that producers are working in a healthy and safe place. Finally, they should not exploit child labour and they should make sure that the materials used in production and packaging do not damage the environment.

Rafael Vizcarra from Ecuador is standing by his stall at the Hong Kong exhibition. Like many here, the stall is a sparse affair – some bars of chocolate, a few panama hats. It seems to confirm the image of fair trade as a worthy but irrelevant sideshow to the blood-and-guts battle over global trade.

Appearances deceive, I soon realize. For a start, the organization Rafael represents, Maquita Cushunchic Comercializando como Hermanos (MCCH), is massive, involving 25,000 Ecuadorian families. Last year it was Ecuador’s second largest cocoa bean exporter, selling both to the fair trade and conventional market.

So, does it sell to Nestlé?

‘No,’ Rafael replies, emphatically.

Even though it now has fair trade certification?

He smiles: ‘Nestlé does not share our principles.’

Is it the babymilk issue?

‘Yes, but there are other reasons too. Look, I worked for 12 years for a multinational. I know what the Nestlé people are thinking. They say they are paying a fair price, but I know it’s not genuine.’

He cites Nestlé’s massive profits. When cocoa bean prices shot up on the world market during the civil war in Ivory Coast, Nestlé jacked up its prices to the consumer. But when world prices went down again, the manufacturer’s prices stayed high. They just went on pocketing the difference. ‘So now they are making a lot of money.’

There are other large chocolate companies that Maquita is happy to sell to. Ferero Rocher, for example. ‘They are applying good principles, internally, with their employees and externally, in the market.’

Maquita has several strings to its bow. It trades in locally produced processed food such as sugar and dried fruit and handicrafts, which involves thousands of artisans. It also operates ‘socially responsible tourism’ in Ecuador, involving indigenous groups and fair trade producers.

But perhaps most challenging to the stereotype is Maquita’s focus on fair trade within Ecuador and with other countries of the South. This works in two ways. First, through local stores, Maquita supplies fair traded food to people living in the poorest parts of Ecuador’s big cities at a price they can afford. ‘We are trying to break the hold of intermediaries who push up the price of food in cities.’

Second, Maquita has established a fair trade shop in the Ecuadorian capital, Quito, where it sells products from other southern producers. All the goods it imports come from International Fair Trade Association (IFAT) members in Latin America, Africa and Asia.

‘We want to create a fair trade shops network in Latin America. There is increasing awareness among people in the South and they want to reflect that in their consumption habits.’ This idea is being developed in other countries too. Claribel David of IFAT’s Asian Network sees the potential for developing fair trade in India, for example.

This is all well and good, but what has it got to do with the big bad world of global trade? What is the interface, if any, between fair trade and what is going on across the way at the WTO summit?

It depends on what you mean by ‘fair trade’. Nobel Prize-winning economist and former World Banker Joseph Stiglitz uses the term quite loosely in his latest book Fair Trade for All. For him ‘fair trade’ is about making the system of free trade fairer (and we will come to some of these ideas later on).

But for others fair trade presents a far more radical challenge. ‘Fair trade is a thorn in the flesh of the established trading system,’ Wolfgang Sachs of the Wuppertal Institute tells a meeting.

‘The WTO looks at the world as a conflict among nations or groups of nations. Fair trade has a different paradigm. It highlights that maybe market access at borders is the wrong focus, national regulations are not what is distorting trade… The power of the transnational corporations governing global markets is a much more distorting factor than differences between countries.’

Small farmers get up to 40 per cent more by selling through fair trade. Fair Trade Federation, US

There are other fundamental differences. ‘The WTO is about cheap prices. The welfare of the consumer is at the centre of this regime. With fair trade the producer is at the centre of attention; you start from there.’

And you have to start with a fair price. ‘A fair price can only be a full cost price,’ says Sachs. ‘Prices are not fair if they do not tell the truth. The present system is one that systematically tells lies.’

Also, because it takes account of the producer, fair trade can address the issue of poverty directly, rather than through the questionable assumption that economic growth will automatically alleviate poverty.

‘I think future historians may look at fair trade as a laboratory,’ says Sachs.

But what if the laboratory is manipulated by transnationals – which already have so much clout in the WTO system? What then? The dilemma facing the fair trade movement today, thrust into the spotlight by the Nestlé fiasco, is a profound one.

‘We want fair trade to become more mainstream,’ says Claribel David. ‘But not at the expense of fair trade standards, so that in the end small producers get a raw deal when they are meant to be the beneficiaries of the system.’

Indeed.

Ethical T-shirt

Welcome to the fair trade T-shirt, coming to a store near you. Perhaps. While some of the big chains are looking to develop their own ‘fair trade’ line of clothing, many consumers have been dressing ethically for some time now, buying fair trade and organic clothes from the websites of a growing number of alternative clothing companies.

Fair trade initiatives are helping small-scale cotton growers in India, Mali, Senegal and Peru to get a decent price for their product. If the cotton is organic too, then the benefits are doubled. Currently cotton accounts for a tenth of all pesticides and more than a fifth of all insecticides used in agriculture. This poisons not only the environment but farmers too. The Pesticides Action Network reports that 20,000 people in the developing world die each year from agricultural pesticides; three million suffer acute or reproductive after-effects.

However, there are some serious limitations to the new fair trade cotton mark recently launched by the London-based Fairtrade Foundation. It applies only to the production and purchase of the raw cotton, not to the subsequent spinning, weaving or making of clothes.

But don’t despair – some of the better alternative clothes retailers do follow the product line right through. People Tree, for example, uses organic cotton grown in India which is made up into clothes by a fair trade project for deaf women.

Meanwhile there are moves elsewhere to introduce a ‘social label’ on clothing, which would certify that human rights and ILO core labour standards have been observed during production.

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