What is Fair Trade?
According to the Fair Trade Federation:
Fair trade is an approach to business and to development based on dialogue, transparency, and respect that seeks to create greater equity in the international trading system.
Fair trade supports farmers and craftspeople in developing countries who are socially and economically marginalized. These producers often face steep hurdles in finding markets and customers for their goods.
According to Fair Trade Certified:
Fair Trade is a global movement made up of a diverse network of producers, companies, shoppers, advocates, and organizations putting people and planet first... Based on the simple idea that the products we buy and sell are connected to the livelihoods of others, Fair Trade is a way to make a conscious choice for a better world. A choice for Fair Trade Certified™ goods is a choice to support responsible companies, empower farmers, workers, and fishermen, and protect the environment. In other words, it’s a world-changing way of doing business.
According to the World Fair Trade Organization:
"Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South.
Fair Trade organisations have a clear commitment to Fair Trade as the principal core of their mission. They, backed by consumers, are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade." They can be recognised by the WFTO logo.
Fair Trade is more than just trading:
- It proves that greater justice in world trade is possible.
- It highlights the need for change in the rules and practice of conventional trade and shows how a successful business can also put people first.
- It is a tangible contribution to the fight against poverty, climate change and economic crisis.
What is the difference between Fair Trade Certified and Fair Trade?
To simplify, the fewer the steps in the supply chain, the more likely it is to be Fair Trade Certified. For instance, food products are easier to certify than is jewelry. So coffee, tea, cocoa, fruit, cotton, etc. can be certified through Fair Trade USA, Fair Trade International or Fair for Life. The labels for these certifications are easily found on the items.
However, because of the multiple sources and steps in the production of a scarf, the cotton in the scarf may be FTC, but the dyeing, weaving, and finishing of the scarf is not certifiable. Thus, those more complicated products follow Fair Trade principles in their production and are verified by membership groups like the Fair Trade Federation and the World Fair Trade Organization. Again, there are usually labels on these products, though not always.
This site, from Fair Trade Winds, goes into much greater detail to explain the differences between Fair Trade Certified products and Fair Trade products, as well as the various labels that represent each. Check it out!
What are the Fair Trade Federation Principles?
The Fair Trade Federation and the World Fair Trade Organization have developed global principles that guide membership into both organizations. These are the Principles, as found on the FTF website:
Create Opportunities for Economically and Socially Marginalized Producers
Fair Trade is a strategy for poverty alleviation and sustainable development. Members create social and economic opportunities through trading partnerships with marginalized producers. Members place the interests of producers and their communities as the primary concern of their enterprise.
Develop Transparent and Accountable Relationships
Fair Trade involves relationships that are open, fair, consistent, and respectful. Members show consideration for both customers and producers by sharing information about the entire trading chain through honest and proactive communication. They create mechanisms to help customers and producers feel actively involved in the trading chain. If problems arise, members work cooperatively with fair trade partners and other organizations to implement solutions.
Fair Trade is a means to develop producers’ independence. Members maintain long-term relationships based on solidarity, trust, and mutual respect, so that producers can improve their skills and their access to markets. Members help producers to build capacity through proactive communication, financial and technical assistance, market information, and dialogue. They seek to share lessons learned, to spread best practices, and to strengthen the connections between communities, including among producer groups.
Promote Fair Trade
Fair Trade encourages an understanding by all participants of their role in world trade. Members actively raise awareness about Fair Trade and the possibility of greater justice in the global economic system. They encourage customers and producers to ask questions about conventional and alternative supply chains and to make informed choices. Members demonstrate that trade can be a positive force for improving living standards, health, education, the distribution of power, and the environment in the communities with which they work.
Pay Promptly and Fairly
Fair Trade empowers producers to set prices within the framework of the true costs of labor, time, materials, sustainable growth, and related factors. Members take steps to ensure that producers have the capacity to manage this process. Members comply with or exceed international, national, local, and, where applicable, Fair Trade Minimum standards for their employees and producers. Members seek to ensure that income is distributed equitably at all times, particularly equal pay for equal work by women and men. Members ensure prompt payment to all of their partners. Producers are offered access to interest-free advance payment for handmade goods, or pre-finance of agricultural harvest with favorable terms.
Support Safe and Empowering Working Conditions
Fair Trade means a safe and healthy working environment free of forced labor. Throughout the trading chain, Members cultivate workplaces that empower people to participate in the decisions that affect them. Members seek to eliminate discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, age, marital, or health status. Members support workplaces free from physical, sexual, psychological, or verbal harassment or abuse.
Ensure the Rights of Children
Fair Trade means that all children have the right to security, education, and play. Throughout the trading chain, Members respect and support the UN Convention on the Rights of the Child, as well as local laws and social norms. Members disclose the involvement of children in production. Members do not support child trafficking and exploitative child labor.
Cultivate Environmental Stewardship
Fair Trade seeks to offer current generations the ability to meet their needs without compromising the ability of future generations to meet their own needs. Members actively consider the implications of their decisions on the environment and promote the responsible stewardship of resources. Members reduce, reuse, reclaim, and recycle materials wherever possible. They encourage environmentally sustainable practices throughout the entire trading chain.
Respect Cultural Identity
Fair Trade celebrates the cultural diversity of communities, while seeking to create positive and equitable change. Members respect the development of products, practices, and organizational models based on indigenous traditions and techniques to sustain cultures and revitalize traditions. Members balance market needs with producers’ cultural heritage.
What are some common Myths & Facts about Fair Trade?
This information is provided by the Fair Trade Federation, intended to dispel rumors and clarify reality about Fair Trade:
Myth: Fair trade is about paying developed world wages in the developing world.
Reality: Wages are designed to provide fair compensation based on the true cost of production, and are not based on North American wage standards.
Fair wages are determined by a number of factors, including:
- The amount of time, skill, and effort involved in production
- Minimum and living wages where products are made
- The purchasing power in a community or area
- Other costs of living in the local context
Myth: Fair trade siphons off American jobs to other countries.
Reality: Fair trade seeks to improve the lives of the poorest of the poor who frequently lack alternative sources of income. Most fair trade craft products stem from cultures and traditions which are not represented in North American production. Most fair trade food products do not have North American-based alternatives.
Also, as North American fair trade organizations grow as successful small businesses, they employ more and more individuals in their communities.
Myth: Fair trade is anti-globalization.
Reality: International exchange lies at the heart of fair trade. 360° Fair Trade Organizations seek to maximize the positive elements of globalization that connect people, communities, and cultures through products and ideas. At the same time, they seek to minimize the negative elements that result in lower labor, social, and environmental standards which hide the true costs of production.
Myth: Fair trade is a form of charity.
Reality: 360° fair trade promotes positive and long-term change through trade-based relationships which build self-sufficiency. Its success depends on independent, successfully-run organizations and businesses–not on handouts. While many fair trade organizations support charitable projects in addition to their work in trade, the exchange of goods remains the key element of their work.
Myth: Fair trade results in more expensive goods for the consumer.
Reality: Most fair trade products are competitively priced in relation to their conventional counterparts. 360° Fair Trade Organizations work directly with producers, cutting out middlemen, so they can keep products affordable for consumers and return a greater percentage of the price to the producers.
Myth: Fair trade results in low quality products for the consumer.
Reality: While handmade products naturally include some variation, 360° Fair Trade Organizations continuously work to improve quality and consistency. Through direct and long-term relationships, producers and fair trade organizations dialogue about consumer needs and create high quality products. Fair traders have received awards at the international Cup of Excellence and Roaster of the Year competitions, SustainAbility in Design, the New York Home Textile Show, and other venues.
Myth: Fair trade refers only to coffee and chocolate.
Reality: Fair trade encompasses a wide variety of agricultural and handcrafted goods, including baskets, clothing, cotton, home and kitchen decor, jewelry, rice, soap, tea, toys, and wine. While coffee was the first agricultural product to be certified fair trade in 1988, fair trade handcrafts have been sold since 1946.
More FAQs from the Fair Trade Federation:
What does “fair” really mean?
The word “fair” can mean a lot of different things to different people. Fair trade is about more than just paying a fair wage. It means that trading partnerships are based on reciprocal benefits and mutual respect; that prices paid to producers reflect the work they do; that producers share decision making power; that national health, safety, and wage laws are enforced; and that products are environmentally sustainable and conserve natural resources.
How do I know that a product is fair trade?
The Fair Trade Federation screens and verifies companies that practice 360° fair trade. These organizations don’t just buy and sell a few fair trade products; they integrate fair trade practices into everything they do. These organizations have a deep level of commitment to fair trade practices and maintain long term relationships with small producer organizations.
You will also see some products in the marketplace that carry a fair trade certification seal. Fair trade certification involves a worksite audit and a 10% fair trade premium. These labels increasingly focus on large factories and farms. They are often used by multi-national brands who cannot be fully fair trade but wish to improve some of their practices.
Do fair trade goods cost more than comparable non-fair trade goods?
Generally, goods sold by 360° Fair Trade Organizations cost the same or a few percent more than similar quality, conventional goods. These fair trade products don’t cost more because the large percentage taken by middle people is removed from the equation. The cost remains the same as conventionally traded goods; however, more of the sale price goes to producers.
In the case of agricultural goods, is the quality comparable to conventional products?
In some cases the quality is actually higher because fair trade organizations factor in the environmental cost of production. For instance, in the case of coffee, fairly traded coffee is often organic and shade grown, which results in a higher quality coffee.
What is a fair wage?
Producers receive a fair wage when they are paid fairly for their products. This means that workers are paid a living wage, which enables them to cover basic needs, including food, shelter, education and health care for their families. Paying fair wages does not necessarily mean that products cost the consumer more. 360° Fair Trade Organizations bypass exploitative middle people and work directly with producers.
How much money (percent of sale price) do the artisans make?
Living wages vary widely between regions of the world and individual communities. Therefore, there is no set percentage given to artisans. Rather, open communication ensures that pricing is transparent and meets the full needs of artisans. A 360° fair trade relationship is a true partnership, allowing all to make a fair profit margin.
Why do 360° Fair Trade Organizations support cooperative workplaces?
Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshop conditions, where unprotected workers earn below minimum wage and most of the profits flow to foreign investors and local elites who have little interest in ensuring the long term health of the communities in which they work. 360° Fair Trade Organizations work with small businesses, worker-owned and democratically run cooperatives and associations which bring significant benefits to workers and their communities. By banding together, workers are able to access credit, reduce raw material costs and establish higher and more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably and often reinvested in community projects such as health clinics, child care, education, and literacy training. Workers learn important leadership and organizing skills, enabling self-reliant grassroots-driven development.
How do 360° Fair Trade Organizations offer financial support to producers?
Small-scale farmers and artisans in the developing world lack access to affordable financing, impeding their profitability. 360° Fair Trade Organizations buy products directly from producers and provide advance payment or pre-harvest financing. Unlike many commercial importers who often wait 60-90 days before paying producers, 360° Fair Trade Organizations ensure pre-payment so that producers have sufficient funds to cover raw materials and basic needs during production.
How do 360° Fair Trade Organizations offer technical support to producers?
360° Fair Trade Organizations provide critical technical assistance and support such as market information, organizational development and training in financial management. Unlike conventional importers, 360° Fair Trade Organizations establish long term relationships with their producers and help them adapt production to changing trends.
Note: Some of the information above was originally published by the Fair Trade Resource Network.
How can I find more information about Fair Trade Certified organizations?
How can I learn more about Fair Trade membership organizations?