Points of Discussion
- As the founders of the Fair Trade movement saw it, there are inherent flaws in the capitalistic trading system around the world. Simply put, people in the Northern Hemisphere have more resources and therefore access to information than those in the Southern Hemisphere, giving them a huge advantage when it comes to global commerce. Therefore, the goal behind fair trade is to give cooperatives and independent producers (in disadvantaged regions of the world) a better chance to participate in world trade.
- Some economists believe that, in the long run, fair trade will make producers fail. While they agree that the current system is not perfect, some economists say that advocates of fair trade are replacing an inherent problem with another. They say that putting a price floor on products will encourage more players to enter the market and existing players to over-produce and bring the price of goods down. This will hurt everyone in the market, but it will hit non-certified fair trade farmers the most. This debate took on new popularity when an article against Fair Trade and Organic products was published in The Economist on December 7th, 2006, called “Buy Organic, Destroy the Rainforest”.
say that, in their experience, the producers don’t increase production. This is because
they still depend on the demand from buyers to purchase sustainable and ethical products,
regardless of the price, so they know how to manage their production. In addition,
the extra money these producers are making is being invested in improving their communities and giving their children a good level of education to break the poverty cycle surrounding them, not to overproduce.
- Another controversy surfaced when the Adam Smith Institute published a report called Un-fair Trade. on February 25, 2008. Research fellow Marc Sidwell argues that Fair Trade distorts local markets by fixing high prices for a small percentage of producers. According to him, this hurts the majority of artisans or farmers who are “excluded” from Fair Trade, or who are not certified. In addition, he argues that Fair Trade keeps the artisans or farmers doing the same work without diversifying or learning new skills, thus not solving their development problems and keeping them in poverty. Finally, he says that Fair Trade only helps “relatively prosperous countries” such as Mexico, while ignoring Africa.
in the experience of thousands of fair traders, none of these claims are true.
Many fair trade products are not more expensive than conventionally traded products,
and in fact non-fair traders are now improving their products and working conditions
to be able to compete with fair trade. Moreover, fair trade encourages wholesalers
and retailers who work directly with producers to educate them, help them diversify
their products, and foster development projects to alleviate poverty in their communities.
This creates a great platform from which artisans and farmers can rise above poverty
and become self-sustainable. Finally, they aruge that fair trade is a global movement
that helps different people in all the corners of the world.
- On the other extreme, more liberal advocates believe that not enough is being done to promote fair trade. Less than one one-hundredth of worldwide commerce involves fair trade. The rest of global trade is managed by that “invisible hand” Adam Smith talked about. However, for the people living under it, that hand is far from invisible and even farther from “fair”. For example, the US still gives subsidies to its farmers, which “protects” the local farmers but hurts the consumer with poor quality, expensive products. This also keeps producers in the rest of the world from accessing the US market. Billions of dollars, as well as a price floor, are given to large-scale farms in the US as part of Farm Bills. Excess production of agricultural products are then either dumped on other markets, or simply wasted, eliminating many opportunities for small farmers (local and international).
- Another question among Fair Trade organizations is: How far must a company go to be considered fair trade? On one hand, some companies try their best to follow the fair trade philosophy, but ultimately know that they cannot monitor everything. Others don’t want to be too transparent in order to maintain competitive advantages over other companies. On the other hand, there are people who believe everything they do must be fair trade: every material that an artisan uses to make a product must be inspected, and the company’s finances must be transparent. For the time being, the rules are not too extreme, since people in charge of fair trade organizations cannot control all the variables that come into play.
- Many people argue that certification methods are not good enough, and they exclude other producers who cannot afford to be certified. It is difficult to control every operation of a fair trade organization, so most people simply trust Transfair USA, FLO or other certifiers. The problem intensifies when the certification agency’s legitimacy is questioned. For example, some fair trade coffee organizations feel like Transfair USA is more flexible with Starbucks, helping them with their promotional campaign to improve their image. Some of these organizations stopped using the fair trade label as a protest.
Some think products with “green”, “fair trade” or “organic” labels are only
taking advantage of a “yuppie brand” to trick consumers into choosing the
“responsible products”. While it is true that many products are indeed branded
under these labels, it is actually done to increase awareness and education about
these products and create a competitive advantage over “unethical” alternatives.
If you think about it, by being certified as organic or fair trade, a product is
actually offering real value for the customer and the producer, as opposed to a
brand that adds a false sense of value by selling only it’s name
(e.g. Dolce & Gabbana, Coca Cola, Nike).
There are many ongoing debates regarding the fair trade movement/industry. A good resource to stay updated on many issues is Change.org’s Fair Trade Blog,, which is regularly updated by Zara Patriana from Global Exchange.
Member of the Green Business Network
Member of Fair Trade Federation