Question about "Fair trade"

[karenmoore1979]

Hi everyone
I am relatively new to these forums so excuse me if anything like this has been discussed before and I have missed it. I was wondering if anyone could enlighten me on the subject of fair trade?
More and more people these days seem to be banging on about it and how it is the "right thing to do" etc. However I seem to remember reading something in one of Mr Icke's books that said fair trade was just another "scam" and that it didn't actually help people in developing countries, it was just there to make us westerners feel like we are doing something to help.

Can anyone expand on this please? I am not even sure exactly what the term "fair trade" means. I know that people throw the term around a lot and I have met several people who seem to think it is great and we should all be buying fair trade products but what exactly does it involve? And how does it allegedly help people? Excuse my ignorance - I am just not to sure what to make of it all.

Thanks :D

[eternal_spirit]

In theory fair trade means that the growers and farmers who say grow coffee or coco beans, should get a higher price for their crops at market time hence the term "fair" Than the alleged lower prices they previuosley received.

In reality I don't know what the truth is. Who's making more money out of this fair trade law???

[karenmoore1979]

Thanks :)

So I guess it is just about giving people a "fair" price rather than slave labour. It sounds good in theory but I am just not convinced :confused:

I feel there must be more to it - with it being shoved down our throats like the global warming thing I sense all is not as it seems!

I have tried to google it but I can't really find anything useful. Ah well.......

[Anders Lindman]

I have noticed that some products are now labeled Fair Trade. Just some year ago or something like that I didn't see any products with that label. I think the Fair Trade label is a good thing. Most likely many people will use it for greedy purposes or even for even worse reasons, but it creates a public consensus that is positive I think.

Consumers can begin to choose fair trade products and that can create a tremendous pressure on manufacturers. I sometimes choose fair trade products, but only when its something I want. I wouldn't choose fair trade products ONLY because of the label.

[mk72]

Hi
It can mean a range of things for instance a poor country will be flooded with overproduced low grade milk from America and then local farmers will loose their livelihood because their milk can not be sold as cheap as the American product, don’t have time now but will come back later I have a few articles on it.

[sidlittle]

Hi
It can mean a range of things for instance a poor country will be flooded with overproduced low grade milk from America and then local farmers will loose their livelihood because their milk can not be sold as cheap as the American product, don’t have time now but will come back later I have a few articles on it.

Thats Free trade, no?

[danielg]

Its an ideal way to keep import companies profits safe... why use profits on paying fair prices when you can play on Western guilt complexes and get those naive consumers to pay the extra. Buy local not imports, and imported fair trade.. after all do we really need to support coffee growers?

[mk72]

Thats Free trade, no?

Sorry Sid
I was in such a hurry - I was trying to say that this is the type of scenario that free trade tries to prevent among other things.

[Anders Lindman]

Its an ideal way to keep import companies profits safe... why use profits on paying fair prices when you can play on Western guilt complexes and get those naive consumers to pay the extra. Buy local not imports, and imported fair trade.. after all do we really need to support coffee growers?

Maybe you are correct about the economic fair trade effects. I know too little about that to be able to evaluate the economic aspects of fair trade. Yet I still think the Fair Trade label is a good idea. It helps to raise the ethical norm in society. I see greed and corruption being less and less accepted in society. Not least on the Web.

[mk72]

Why Fair Trade?
A Brief Look at Free Trade in the Global Economy
From around the world, we hear heart-wrenching stories about mistreated and abused workers who earn meager wages. Or worse, we hear about millions of children sold into servitude or forced to work in unsafe conditions for pittance wages to contribute to their family's survival. Unfortunately, these stories are all too common in the new global economy where competitiveness and profits to stockholders are paramount, and poverty is rising. Increasing globalization, along with U.S. government support for free-trade and investment agreements, are exacerbating three intractable problems that now plague almost every nation on earth: income inequalities, job losses and environmental damage.

Around the world, production, trade and retailing of most goods and services are increasingly concentrated under the control of a small number of corporations. Economist John Cavanagh and Frederick Clairmonte have calculated that just over a quarter of the world's production comes from General Motors, Mitsubishi, Shell, Philip Morris and 200 of the other largest firms. These firms are the primary beneficiaries of the world's rapidly growing trade. As they compete with one another to capture global markets, their primary mode of reducing costs has been through cutting jobs, wages and benefits. Between 1979 and 1992, for example, the Fortune 500 largest firms in the U.S. cut 4.4 million workers from their payrolls globally to remain competitive and keep profits high.

Backed by conventional economists, large corporations have convinced most of the world's governments that they should maximize global competitiveness through freer trade. Corporate and government officials often theorize that free trade will be beneficial for workers, whose wages and benefits can rise as foreign markets expand for their goods and for consumers who can buy cheap foreign imports. Following this theory, new regional trade agreements, like the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) are reducing barriers to trade and investment for firms. These free trade agreements offer firms global protection for their intellectual and property rights but there are currently no equivalent enforceable global standards to protect workers and the environment. Furthermore, as barriers to entering local markets are removed, large scale manufacturers edge small businesses and local cooperative enterprises out of the market. Local economies suffer when these firms' profits are channeled out of the country rather than being reinvested locally. According to World Bank figures, roughly half of the new foreign direct investment by global corporations in the South in 1992 quickly left those countries as profits.

As a result of these trends, the gap between the rich and the poor has increased dramatically in recent decades. Today, the richest 20% of the world's population has 60 times the income of the poorest 20%. The benefits of trade are similarly concentrated among the wealthiest segments of the world's population and only a handful of developing countries. For example, of the $102 billion in private investment that went to developing countries between 1970 and 1992, 72% went to only 10 countries. Most of those ten were the emerging markets such as China, Hong Kong Singapore, South Korea and Taiwan. Even in many countries that are currently experiencing high growth rates from expanded trade, the benefits of growth are not trickling down to the poor.

Another problem is that the bulk of exports from developing countries tends to be in primary product commodities, such as sugar, cocoa, coffee, etc., whose prices generally rise much more slowly than the prices of manufactured goods imports. This "terms of trade" decline was particularly sharp between 1985 and 1993 when the real prices of primary commodities fell 30%. This translates into losses of billions of dollars. Free trade agreements do little to enhance the trading positions and commodity prices of these poor countries. In many cases, the world market price for commodities such as coffee and cocoa falls below the cost of production, forcing farmers to sustain huge losses. Fair Trade organizations offer a crucial alternative by paying farmers a price that always covers at least production costs.

FAIR TRADE HAS NEVER BEEN MORE IMPORTANT. The business generated by Fair Trade Organizations in Europe and the U.S. now accounts for an estimated US$400 million, just .01 % of all global trade. Small as it may be, the rapidly growing alternative or fair trade movement is setting standards that could redefine world trade to include more social and environmental considerations. Fair traders believe that their system of trade, based on respect for workers' rights and the environment, if adopted by the big players in the global economy, can play a big part in reversing the growing inequities and environmental degradation that have accompanied the growth in world trade.

Hilary French, author of Costly Tradeoffs: Reconciling Trade and the Environment, reflects the views of many Fair Trade Organizations: "Trade is neither inherently good nor bad. But how it is conducted is a matter of great concern-and an unprecedented opportunity. Trade can either contribute to the process of sustainable development or undermine it. Given the rapidly accelerating destruction of the earth's natural resource base, there is no question what the choice must be."

For Fair Trade Organizations, the choice is simple. Whether trade is good for producers and consumers depends entirely on how the goods are made and how they are sold.

Fair Trade brings the benefits of trade into the hands of communities that need it most. It sets new social and environmental standards for international companies and demonstrates that trade can indeed be a vehicle for sustainable development. Today, a growing movement of workers, environmentalists, consumers, farmers and social movements worldwide is calling for a different framework for trade. They want a global trading system that promotes workers' rights, protects the environment and sustains the ability of local producers to meet community needs. Together, as consumers, they can make a huge difference by demanding significant changes in the ways goods are produced, and vote with their dollars for a more just and environmentally sound trading system.

This article was written by John Cavanagh, co-director of the Institute for Policy Studies.

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[them]

A couple of areas worth considering when mincing around trade.

Perverse Subsidies (http://www.brocku.ca/envi/db/envi1p90/readings/Perverse%20Subsidies%20Executive%20Summary.pdf)

The Codex Alimentarius Commission (http://www.codexalimentarius.net/web/index_en.jsp)

[haukipesukone]

I've heard fair trade products don't differ much from normal ones. They just have the label so you'd pay extra. I believe it's a scam until proven otherwise.