Despite what you may think, fair trade has nothing to do with stocks trading or any form of trading that will quickly make you money. No, as a matter of fact, it is all about taking a slightly disadvantageous position in order to let others live. Let us explain.
Let’s start with coffee. If you have ever looked at the coffee selection at Starbucks, you have probably seen some coffee bags with a fair trade seal on them. The seal isn’t just for good press. The coffee giant actually deals with local coffee farmers all over the world, buying their coffee at a fair price while ensuring that the workers who till the land and take care of the coffee plants are working in humane conditions.
In most cases, though, fair trade agreements often means that the suppliers are paid a higher price for their products. In a typical agreement, a developing country exports to a developed country. Products covered are commodities that are consumed in both countries. Aside from coffee, you will find other products like handicrafts, fresh fruit, cocoa, wine, chocolate, and even gold.
The idea behind fair trade is one of respect for the people who are making those products, and there are many organizations supporting the movement. There are also several fair-trade certifying agencies, including FairTrade International, Make Trade Fair, Eco-Social, and IMO. Fair Trade USA is a breakaway group from FairTrade International that is implementing its own certification system.
Is the product you are using a product of the fair trade? The best way to know is to look at the label. As it stands right now, there are over 3.4 billion EUR worth of products that are certified by FairTrade International. You can get a complete list of these of products by going to the World Trade Organization website – it publishes an annual list.
The popularity of fair trade product isn’t as widespread as one might think. It is largely popular in the United Kingdom where you can find 500 Fairtrade towns, as well as 118 universities, more than 6,000 churches, and over 4,000 schools that are registered in the Fairtrade Schools Scheme.
While the ideals behind fair trade are laudable, the movement itself is not without its critics. According to MIT press, while there is no problem certification, in fact, there is ongoing over certification of products, there is a problem with distribution. Only very few certified products are actually being sold in fair trade markets. But the problems do not end there. Studies have found that certain standards actually cause greater inequality when certain rules are inappropriate for a certain market.
And there are also reports that producers, packers, cooperatives and importers unfairly profiting from the fair trade by actively evading standards that could cost them more money.
In all, though, while it is not without its flaws, the fair trade have had success in raising awareness for equality between producers in third-world countries and respect for the products they produce in quality.