The History of Fair Trade
August 01, 2014
Here at Global Groove Life we’re proud of our Fair Trade certification, and we’re proud to be part of the global Fair Trade movement.
That movement has been riding a groundswell since the late 1940s, when a handful of religious and political groups, morally incensed by the horrors of World War Two, started started developing supply chains for from a small number of developing countries.
The products they started producing were largely sold into local economies - there was not enough awareness or demand at the time for department stores or chains to stock the cross-stitch and jute products.
It was not until the 1960s that Fair Trade really started to evolve into a social force.
The 60s are famous now for their political and social upheaval, and the blooming focus on social responsibility and individual ethics were one positive outcome.
At this time, students and young political players realised that boosting local economies was a much more effective way to help people than the scattershot approach to aid that most Western countries were applying.
In 1968, the UN adopted the popular slogan from the student movement - “Trade, not Aid.” That was the same year that Whole Earth Catalog, a broadsheet in the USA, started connecting producers in developing nations with the retailers and consumers who would start trading directly with them, effectively bypassing the bottlenecks of large corporate buying procedures.
By the time the early 1970s rolled around, dozens of ‘worldshops’ had opened around Europe, with volunteers running the stores to sell goods produced to fair trade standards in the developing world.
The 70s also saw a much greater proportion of individuals getting involved in Fair Trade. With many developing nations excluded from international trade on a political basis, thousands of volunteers took to selling products from their homes, churches and parks to support farmers in places like Angola and Nicaragua. This helped improved the general visibility of the fair trade movement, and exposed thousands more people to the concept of buying responsibly.
The Fair Trade movement faced a crisis point in the early 1980s. Many retailers felt that Fair Trade products often looked dated, and they were having trouble trading off the declining novelty factor. Demand for ethically sourced products plateaued, and a fall in commodity prices meant that the industry had to restructure - and quickly - to maintain any momentum.
Into the 1990s, many of these concerns were addressed, and ethical products became very successful in the Western retail markets.
Handicrafts slowly regained their popularity, maintaining the lion’s share of the Fair Trade industry. The emergence of agricultural products like coffee, tea, rice, nuts, cocoa, dried fruit, sugar and spices was key in the continuing growth of the industry.
A hugely important event in the development of Fair Trade was the introduction of certification. Up until this point, there has been no real regulation on the products being promoted as ethically sourced. In 1988, the first certification board was created in the Netherlands. This independent certification meant that Fair Trade products could be sold far beyond the confines of the little European worldshops.
At this point, Fair Trade sales really started taking off, as products started being stocked in large chains and department stores, removing the serious inconvenience consumers had previously faced in obtaining these products.
It also gave retailers and consumers alike the confidence they had previously been lacking - that they were truly paying for a product that would benefit the producer.
Soon enough, certification organizations had popped up all over the world, and in 1997, Fairtrade Labelling Organizations International (FLO) had standardized the global certification process. FLO now sets the standard all Fair Trade products must meet, how inspections are conducted, how support is provided to producers, as well as harmonizing the message over Fair Trade between participating organizations.
These days, in order to be approved to carry the Fair Trade Certified stamp, the product in question must meet some key criteria:
Crops must be grown and harvested according to FLO standards
The supply chain must be monitored by FLO to guarantee the product’s integrity
The working conditions of the producers must be safe and healthy
Producers must be paid a living wage and not face exploitation
The organization must not engage any child or slave labor
The production process must protect and conserve the local environment
The organization must facilitate social development
These days, the proportion of Fair Trade goods on the market has switched from what it was throughout the 1980s and 1990s. Agricultural products now lead the charge, with a huge variety of goods falling under Fair Trade certification: bananas, mangos and oranges; sugar, tea and coffee; cocoa beans and cocoa; honey, nuts, seeds and oils; rice, quinoa, spices and wine. Handicrafts - such as clothing, jewelry, yoga accessories and homewares - now account for about a third of the ethical goods on offer.
Free Trade vs Fair Trade
July 22, 2014
“This is Gina - she runs a free trade company!”
“No, no, actually, I run a fair trade company.”
“Oh… what’s the difference? Aren’t they the same?”
Ohhh boy. Today we’re going to clean up one of the biggest misconceptions we butt up against frequently in our work with Global Groove Life.
The conversation above is one we have pretty often, and it’s a mistake that even the most well-meaning people make, without even realising they’re doing it. Every so often, someone will refer to what we do as free trade, rather than fair trade.
And I get it - it’s confusing! The phrases are really similar. Thing is though, they mean really different things. Really different things.
Free Trade is defined as:
“The unrestricted sale and purchase of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas.”
Fair Trade is defined as:
“A movement whose goal is to help producers in developing countries to get a fair price for their products so as to reduce poverty, provide for the ethical treatment of workers and farmers, and promote environmentally sustainable practices.”
These are both economic systems focused on the purchase and sale of products between countries or communities. But one is focused on profits, and one is focused on people.
Free trade agreements are generally employed by the governments of wealthy nations when dealing with the governments of developing nations.
These agreements generally remove the barriers to countries doing business, such as high import taxes or price controls that might otherwise come into play.
Proponents of free trade believe that businesses should succeed or fail based on whether they can compete in the marketplace. They believe that each business should be capable of meeting the demands of its customer base, and stay ahead of its competitors, without needing any special government involvement to protect workers or regulate practices.
The principle at work here is that a voluntary exchange between the business, their customers and their workers will ultimately result in fairness for all involved.
Fair Trade is about doing business ethically. Its main concern is about the end producer: how they are treated and how their resources are managed, rather than whether the government of their country is being charged export taxes on their products.
Proponents of Fair Trade argue that trade between developed countries and developing countries is skewed in favour of the developed country. They believe trade should take place on more equitable terms, with mutual advantage resulting for both parties.
Fair Trade aims to pay producers (such as farmers, tailors and jewelers) a living wage; that is, a wage that enables them to live comfortably in their community, instead of living hand to mouth despite doing demanding and time-consuming work. This stands in direct contrast to the free trade model, where paying the producer less is an acceptable way of increasing a company’s total revenue.
According to Fairtrade.org, free trade introduces an exploitative mechanism which impoverishes those in the Third World:
"Particularly in the field of trade, our area of attention, the law of the strongest is frequently the only law. In Asia, Africa and Latin America, both male and female craftsmen and farmers know all about this. If they cannot free themselves from the grasp of the numerous middlemen and buyers, who from their position of power prescribe the lowest prices, they will remain slaves of circumstances their entire lives."
To combat this, most Fair Trade business trade with local producers at ‘supracompetitive’ prices - they pay more than the standard market price in order to alleviate the cycle of poverty and hopelessness producers would otherwise face.
This is an extensive topic, and really today we’ve just scratched the surface! But now you know the difference:
Free trade is about profits, fair trade is about people.
Why GGL Is a Fair Trade Company
July 08, 2014