Fair Trade, Not Free Trade
by Deborah James
excerpted from the book
edited by Kevin Danaher and Roger Burbach
Common Courage Press, 2000
More and more people are demanding that corporations must
pay living wages in order for people to buy their products. After
a few years of sweatshop exposes and increased global labor struggles,
most people in the United States would rather buy a product made
under fair trade conditions than under sweatshop labor conditions.
According to a recent consumer study, 78 percent of consumers
would rather purchase a product associated with a cause in which
they believe, and 54 percent said that they would pay more for
a product that supports their cause. A 1997 consumer study by
TransFairUSA revealed that 49 percent of specialty coffee drinkers
surveyed said they would buy Fair Trade coffee.
We rightly resist allowing ourselves to be defined primarily
as consumers in a society based on consumption. We resist the
marketers and free trade advocates who try to define freedom as
the freedom to consume the most or cheapest or most luxurious
products. Yet to deny our power as consumers is to abandon an
immense influence that, when organized, we can use for positive
Historically consumer organizations have existed to protect
consumers from fraudulent product marketing, such as quack medicine
or false nutrition claims. They have also served to demand increased
car safety, organic foods, fire-resistant children's clothing,
nutrition labeling, truth in advertising and much more.
Recently consumer associations have been a leading force in
the debate around the safety of genetically modified organisms
in our food supply. But the question remains, can we organize
ourselves as consumers to demand not only safer and better quality
products for ourselves, but safer, healthier and more just working
conditions for the producers of the products we buy?
Fair Trade, thrust into popular consciousness during the WTO
protests in Seattle, means different things to different people.
As an oppositional ideology to free trade, its essence is an approach
to trade policies that benefit workers, communities and the environment,
rather than multinational corporations. This approach demands
change of the existing multilateral structures and agreements.
Another aspect seeks to propose alternative agreements such as
the HOPE for Africa Bill or the Alternative Agreement for the
Americas, which include provisions such as debt cancellation,
labor rights and environmental protections. A third aspect of
Fair Trade, however, involves bypassing the existing structures
and creating our own model of global trade, based on economic
justice and community development.
Fair Trade means an equitable and fair partnership between
marketers in North America and producer groups in Asia, Africa,
Latin America and other parts of the world. Fair Traders agree
to abide by the following criteria:
* Paying a fair wage in the local context;
* Offering employees opportunities for advancement;
* Providing equal employment opportunities for all people;
* Engaging in environmentally sustainable practices;
* Being open to public accountability;
* Building long-term trade relationships;
* Providing healthy and safe working conditions within the
* Providing financial and technical assistance to producers
In the United States, the Fair Trade Federation is the national
alliance of retailers, wholesalers, producers and consumers who
support living wages for artisans and farmers according to Fair
Trade criteria. Fair Traders are actively involved in educating
their customers about the working conditions of the people who
produce the products they sell.
The amount and quality of Fair Trade goods brought into the
United States has increased dramatically over the last several
years. Products include those based on primarily traditional skills
such as textile weaving, pottery and silversmithing, as well as
products designed specifically for environmental conservation
such as paper handmade from local renewable plants.
"United to Live Better" (UPAVIM) expresses the activities
of a group of women in the poverty-stricken barrio of La Esperanza
(in Guatemala City) who organized themselves into a community
organization. UPAVIM oversees the development and operation of
health and education programs which benefit the people of La Esperanza,
including medical and dental clinics and a laboratory, a well-baby
program, a breast-feeding program directed by the La Leche League
of Guatemala, a day care center, and a children's scholarship
and tutoring program that sends more than 500 children to public
school and provides the tutoring support to keep them there. Key
to the UPAVIM programs is the production and sale of the crafts
and clothing marketed through fair trade groups. Sale of these
items provides direct income for the women as well as crucial
financial support for the various programs.
While the percentage of total world trade that is Fair Trade
is quite small, it represents both an important model as well
as important income for the hundreds of thousands of producers
worldwide who receive fair wages for their work.
The Fair Trade movement is many times stronger in Europe than
in the United States. Over 2,500 stores are part of the Network
of European World Shops. The European wholesaler alliance (the
European Fair Trade Association) has member organizations from
nine countries who import from 550 producer groups around the
world. And the International Federation for Alternative Trade
includes 143 Fair Trade organizations in 47 countries.
Setting up an alternative network of distribution may not
be the answer in every sector: it may work for traditional craft
products but it is not likely to be a solution for the steel industry.
Yet Fair Trade does demonstrate that it is possible to operate
a business and import from developing countries while empowering
workers and conserving the environment.
The Coffee Alternative
There is one highly-traded commodity for which there is an
international system of Fair Trade certification that is making
its debut in the United States-coffee.
Coffee is the world trading system's second most valuable
legal commodity (behind oil), with over 10 billion pounds exported
each year from over 70 countries. With over 130 million North
Americans drinking coffee, the United States consumes over one-fourth
of the world supply.
About half of all coffee worldwide is produced by small farmers.
These farmers own and farm their own small plots of land, but
have little or no control over the export system for their coffee.
"Free trade" in the coffee industry means farmers generally
receive between 30 and 50 cents per pound of coffee that retails
for as much as $10-$12 per pound in gourmet coffee markets. Small
farmers working without the benefit of an organized export cooperative
are forced to sell to exploitative middlemen who generally pay
them less than half of the export price. This export price is
based on the New York "C" Contract spot price and is
usually around $1 per pound, but fluctuates wildly. Like most
raw export commodities, when the price goes up, the exporters
benefit and consumers pay more; when the price goes down, the
farmers gets gouged yet consumer prices often remain high.
Fair Trade seeks to correct these imbalances by setting a
minimum price per pound. This international Fair Trade price,
$1.26 per pound, is set by the Fair Trade Labeling Organizations
International (FLO) which includes farmer cooperatives. When market
prices go above this level, farmers get the market price plus
a five cent premium. But when market prices are below $1.26 per
pound, as they have been for most of the last decade, the farmers
still get the floor price: a living wage. Rather than operating
on a charity model, where donations are made based on net profits
of a company, Fair Trade changes the entire business model to
include fair wages for workers as an integral part of the business
arrangement. When prices are at $.85 per pound, as they were on
November 30, 1999, Fair Trade can easily make the difference between
keeping and losing the farm.
TransFairUSA is the national licensing agency that certifies
importers and roasters here in the United States. They are the
U.S. section of FLO, which includes monitors from 17 different
countries. The International Fair Trade Registry certifies over
300 cooperatives in 20 different producer countries, representing
over 550,000 farmers. The monitors in other countries-but not
yet in the U.S.-also certify cocoa, honey, sugar, tea and bananas.
Fair Trade coffee goes beyond simply paying a fair price for
hard work, as the workers actually own the means of production
(especially land) and have much more control over the means of
distribution (direct export). For a farmer group to get on the
International Fair Trade Registry, they have to meet two basic
criteria; they have to be small farmers (the Fair Trade system
does not certify plantation estates) and they have to be organized.
This means that they have their own system for ensuring democratic
distribution of profits and providing for community development.
Monitoring then, serves not as a substitute for independent labor
organizing, but as a way to ensure that importers and roasters
are adhering to Fair Trade criteria of paying a fair market price
to worker-owned production cooperatives.
Fair Trade criteria also address the needs for credit and
technical assistance. In addition, serious Fair Traders such as
Equal Exchange and Thanksgiving Coffee (pioneer Fair Trade coffee
companies) build long-term relationships with farmers and treat
them as equals in the business partnership.
Other key issues in coffee production include organic and
shade grown methods of production. These primarily address environmental
concerns, but have significant advantages for small producers
because farmers often receive premiums for organic and shade grown
coffee. Farmers also obviously benefit by working on land free
of pesticide pollution, increasing financial security through
crop diversity, and being less beholden to expensive inputs of
chemical fertilizers and pesticides. Most of the regions that
produce organic and shade grown coffees also participate in Fair
Trade cooperatives: primarily Mexico, as well as Central America
and the Andean countries of South America. While 85 percent of
coffee produced by Fair Trade cooperatives is organic and shade
grown, a large part of the coffee grown under organic and shade
conditions are not sold at Fair Trade prices.
Fair Trade cooperatives last year together produced over 60
million pounds of coffee, yet were only able to sell half of that
coffee at Fair Trade terms. That means there are over 30 million
pounds still available in the Fair Trade market. The big gap is
U.S. consumption; U.S. importers purchase one in every four pounds
in the world market but most are not buying Fair Trade. Dozens
of small roasters have already signed on to be Fair Trade Certified;
but there are over 1,000 coffee roasters-including the major chains
such as Starbucks-that have yet to sign on. We need to demonstrate
to them that there is a serious demand for Fair Trade in the coffee
industry by organizing Fair Trade campaigns in every town together
with campuses, churches, unions, farmers, environmental and solidarity
Various efforts have been made by industry leaders in past
years to limit the use of voluntary labels. Timber and paper corporations
have sought to ban labels such as "sustainably harvested"
and "recycled" by getting them declared WTO-illegal
on the basis that they unfairly prejudice consumers towards certain
products based on methods of production. World Trade Organization
rules do not allow differential treatment of a product based on
its method of production. But these labels are voluntary, not
obligatory, and they are as important for consumer choice as product
content and nutritional information.
Don't we have a right to know if a product we buy was produced
in a sweatshop or with living wages? We have the right to know
how a product affects our own bodies, so shouldn't we have the
right to know how it affects the earth and how it affects the
people who produced it? Shouldn't companies that voluntarily follow
sustainability and social justice criteria be legally able to
communicate that message to consumers eager to make consumer choices
according to their beliefs about the importance of living wages?
Making Fair Trade a viable economic system and a widespread
consumer preference through coffee is a strategically important
effort. It demonstrates that there are consumers willing to shift
purchasing preferences based on conditions of production. It demonstrates
that workers in the U.S. stand in solidarity with workers and
farmers in developing countries in demanding living wages and
just economic systems. It demonstrates that environmentalists
recognize the links between living wages and ecology. And it enables
us to demonstrate that there is a viable way of conducting global
trade based on economic justice and environmental sustainability
rather than corporate profits, cheap labor and resource extraction.