The unfairness of free trade is easy to point out. But what are the steps that the developed world in general has taken to rectify this? Lets take an in-depth look at one of them-the idiosyncratically named Fairtrade certification program.
To put it as simply as possible, Fairtrade is essentially a product certification system overseen by a non-profit body, allowing people to identify and purchase products that meets agreed labour and environmental standards. This certification mostly favors agricultural products i.e. fresh fruits,vegetables,rice and spices. Sales of Fairtrade-certified products hit US$ 3.6 billion in 2007 and with rapid growth amounting to nearly 50% a year, is expected to reach US$ 25 billion by 2020.
Digging a bit into its history, the rise of Fairtrade from a niche product to the mainstream is a relatively recent one. The first launch of a Fairtrade branded product was in 1988 in the Netherlands, where coffee from Mexico were sold under the name ‘Max Havelaar’, the protaganist in a significant 19th century novel rife with anti-colonial undertones. This initiative spread to several other markets in Europe and North America in the early 90s, and that was when it really took off.
How Fairtrade works is twofold-it has standards for farmers’ organizations as well as for hired labour. Standards for the former mainly involves making sure that there is a democratic system in place for decision making as well as aiding in economic growth, while the latter group is helped by checks ensuring that workers receive fair wages and that basic health and hygiene requirements are met.
The benefits of Fairtrade are seemingly obvious. Disadvantaged producers and farmers are now protected against exploitation, the big corporations have no choice but to give up a cut of their sizable profits which now goes towards these producers. But is there a downside to Fairtrade and is it really as beneficial and just as it would seem?
Lets take Nestle as a case study. Known to have a long standing ideological issue with the notion of fair trade, in 2005 the company introduced its own Fairtrade-certified coffee, citing market forces as one of the game-changers. Of course, the irony of this seems about apparent to everyone but Nestle itself. Isn’t the whole point of Fairtrade about going against market forces in order to help the disadvantaged? Nestle’s move in this case reeks of what one would only describe as a PR move, giving the company a eco-friendly image in spite of whatever reality might hold. This is further put into perspective by the fact that this new ‘Partner’s Blend’ accounts for less than 0.1 percent of Nestle’s total coffee productions, with the rest remaining outside Fairtrade certification.
The move to award Nestle’s new product with Fairtrade did not come without much criticism and controversy. However, the real issue at hand goes deeper than that, going to the roots of how Fairtrade operates. The certification is awarded to individual products, not companies, resulting in either the company being unjustly viewed as ethical by the public at large, or the Fairtrade mark being undermined and deemed useless. How Fairtrade will come to a compromise has yet to be seen.
Second, and more trivially, the price of Fairtrade products are generally much higher than that of similar products. While this is understandable, the breakdown is not transparent enough and there is always a danger that retailers are actually benefitting from the marked up prices as well. Even if they are not, the price difference may be a huge deterrence to some consumers
These two factors, are in my opinion, crucial to whether Fairtrade would be adopted in the mass market enough to make a true difference in the future.
