IBFX Logo
YOUR TRADE MATTERS.

All About Fair Trade

Overview of Fair Trade

What Fair Trade Is:

Fair trade is a social and environmental movement intended to ensure imported products are traded for a reasonable compensation. It ultimately ensures better prices, working conditions, and increased sustainability for farmers of the developing world.

Fair Trade Goals:

The goals of fair trade are many and vary according to the organization in charge, but there are some goals these organizations, by and large, agree upon. Fair trade seeks to:

What is Fair Trade?

Principals and Goals of Fair Trade

Five Goals of a Fairtrade Town

World Centric: Fair Trade For a Better World

Fair Trade Facts and Figures

Goals for Fair World Project

United Students for Fair Trade

Fair Trade in the News

History of Fair Trade

How Fair Trade Started:

The history of fair trade can be traced to the 18th century, though the modern movement did not really begin in the form it currently has until just after World War II. At its beginning, in 1700s England, the movement was more to protect consumers from producers, for in those times producers, often being private enterprises unto themselves, held the majority of the power. Fair trade, or the “old moral economy,” as it was called then, asserted that producers could not hold goods until there was an increased need (and therefore increased price) for the product.

Fast forward three hundred years and the power dynamic has shifted. Now, the consumer, not individual but national, holds the power over the underdeveloped producer. If the consumer pays little, it keeps the producer desperate and underdeveloped, never allowing it the opportunity to one day demand market value for its products. Kept in destitution, the developing country must accept any bid from its main consumer, and the powerful consumers of the world make this work to their advantage.

The first instances of modern fair trade occurred in the 1940s, when religious groups and other various groups took it upon themselves to enhance the quality of life of disadvantaged producers. In 1946, the Mennonite Central Committee was the first organization to work with developing countries to cultivate supply chains. They were soon followed by SERRV International in 1949. The goods traded at this time were usually handicrafts, and were sold by “charity stores”.

The movement continued to be shaped through the 1960s, when European students began targeting large corporations, deeming them flawed according to a Post-Keynesian economic model, which stated, among other things, that production costs should be the only thing to determine price.

Throughout the 60s, organizations began to be formed, mostly in Europe, promoting the advancement of disenfranchised producers by further developing (and in many cases initiating) lines of trade between these new alternative trading organizations and developing countries.

Fair trade was still a marginal idea, however, until 1988. It was during this year that Max Havelaar, a Fairtrade label which made it possible to easily identify free trade products on the shelf, changed things for the movement. Having independent certification meant that it was easier for fair trade organizations to get their products into mainstream stores, rather than the European Worldshops they had been sold in to that time. This label allowed consumers and distributors to track the supply chain back to the producers, allowing them to make sure the producer was adequately compensated. Doing this helped assuage any concerns consumers and distributors may have had that the increase in popularity of fair trade goods would have the same corrupting influence on Fairtrade labels as it had had on mass consumers.

The Creation of the World Trade Organization:

Put into effect in 1945, the General Agreement on Tariffs and Trade (GATT) was put into effect as an attempt to reduce tariffs. Though it continued to operate for fifty years, the GATT had trouble adapting to a global world economy, it is now only the umbrella treaty for the World Trade Organization (WTO).

The WTO did what the GATT could not, adapt to a global economy. The organization is not one which enforces laws, but makes them, providing a framework for trade. If a nation is part of the WTO, they must adhere to the five principles of the organization: non-discrimination, safety valves, binding and enforceable commitments, reciprocity, and transparency.

History of Fair Trade

FTF: History of Fair Trade

Fair Trade Labels

World Trade Organization- What is it?

WTO and the Principals of the Trading System

Fair Trade in North America

Statistics:

Some interesting facts from a 2009 study done by the Fair Trade Federation (The complete study can be found here):

Organizations:

The World Fair Trade Organization
A network of fair trade organizations with a membership of 350 fair trade organizations in 70 countries.
Fair Trade Federation
Another network of sorts that enhances the capabilities of its members.
Divine Chocolate
The world’s first farmer-owned fair trade chocolate brand, which is a major step considering chocolate is a product harvested largely in developing countries.
Equal Exchange
A worker-owned co-operative located in Massachusetts dedicated to fair trade and sustainable agriculture.
Level Ground Trading Ltd.
A direct importer of fair trade coffees, naturally dried tropical fruit, and cane sugar.
SERVV
Purchases and markets crafts by people in developing countries.

Products:

Fair trade products are more mainstream than ever before. By looking for the Fair Trade Certified label, the consumer can be assured the product they are buying was purchased at (at the very least) market value. Via this label, consumers can also trace the origin of the product and make sure themselves it was paid for honestly. There are many varieties of fair trade products, and today they can be found in supermarkets and specialty stores.

Fair Trade Federation

Fair Trade USA

Equal Exchange Co-op

International Trade Administration

Fair Trade Coffee

Fair Trade Cotton

Benefits of Fair Trade

Helping Farmers:

One way fair trade benefits the world is by helping the farmers who grow the food. For the small-scale farmer, very little of the money the consumer spends on food at the supermarket actually goes back to the farm. There are just too many middlemen getting their cut of a markup. Fair trade hopes to make things more equitable and profitable for the farmer by, among other things, reducing the number of middlemen. This raises the incomes of small-scale farmers. FTOs also advocate for workers, promoting their right to organize and, because the farmer is now making more money and assuming less risk, demand more in salary. Finally, FTOs work to make the consumer aware of the hardships faced by the farmers involved in non-fair trade agreements.

Domestic Economy:

Many people today are aware of fair trade and its benefits, but there is also a movement to increase domestic fair trade. This is because there are farmers here in the US who are being put out of business by the larger “agribusinesses.” While consumers pay more for their groceries, the farmers who grew them are paid less. This decrease in profit is translated to workers earning less and not receiving basic employment rights.

Health Benefits:

All the benefits to developing nations aside, it is difficult to convince a nation to make a fundamental change to the way it trades with foreign countries. “Yes, this will benefit developing nations out there,” some say, “but what about us?” The fact is, the benefits of free trade do benefit the consumer nation because of the very fact that they are consumers. With the fact of consumption (demand) being a forgone conclusion, the quality of the goods consumed becomes of utmost importance. Here, free trade is an excellent alternative to some of the larger, more corporate options. Because the food has a more direct path from farm to plate there are less preservatives within the food. Also, as much of what is labeled free trade is also organic, there are less preservatives entering the consumers system as he or she eats.

Benefits of Fair Trade

Impact of Fair Trade Over the Past Ten Years

Environmental Benefits of Fair Trade

Fair Trade and Social Justice

Four Important Benefits of Fair Trade

How You Can Join the Movement

Where Fair Trade Products Are Located:

As stated above, fair trade food can be found in supermarkets, but the place to find the greatest variety of free trade produce is still at a specialty market or co-op. The same idea applies to crafts and other products. To an increasing extent, these products can be found in large box stores, but the place to find the highest quality and most diverse goods is still at a specialty store or online.

How You Can Join Fair Trade Organizations:

Fair trade is to an increasing extent a local movement with global effects. It is possible to join or at least donate to the various FTOs mentioned in this article. Also, it is possible to get involved in a local co-op or farmer’s market, as the same ideas of fair trade resonate with those efforts.

Global Exchange's Fair Trade Campaign

Fair Trade Resource Network

Catholic Relief Services Fair Trade

Lutheran World Relief Fair Trade

Green America Fair Trade

Public Citizen: Get Involved in the Fair Trade Movement

Investing in Fair Trade for the Future

Forex Trading Trading Platform Learn Forex Forex Broker Trading Tools Careers Safety Of Funds

Forex trading is one of the riskiest forms of investment available and may not be suitable for all traders.
IBFX, Inc., NFA # 0422448 is part of the Monex Group. Read the full risk disclaimer and privacy policy on trading Forex online.

National Futures Association Member, National Futures Association Commodity Futures Trading Commission Registered, U.S. Commodity Futures Trading Commission