The Principles of Fair Trade
Nimmity Zappert, founder of All of the Good Things shares some insights on what some of the principles of Fair Trade actually mean.
Fair Trade Principle 1: Opportunities for Disadvantaged Producers Poverty reduction through trade must form a key part of the organisation's aims. The organisation or business must assist vulnerable producers to move from income insecurity and poverty to economic self-sufficiency and ownership.
How do Fair Trade businesses support disadvantaged producers? Most Fair Trade businesses in Australia and other wealthy countries, support disadvantaged producers in developing countries by providing access to the market. So how does this work? Imagine you are living in Kampala, Uganda. Your main skill is the ability to make high-quality baskets. You know that these are sought after by the tourists that you see in the local market from time to time, but you have no way to sell your product beyond your small local market. Your local market is visited by a woman from the UK, who is running a Fair Trade business. This Fair Trade business then begins working with you, organising to buy your baskets and sell them in the UK. This provides you, the basket maker, with a new reliable revenue stream, enabling you to further develop your business. In addition, as a Fair Trade business owner, the woman from the UK has guidance and advice from the World Fair Trade Organisation (WFTO), to help her understand what a fair price is for the baskets you are providing. So, rather than being negotiated down to the lowest price possible, you agree on a fair price for the work you are doing. This in turn means you can focus on providing good quality products and ensure you can comfortably support your family. The UK based business works with you as you develop your business, to ensure your product is suitable for her market, and to help you implement the other principles of Fair Trade in your business. I’m sure you can picture the larger flow-on effects from this. If you are able to comfortably support your family, that means your children don’t have to work and can attend school. It also builds the business skills of the Ugandan basket maker, ensuring that if the UK business can no longer buy from them, they have the skills and knowledge to find other buyers. Less pressure on the Ugandan family means they are less vulnerable to human trafficking threats. The Fair Trade model has proven that providing economic self-sufficiency has a significant direct impact on reducing poverty.
Fair Trade Principle 2: Transparency & Accountability
The organisation must be transparent in its management and commercial relations. The organisation finds appropriate, participatory ways to involve employees, members and producers in its decision-making processes.
How does transparency and accountability in Fair Trade businesses help to alleviate poverty?
One of the key ideas bedded into the Fair Trade movement is the concept of openness and transparency. This is often made easier by reducing the number of links in a supply chain – so that the consumer is closer to the person that has made the product they are buying and using.
In addition to helping consumers have a better understanding of what work goes into the product they are buying, transparency also helps to maintain credibility. Organisations that are guaranteed by the World Fair Trade Organisation, or who have been endorsed by the Fair Trade Association of Australia and New Zealand, are required to share details of their business practices. This ensures that businesses who are claiming to operate with the 10 Principles of Fair Trade, are in fact doing so. It also provides consumers with a strong level of trust in the product that they are buying, and the business they are buying it from.
We have all heard of ‘greenwashing’. The same can happen with businesses that claim ethical or fair trade practices. Transparency and accountability are important to ensure that you as the consumer can be confident in what you are buying, and the maker can be confident in choosing a business to buy and sell the products that they make.
Fair Trade Principle 3: Fair Trade Practices
The organisation must have concern for the social, economic and environmental well-being of marginalised producers. It is responsible and professional in meeting its commitments in a timely manner. Suppliers respect contracts and deliver products on time and to the desired quality.
What are Fair Trade Practices?
Fair Trade practices are the way in which a Fair Trade business operates. This includes things like paying on time and sticking to order commitments. It is more than just being ethical. The concept of ethics is based on doing no harm. Fair Trade business practices go further, for all parties to show active concern for the well being of the people they are working with, and the environment they are working within.
Anyone who has ever been involved in running their own business would know how important getting paid on time can be. If this is crucial for us in a wealthy country like Australia, imagine how much more critical it is for a family breadwinner who is relying on that payment to feed their family that week.
For Fair Trade makers, the concept of Fair Trade practices also helps them to understand what is required of an enterprise selling into international markets. If they wish to be paid fairly, they must produce a quality product in a timely manner, for the business model to work. This basic concept of fairness, quality product for fair pay, helps all parties to rely on each other and continue to build out a business over the longer term.
Fair Trade Principle 4: Fair Payment
What is Fair Trade Principle 4? Fair Payment
A fair price is one that has been mutually agreed by all through dialogue and participation which provides fair pay to the producers and can also be sustained by the market, taking into account equal pay for men and women and a Local Living Wage.
How do you know what is a Fair Price?
Fair Trade businesses work with their local Fair Trade organisation or the World Fair Trade Organisation, to help them determine what a fair price and living wage is in their market.
A fair price must adequately compensate the maker for the work they are doing, taking into account not just time, but the skill required to make the item. It should also take into account the cost of procuring supplies and any other costs involved in making the item, such as a premise to work or travel costs to deliver the item.
The price should also be fair in regards to what the product can reasonably be sold for. This is not about falsely inflating prices. It is about finding a fair price, that works for both the maker and the seller.
What is a Living Wage?
A living wage is a suitable amount of payment for work, that enables a worker to maintain a decent standard of living where they live.
Note that a living wage is often more than what may be described as a minimum wage. A minimum wage is usually the minimum amount an employer can legally pay someone for their work, usually stipulated by the government of that place. Minimum wages are not guaranteed to keep pace with the cost of living.
A living wage takes into account the basic costs of living in the place where the worker lives, such as food, clothing and shelter. The living wage aims to ensure they can adequately support themselves on that wage as a full-time worker.
Fair Trade Principle 5: No Child Labour. No Forced Labour.
What is Fair Trade Principle 5: No Child Labour. No Forced Labour?
The organisation must adhere to the United Nations Convention on the Rights of the Child, and local law on the employment of children. Any involvement of children in the production of products is disclosed and monitored and does not adversely affect the child's well-being.
Ensuring no Child Labour and No Forced Labour
This seems like something that shouldn’t need to be stated, but it does.vThere is currently estimated to be over 40 million people in slavery worldwide.vThere is currently estimated to be over 160 million children being used for labour globally.vBy ensuring that this is a stated principle, Fair Trade businesses actively work to ensure there is no child labour and no forced labour in their business, or in the businesses they work with.
What is Modern Slavery?
Modern Slavery* is an umbrella term that is used to describe human trafficking, slavery and slavery-like practices. Crimes include human trafficking, slavery, servitude, forced labour, debt bondage, forced marriage and the worst forms of child labour.
The Palermo Protocol (an international agreement to prevent and address slavery) describes the components as
the recruitment, transportation, transfer, harbouring or receipt of persons,
by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits
to achieve the consent of a person having control over another person, for the purpose of exploitation.
*Source: Be Slavery Free
Fair Trade Principle 6: No Discrimination. Gender Equality. Freedom of Association.
The organisation does not discriminate in hiring, remuneration, access to training, promotion, termination or retirement. The organisation has a clear policy and plan to promote gender equality and respects the right of all employees to form and join trade unions of their choice and to bargain collectively.
No Discrimination. Gender Equality. Freedom of Association.
The Fair Trade movement is committed to alleviating poverty for all. This means ensuring that Fair Trade enterprises do not discriminate.
In any society, those on the outskirts culturally, are often at a disadvantage for employment. We know the saying ‘It’s not what you know, it’s who you know.”. This is a short-hand way of saying that most people find employment or advance their careers through their relationships. This is a natural part of how we all as humans operate. The challenge is to ensure that these networks, in-particular those which may have come from a traditional way of thinking over a long period of time, do not exclude others or have too much resistance to change.
By stating that Fair Trade enterprises should have no discrimination, this ensures that they actively work to be inclusive, not just in hiring but in all aspects of their enterprise.
Many Fair Trade enterprises work directly with smaller communities that may have traditionally been excluded from the mainstream economy in their region, to help them build their own businesses and provide employment for their own community.
Fair Trade has Positive Impact on Gender Equality
Fair Trade enterprises impact 1 million livelihoods globally, 74% of whom are women. 54% of senior positions in Fair Trade Enterprises are held by women.* This is way above the global number, which currently sits at 31%**, an amazing achievement.
Why have Fair Trade enterprises managed to have such great success in this area, where other businesses have failed?
It’s a good question. One of the reasons is that Fair Trade businesses are built by the people, to work for them. For example, in the Fair Trade business that I visited in Uganda several years ago, they were organised as a cooperative, so that the women got together regularly to talk through any concerns they had and how the business should operate. They supported each other with child care and flexibility around their other family commitments.
Fair Trade enterprises are enduring examples of how when given the right support and freedoms, people can come together to achieve great things.
Fair Trade Principle 7: Good Working Conditions
The organisation provides a safe and healthy working environment for employees and/or members. It complies, at a minimum, with national and local laws and International Labor Organisation's conventions on health and safety. Fair Trade organisations are aware of the health and safety conditions of their producer groups.
Good Working Conditions
Living in Australia, we tend to take for granted that our working environment is safe and healthy. Health and safety work practices have become part of our everyday language when working.
This is not the case everywhere in the world. In many countries, national health and safety standards may be very light, with little or no checks in place to ensure they are being followed. Often ensuring a safe and healthy work environment is left to the employer.
Fair Trade enterprises are helped to understand good practices in terms of providing a safe and healthy environment for their workers. This might start with simple hygiene measures, such as having clean and safe bathrooms and washrooms, for employees. It may include separating eating areas from work areas. The advice can be given on how to ensure workers using equipment are using the appropriate safety gear, such as goggles or glasses to protect their eyes.
Good Working Conditions During Covid
When Covid hit, many Fair Trade enterprises were heavily impacted, being in countries that were heavily hit by the pandemic. Fair Trade enterprises were helped to implement necessary meas