Fair Trade is just an excuse for

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Fair Trade is just an excuse for developed
nations to shut developing countries out of their
markets.
Smart Team Cheng Zhongliang Chen Jiawu
Xin Da Qian Mingyang Feng Baoguo
Zhan Enqiang
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CONTENTS

• What is Fair Trade Why?
• Fair Trade History Status Review
• Fair Trade Principles How to Operate?
• Fair Trade Benefits
• Fair Trade is just an Excuse

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What is Fair Trade?

• Fair Trade is a movement promoting trading
  partnerships based on dialogue, transparency and
  respect, and that seeks greater equity in
  international trade. This movement is a global
  network of producers, traders, marketers,
  advocates and consumers focused on building
  equitable trading relationships between consumers
  and the worlds most economically disadvantaged
  artisans and farmers.

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• Fair trade means that farmers, workers, and
  artisans
• receive a sufficient price under direct long-term
  contracts
• small-scale producers in democratic co-ops
  (coffee, cocoa, bananas, fruits, crafts) or
  workers on larger farms who receive a living wage
  and can bargain collectively (tea, bananas,
  fruits)
• don't use abusive child labor or forced labor
• use ecologically sustainable methods.

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• Fundamental Elements
• Equality non discrimination. Actions should
  treat people as if they were equals. To be
  fair, equals should be treated equally. To be
  fair, the actions of businesses or the policies
  of governments should be non-discriminatory among
  equals.
• Reciprocity Reciprocity fairness comes in two
  versions, positive reciprocity and negative
  reciprocity fairness.
• Positive reciprocity occurs when an action that
  has a positive effect upon someone else is
  reciprocated with an action that has
  approximately equal positive effect upon another.
  A quid pro quo type of response.
• Negative reciprocity occurs when an action that
  has a negative effect upon someone else is
  reciprocated with an action that has
  approximately equal negative effect upon another.
  A quid pro quo type of response
• Optimization a desire to maximize profits or
  benefits.

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Why Fair Trade?

• Difference between Free trade and Fair trade
• Free traders regard voluntaries as the chief
  component of justice. They believe the best way
  to alleviate poverty in the long run is to permit
  freer trade while fair traders think that opening
  trade even further would entrench trends of rich
  nations becoming richer and poor nations becoming
  poorer.
• Fair traders regard the expression of human
  dignity as the chief component of justice. They
  think global prosperity cannot forget to include
  the immediate needs of those in the least well
  off group, while free traders regard such
  targeting as potentially dangerous.

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Why Fair Trade?

• The Problems of Free Trade
• Mistreated and abused workers
• Reduce costs leads to serious layoffe.g.Between
  1979-1992, the Fortune 500 largest firms in U.S.
  cut 4.4 million workers from their payrolls to
  remain competitive and keep profits.
• Free trade competition leads to large scale
  manufacturers edge small businesses and local
  cooperative enterprises out of the market.
• Increased dramatically the gap between rich
  poor in recent decades. The richest 20 of the
  world's population has 60 times the income of the
  poorest 20.
• Free trade agreements do little to enhance the
  trading positions and commodity prices of these
  poor countries.

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Why Fair Trade?

• There is a strong need for
• Fair treatment to Workers (wages, security
  working conditions)
• Support and protect small traditional producers
• Protect environment
• Protect cultures
• For example The low price of coffee in the early
  90s had a catastrophic effect on the lives of
  millions of small farmers, forcing many into
  crippling debt and countless others to lose their
  land.
• So, there is a need for Fair Trade!

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History Status

• The history of fair trade movements spans the
  20th century. Initiatives include "goodwill
  selling" that was practiced in the United States
  from the 1950s until 1970s.
• Some Italian consumer organizations proposed in
  the 1980s that goods that were imported to Italy
  should be taxed inversely proportionately to the
  degree to which social and ecological standards
  of the exporter matched those of Italy - in other
  words, lower standards meant a higher offsetting
  tariff. The money so collected would presumably
  be spent on foreign aid to bring the exporting
  nation up to Italian standards - thus, all
  purchasing in Italy would be normalized as moral
  purchasing within ethics prevailing in Italy.

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History Status

• An extreme version of fair trade is the
  Community-Based Economics also promoted by
  worldwide green parties, which establishes a
  local currency for trade only in locally produced
  goods and services. Presumably, since each
  purchaser and producer are part of the same
  community sharing some risk of bodily harm due to
  infrastructure lacks or failures of emergency
  response or policing or government, there is an
  implicit and common standard of fairness assumed
  in all such local trade. Trade outside the
  borders of the community is at higher tax rates,
  with more complex trade rules including labels,
  and at higher tariff rates, to pay for the
  difficulties of assessing and equalizing the
  risks borne by the community for its involvement
  in remote production and (potentially)
  exploitation.
• the current fair trade movement concentrates more
  on a fairer price on fair trade goods, and
  abolition of agricultural subsidies and dumping,
  and to a much lesser extent on offsetting
  penalties on "unfair" goods. Fair trade is
  therefore best known for the fair trade labeling
  plan, which gives the consumers a tool or brand
  which they can recognize, should they wish to
  take part in the process.

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History Status

• Organizations
• In 1989, the Netherlands became the first country
  to launch the Fairtrade consumer guarantee the
  Max Havelaar label.
• In 1989, International Federation of Alternative
  Trade (IFAT)
• In 1990, European Fair Trade Association (EFTA)
• In 1992, Fairtrade Labelling Organizations
  International (FLO)
• Network of European World Shops (NEWS)
• TransFair USA

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History Status
Organizations
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History Status

• Some Facts of Fair Trade
• Worldwide, fair trade sales total 400 million
  each year.
• Of 3.6 trillion of all goods exchanged globally,
  fair trade accounts for only .01.
• Fair trade businesses return 1/3 to 1/4 of
  profits back to producers in developing
  countries.
• Sixty to seventy percent of the artisans
  providing fair trade hand-crafted products are
  women. Often these women are mothers and the sole
  wage earners in the home.

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History Status
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History Status

• Food Products
• Bananas, Cocoa, Coffee, Cotton, Dried Fruit,
  Fresh Fruit Fresh Vegetables, Honey, Juices,
  Nuts/Oil Seeds and Purees, Quinoa, Rice, Spices,
  Sugar, Tea, Wine
• Non-Food Products
• Cotton, Cut Flowers, Ornamental Plants, Sports
  Balls

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Fair Trade Key Principles

• Creating opportunities for disadvantaged
  producers
• Payment of a fair price
• Healthy and safe Working conditions
• Capacity building
• Equal employment opportunities
• Transparency and accountability
• The environment sustainability
• Consumer education

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Fair Trade Key Principles

• Creating opportunities for disadvantaged
  producers
• A strategy for poverty alleviation and
  sustainable development.
• Creating opportunities for producers who have
  been disadvantaged or marginalized by the
  conventional trading system.
• Payment of a fair price
• Paid fairly for products, which means that
  producers are paid at least that country's
  minimum wage.
• Paying fair wages does not mean that products
  cost the consumer more. Bypassing exploitative
  middlemen and work directly with producers, fair
  trade can cut costs and return a high price to
  the producers.

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Fair Trade Key Principles

• Healthy and safe Working conditions
• A safe and healthy working environment are
  maintained.
• Producers gain greater control and decision
  making power over the use of their local
  resources.
• Capacity building
• Fair Trade assists in developing producer
  independence and helps producers and buyers trade
  under direct long-term relationships.
• Producers have access to financial assistance by
  direct loans, prepayment and technical assistance
  by providing market information, product feedback
  and management skills.

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Fair Trade Key Principles

• Equal employment opportunities
• Equal employment opportunities are provided for
  all. Equal pay for equal work by women and men.
• Emphasis placed on ensuring that womens work is
  properly valued and rewarded.
• .
• Transparency and accountability
• All aspects of trade and production such as
  Finances, management policies, and business
  practices are open to the public and monitored by
  Fair Trade Organizations

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Fair Trade Key Principles

• The environment sustainability
• Encourage producers to engage in environmentally
  friendly practices.
• Develop products based on sustainable use of
  their natural resources, giving communities an
  incentive to preserve their natural environments
  for future generations.
• Consumer education
• Educate consumers and policy makers about the
  importance of purchasing fairly traded products,
  telling the inequities in the global trading
  system.
• Respect workers' rights and environment by
  defining fair trade and conducting such business.
• Enhance cross-cultural understanding and respect
  between consumers and communities in the
  developing world.

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How To Operate

• Fair Trade is operated through the following
  organizations
• Producer Organizations
• Fair Trade Importers and Wholesalers
• Fair Trade Retailers
• Fair Trade Labeling Initiatives

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How To Operate

• Producer Organizations
• Producer organizations may be village or
  community groups or cooperatives, and often may
  have joined together under export marketing
  umbrellas. The products cultivated or produced by
  these organizations include numerous food and
  drink products such as coffee, tea, cocoa, and
  spices, as well as a wide range of handicrafts
  such as glassware, jewellery, baskets, furniture
  toys, fabric and many more too numerous to list
  in this report.
• Fair Trade Importers and Wholesalers
• Fair trade importing organizations are importers
  and wholesalers that source from Fair Trade
  Producer Organizations, and are committed to
  providing fair wages and employment opportunities
  to these producers. Fair Trade importers and
  wholesalers provide a range of services and
  assistance directly to these producers.

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How To Operate

• Fair Trade Retailers
• Fair trade retailers are stores, either brick and
  mortar or Internet-based, or mail order catalogs,
  that carry fairly trade items, bought directly
  from Fair Trade Producer Organizations or from
  Fair Trade Importers and Wholesalers. Fair Trade
  Retailers often import and wholesale as well.
• Fair Trade Labeling Initiatives
• Fair Trade Labeling Initiatives certify the chain
  of supply of certain commodities in order to
  guarantee adherence to fair trade practices.
  Fairtrade Labeling Organizations International
  (FLO), based in Bonn, Germany, coordinates these
  labeling initiatives in 17 countries in Europe,
  North America and Japan. FLO guarantees that all
  products sold with a Fair Trade certification
  label conform to the Standards developed by its
  Standards Policy Working Group and contribute
  to the development of disadvantaged producers.
  The range of products that carry the labels now
  includes coffee, chocolate and cocoa, rice, fruit
  and fruit juices, tea, honey and sugar. TransFair
  USA, Canada and Japan are among these 17 Fair
  Trade labeling initiatives.

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How To Operate

• How to be a Fair Trade Producer
• The process begins with a written application to
  FLO from the producer organization, often with
  the support of a trading partner.
• If the application is accepted, the organization
  will be physically inspected against Fairtrade
  standards by a regionally-based FLO inspector.
• The inspectors report is then considered by an
  independent Certification Committee which takes
  the final decision on whether or not to certify.
• Certified producers are re-inspected every year
  and groups that violate Fairtrade standards will
  be removed from the FLO register

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How To Operate

• Fair Trade Standards
• There is a series of fair trade standards
  established in detail, updated/amended by FLO
  from time to time, mainly covering in two
  aspects
• Small farmers
• Workers on plantations and in factories

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How To Operate
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How To Operate
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Fair Trade Benefits

• More Biz opportunities
• Fair Wages
• Good Working Conditions
• Financial and Technical Support
• Capacity expansion
• Environmental Improvement
• Cultural Identity

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Fair Trade Benefits

• A case study shows how Fairtrade sales can
  benefit Third World farmers and their community.
• An interview is undertaken from a group of banana
  farmers and workers in the Dominican Republic.
  They received benefits from the sales to the UK
  Fairtrade market (just in 2 years).

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Fair Trade Benefits Banana Case Study

• regular income

Alfredo Martinez used to sell his bananas to the
local domestic market in the Dominican Republic.
The price swung up and down wildly, and some
months he couldn't sell his crop at all. But
for the last two years Alfredo has had a regular
income, and regular food for his three children.
He has sold his bananas to the Fairtrade export
market. 'Now food, at least, is secure. I'm
earning double what I was earning when I was
selling to the local market.'
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Fair Trade Benefits Banana Case Study

• Workers' pay and conditions

Supervisor Martina Valdez and her team pick, wash
and pack bananas for Fairtrade farmers. They are
paid above the national minimum wage, and receive
health and social security benefits. I've
worked in bananas for 23 years,' says Martina.
'Things are good right now.
All the workers are enrolled in the local social
security system and are paid more than the legal
minimum wage. Workers have decent working terms
and conditions, such as lunch, double wages in
December, and payments to attend private medical
clinics if necessary.
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Fair Trade Benefits Banana Case Study

• a cleaner environment

Agronomist Felipe Rivas is helping farmers meet
Fairtrade's environmental standards 'You need to
educate people so that they understand the
issues.' Felipe's group now clear away old
plastic bags used to protect growing bananas,
even if the bags were dumped by other farmers.
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Fair Trade Benefits Banana Case Study

• new housing

Most of his life, Gregorio Alvarez lived in
crumbling state-owned housing. His whole family
lived in one room. But then he started selling
bananas to Fairtrade. Finally, we are building
something that is ours -something that can belong
to my family.
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Fair Trade Benefits Banana Case Study

• health and sanitation

Dolora Castillo wants to bring up her
grandchildren to be clean and hygienic. But there
was no sanitation in Dolora's community until
local Fairtrade farmers started donating outside
toilets.
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Fair Trade Benefits Banana Case Study

• increased efficiency

'"The fight is to show we can organize ourselves
as effectively as the big companies," says
Fairtrade banana farmer Angel Regalado.
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Fair Trade Benefits Banana Case Study

• new water supply

Roberto Rivas, like everyone in his village, buys
water in tanks and bottles. But soon Fairtrade
farmers will be pumping water into the village's
disused pipes from a local well.
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Fair Trade Benefits Banana Case Study

• community canteen

Fairtrade farmers are setting up a community
canteen, where local people can get a decent
midday meal at a reduced price.
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Fair Trade Benefits Banana Case Study

• sport and education

Fairtrade farmer Jose Mendoza persuaded his
fellow-farmers to give free uniforms to local
schools and baseball teams
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• Pro- Viewpoint to
• Fair Trade Is An Excuse for Developed Countries
  to Shut Developing Countries out of Markets

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• Fair Trade Can Really Do Good as They Intend?
• Fair Trade Is a Camouflage of Trade Protectionism

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• Fair Trade Can Really Do Good as They Intend?
• Fair trade maintains nothing more than a
  feel-good cycle of poverty.
• The fair trade can not help and protect the poor
  workers in the developing countries
• Fair trade is not fair to consumers of developed
  countries

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Fair trade maintains nothing more than a
feel-good cycle of poverty

• On the surface
• Fair trade may appear to be a good idea. Farmers
  in the developing world get paid decent wages
  thanks to socially conscious consumers in the
  first world.

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Fair trade maintains nothing more than a
feel-good cycle of poverty

• In reality
• Developing nations cannot expect to compete with
  the industrialized first-world when they continue
  to expend the majority of their workforce on
  inefficient agricultural labor.
• Fair trade encourages them to remain in this
  condition, Rather than force developing countries
  to modernize and industrialize, fair trade allows
  them to stagnate in old pastoral squalor

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The fair trade can not help and protect the poor
workers in the developing countries

• No farmer will ever get rich from fair trade, the
  farmers would stay on the land and continue to
  eke out their existence, In essence, fair trade
  will do nothing more than maintain the
  unsatisfactory status quo.
• Without fair trade, people will be wake early and
  forced to joint the industrialized workforce,
  developing nations would be furnished with a
  ready and willing industrial labor force, working
  to pull them out of poverty and into prosperity

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Fair trade is not fair to consumers of developed
countries

• The Fair Trade Organization encourage people to
  buy the so-called high price fair trade
  Products, and then the costs are transferred to
  the consumers.
• Economists have a phrase that is their equivalent
  of the
• Road to hell is paved with good intentions.
• It is that they ignore the law of unintended
  consequences at the peril.

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Trade is good, but imports are bad."

• Fair Trade Is a Camouflage
• of Trade Protectionism
• The origin of Fair trade as Trade protection
  means
• Make developing country products lose competing
  capability
• Deliberate use the concept of Fair Trade to set
  non-tariff trade barriers

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The origin of Fair trade as Trade protection means

• Even With the great effort development of
  developing countries, for the status quo, they
  are still far behind of the developed counties,
  especially at the high-tech areas.
• They just got some comparative advantages on some
  a few of agriculture products like coffee bean,
  cotton and etc. and labor force intensive
  product like textiles, some developed countries
  are trying to used different means to restrict
  them to compete with in the international market.

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The origin of Fair trade as Trade protection means

• As to the cut-down of some developed counties
  product subsidies, and the condemnation of
  products dumping from developing countries can
  not be a real reason to restrict the developing
  countries productions. (Why? the purpose of
  dumping is to make a monopoly and to make great
  benefit for future. But now, no developing
  country at the position to make the monopoly to
  do so.)
• With the development of free trade, tariff
  barriers have come down,
• the unfair "fair trade" laws are increasingly
  being used as developed countries favored
  protectionist tool.

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Make developing country products lose competing
capability

• According to the requirement of Fair Trade, the
  improvement of ecology, work condition and wages
  will increase the cost and price.
• so with the increased cost, out of the question,
  it result in high price, and finally it will make
  the developing countries products lose the
  competing capability in the global market.

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Deliberate use the concept of Fair Trade to set
non-tariff trade barriers

• Put the West countries axiological viewpoint,
  unrealistic facts and subjective justice in the
  concept
• By fully use the concept of fair trade, put
  developing countrys products at the position of
  unfair trade, restrict the products to get to
  developed countries markets.
• Set a non-tariff barrier.

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Examples of trade protection by fair trade

• By the name of fair trade, America restricted
  to import cotton from some African countries,
  meanwhile, some American farmers get great
  profit, cotton subsidies a windfall.
• Eliminating this subsidy and allow the cotton to
  get to American market would help 10 million poor
  cotton farmers in sub-Saharan Africa. This is
  much more than the so-called fair trade can help.
• American taxpayers would also benefit.

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Examples of trade protection by fair trade

• EU denounced the developing countries products
  are not meeting the fair product condition, like
  Thailand, and some other Africa countries on the
  sugar, banana products and etc.. And restrict the
  product to get to their market. They just to
  protect their markets.

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Examples of trade protection by fair trade

• What would happen if they allow the developing
  countries product to get into their markets?
  Immediately, some of EU farmers would be subject
  to intense competition from producers in the
  Third World - the chances are that many EU
  farmers unable to improve efficiency and increase
  productivity would go out of business.
• The profits enjoyed by Third World producers
  would steadily increase as their businesses
  prospered with open access to a massive market
  like the EU, In the long-term many Third World
  nations would enjoy more widespread economic
  prosperity,

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Virtual Trade protectionism

• "Fair trade bears a suspicious likeness to our
  old friend protection. Protection was dead and
  buried long time ago, but he has come out of the
  grave and is walking around in the broad light of
  day. But after long experience underground, he
  endeavours to look more attractive than he used
  to appear... and in consequence he found it
  convenient to assume a new name."
• William Gladstone

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Conclusion

• There are several old jokes about economists,
  none of them very funny. Perhaps the best known
  is
• if you have six economists, you will have seven
  points of view.