Globalaffairs

Issue 1/February-March 2007
By Carolina Ferreiro Fajardo

Nowadays, the Fair Trade is the most viable initiative for the achievement of more equal commercial relations between producer and consumer. This activity is an alternative to international trade at global level and it has become an effective cooperation tool for eliminating poverty and exploitation in undeveloped countries.

We can state that the Fair Trade is a growing activity in Spain because it had a 17% increase in the last five years. Despite these data, Spain has long way to go because it is bottom of the league when it comes to fair products market.

According to the last statistics (2006) of the Fair Trade Yearbook in Spain carried out by the SETEM organization, the average spending in fair products is less than 350 euros per thousand inhabitants. This figure shows that the Fair Trade is a social accepted activity but not enough known especially if we compare it with the EU average where the average spending is 2,318 euros per thousand inhabitants. The Spanish regions with the highest rates of fair products sales are: Catalonia 35,5%, Madrid 20,3%, Galicia 15,5% and Andalucia 9,3%.

What is Fair Trade?

The Fair Trade in an alternative to the economic exchange system promoted by many governmental organizations, social movements, politicians and NGOs from all around the world. Ass for economic activity the Fair Trade looks for an equal and fair relation among producers, Southern countries inhabitants and developed countries consumers. The Fair Trade contributes to sustainable development in the producer-consumer commercial exchange.

Some of the Fair Trade principles are: men and women equality at work, stop children exploitation, decent work conditions according to human rights, equal salary for producers, environment respect and middlemen reduction.

246 millions of children work in the whole world. According to the International Labour Organization (ILO) data this figure is decreasing each year. The international organizations not only governmental but also non governmental are working for the children respect and they are achieving important goals in this issue. Child labour is the last way of slavery in today’s world.

The sharp prices decrease in raw materials from undeveloped countries increased the weak position of these countries making multinational companies the “great winners” of the commercial game.

We have to make this point clear; the Fair Trade is trade and not an altruistic aid from Northern countries to undeveloped countries. It is about developed countries having to open their markets in a clear way to Southern countries respecting decent prices and labour conditions.

The big Chain of Fair Trade

Different actors intervene in this alternative commercial activity to make the Fair Trade an important activity in the international realm. First, the producer is the departure point for the product manufacturing. The Fair Trade fights for the producers’ rights. Second, importers buy products to producers with a previously agreed price that allow them to live in decent conditions and to have social and education opportunities. Shops are the third actor in the commercial chain because they buy products to importer organizations. Moreover they realize an important task to make people aware of the existence of such products and they fight for a fairer world trade. The fourth element in this Fair Trade chain is the customs. Due to a responsible product consumption customs are helping to producers - the first element in the chain – to improve their life conditions. The last element is international organizations; they guarantee the right compliance with Fair Trade criteria at global level and equal for all countries.

The products that we can find in Fair Trade shops are from the poorest regions in Latin America, Africa and Asia. It is very often that producers are families, small cooperatives, women or workshops for disabled people. They are social groups without direct access to markets due to economic, geographical reasons or lack of experience. In case of market access the price is not enough to survive. In Fair Trade shops, it is very often to find products made by underprivileged groups from developed countries.

History

The Fair Trade was officially recognized in 1964 in the United Nations Conference on Trade and Development (UNCTAD). The poorest countries claimed for more equal and fairer commercial relations between North and South. After this conference just a small group of developed countries decided to create shops to sell products from Southern countries trying to avoid a large number of tariff barriers on such goods.

In Europe the country at the forefront of the creation of a solidarity shops network was Holland followed by Germany, Swiztland, Austria, France, the UK and Belgium.

At the beginning these shops were marketing by catalogue handcraft products from undeveloped countries. In 1973 the sale of the first agricultural good began with the FT coffee made by cooperatives in Guatemala.

In the 80’s this kind of trade became popular and the list of products to sell increased. More products were incorporated such as: honey, tea, sugar and cocoa. Handcrafts and textiles increased in quality and quantity. In 1990 the European Fair Trade Association was created by the initiative of eleven Trade Fair organizations from nine European countries. After ten years of informal cooperation this organization searches boosting cooperation at practical level among its members as well as applying common policies and strategies.

In 1999 the European Commission made a statement in favour of Fair Trade and claimed that it was going to fight for the Fair Trade goals. This document has been included in the EU legislation regarding development policies.

The EU stated that Community policy in the sphere of development co-operation shall foster: “the sustainable economic and social development of the developing countries, and more particularly the most disadvantaged among them, the smooth and gradual integration of the developing countries into the world economy, the campaign against poverty in the developing countries.” (Communication from the Commission to the Council, November 29th, 1999)

In 1986 Spain opened the first Fair Trade Shop in the Basque Country. Ten years later resulting from the success of this solidarity activity the State Coordinator of Fair Trade Organizations was established. This organism aims to group all shops and organizations of this kind of trade in Spain. Today there are 34 organizations and 60 shops in the State Coordinator.

In 2006, 3000 shops were created in the most developed regions in the world: Europe, Canada, The USA and Japan.

Coffee, the star product in the Fair Trade sales

Coffee has been the most successful product in Fair Trade. Northern countries use it daily; however, it has its dark side in coffee producers from Latin America, Africa and Asia.

The brand coffee sales in developed countries are carried out by multinationals that very often pay ridiculous prices to coffee producers for this raw material and in many cases they make producers to get into debt. It is estimated that these practices of multinational companies destroy 25 millions of coffee producers a year all around the world.

With the Fair Trade initiative, coffee farmers have an alternative solution to coffee multinational companies. Due to this fair exchange producers from Mexico, Nicaragua and Tanzania can have a guaranteed salary and decent labour conditions.

The Fair Trade organizations decide to make coffee number one in sales due to the precarious situation of the coffee labour market. Today big coffee plantations workers in South America or Africa earn an average of 102 euros a month and they often suffer from the commercial middlemen extortions. They buy coffee to farmers at low prices and then they sell it in the national market at substantially increased prices. These casual labourers do not have contract, health insurance or any other legal consideration. Furthermore, coffee industry has high rates of child exploitation because it is estimated that most of the producers’ children started working in plantations when they are six or seven years old so as to contribute in the family economy.

What is a fair price? It is the price that covers all manufacturing costs and leaves profits to producers so they can have a decent life and invest their profits into social needs such as education, health or houses. In the case of some products such as coffee or cocoa, the Fair Trade organizations take prices from International stock exchanges from New York and London as reference point and then they add an additional quantity. Thus, they ensure that producers will receive a minimum price even if market price is lower than the one stipulated by international exchange stocks.

Holland was not only the first European country to implement the Fair Trade initiative – as stated before – but also the first one to boost coffee sales. In 1988 due to the increasing coffee demand in the Trade Fair shops the Max Havelaar Foundation was established to create a coffee brand that will be have a Fair Trade label. This initiative was very successful in countries such as the USA, Japan and twenty European countries. Since then, the organizations selling coffee with the Fair Trade label are coordinated by the FLO (Fair Trade Labelling Organization) and the coffee sales have increased in the last years. According to the report “Coffee and Fair Trade” made by the Spanish organization SETEM, in 2003 16,600 tones of this coffee brand were sold in Europe which demonstrated the spectacular reception of this product in the markets of developed countries.

Main organizations working for the Fair Trade in Spain

Most Fair Trade shops are managed by NGOs; they have a good experience about the problems of the Third World. But also there are some individuals worried about the situation of most unprivileged communities who sell Fair Trade products.

Between 2000 and 2003 the Fair Trade products sold in Spain were from 34 countries in Africa, South America and Asia. In the forthcoming years, the Fair Trade organizations in Spain estimate that the number of fair products exporters will be 42.

In Spain there are many different organizations working for the Trade Fair. Most of them have contact with importer cooperatives of fair products and they sell them in their shops.

The most important Spanish organizations promoting fair trade by sales volume and campaigns number are Intermon Oxfam and SETEM.

Intermon Oxfam is a NGO founded in 1956 that realizes many humanitarian projects in many countries in the world. Intermon Oxfam is especially concerned about fair trade therefore it is improving the situation of Southern countries that are either exporters or producers for the First World.

The “Trade with Justice” campaign promotes respect and decent salaries for main coffee producers. Intermon estimated that in the world there are 25 millions of coffee producer families who are living in critical conditions. The price of their coffee is so low than they can not cover the manufacturing costs. Oxfam states that while these families are reaching limit situations, multinational companies are the privileged ones of this unfair exchange.

We have to mention the “pull the thread” initiative that demands to the Spanish Federation of Textile Companies (FEDECOM) to ensure the right conditions for improving the worker’s life. This campaign has collected 14,000 signatures and got many textile companies to take measures to fight against the precarious labour situation in this sector.

Intermon states that the first victim of precarious labour conditions is the woman because it is 75% of the labour force in textile industry. The organization calculates that 15 millions of women are working without contract or health insurance in countries such as Bangladesh, China, Bulgaria and Morocco. This organization has 37 shops of Fair Trade in several Spanish cities.

The SETEM organization is a federation of ten NGOs that make people aware of social inequalities between Northern and Southern countries. The Fair Trade is one of its main targets therefore it manages many campaigns in this area.

The SETEM NGO in Madrid has a campaigns department that makes Southern countries problems know and proposes alternative solutions to these problems.

The “Clean Clothes” campaign fights for the respect of labour rights in the textile industry at global level. Moreover, it fosters producer social responsibility as well as making consumers aware of responsible consumption of these products and making the labour conditions of the textile industry to be known.

This initiative was first realized in Holland in 1989 and today it is being developed by ten European countries at the same time. In Spain it began in 1996 by SETEM and today it has the support of 60 social, trade union and consumer organizations.

Another socially successful campaign by SETEM is “Ethical Finances”. With this initiative the organization aims to make consumer think about where to invest. It proposes alternative ways for investing and saving with triple benefits: economic, social and environmental. They want to make citizens aware of the importance of their money to transform our society therefore this campaign denounces financial activities that violate human rights. The slogan of this campaign is “Count your values, humanize your money”.

Carolina Ferreiro Fajardo
Journalist