What's FairTrade

The history of fair trade

The idea of fair trade was born in the 1940’s in the U.S. as an alternative form of trade. It was started by NGOs that were working toward international cooperation. In the U.K., in the late 1950’s　Oxfam started an aid project to support people who lived in developing countries.　 It was called “Helping by Selling”.　This means that NGOs in the developed countries bought the products, which were made in developing countries, and then they sold them to consumers in developed countries. The main purposes were aid and international cooperation.

However, in the 1960’s many countries in Africa became independent, and UNCTAD (United Nations Conference on Trade and Development) was held in 1968. This conference decided on a new slogan “trade, not aid” which was proposed by people from developing countries. This slogan was intended to show that the most important thing for developing countries was financial independence from developed countries.

The usage of “fair trade” began in the U.S. around the mid-80’s. At first “fair trade” had a different meaning, because this wording was used by the U.S. to fight against protectionism in Asian countries, which were showing strong economic growth then. However, when we consider world trade and the real meaning of “fair”, we have to ask, “How should we use these words correctly?” We realize that the real victims of world trade are the people who live in the developing countries.　 In addition to this problem, there is the North-South problem, which had started in the colonial period. Then the meaning of “fair trade” changed, and the fair trade movement has started to try to improve existing trade.

In the 1990’s the fair trade movement emphasized a reformation of consumers’ ideas in the developed countries. And many campaigns and lobbies were held. In Europe, 11 groups in 9 countries established the EFTA (European Fair Trade Association), and also 100 groups in 45 countries all over the world established the IFAT (International Federation for Alternative Trade) at 1989.

The problems of free trade

When we think about the problems surrounding developing countries, we can find two important points. One is ODA (Official Development Assistance) causes developing countries to take on a great deal of debt, and the debt produce poverty. The other point is that free trade is controlled by multinational corporations. Both points are based on the North-South problem, which was began in the colonial period. Also, we should keep in mind that the system of free trade always works to bring big benefits to both the rich people in the developed countries and the rich people in the developing countries. The world market is controlled by multinational corporations. They took over the trade networks that had been developed during the period of the slave trade under European domination in the colonial period. Therefore, people who live in developing countries produce primary products for developed countries, and developed countries invest capital in developing countries and teach them industrialized agricultural techniques. Developing countries offer natural resources and cheap labor to the developed countries. In fact, it is difficult for the people who live in the South to change the systems of world trade (the structural control), so developing countries are controlled by the power of free trade and capitalisom.

Since the multinational corporations are able to control both the market side and the production side, they need natural resources in developing countries and a cheap labor force in both countries. Also, they need the rich markets in both sides to sell their products. This cleavage in society between the rich and the poor not only brings big benefits to multinational corporations, but also it also aggravates the difference between the rich and the poor. Now, several big multinational corporations transfer their products from country to country within their own corporations, and they have begun to control farm products. Fair trade is one method to solve the inequalities of this structural control system.

What is alternative trade (fair trade)?

Alternative trade is a trade system to move toward an equal exchange between developing countries and developed countries. In addition, people who are engaged in fair trade are trying to find a form of direct trade between the consumer side and producer side, and they emphasize that people who live in the South need support from consumers in the North for their financial independence.

In their history, some fair trade groups started their activities as charity to save people from hunger and some kinds of disasters in developing countries; therefore many groups have religious backgrounds. Oxfam is a famous Christian group, which started their activities during the Second World War to raise the money for the hungry. However, they began to change the form of these activities from charity to fair trade little by little. The main reasons why they changed are that they had wanted to develop an equal relationship between developing countries and developed countries, and that they wanted to advance the independence of the developing countries through sustainable alternative trade. Furthermore, people who live in developing countries had proposed the slogan “Trade, not aid” at UNCTAD. However, the history of fair trade is very short, and each developing country is in a different situation, so sometimes the same rules for fair trade cannot be applied to every group. Besides, there are some cases when it is hard to decide if it is fair trade or aid.　In this situation, ATOs (Alternative Trade Organization) are making every effort by trial and error.

The big differences between free trade and fair trade are the purpose and size of their business, but the specific characteristic of fair trade is the close relationship between the producer side and the consumer side. Generally, NGOs carry out the function of middlemen. In the case of free trade, there are too many middlemen between the producer side and the consumer side. Therefore, it seems impossible to know and understand each situation and background. However, ATOs are trying to find alternative ways that both sides are able to communicate through ATOs. Moreover, the producers in developing countries are able to find a way to be independent by selling their products at a reasonable price, and consumers in developed countries are able to get good quality products such as organic food. Fair trade has great potential because, people who engage in small projects will be able to consider what is possible or impossible in each situation, so we could say fair trade is new type of trade to find out what is ideal trade.

The products of fair trade

There are two types of fair trade products, primary products and handmade crafts. However, when we think about primary products, we could ask the fundamental question of whether world trade itself is really needed in this world? Some people have this kind of idea and say that people who live in developing countries should produce their own food instead of producing products for trade, and should keep natural resources in their countries. Actually, most land in developing countries is developed to produce cash crops, and developing countries import their food from developed countries. Michael Barratt Brown mentions in his book “Fair Trade” that we can find real benefits through fair trade for both the North and the South. The markets for people who live in developing countries are in the developed countries, and the developing countries also need the facilities and techniques of the developed countries. If they think that they have to join in the global market, we should not say “no”. We should help their ability to manage and negotiate as much as possible.

Nowadays, alternative trade deals worth billions of dollars flows in the global market, free trade deals worth trillions of dollars, so it is not sure whether fair trade is succeeding or not, but fair trade expands their networks year by year bit by bit. The idea of ATOs is that the relationship between the producers and consumers is a human relationship; they propose that the necessity of thinking about changing the structural control in the world trade. Therefore, ATOs have to try to become the new “middlemen” who have a completely different character to work for brings benefits to people who live in developing countries. Also, the propose of fair trade should not be only to promote their own projects; they should make every effort to achieve the goal of improvement of living standards in developing countries (especially, for women who are living in inferior situations). At the same time, we have to realize that the problems surrounding developing countries are caused by poor use of natural resources and labor.

What can we do? Green consumerism.

The developed countries have one-fifth of the population in this world and consume two-thirds of the natural resources of the Earth, and the developing countries have the other fourth-fifths of the population; they cut down trees in the tropical rain forest to pay back debts, grow fat line stock, and cash crops on their land. We realize that the environmental destruction is getting worse and worse all over the world. In this situation, “Green Parties” are growing up in east Europe and U.S. Environmental NGOs such as Friends of the Earth, Green Peace, and WWF are practicing many activities to protect the environment from destruction. In fact, most governments in developed countries have changed their behavior and show some provisions to solve environmental problems, because of the effective actions by citizen’s movements. Multinational corporations only try to expand the economy, and they treat foods the same as industrial products, to be used to control consumers’ needs. However, we have to know that we, as consumers, have power in this global market. We can choose either to accept the situation made by multinational corporations, or to refuse it. Although, grass roots movements are very small in the global market, they have the potential to act more effectively than the big projects run by governments in developed countries.

References “FAIR TRADE” Michael Barratt Brown
“How the Other Half Dies-The Real Reasons for World Hunger” Susan George
“The present state of fair trade in Nepal” FairTrade Committee