January 2006
Fair Trade Organizations
Fair Trade and Trans National Companies
 Dear Members of
the FLO Board and Representatives of the National Initiatives,
we are writing as
Fair Trade Organisations to let you know that we strongly oppose the involvement
of Trans National Companies (TNCs) in Fair Trade.
We believe it a serious mistake to underestimate the negative effects
of such involvement on the whole Fair Trade movement and to consider it
only from the viewpoint of its supposed economical benefits.
Improved market access for producers and products plus the less tangible
benefits of coming into contact with important international traders have
been stated as the justification for the recent decisions taken by some
FLO members to involve TNCs in Fair Trade.
This is really not good enough, especially when we consider how seriously
this engagement is going to affect the whole Fair Trade movement.
We believe that Fair Trade should continue to focus on increasing market
access for small-scale producers, and that there remains much to be done
to fulfil this aim. We also think that Fair Trade should be looking to
develop and strengthen local and regional economies in order to meet the
needs of the local population and to reduce their dependency on international
markets. It is clear that this aim is in contradiction with the actual
development of international trade and with the policies of the big TNCs.
Fair Trade certainly needs to work to change the role and behaviour of
the TNCs, and to expand the market for products made in compliance with
Fair Trade standards. But this cannot be done at any cost and without
a clear plan for the future.
The TNCs could be required to commit themselves to Corporate Social Responsibility
(CSR), and to respect ethical and fair standards in all their activities
(and not just in a few productions or plantations).
They should start by respecting all the ILO agreements, and thus paying
wages which provide producers with satisfactory living conditions. This
implies a complete revolution in the way TNCs look at profit maximisation!
The involvement in Fair Trade of TNCs still not seriously committed to
CSR doesn’t make any sense.
Decisions concerning such involvement have to take into consideration
all the stakeholders and relevant elements involved, including those often
excluded or forgotten: grass roots communities, workers, small farmers,
the environment. How can you contemplate involving in Fair Trade TNCs
known not to respect human, labour or environmental rights?
It is very important to remind ourselves of what Fair Trade is really
all about: the rights of small, marginalised producers.
If FLO and its members continue to involve TNCs in Fair Trade you must
oblige them to:
- seriously work with small Fair Trade producer
organisations;
- increase the proportion of their international trade that is fairly
traded year on ear to agreed targets, according to a long term plan;
- buy a relevant amount of products from them.
- commit themselves to implement a Corporate Social Responsibility
plan, reporting year on year the achieved objectives, mainly concerning
the respect of labour and environmental rights. |
Despite the statements and the positive attitude of some mainstream companies,
we do not believe that we are about to see substantial changes in the
behaviour of the TNCs. Without such change, the formal respect of Fair
Trade standards in a small part of their purchasing activities is not
going to produce any substantial transformation of the global market.
The risks of TNCs using the FT Label on their products are high:
- a TNC could easily promote itself as “Fair” even
if if it complies with Fair Trade criteria only in a small part of
its overall activity. This will affect the identity and credibility
of the whole Fair Trade movement, and cause political and economic
problems to Fair Trade Organisations;
- Many TNCs promote inequality and injustice through their dumping
of subsidised, Northern agricultural products on Southern markets.
They often reject the concept and the practice of paying a Fair price.
Connecting them to the Fair Trade Mark through one of their products
will cause the Fair Trade message to lose credibility and clarity
and any foreseen enlargement of the Fair Trade market cannot pay a
compensation to this loss;
- some TNCs are trying to control the whole supply chain: their involvement
in Fair Trade could also mean that they will soon begin to influence
Fair Trade policies, criteria, standards and certification rules;
- involving TNCs in Fair Trade could lead to a situation in which
some bigger Fair Trade Organisations, in order to compete with big
companies, buy out smaller ones. This would impact negatively on small
producers unable to supply products in the large quantities required.
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Fair Trade is not only focused on the development of producer organisations.
And the purpose of awareness raising goes beyond the payment of a fair
price.
We consider it our responsibility to work to bring about positive change
in all those economic and trade practices causing underdevelopment and
exploitation. The involvement of TNCs in Fair Trade may benefit a few
Fair Trade registered producer organisations in the short-term, but it
won’t change the companies’ behaviour and it will certainly undermine
the work of the Fair Trade movement, creating confusion and misunderstandings.
We believe that if we really want to spread Fair Trade, we ourselves need
to be seen to be sustainable and reliable organisations, promoting clear
and transparent values. Anything that weakens this, even if it gives short-term
market advantage, will threat the credibility of the whole movement and
compromise the opportunity provided by Fair Trade to improve the living
conditions of Southern producers and influence international trade rules.
This is why we strongly ask FLO and its members:
- to reconsider their decision on the inclusion of TNCs in Fair Trade,
focusing the attention on small producers and on Fair Trade main concerns;
- to consider this issue as a priority concerning the whole Fair Trade
movement;
- to be opened to a serious and tightened debate on it with all the Fair
Trade Organisations (both in the North and in the South) and not only
discussing it within the executive boards or directors. This discussion
should aim not only at analysing the situation, but also at defining common
and shared positions and behaviours.
Yours sincerely,
Agices, Roma - (Italian member of Ifat)
Chico Mendes, Milano - (Italian member of Ifat)
Commercio Alternativo, Ferrara - (Italian member of Ifat)
CTM altromercato, Verona - (Italian member of Ifat)
Equoland, Firenze - (Italian member of Ifat)
Equomercato, Cantu (CO) - (Italian member of Ifat)
Liberomondo, Bra (CN) - (Italian member of Ifat)
Ravinala, Reggio Emilia - (Italian member of Ifat)
Roba, Rapallo (GE) - (Italian member of Ifat)
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