What are the global ethical issues embedded in the concept and implementation of fair trade?

The Fair Trade Movement began with coffee. Starbuck’s was one of the first companies to sign on to the idea of fair trade coffee to help farmers and workers in lessdeveloped countries. But, after the collapse of the Rana Plaza factory in Bangladesh, killing over 1,100 workers, the fair trade movement for apparel and home furnishings took off. Fair trade is an alternative approach to conventional trade and is based on partnerships being developed between producers and traders, businesses and consumers. The global fair trade system is represented by Fair Trade International (FTI) and its member organizations.

FTI carries out its mission of empowering producers and combating poverty by certifying factories that meet certain standards that include employee safety and health, acceptable wages and working conditions, environmental impact, worker’s rights, and other pertinent criteria.

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Fair Trade USA (FTUSA) audits and certifies transactions between U.S. companies and their international suppliers to ensure that rigorous Fair Trade standards have been met. Fair Trade USA is a 501 (c) (3) non profit organization that seeks to inspire the rise of conscious consumers and eliminate exploitation. Fair Trade USA now certifies 20 brands and includes companies such as Patagonia, Williams-Sonoma, and Bed Bath & Beyond. Before Rana Plaza, FTUSA only certified a handful of brands. Whole Foods Market got into apparel when it began carrying Fair Trade Certified T-shirts made by Pact Apparel.

Fair trade does not come without higher costs. The average total cost to the brands to get certification including third-party factory audits comes to about 1 to 5 percent of what the brands pay to factories. Brands are also expected to pay more based on the volume of purchases from factories.

In its concept, the Fair Trade Movement appears to be the epitome of CSR. The Fair Trade Movement has its detractors, however. Among the criticisms are that: (1) little money actually reaches the developing world, (2) less money actually reaches the farmers and workers, (3) evidence of impact has not been adequately assessed, (4) fair trade is profitable to traders in rich countries, (5) fair trade hurts other farmers and producers, (6) fair trade criteria presuppose a set of political values that everyone does not agree with, (7) some supporters of fair trade use bullying and misleading selling techniques, (8) people who volunteer to work on free trade are misled, (9) there is failure to monitor standards, and (10) corruption is in the process. In another criticism of fair trade, it was pointed out that it may increase revenues to some farmers, but it is mostly about redistribution rather than expanding the overall amount of value created.

 

1. Do consumers continue to support the idea of paying more for a product just to help workers in emerging economies?

2. Why did the Fair Trade movement explode in popularity after the Rana Plaza collapse? Will the movement continue to grow once working conditions get better?

3. What are the global ethical issues embedded in the concept and implementation of fair trade?

4. Do the “certified” companies really care or are they simply interested in their reputations?

5. Is the Fair Trade Movement sustainable? Or, will it plateau and decline over time?

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