Fair Trade

The Challenges of Transforming Globalization

Laura T. Raynolds, Douglas Murray, John Wilkinson, Laura T. Raynolds, Douglas Murray, John Wilkinson

• Publisher: Routledge
• Year: 2007
• ISBN:
  9781134002627
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

This book explores the challenges and potential of Fair Trade, one of the world's most dynamic efforts to enhance global social justice and environmental sustainability through market based social change.

Fair Trade links food consumers and agricultural producers across the Global North/ South divide and lies at the heart of key efforts to reshape the global economy. This book reveals the challenges the movement faces in its effort to transform globalization, emphasizing the inherent tensions in working both in, and against, the market. It explores Fair Trade's recent rapid growth into new production regions, market arenas, and commodity areas through case studies of Europe, North America, Africa, and Latin America undertaken by prominent scholars in each region. The authors draw on, and advance, global commodity and value chain analysis, convention, and social movement approaches through these case studies and a series of synthetic analytical chapters. Pressures for more radical and more moderate approaches intertwine with the movement's historical vision, reshaping Fair Trade's priorities and efforts in the Global North and South.

Fair Trade will be of strong interest to students and scholars of politics, globalization, sociology, geography, economics and business.

Part I
Introduction

1 Globalization and its antinomies
Negotiating a Fair Trade movement

Douglas L. Murray and Laura T. Raynolds

Introduction

Mainstream economists would have us believe that consumers seek out the lowest price for goods of any given quality, maximizing their individual gains. But how then do we explain why millions of consumers around the world are now choosing certified Fair Trade products instead of other often cheaper options? Are they actively “voting with their money” for a different model of global trade that is tangibly “fairer” than conventional trade? Further, traditional economic logic tells us that producers seek to maximize their competitive advantage over others in a zero sum game of winners and losers in the global marketplace. How do we then explain the systematic assistance that early participants in Fair Trade provide to subsequent entrants into this dynamic market? Are Fair Trade certified producers replacing competition with solidarity? Finally, mainstream economists also tell us that corporations will always purchase products at the lowest possible price, bargaining down their input costs where possible through competitive sourcing. Why then would an increasing number of companies, both large and small, willingly participate in a system where they must pay a price negotiated by a third party, well above the conventional price, for products that are produced under Fair Trade standards?

Far from anomalies – or the lingering inefficiencies the mainstream economists bemoan – these are but a few of the examples explored in this book that are part of the rapidly growing Fair Trade phenomenon. These examples cannot be discounted as merely the practices of an obscure and irrelevant group of progressive producers and elite consumers. Fair Trade products represent one of the fastest growing segments of the global food market, with total Fair Trade sales reaching US$ 1.6 billion annually (see Chapter 2). In the Global South, over five million farmers, farm workers, and their families across 58 countries have joined the Fair Trade movement, and many more are actively seeking access (FLO 2005).

Yet tensions are rising in conjunction with this movement’s remarkable success. As Fair Trade has moved into the mainstream of international trade, it has become embroiled in a range of debates and dilemmas that threaten to divide the movement. Fair Trade is both confronting and engaging large corporate actors in the Global North and South. In the process it is being challenged by its supporters and its opponents. The following discussions reveal the difficult dilemmas and even contradictions facing the movement as it seeks to both challenge the existing global trade regime, and to transform it from within.

What is Fair Trade?

Fair Trade is perhaps the most dynamic of a range of movements, campaigns, and initiatives that have emerged in recent decades in response to the negative effects of globalization. Efforts such as the anti-sweatshop movement in garments, eco-labeling in timber, and Fair Trade certification in food products all seek to create a more sustainable and socially just future. These movements represent the constituent elements of what we describe as “the new globalization,” reshaping the patterns of international trade and the very processes of corporate expansion in the global economy that have historically undermined ecological and social conditions around the world. Northern activists working with producers, laborers, and other impoverished sectors of the Global South, are using market-based strategies to mobilize consumer awareness in order to bolster incomes and empower Southern producers and workers. In so doing, Fair Trade seeks to redirect globalization’s transformative powers toward the creation of greater social equity on a global scale (Brown 1993; Ransom 2001; Raynolds 2000).

The moral appeal of Fair Trade and associated movements is demonstrated by the widespread adoption of their logic and terminology by varied groups. The term “fair trade” is currently used extensively, sometimes to support efforts which stand in stark contrast to the vision of the Fair Trade movement. Most strikingly, neoliberal politicians are increasingly utilizing the concept of “fair trade” as a synonym for “free trade” to give moral weight to their arguments for abolishing trade restrictions, even if these changes would undermine national social and environmental conditions. In recent political debates in the United States, “fair trade” has been used to refer to trade that results in fewer US job losses, while opening up export markets overseas without regard for the impacts on jobs in those countries. In its more progressive sense, the term “fair trade” is used by social activists to refer to a broad array of efforts which share at least some common ground with the Fair Trade movement. For example, direct local farmer-to-consumer food networks or initiatives promoted in the World Social Forum have described themselves as “fair trade” efforts.¹

The Fair Trade movement is comprised of a set of groups which are linked through their membership associations – the Fairtrade Labelling Organizations International (FLO), the International Federation of Alternative Trade (IFAT), the Network of European Worldshops (NEWS!), and the European Fair Trade Association (EFTA). Together these organizations are identified as the FINE network, a name created from the first letter of each of the four association’s names. We include in this definition of the Fair Trade movement the associates of the Fair Trade Federation, the North American equivalent to the Europeanbased FINE.

According to the Fair Trade movement’s joint statement, their goals are ambitious, yet straightforward:

1. to improve the livelihoods and well-being of producers by improving market access, strengthening producer organizations, paying a better price, and providing continuity in the trading relationship;
2. to promote development opportunities for disadvantaged producers, especially women and indigenous people and to protect children from exploitation in the production process;
3. to raise awareness among consumers of the negative effects on producers of international trade so that they exercise their purchasing power positively;
4. to set an example of partnership in trade through dialogue, transparency, and respect;
5. to campaign for changes in the rules and practice of conventional international trade;
6. to protect human rights by promoting social justice, sound environmental practices, and economic security.

Certified Fair Trade benefits marginalized producers and workers in the Global South in four critical ways. First, it provides producers with guaranteed prices that are higher than conventional world market prices, particularly in volatile tropical commodity markets. Second, it supports organizational capacity building for the democratic groups that are required to represent small-scale producers (via cooperatives) and workers (via unions). Third, it enhances production and marketing skills for participants and their families which extend beyond Fair Trade production. Fourth, it provides a social premium to finance broader community projects such as health clinics, schools, better roads and sanitation, and other social services.

Fair Trade’s success has indeed been remarkable. In less than two decades it has grown from an obscure niche market to a globally recognized phenomenon. Fair Trade has evolved from a small church and Third World solidarity movement appealing to a conscience-motivated consumer minority, to a movement with expanded conventional market-bases, directed toward the mainstream consumer majority. Within the past several years Fair Trade has entered into a new phase characterized by changes in Northern markets and supporting Non-Governmental Organization (NGO) movements, in the relationships between Northern activists and Southern producer groups, and in the nature and functioning of Southern producer groups and movements.

With Fair Trade’s growth and transformation have come new pressures simultaneously pulling the movement in multiple directions. The challenges that are emerging for Fair Trade raise serious questions about the nature and future direction of Fair Trade. Where is the movement headed? As it becomes increasingly subject to the disciplining forces of global trade and development, is it maturing into a less dynamic phenomenon than it once was? Or is it becoming part of a broader-based and more sustainable challenge to the neoliberal globalization regime? While the answers to these questions are critical to the future of Fair Trade, they are also important for other initiatives pursuing marketbased strategies for social change.

Globalization . . .

Fair Trade is best understood as an emerging response to the negative effects of contemporary globalization, and particularly to the often unjust and inequitable nature of contemporary international trade. As such it is not an “antiglobalization” movement, but instead it is part of what we describe as a “new globalization,” being developed through counter-hegemonic networks (Evans 2005) pursuing a strategy of reframing globalization from below (Falk 1997).

To understand globalization in its current form and the potential of one of its emerging challenges, Fair Trade, we need to look back over the past 50 years. In the post World War II era (and most dramatically since the 1980s) the ties linking national and regional economies to the global economy were significantly deepened, subordinating many aspects of social life to global realities (Dicken 1998; Hoogvelt 1997). Technological advances, particularly in transportation and communication, fueled processes of globalization in economic, political, and cultural arenas. With the globalization of production and consumption, people in the Global North became increasingly accustomed to ever-cheaper and ever more-available food, apparel, appliances, and other products. Wealth, in gross material terms, increased to previously unimaginable levels in some parts of the world, but so too did income inequalities within and between countries.

These processes of globalization have led to a “race to the bottom” where corporations compete globally to exploit the lowest cost human and environmental inputs. Workers and producers, first in the Global South but then also in parts of the North, saw real wages, incomes, and standards of living stagnate or decline, sometimes precipitously. Entire communities have been uprooted and swept aside by the social, economic, and political forces of postwar globalization. Land and water resources have been so affected that biodiversity around the world has been declining at an unprecedented rate (Millenium Ecosystem Assessment 2005).

The rise of transnational corporations has been at the heart of accelerating globalization, sourcing, and marketing in an increasingly unfettered fashion. Powerful private enterprises have exploited the emerging international trade regime and gained increasing influence over not only economic, but political (Held et al. 1999) and cultural (Appadurai 1990) realities around the world. The ability of these corporations to reap the benefits of globalization has been fostered by institutional and political changes in the postwar era. Global financial institutions, most importantly the International Monetary Fund (IMF) and World Bank, have become primary vehicles for promoting neoliberal economic policies forcing the deregulation of national economies. Import substitution regimes and important national economic development policies were dismantled in the 1980s. These policy changes undermined national protections for workers, producers, and consumers. The creation of the World Trade Organization (WTO) in 1995 cemented the hegemony of the neoliberal orthodoxy and the free trade vision of world development.

. . . and its antinomies

Over recent decades we have also seen dramatic changes in popular pressures for social change in both the industrialized North and the developing South. During the 1970s and 1980s the civil rights movement in the United States and the antiwar and organized labor movements in the United States and Europe faded. The collapse of the Soviet Union and the failure of Third World revolutions gave credence to the emerging dominance of neoliberal capitalism. At the same time, it became apparent that the grinding hardships and poverty long associated with authoritarian and totalitarian regimes were increasingly being imposed by the global market itself. Rather than focusing their efforts at the national level, social movements in this context shifted their strategies to global arenas and new movement goals.

Particularly striking has been the emergence of market-based approaches to challenging conventional globalization and its negative effects. Consumer boycotts, such as the grape boycott launched by the United Farm Workers Union in 1965 to address labor conditions, and the international Nestlé’s boycott begun in 1977 to challenge the marketing of baby formula in the developing world, were two early examples. The international divesture movement that sought to end financial ties with companies in South Africa and thus challenge the Apartheid regime was yet another. What is novel about these initiatives is that they were primarily market-based, often transnational in nature, and their actions were directed at corporations rather than nation states.

The Fair Trade movement emerged from this milieu. After World War II, church organizations began marketing handicrafts from the recovering war-ravaged communities of Europe. These direct marketing links became central to a number of religious group solidarity efforts with impoverished regions of the developing world, and shaped the early principles of social j...