Fair Trade and Social Justice

Global Ethnographies

Mark Moberg, Sarah Lyon, Sarah Lyon

• Publisher: NYU Press
• Year: 2010
• Print ISBN:
  9780814796214
• eBook ISBN:
  9780814796221
• Topic: Sozialwissenschaften
• Subtopic: Anthropologie

By 2008, total Fair Trade purchases in the developed world reached nearly $3 billion, a five-fold increase in four years. Consumers pay a “fair price” for Fair Trade items, which are meant to generate greater earnings for family farmers, cover the costs of production, and support socially just and environmentally sound practices. Yet constrained by existing markets and the entities that dominate them, Fair Trade often delivers material improvements for producers that are much more modest than the profound social transformations the movement claims to support.
There has been scant real-world assessment of Fair Trade’s effectiveness. Drawing upon fine-grained anthropological studies of a variety of regions and commodity systems including Darjeeling tea, coffee, crafts, and cut flowers, the chapters in Fair Trade and Social Justice represent the first works to use ethnographic case studies to assess whether the Fair Trade Movement is actually achieving its goals.
Contributors: Julia Smith, Mark Moberg, Catherine Ziegler , Sarah Besky, Sarah M. Lyon, Catherine S. Dolan, Patrick C. Wilson, Faidra Papavasiliou, Molly Doane, Kathy M'Closkey, Jane Henrici

1

What’s Fair?

The Paradox of Seeking Justice through Markets

MARK MOBERG AND SARAH LYON

Fair Trade and Neoliberal Globalization: A Brief History

In recent decades, the growth of global markets for agricultural commodities, manufactured goods, and artisanal products has made available to residents of the developed countries an unprecedented array of consumer goods originating in diverse cultures and geographies. This seemingly endless expansion of consumer choice is rooted in the process of neo-liberal globalization, a model of economic development now dominant among the world’s governments, multilateral lending agencies, and trade bodies. Intended to promote global trade through neoliberalism as exercised through institutions such as the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO), globalization has dismantled most state policies regulating the movement of capital and commodities across national borders (Basch et al. 1994; Greider 1997; Brennan 2003). Implemented through regional trade agreements such as the North American Free Trade Agreement (NAFTA) and the Single European Market, neoliberal policies have also facilitated massive levels of transnational investment, most of which originates from financial centers in the developed North. Meanwhile, technological and transport innovations of recent decades, particularly jet air cargo and containerized shipping, have brought the fruits of such investment within the reach of consumers in the developed countries (Harvey 1989: 24off.). The result has been a profusion of once-novel agricultural and manufactured goods on retail shelves, as well as traditionally available items originating in new sites of production: winter fruits and vegetables from Central America, cut flowers from Ecuador and Colombia, and fresh seafood from Asia have become routine items of consumption for North American shoppers (Fischer and Benson 2006; Ziegler 2007). This global sourcing of new products, combined with the ongoing volatility associated with markets for traditional bulk commodities such as coffee, tea, cacao, and bananas, has in turn heightened awareness of global wealth disparities. This awareness is a major impetus for the contemporary fair trade movement.

Neoliberalism¹ has largely supplanted earlier models of economic development rooted in state regulation of markets and international trade, a project whose origins date to the Bretton Woods conference of 1944 to plan a postwar global economy (Helleiner 1994). Bretton Woods endorsed Keynesian policies conferring a primary role for economic management on central governments, upholding controls on international transfers of capital to further national goals of investment and social welfare (ibid.). As independence movements swept colonized regions of the globe following World War II, newly installed national governments adopted Keynesian measures to regulate their countries’ involvement in the global economy. Promoting industrialization at home through state-led investment, developing countries also pursued regulation to ensure more stable markets for their exports. The term fair trade first arose during this time to encompass an agenda among United Nations member states favoring more equitable exchange between the developed and developing worlds (Fridell 2007: 24). Arguing that the global South’s reliance on primary product exports placed it at a disadvantage relative to the industrialized North, developing nations in the United Nations Economic Commission on Latin America (ECLA) and UN Commission on Trade and Development (UNCTAD) lobbied for commodity controls ensuring “fairer” prices for primary product exporters of the South (ibid.: 30). Hence, the fair trade movement in its earliest incarnation was opposed in principle to the deregulation embraced by later neoliberal policies.

During the 1980s, the Bretton Woods framework crumbled as national governments rescinded controls over international capital transfers, following the lead of the United States, which renounced such measures in 1973. Over the ensuing decade, severe trade imbalances due to deteriorating export prices and the rising costs of oil imports led many governments of the global South to default on foreign loans. In seeking assistance from the U.S.-dominated International Monetary Fund, developing countries averted bankruptcy only after agreeing to IMF Structural Adjustment Programs (SAPs) that diverted government spending into debt repayment. The effect was a forced imposition of neoliberal policies, as SAPs restricted the regulatory tools that national governments had earlier used to manage trade. Under the mandates of Structural Adjustment, developing countries were required to remove protective tariffs and restrictions over foreign investment, suspend subsidies for domestic producers, and orient their agricultural and manufacturing sectors to export production—all with the goal of maximizing export earnings in order to repay debts. In effect, national governments lost sovereign control of their economies. With the demise of the Soviet bloc in 1990, free trade—premised on the absence of tariffs, quotas, or state intervention in labor and commodity markets—emerged as the unchallenged economic paradigm virtually everywhere in the global economy. Upon the creation of the World Trade Organization in 1995, neoliberal doctrines acquired the force of law, as member governments could now sue others to force them to open their markets and remove “illegal” restrictions on the transnational movement of commodities. By that decade, the fair trade movement as originally conceived, that is, a statist program challenging free trade, appeared to be as moribund as the Keynesian policies on which it was based.

Yet with the expansion of neoliberalism the need for fairer international trade has become ever more pressing to many people in the postcolonial world. Free-market policies have brought millions of small-scale farmers into competition with industrial agriculture, which enjoys greater productivity because of its technological advantages as well as subsidies in the form of tax credits and price supports in the developed countries.² Usually unable to compete in deregulated markets with much larger corporate farms, household-based farmers confront the alternatives of plummeting earnings or a withdrawal from commercial farming altogether. National governments throughout the developing world face new pressures to export goods and generate foreign exchange, further glutting global markets for traditional export crops and depressing farmers’ receipts below their costs of production. The abandonment of longstanding multilateral efforts to regulate commodity prices, such as the International Coffee Agreement (ICA) and Lomé Convention,³ has also forced producer prices for many commodities to unprecedented lows (see Jaffee 2007: 42ff). These trends have been exacerbated by the consolidation of retail power in the developed world—epitomized by the emergence of Wal-Mart as a multinational supermarket chain—which has fueled intense price competition among the surviving retailers for the consumer market (Barrientos and Dolan 2006). By the 1990s, coffee growers experienced the lowest prices in a generation, and the decade witnessed deepening material hardship and even starvation in some coffee-growing regions (Charveriat 2001; R. Collier 2001). The attendant effects of neoliberal globalization have included massive emigration from rural areas (in turn lowering wages and living standards in manufacturing sectors) and recourse to dangerous and often exploitative survival strategies, such as prostitution and the production of illegal drugs (Nash 1994; Baumann 1998; Farmer 1999; Collins 2000; Moberg 2008). Yet, in many areas of the world, small-scale farmers are unwilling to “go quietly into that dark night,” at least not without resisting draconian neoliberal measures. It is no coincidence, for example, that the Zapatista rebellion in southern Mexico began on the very day that the North American Free Trade Agreement took effect. Zapatista leaders recognized that the dismantling of tariffs on cheap U.S. maize, one of NAFTA’s provisions, would decimate Mexico’s small farmers (G. Collier 1994).

Awareness of these global dislocations has given fair trade a rebirth in a nonstatist incarnation as an international movement that seeks economic justice and environmental sustainability through markets themselves. Thus redefined from government intervention to a market-based initiative, fair trade seeks to extend a preferred retail niche to products grown and manufactured under ethical conditions, thereby rewarding their producers with a higher return to their labor. As characterized by a coalition of European alternative trade organizations (ATOs) involved in the movement,

Fair trade is a trading partnership, based on dialogue, transparency, and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers—especially in the South. Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional trade. (Quoted in Moore 2004: 73)

By certifying the products of family farmers, cooperatives, and ethically run commercial farms as fair trade goods, ATOs claim to encourage more socially just and environmentally sustainable forms of production. Consumers of fair-trade-certified goods pay substantially higher retail prices for such items than for their conventional counterparts, with the difference ranging up to 100 percent or more for some fresh juice and produce (Stecklow and White 2004). Such prices are intended to generate greater earnings for family farmers and living wages on commercial farms. In addition, a portion of every fair trade purchase is returned to the producer’s organization itself as a “social premium” to be invested in a community project of local design. Fair trade producers are required to satisfy sustainable environmental criteria, including restricted pesticide use and practices intended to reduce erosion and maintain watersheds. Thus, the contemporary fair trade movement claims to privilege the interests of small-scale producers and the environment over large-scale agribusiness. It does so not through state intervention in commodity and labor markets but by encouraging more ethical consumer choice among the many alternatives made freely available to shoppers by neoliberal globalization.

Although the use of the term fair trade for the pursuit of social justice through markets is relatively recent, such initiatives date back to the mid-twentieth century in efforts to improve the prices received by artisans in the developing world for goods exported to the developed North (Jaffee 2007: 12ff.). In the 1950s, handicrafts were sold through OXFAM in the United Kingdom, SOS-Kinderhof in Holland, and the U.S.-based Mennonite SELFHELP initiative (later to become Ten Thousand Villages) in ways that averted traditional middlemen, ensuring higher prices for artisans themselves. In the United States, the marketing of coffee along fair trade lines accelerated in tandem with the Central American solidarity movement of the 1980s. The most prominent of these initiatives, Equal Exchange, developed direct marketing relationships with Nicaraguan coffee cooperatives to offset the Reagan administration’s trade embargo against the Sandinista government. North American fair trade groups at their inception focused on mail-order and later online systems of distribution and have only expanded into coffeehouses and other retail outlets within the past decade. Supermarket sales remain a small, albeit growing, segment of fair trade purchases in the United States. In contrast, three European ATOs, TransFair, Max Havelaar, and Fairtrade Mark, were promoting fair trade goods in mainstream supermarkets by the late 1980s. Over the following decade, fair trade labeling initiatives proliferated in seventeen nations of Europe, North America, and Japan, each geared to its respective national market. In 1997, these organizations sought to coordinate their efforts with the creation of an umbrella group, the Fairtrade Labelling Organizations International (FLO), based in Bonn, Germany. FLO is responsible for formulating consistent certification standards for fair trade products among its member organizations and creating a unified retail market through labeling and promotion (Raynolds 2000).

In order to receive the benefits of fair trade prices, producers must satisfy an array of criteria by which FLO attests that goods are grown or manufactured under conditions of social equity and environmental sustainability. Certification standards vary according to the commodity and the scale of the enterprise that produces it (see FLO 2008). Small-scale fair trade farmers must belong to democratically run producers’ associations in which participation is open to all eligible growers, regardless of ethnicity, gender, religion, or political affiliation. Alternately, if fair trade products originate on larger commercial farms, farm owners are expected to abide by International Labor Organization (ILO) standards affirming the right to association (including union membership), freedom from discrimination, prohibition of child or involuntary labor, and workplace safety. In addition, a host of environmental criteria apply to the production of fair trade goods, all designed to minimize the impact of farming on watersheds, topsoil, and wildlife. Most fair trade farmers are prohibited from using herbicides and must maintain uncultivated zones adjacent to streams to reduce chemical runoff and soil erosion. Chemical inputs are limited to a narrow range of approved substances, and the amounts and frequency of their use must be recorded on each farm. These requirements originate with ATOs based in developed countries; they are monitored through on-site visits by representatives of FLO-Cert (a third-party auditing body reportable to FLO) and are subject to little or no alteration from farmers seeking certification.⁴ In some cases, the standards have been criticized for their apparent arbitrariness and lack of transparency (Raynolds 2002; Calo and Wise 2005; Giovannucci and Ponte 2005; Lyon 2006).

By 2005, FLO had established certification standards for producers of coffee, tea, cacao, bananas and many other fresh fruit and vegetables, sugar, honey, orange juice, wine, cut flowers, and spun cotton, as well as for producers of some manufactured goods. All of these items are prominently displayed on supermarket shelves in the United Kingdom and continental Europe and are heavily promoted in broadcast and print advertising. A commitment to fair trade principles is also conspicuously advertised on European retailers’ Internet websites as a measure of their corporate social responsibility (see Tesco 2008, Sainsbury’s 2009). By 2005, the volume of fair trade sales in the developed world reached US$1.45 billion, a nearly fivefold increase in three years (FLO 2006: 12; FLO 2004). Sales increased another 42 percent in the following year, with the leading two fair trade markets being the United Kingdom and Switzerland (FLO 2007: 11). In 2006, annual per capita sales in Britain reached US$9.19, well below Switzerland’s $25.67 but more than four times their per capita level in the United States (ibid.). Despite the still rudimentary size of the U.S. market—a reflection of fair trade’s relatively late arrival in North America—it is now the fastest growing market worldwide in annual percentage terms.

Fair Trade and Neoliberal Paradoxes

The contemporary fair trade movement rests on a deep (and perhaps deepening) paradox. Many consumers of fair trade goods are motivated by a strenuous opposition to the effects of neoliberal globalization as measured in the growing poverty and environmental damage in many regions of the developing world. In seeking social justice and environmental sustainability, however, fair trade pursues a market-based solution to the very problems developing from free markets. As one recent observer notes, fair trade’s “voluntarist, non-statist program has been viewed by public institutions and corporations as being fundamentally compatible with neoliberal reforms” (Fridell 2007: 21); indeed, market-based fair trade has been promoted b...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• 1 What’s Fair? The Paradox of Seeking Justice through Markets
• PART I : GLOBAL MARKETS AND LOCAL REALITIES: REGULATING AND EXPANDING FAIR TRADE
• PART II : NEGOTIATING DIFFERENCE AND IDENTITY IN FAIR TRADE MARKETS
• PART III : RELATIONSHIPS AND CONSUMPTION IN FAIR TRADE MARKETS AND ALTERNATIVE ECONOMIES
• About the Contributors
• Index