Fair Trade is a global movement stemming out of a sense of social responsibility. There are over a million small-scale producers and workers in over 70 countries in the southern hemisphere operating under the umbrella of Fair Trade. These products are sold in Fair Trade shops, grocery stores and other major sales outlets all over the world. Fair Trade has started conversations amongst political decision makers and made the general public more aware of how mainstream business operate in terms of their social and environmental responsibilities. The intention of Fair Trade is to make trade more fair, therefore improving the quality of life for people living in poverty. While the intentions behind Fair Trade are noble, there are some questions of viable it is in the long run as an economic model.
Fair Trade is built on the idea of paying fair prices to producers in developing countries. There are two main Fair Trade organizations, the Fair Trade Federation (FTF) and the World Fair Trade Organization (WFTO), they share the same general definition of Fair Trade:
"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 have a clear commitment to Fair Trade as the principal core of their mission. They, backed by consumers, are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade." -The World Fair Trade Organization
Additionally, these two organizations share the same general definitions for the 10 Fair Trade principles that organizations and companies operating under the Fair Trade umbrella must abide by. Click here to see the 10 principles of Fair Trade.
Fair Trade as we know it today traces its roots back to the 1940’s in the United States and Europe. In the UK, Oxfam began selling handicrafts from Chinese refugees in their shops and in 1964 created the first Fair Trade organization. In Holland, Dutch organizations began selling sugar with the tagline, ‘by buying cane sugar you give people in poor countries a place in the sun of prosperity’. These Dutch groups went on to open what they dubbed ‘Third World Shops’, where handicrafts from the Southern hemisphere were sold. At the same time, two new organizations developed in the United States called Ten Thousand Villages and Sales Exchange for Refugee Rehabilitation and Vocation (SERRV). In the 1960’s, Fair Trade became a serious part of the conversation for the international community during the 1968 United Nations Conference on Trade and Development (UNCTAD) in Delhi. This conference emphasized ‘Trade not Aid’, pushing for more equitable trade relationships rather than development aid. This set the tone moving forward for development through trade, opening the door for the multitude of organization promoting Fair Trade as a solution to poverty.
A woman named Edna Ruth Byler visited Puerto Rico to take a sewing class. While there, she was exposed to the talent the women there had for making lace. She was also exposed to the extreme poverty many of the women lived in, so she began taking these pieces back to the US to sell and returning the money directly to the women. Byler’s project expanded into an organization called Ten Thousand Villages, which opened its first Fair Trade shop in 1958 and is now the largest Fair Trade retailer in North America.
SERRV was started by a group of Church of the Brethren relief workers who were helping refugees rebuild after World War II. The first product sold by SERRV was a cuckoo clock from Germany, now they have expanded into almost all areas of trade. SERRV was one of the first Fair Trade organizations in the United and was a founding member of both the World Fair Trade Organization (WFTO) and the Fair Trade Federation (FTF).
Guatemala’s two biggest Fair Trade industries are coffee and crafts. There are countless NGO’s working in Guatemala to promote Fair Trade and sell these products to the international market. Many of these organizations focus on the indigenous population due to social and political marginalization that has resulted in high levels of poverty. The pervasive poverty seen in Guatemala’s indigenous population stems from Spanish colonialism. The Spanish colonial government gave land titles to Spaniards who generally turned the land into coffee plantations and turned the indigenous people into laborers. This social hierarchy has continued to negatively affect Guatemala’s indigenous population and resulted in drastic socioeconomic disparities amongst the population.
The goal for these Fair Trade oriented projects working in Guatemala is to improve the way trade happens in the country. The majority of indigenous peoples in Guatemala live in rural areas where they survive off of small scale farming and craft production. There are not many job opportunities in indigenous communities, resulting in many people migrating for labor on seasonal plantations or as house laborer in the bigger cities. Fair Trade intends to offer an alternative, providing access to markets where crafts can be sold at a fair price so that people are able to improve their financial situation.
On the ground, you are able to see how Fair Trade provides benefits to the community. In Guatemala, women have a difficult time having access to markets due to social and political marginalization. Through Fair Trade partnerships with organizations such as Maya Traditions Foundation, many women are able to gain access to the market and other social programs they would otherwise be ostracized from. Due to gender norms that limit women’s ability to work outside the home, there are few jobs they are able to obtain. Weaving as a member of a cooperative has provided many women with the ability to contribute to their household income and improve the quality of life for their families. Women living in rural areas face even more difficulty since many opportunities to sell their products are lost due to their restricted location. By partnering with Fair Trade oriented organizations, these women are often provided with pathways to sell their goods on a larger scale both nationally and internationally. While this does not solve the underlying social and political issues that are perpetuating poverty, it does offer the opportunity for women to begin to process of becoming more economically independent.
Is Fair Trade Working?
Fair Trade has been a point of contention in the development world for a multitude of reasons. Some argue that it is unethical that companies and organizations must pay in order to have the Fair Trade logo featured on their products, especially considering that many of the organizations that would benefit from the logo are small and unable to afford the payment. Another issue is the limited ability of Fair Trade organizations to monitor their partners; they may put the label on their products but how do we know they are actually abiding by the 10 Fair Trade principles? Lastly, there is the argument that Fair Trade may benefit a few in the short-term, however is unrealistic in the long term as an economic model.
Critics argue that the Fair Trade model artificially inflates prices to reduce poverty, asking consumers in developed countries to pay out of a sense of social responsibility. Those for Fair Trade argue that with the extra money people will be able to improve their quality of life, send their children to school and create pathways out of poverty. The retort is that it is one-sided and looks at the solution as an increase in prices, disregarding supply and demand. There have been multiple incidents of artisans producing large amounts of goods that go unsold for long periods of time due to overproduction, too much competition, dependence on tourists as consumers, minimal ability to transport their products to larger markets, low in country demand and poor planning. When this happens, artisans will often greatly lower the price (that fair price that they were encouraged to set) in order to unload their stockpiles.
While those who are associated with Fair Trade partners generally do make more money, there is more to the problem that finances. Social and political marginalization extends beyond access to markets, it involves access to health care, education and more. Fair Trade offers some benefits, but it is unclear how it can be sustained and if it can really create enough economic opportunity to help address the other social issues facing Guatemala’s indigenous population.
A major question within the Fair Trade industry is transparency, it is difficult to get a clear view of the value chain. Often, Fair Trade products retail at a high price in countries like the US yet the person making the textile is still receiving what seems like a relatively low wage. How does this product go from say $30 in a rural Guatemalan village to $350 in a retail store in New York? While it is expected that value will be added to the product throughout the value chain, isn’t the point of Fair Trade to provide much more direct benefits to the producer?
Organizations like Maya Traditions Foundation strive for transparency and to provide social benefits in addition to access to markets. Click here to learn about how Maya Traditions Foundation applies the 10 Fair Trade principles and works to benefit Guatemala's indigenous community through Fair Trade and multitude of other projects!
World Fair Trade Organization: 60 Years of Fair Trade: A Brief History of the Fair Trade Movement. Last update December 2015. Available at: http://wfto.com/about-us/history-wfto/history-fair-trade
Fair Trade Federation: History of Fair Trade in North America. Published in 2011. Available at: https://www.fairtradefederation.org/history-of-fair-trade-in-the-united-states/
Sales Exchange for Refugee Rehabilitation and Vocation (SERRV): Our History and Name. Available at: http://www.serrv.org/category/about-us
Equal Exchange Fairly Traded: History of Coffee in Guatemala. Available at: http://equalexchange.coop/history-of-coffee-in-guatemala
Camp, Mark. Jenn Goodman. Fair Trade and Indigenous Peoples. Cultural Survival issue 29.3. Fall 2005. Available at: https://www.culturalsurvival.org/publications/cultural-survival-quarterly/guatemala/fair-trade-indigenous-peoples
Reeves, Benjamin. Does Fair Trade Harm Economies and Rip-Off Consumers? 13 June 2014. Available at: https://www.beaconreader.com/benjamin-reeves/does-fair-trade-harm-economies-and-rip-off-consumers