Fair Trade and Wider Trade Issues
Fair Trade offers an alternative trading system that benefits millions of people -- but we also need to press for reform of the global trading system as a whole.
Right now, global trade rules and practices are often rigged against developing country farmers and manufacturers. In agriculture, for instance, the wealthiest countries offer around $300 billion a year in direct and indirect support to their farmers, while developing countries are often prevented by IMF and World Bank conditionality from offering any subsidies at all. At the same time, conditionality often forces developing countries to lower their tariffs. Developed-country farmers are therefore lowering world prices across the board and “dumping” produce at prices below the cost of production in developing countries, undercutting small-scale farmers. Cotton from the US is among the most notorious examples of the effects of subsidies on world prices. Meanwhile in certain parts of West Africa, for instance, the poultry industry has been largely wiped out by cheap EU chickens.
Developing country producers also faces barriers to adding value to their products. Most of the value in a chocolate bar, for example, is added in the manufacturing process. But current tariff structures in the EU and Japan, for example, allow cocoa beans to come in at a very low rate – but charge tariffs of over 20% on finished chocolate products. So developing-country producers are stuck at the bottom of the value chain.
The Fairtrade Foundation and Traidcraft are both part of the Trade Justice Movement, which is campaigning on these and other trade issues. Within this context, Traidcraft’s policy department is working to use the Fair Trade model to challenge unfair rules and practices. The unit draws on Traidcraft’s experience as a socially responsible Fair Trade company to address issues in corporate social responsibility, trade policy and various areas of development. All of the policy unit’s publications, including “Fair Trade Tool Kit” fact sheets such as “Fair Trade in the Wider World,” are available on their website.
Other agencies that work as part of the Trade Justice Movement – and produce resources on trade justice -- include Action Aid, CAFOD, Christian Aid, Commitment for Life, Methodist Relief and Development Fund, Oxfam, Tearfund, War on Want, and the World Development Movement. The Baptist Union, Church of England and United Reformed Church are also members. Christian Aid and the Church of England produced jointly “Trade Justice: A Christian Response to Global Poverty,” available for £4.99 or online from Christian Aid.