What are the Principles of Fair Trade?

Have you ever wondered where the products you buy come from, how they are made, and who benefits from them? Do you care about the social and environmental impact of your consumption choices? If so, you might be interested in learning more about fair trade.

Fair trade is a global movement that aims to make trade more ethical and sustainable, by following 10 principles that respect the rights and interests of producers, consumers, and the planet. Fair trade is not a charity, but a partnership based on dialogue, transparency, and mutual benefit.

The origin of fair trade can be traced back to the late 1940s, when some religious and humanitarian organizations started to sell handicrafts made by poor communities in developing countries, as a way to provide them with alternative sources of income. Since then, fair trade has evolved and expanded to include different sectors, such as agriculture, textiles, cosmetics, tourism, and sports.

According to the World Fair Trade Organization (WFTO), 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.”

In this article, we will explore the 10 principles of fair trade in detail, and see how they benefit producers, consumers, businesses, society, and the environment. We will also provide some practical tips on how you can support fair trade in your daily life.

Key Takeaways

What is fair trade?

Fair trade is a global movement that promotes ethical and sustainable trading practices, based on 10 principles that aim to empower marginalized producers and protect the environment.

What are the benefits of fair trade?

Fair trade benefits producers, consumers, and the planet by ensuring fair prices and wages, improving working and living conditions, enhancing product quality and diversity, fostering long-term relationships, and reducing environmental impact.

How can you support fair trade?

You can support fair trade by buying products that are certified or endorsed by fair trade organizations, joining or starting a fair trade community, raising awareness and advocating for fair trade policies, and choosing fair trade enterprises as your business partners.

Principle 1: Creating Opportunities for Economically Disadvantaged Producers

One of the main goals of fair trade is to reduce poverty and inequality through trade. Fair trade supports small producers who are marginalized by conventional markets, such as farmers, artisans, and workers. These producers often face challenges such as low prices, unfair competition, lack of access to credit and markets, exploitation by middlemen, discrimination based on gender or ethnicity, and vulnerability to external shocks.

Fair trade creates opportunities for these producers by providing them with:

• A fair price for their products that covers their production costs and allows them to earn a decent living
• A premium for social and environmental projects that benefit their communities
• A pre-payment or advance payment that helps them overcome cash flow problems
• A market access that connects them with ethical buyers who value their products
• A product development that helps them improve their quality and diversity
• A capacity building that enhances their skills and knowledge
• A empowerment that enables them to participate in decision-making processes

Some examples of how fair trade creates opportunities for economically disadvantaged producers are:

• Fairtrade coffee farmers in Ethiopia receive a minimum price of $1.40 per pound of coffee beans, which is higher than the average market price of $0.93 per pound. They also receive an additional $0.20 per pound as a Fairtrade premium, which they use for community projects such as building schools, health clinics, water wells, and roads.
• Fair Trade Certified™ apparel factories in India pay their workers at least 15% above the legal minimum wage, which helps them afford basic needs such as food, housing, education, and health care. They also provide them with benefits such as paid leave, maternity leave, social security, health insurance, and pension schemes.
• World Fair Trade Organization (WFTO) Guaranteed members in Bangladesh produce handmade jute bags that are sold in Europe. They receive a fair price for their products that covers their material costs and labor costs. They also receive training on design development, quality improvement, marketing skills, and business management.

Principle 2: Transparency and Accountability

Another important aspect of fair trade is honesty and integrity in trading practices. Fair trade ensures transparency and accountability at all levels of the supply chain, from producers to consumers. Transparency means sharing relevant information openly and accurately with all stakeholders. Accountability means taking responsibility for one’s actions and being answerable to one’s partners.

Fair trade involves stakeholders in decision-making processes by:

• Establishing democratic and participatory structures that allow producers and workers to have a voice and a vote in their organizations
• Developing clear and fair contracts that specify the terms and conditions of trade, such as prices, quantities, quality standards, delivery dates, and payment methods
• Providing regular feedback and evaluation that help monitor and improve performance, quality, and impact
• Resolving disputes and conflicts through dialogue and negotiation, respecting the rights and interests of all parties
• Reporting and communicating the results and achievements of fair trade to the public, using reliable and verifiable data

Some examples of how fair trade ensures transparency and accountability are:

• Fairtrade International (FLO) has a multi-stakeholder governance structure that includes representatives from producer networks, trader organizations, national fair trade organizations, and independent experts. They jointly set the Fairtrade standards, policies, and strategies.
• Fair Trade USA (FTUSA) requires all its certified partners to submit annual audits and impact reports that verify their compliance with the Fair Trade standards. They also publish their financial statements and annual reports on their website.
• WFTO has a peer review system that involves members visiting and assessing each other’s operations, based on the WFTO Guarantee System. They also publish their members’ profiles and stories on their website.

Principle 3: Fair Trading Practices

Fair trade also respects the rights and interests of producers and consumers in trading relationships. Fair trade establishes long-term and mutually beneficial relationships that are based on trust, respect, and solidarity. Fair trade does not seek to maximize profit at the expense of others, but to create a balance between economic, social, and environmental goals.

Fair trade follows the standards and guidelines for fair trading practices that are defined by different fair trade organizations, such as FLO, FTUSA, WFTO, Fair for Life, etc. These standards and guidelines vary depending on the sector and region, but they generally include:

• Paying a fair price that reflects the true value of the product and covers the production costs
• Paying a fair wage that meets or exceeds the legal minimum wage or the living wage
• Paying a timely payment that avoids delays or defaults
• Providing a stable market that guarantees a minimum volume or a long-term contract
• Providing a preferential treatment that gives priority to fair trade products over conventional products
• Providing a non-exclusivity clause that allows producers to sell to other buyers if they wish
• Providing a flexibility clause that allows producers to adjust to changing market conditions or unforeseen circumstances
• Providing a quality assurance that ensures the product meets the agreed quality standards
• Providing a traceability system that tracks the product from its origin to its destination

Some examples of how fair trade follows fair trading practices are:

• Fairtrade chocolate makers in Switzerland pay cocoa farmers in Ghana a minimum price of $2.20 per kilogram of cocoa beans, which is higher than the average market price of $1.86 per kilogram. They also pay an additional $0.20 per kilogram as a Fairtrade premium, which farmers use for improving their productivity, quality, and sustainability.
• Fair Trade Certified™ seafood importers in the USA pay fishers in Indonesia a fair price for their tuna catch, which is based on the local market price plus a 10% premium. They also pay an additional $0.05 per pound as a community development premium, which fishers use for improving their social services, infrastructure, and environment.
• WFTO Guaranteed members in Nepal produce handmade felt products that are sold in Australia. They receive a fair price for their products that covers their material costs, labor costs, overhead costs, and profit margin. They also receive advance payments that help them buy raw materials and pay wages.

Principle 4: Payment of Fair Prices and Wages

A key feature of fair trade is the guarantee of a fair income for producers and workers. Fair trade recognizes the value of their work and products, and ensures that they receive a fair share of the benefits of trade. Fair trade also protects them from price fluctuations and market volatility, which can affect their livelihoods and well-being.

Fair trade determines and pays fair prices and wages by:

• Setting a minimum price that covers the production costs and allows the producers to earn a decent living
• Setting a living wage that meets or exceeds the legal minimum wage or the local living wage
• Adding a premium that is paid on top of the price or wage, and is used for social and environmental projects
• Adjusting the price or wage according to the inflation, exchange rate, quality, or organic status
• Negotiating the price or wage with the producers or workers, based on their needs and expectations
• Paying the price or wage promptly and directly to the producers or workers, without intermediaries or deductions

Some examples of how fair trade pays fair prices and wages are:

• Fairtrade tea farmers in Kenya receive a minimum price of $1.40 per kilogram of tea leaves, which is higher than the average market price of $1.10 per kilogram. They also receive an additional $0.50 per kilogram as a Fairtrade premium, which they use for improving their infrastructure, health, education, and environment.
• Fair Trade Certified™ flower farms in Ecuador pay their workers at least 20% above the legal minimum wage, which helps them afford basic needs such as food, housing, education, and health care. They also provide them with benefits such as paid leave, maternity leave, social security, health insurance, and pension schemes.
• WFTO Guaranteed members in Thailand produce handmade silk scarves that are sold in Canada. They receive a fair price for their products that covers their material costs, labor costs, overhead costs, and profit margin. They also receive advance payments that help them buy raw materials and pay wages.

Principle 5: Ensuring No Child Labor, Forced Labor, or Other Forms of Exploitation

Fair trade protects human dignity and rights in production processes. Fair trade monitors and prevents child labor, forced labor, or other forms of exploitation that violate the International Labor Organization (ILO) conventions and the United Nations (UN) declarations. Fair trade also supports the victims of exploitation by providing them with rehabilitation, education, and empowerment.

Fair trade defines child labor as any work that deprives children of their childhood, their potential, and their dignity; that is harmful to their physical and mental development; that interferes with their schooling; or that exceeds a certain number of hours per day or week. Fair trade defines forced labor as any work that is performed involuntarily under threat of penalty; that involves coercion, deception, or abuse; or that restricts freedom of movement.

Fair trade combats exploitation by:

• Prohibiting any form of child labor, forced labor, or other forms of exploitation in fair trade production processes
• Conducting regular inspections and audits to verify compliance with fair trade standards and policies
• Providing remediation and compensation to any victims of exploitation who are identified in fair trade supply chains
• Raising awareness and educating producers, workers, consumers, and other stakeholders about the causes and consequences of exploitation
• Empowering producers and workers to organize themselves and defend their rights

Some examples of how fair trade ensures no exploitation are:

• Fairtrade cotton farmers in India have formed a child labor monitoring committee that identifies and removes any children who are involved in cotton cultivation. They also provide them with free education, health care, nutrition, and counseling.
• Fair Trade Certified™ soccer ball factories in Pakistan have implemented a strict no forced labor policy that prohibits any form of coercion, deception, or abuse in recruitment and employment. They also provide their workers with identity cards, contracts, payslips, grievance mechanisms, and freedom of association.
• WFTO Guaranteed members in Cambodia produce handmade jewelry that are sold in France. They employ survivors of human trafficking who have been rescued from sexual exploitation. They also provide them with counseling, training, health care, and social support.

Principle 6: Workplace Non-Discrimination, Gender Equity, and Freedom of Association

Fair trade promotes diversity and inclusion in workplaces. Fair trade supports non-discrimination, gender equity, and freedom of association for producers and workers. Non-discrimination means treating everyone equally regardless of their race, ethnicity, religion, age, disability, sexual orientation, or any other personal characteristic. Gender equity means ensuring equal rights, opportunities, and outcomes for women and men. Freedom of association means allowing producers and workers to form and join organizations of their own choice, such as cooperatives, unions, or associations.

Fair trade fosters diversity and inclusion by:

• Prohibiting any form of discrimination, harassment, or violence in fair trade workplaces
• Ensuring equal representation, participation, and leadership of women and men in fair trade organizations
• Ensuring equal access to resources, training, and benefits for women and men in fair trade production processes
• Supporting women’s empowerment and gender mainstreaming in fair trade communities
• Supporting the formation and functioning of democratic and representative organizations of producers and workers

Some examples of how fair trade promotes diversity and inclusion are:

• Fairtrade banana farmers in Colombia have formed a gender committee that promotes women’s participation and leadership in their cooperative. They also provide women with training, credit, and land ownership opportunities.
• Fair Trade Certified™ coffee roasters in the USA have implemented a non-discrimination policy that ensures equal employment and promotion opportunities for all employees. They also provide diversity and inclusion training, mentoring, and networking programs for their staff.
• WFTO Guaranteed members in Peru produce handmade alpaca products that are sold in Germany. They employ indigenous people who have been marginalized by the mainstream society. They also provide them with cultural preservation, language revitalization, and identity affirmation activities.

Principle 7: Ensuring Good Working Conditions

Fair trade improves health and safety in workplaces. Fair trade provides adequate facilities, equipment, training, and social security for workers. Fair trade also respects the workers’ right to a reasonable working time, rest, and leave. Fair trade aims to create a positive and productive work environment that enhances the well-being and satisfaction of workers.

Fair trade ensures good working conditions by:

• Complying with the national and international laws and regulations on occupational health and safety
• Providing clean, safe, and comfortable workplaces that meet the basic needs of workers, such as water, sanitation, ventilation, lighting, and temperature
• Providing appropriate protective equipment and clothing that prevent injuries and illnesses
• Providing regular training and education on health and safety issues and procedures
• Providing adequate social security and insurance schemes that cover health care, disability, retirement, and death
• Respecting the workers’ right to a maximum working time of 48 hours per week, with at least one day off
• Respecting the workers’ right to paid annual leave, sick leave, maternity leave, and parental leave
• Encouraging a positive work culture that fosters teamwork, communication, motivation, and recognition

Some examples of how fair trade ensures good working conditions are:

• Fairtrade sugar cane farmers in Malawi have improved their irrigation system and installed water pumps that provide clean water for drinking and washing. They also have built toilets and showers that improve hygiene and sanitation.
• Fair Trade Certified™ wine producers in South Africa have upgraded their facilities and equipment to meet the highest standards of quality and safety. They also have provided their workers with helmets, gloves, boots, and masks that protect them from accidents and hazards.
• WFTO Guaranteed members in Kenya produce handmade soapstone products that are sold in the UK. They have improved their ventilation and dust extraction systems to reduce the exposure to harmful dust. They also have provided their workers with health insurance and pension schemes.

Principle 8: Providing Capacity Building

Fair trade enhances skills and knowledge of producers and workers. Fair trade provides training, technical assistance, market access, and organizational development for producers and workers. Fair trade aims to improve their productivity, quality, diversity, competitiveness, and sustainability.

Fair trade provides capacity building by:

• Assessing the needs and expectations of producers and workers
• Designing and delivering relevant and effective training and education programs
• Providing technical assistance and advice on production processes, quality improvement, product development, certification, etc.
• Providing market access and information on market trends, opportunities, and challenges
• Providing organizational development and support on governance, management, administration, finance, etc.
• Encouraging innovation and creativity in product design and development

Some examples of how fair trade provides capacity building are:

• Fairtrade cocoa farmers in Ivory Coast have received training on good agricultural practices, pest management, post-harvest handling, quality control, etc. They also have received technical assistance and equipment for fermentation and drying of cocoa beans.
• Fair Trade Certified™ basket weavers in Uganda have received training on design development, color combination, product diversification, etc. They also have received market information and access to international buyers who value their products.
• WFTO Guaranteed members in Vietnam produce handmade bamboo products that are sold in Japan. They have received training on business skills, marketing strategies, customer service, etc. They also have received organizational support and mentoring from other WFTO members.

Principle 9: Promoting Fair Trade

Fair trade raises awareness and advocacy for ethical and sustainable trading practices. Fair trade engages consumers, communities, policymakers, media, and other stakeholders in promoting fair trade. Fair trade aims to create a more informed and responsible consumer behavior, a more supportive and enabling policy environment, and a more positive and influential public opinion.

Fair trade promotes fair trade by:

• Educating and informing consumers about the origin, production, and impact of fair trade products
• Encouraging and facilitating consumers to buy fair trade products and to join or start fair trade communities
• Lobbying and influencing policymakers to adopt fair trade policies and regulations that support fair trade producers and consumers
• Communicating and collaborating with media to spread the message and the stories of fair trade
• Networking and partnering with other organizations that share the vision and the values of fair trade

Some examples of how fair trade promotes fair trade are:

• Fairtrade schools in the UK have integrated fair trade into their curriculum, activities, and events. They also have organized campaigns, fundraisers, and fairs to support fair trade producers and causes.
• Fair Trade Towns in the USA have declared their commitment to support fair trade in their local communities. They also have encouraged their businesses, institutions, and residents to use and sell fair trade products.
• Fair Trade Advocacy Office in Brussels has advocated for fair trade policies and regulations at the European Union level. They also have coordinated with other civil society organizations to influence the global trade agenda.

Principle 10: Respect for the Environment

Fair trade minimizes environmental impact and maximizes environmental benefits. Fair trade uses natural resources responsibly, reduces waste and emissions, adapts to climate change, preserves biodiversity, and supports organic farming. Fair trade aims to create a balance between human needs and environmental sustainability.

Fair trade respects the environment by:

• Complying with the national and international laws and regulations on environmental protection
• Implementing environmental management systems that monitor and improve environmental performance
• Using renewable energy sources and energy-efficient technologies that reduce greenhouse gas emissions
• Reducing, reusing, recycling, and composting waste materials that reduce pollution and landfill
• Adapting to climate change impacts and mitigating climate change risks through disaster preparedness, resilience building, and carbon offsetting
• Preserving biodiversity and ecosystems through conservation, restoration, and diversification
• Supporting organic farming practices that avoid synthetic chemicals, genetically modified organisms, and monoculture

Some examples of how fair trade respects the environment are:

• Fairtrade coffee farmers in Peru have switched to solar panels and biogas digesters that provide clean energy for their homes and farms. They also have reduced their water consumption and improved their water quality through drip irrigation and wastewater treatment.
• Fair Trade Certified™ coconut oil producers in the Philippines have implemented a zero-waste policy that utilizes all parts of the coconut. They also have planted native trees and plants that enhance soil fertility and biodiversity.
• WFTO Guaranteed members in Morocco produce handmade leather products that are sold in Italy. They have adopted eco-friendly tanning methods that use natural vegetable dyes instead of harmful chemicals. They also have supported organic farming cooperatives that supply them with raw materials.

Conclusion

In this article, we have explored the 10 principles of fair trade in detail, and seen how they benefit producers, consumers, businesses, society, and the environment. We have also provided some practical tips on how you can support fair trade in your daily life.

Fair trade is more than just a label or a certification. It is a movement that challenges the conventional model of trade that is based on exploitation, inequality, and unsustainability. It is a vision that proposes a new model of trade that is based on empowerment, justice, and sustainability.

By choosing fair trade products, you are not only buying high-quality goods that meet your needs and preferences. You are also supporting small producers who are working hard to improve their lives and communities. You are also contributing to social change that makes the world a better place for everyone.

We hope this article has inspired you to learn more about fair trade and to join us in our mission to make trade fair. Thank you for reading!