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Fair trade Short Answer
Terms in this set (24)
Focused on building ecosystem resilience as a social strategy. NGOs such as IIED and ActionAid report on measures used by farmers to adapt to climate change and document grassroots experiences of adaptation.
official definition of Fair Trade
"a trading partnership based on dialogue, transparency and respect... sees equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, disadvantaged producers and workers, especially in the south." From this, Walton argues that FT must be understood as a critique of present international trading conditions, and an attempt to alter them
1. Global market justice
He goes onto argue that FT is best categorized as an attempt to establish a form of interim global market justice in a non-ideal world. FT promotes justice via tools to re-shape trade relationships, such as pre-set long term contracts, which reduce instability, and a minimum price level and premium for business and community development projects (such as healthcare and education), in the name of welfare.
2. Complete or interim
arguable that Fair Trade offers an interim solution, rather than an answer. This is because Fair Trade Practices so not depart from market structure, only refines it, so Fair Trade is unlikely to ____. For example, characteristics of fair trade, such as pre-financing, would not be necessary in a just world, thus, is a temporary measure that would be phased out if the market were to become just.
i. Interim Account: Fair Trade is a temporary, second-best proxy in the absence of the wider implementation of global justice.
ii. Complete Ideal Account: The tools Fair Trade employs are themselves constitutive of ideal trade arrangements.
iii. Recognize that markets need certain structural constraints but does not object to the market as an institution
3. Commodity Fetishism
a. Commodity fetishism is the perception of the social relationships involved in production, not as relationships among people, but as economic relationships among the money and commodities exchanged in market trade.
b. Negates the importance of labour (and social relations) as the source of satisfaction that commodities produce.
c. Marx argues that the materiality of value is not physical but social. Value is therefore a social substance that appears in a series of material forms
i. Fair Trade is conceptualized as a challenge commodity fetishism by imbuing consumable good with a sense of production history
4. Ethical consumerism
a. Conversely, it can be argues that Fair Trade is better understood as a strategy for ethical consumerism, as globalisation has created markets of households demanding ethically produced goods. FT is simply a response to this demand. However, Walton notes that FT originated before contemporary globalisation, and this definition does not account for the ways in which FT assists producers, or campaign efforts.
i. Evidence: A number of standards, labels and marks have been introduced for ethical consumer e.g. Halal, Kosher, rainforest, recyclable.
Fair trade is seen as a larger part of this movement
5. A development initiative
a. A development project designed by non-governmental actors seeking to support and advance the welfare of poor producers.
i. A business view of FT is that it is a development initiative that offers assistance as a means of enabling producers to compete in a global market, hence its emphasis on training via programmes such as business assistance requirements. Again, this definition does not consider that assistance is not all FT does, for example, a principle of fair trade is also environmental sustainability.
1. Offer marketing and technical assistance as a means of enabling producers to compete in the global market
2. Training producers to fit within the existing system
3. In reality, projects are more comprehensive than business focus.
6. Challenge to the conventional market
a. Finally, FT might be understood as a challenge to the conventional market structure. Some believe it is an attempt to revolutionize the market, though it is more plausible that FT is in an against the market, therefor aiming more to revise the market.
b. Normative: (markets are seen as dehumanizing; involving commodification and alienation of people. They should replaced by a different economic system )→ Revolutionary v. Revisionist
c. The Goal of FT can be achieved within the present market structure: Remodel trade relations
i. It re-embeds trading relations to incorporate considerations or the social and environmental dimension of goods
ii. Resists commodity fetishism
iii. Links consumers and producers in multidimensional information flows (creating associative relationships)
iv. Studies find power imbalances remain in trade relationships: there is a trust deficit in these relationships due to top-down approach
v. Social relations in production not unmasked: producers understand little about "Fair Trade" and consumers are fed a few "model" cases about producers.
vi. Standard materialism of the market remains
Fair Trade Organizations are engaged actively in supporting producers, raising awareness and in campaign for change in the rules and practices of international trade.
• Principles include:
1. Creating opportunities for disadvantaged producers
2. Transparency and accountability
3. Capacity building
4. Payment of a fair price
5. Gender equity
6. Better working conditions
7. Environmental protection
• Vendors are non-profit organizations that depend on volunteer staffing in order to produce higher price for producers in the final markets.
• Few specific formal criteria for "fair trade" products
• Vendors associate with well-known non-profits whose name recognition provides legitimacy
• Products sold exclusively in "alternative stores"
• "Alternative stores" specialize in fair trade products
• Many fair trade organizations had difficulties getting their products in mainstream markets, necessitating collaboration with mainstream brands in order to demonstrate a new model of international trade.
• Fair trade labelling Organization International (FLO)
• Responsible for certifying the chain of custody; engage with corporate brokers, processors, wholesalers, producers, and retails; and the promotion of fair trade products
• Developed or endorsed fair trade standards: standards for producers and standards for trading.
• FLO Cert manages the worldwide inspection and certification of producer organizations that qualify to sell into Fair Trade markets under Fair Trade criteria.
• Fair Trade Seals
• Rigorous process and comprehensive standards for social and environmental responsibility:
• Relatively small scale operation organized in a democratically functioning cooperative to process and ship products
• Large farm or plantation with all workers represented in some form of democratic organization for labour management relation
• Environment standards include ban on chemicals; economy in water use
• Pay a price that covers costs of sustainable production at the local cost of living
• Pay a small premium above that price so that producers can invest in social development programs
• Provide partial pre-financing when producers request it, rather than holding payment until all the product is sold to retailers.
• Work to develop longer-term commercial relationships with producers that allow for long-term planning and sustainable production practices.
• Higher prices force non-fair trade producers to raise their prices without providing similar benefits to producers
• Problem of balancing advocacy with business interest
• Includes products grown on massive plantation, that still benefits corporates, which compete with small scale producers and cooperates
• Corporates (e.g. MNCs) sell fair-trade with non-fair trade producers. Should the Fair Trade designation be limited to "100%-er" companies?
• Major MNCs are able to "Fairwash" their brands
• Lack of clarity on how to conceptualize it or evaluate "fair trade"
• Methods of achieving goals are not appropriate - no evidence of income or gender benefits
• Solving problems such as oil management, pest control, nutrition and food security
• Cooperative Farming
• Development of social networks to share resources e.g. seed, cattle, etc.
• Sound agriculture e.g. mixed cropping
Success: Farmers have reversed desertification in some areas, and have increased food production ahead of population growth
Three-stage "fetishization" in commodity production:
d. Three-stage "fetishization" in commodity production:
e. Value creation by labor;
f. "realization" of this value in monetary form;
g. "accumulation" of this value through capital investment that set in motion further cycles of valorization, realization, and accumulation
5. A development initiative
ii. A more comprehensive view of FT, might see it as a development project, HERE UGH.
2. Include enhanced level of economic security provided by minimum price
3. Social capital (cooperatives)
4. Improvements in health,, education etc. and social empowerment.
5. Fair Trade has had mixed success.
Certification Steps and problems
Fair trade certification
1. apply online
3. Analyze your compliance with fair trade standards
5. follow up (one cycle is three years)
Problems: more producer focused so ignores other forces in the supply chain. There needs to be more steps before the apply stage. Farmers can't always afford to apply, so there needs to be organizations to help farmers give the ability to apply. Also farmers are not educated, they don't know fair trade exists and if they do, they have no idea where their product is going.
Consumers are confused and don't know what fair trade is, combated with things eco-friendly organic etc.
Subsidizes the production of commodities that are overpriced and inefficient. It creates false markets and promotes inefficiency.
• This is the liberal critique: should not artificially support producers but support them to pursue new areas of production in which they have comparable competitive advantage.
Marxists: Capitalism is the problem, FT can not resolve problems created by structural forces of power imbalances and exploitation. Markets and justice are incompatible. It individualizes responsibility rather than tackle the root structure.
• But.... Isn't promotion of human rights and welfare better than doing nothing? The world is non-ideal, there needs to be some kind of interim until justice can be realised.
Individual responsibility critique of FT
• Makes consumers individually responsible for justice thereby belittling collective duty
• Consumers demanding FT motivated by ideological commitment to ethical consumption, unlikely to reduce political efforts
• Public attitudes are less important than private attitudes (personal commitment is conducive to augmenting civil support)
Benefits of FT
• However, fair trade is associated with higher family incomes, protected environments, vibrant communities, improved equity in international trade and the forging of a new international business model that links small-scale farmers and farm and factory laborers to the global economy In a powerful, positive alliance with industry
• Greater access to credit for expansion of production = invest more in land, tools, sheds, livestock's and other farm improvements.
• Greater economic and social and family stability
• Access to training and enhanced ability to improve product quality
• Fostering networking
• Access to projects developed by cooperatives with social premium
• Cultural revival
• Increased organizational credibility
• Access broader range of government support programs.
• Fair trade farmers sold more/receive higher prices than comparable non-fair trade neighbours
Why difficult to measure impact of FT
• No reliable estimates of overall size or impact of the complete Fair Trade movement to date because:
1. There is no central registry for components of the movement
2. Different vendors measure sales at different points in the supply chain
3. No central clearing house that collects and aggregate sales data
Identify the technical criteria for being in the labor force. Cite and explain a problem with these criteria. Identify the technical criteria for being counted as employed. Cite and explain a problem with these criteria. Define discouraged worker, underemployed.
How did this affect the economy?
Why might rulers of command and socialist economies see market oriented reforms as a threat to their leadership?
help a developing host country by increasing investment, income and employment in its economy; They basically seeks maximization of profits by using cheap raw materials and labor and have contributed immensely to the global economy.
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