What is Fair Trade?

A concise description of fair trade and its guidelines.

written by Keri Lien

The concept of Fair Trade has become a trending topic, and while it is likely that you have heard of it, perhaps you are uncertain as to what all the fuss is about. So here is a brief summary of what fair trade is, and what impact businesses who abide by it hope to make.

What is fair trade? Is it good? Should you support it? What does the WFTO (World Fair Trade Organization) have to say about it?

Screenshot of WFTO website.

While there are differing opinions, and various organizations which hold their own interpretations on the definition of fair trade, the aim, regardless of those differences, is to engage in commerce which is beneficial to local people and communities in less developed nations, as well as to the environment. Advocates for fair trade strive to achieve better working, producing, and trading conditions for all involved parties, particularly those who are relegated to the margins of the global exchange of commerce. Organizations which engage in fair trade seek to provide a just system of commerce by putting the people involved in production before the product itself.

"...the aim is to engage in commerce which is beneficial to local people and communities in less developed nations, as well as to the environment."

According to the World Fair Trade Organization (WFTO), there are several principles to which a business must adhere in order to be considered manufacturers of fair trade products. One of these principles is that the producer attempts to establish independence and sustainable income in the local communities in which the goods are produced. This will provide opportunities to reduce the number of people living in poverty, and will allow them financial security.

The principle of fair wages is key to being designated a fair trade business. The wages paid to the workers must correlate to the standard minimum wage where the products are made. The manufacturer must not engage in or allow any child labor, or forced labor. This is an integral element of the fair trade system, particularly since it is designed to facilitate justice in the manufacturing and selling of goods. Refusing to participate in forced labor or child labor firmly establishes a producer's commitment to the prioritization of people and justice. Fair trade manufacturers are also committed to wage equality for men and women, refusing to discriminate on the basis of gender.

They also provide working conditions which are in accordance with the health and safety codes of the locations in which their products are made. In addition to creating safe and beneficial environments for the workers, these businesses also aim to develop the skills of their employees. They hope to instill in the workers leadership and management skills in addition to craft skills, so  they are better equipped to excel in a variety of businesses in their communities.

Fair trade organizations must function in honesty, holding themselves accountable to the investors and shareholders, as well as protecting the information of all involved parties. They must concern themselves with the well-being of the small businesses and manufacturers, by honoring all commitments and contracts.

These organizations must also be environmentally-minded. Fair trade businesses use packaging that is either biodegradable, or made from recycled products. These organizations further support the environment by emphasizing the use of raw materials, and using sustainable means of production as frequently as possible. They strive to limit the impact that production has on the environment. 

"All in all, fair trade seeks a just and ethically-driven system of commerce which benefits marginalized people and communities by introducing their products to the global market and cultivating local commerce in those regions."

The price of the products sold by fair trade organizations is dependent upon the cost of production, the quality of the product, and the cost of living and minimum wage in the countries where they are made. Many of the products originate from cultures which are not typically or predominantly represented in the global system of commerce. All in all, fair trade seeks a just and ethically-driven system of commerce which benefits marginalized people and communities by introducing their products to the global market and cultivating local commerce in those regions.

Thanks for reading.

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