A more just fair trade is needed

H.A. Harry Hendrarto, Researcher, Justice & Peace Institute (Yayasan Samadi), Surakarta, Central Java, hendrarto@terranusa.org

Today, May 17, we celebrate World Fair Trade day, with the theme "Quality that cares". The theme might sound cliche, yet its novelty lies in the concern for producers and the environment -- something often, if not always, neglected within the current modern global trade system which merely seeks profit.

Global trade has more than doubled over the past 15 years. But the system, based on free trade mechanisms, has also created massive poverty as the result of its "win or lose" spirit. Last year, the European Union earned US$80 billion from free trade, while Africa lost $2.6 billion, according to the New Internationalist periodical. And surely, this was not the first recorded implication of free trade.

In 1999, The United Nations Development Program (UNDP) reported that the developed industrialized countries (with 22.9 percent of total world's population) produced 84.2 percent of the world's gross national product (GNP), while the developing countries (populated by 77.1 percent of world inhabitants) only were able to produce 15.8 percent of the world's GNP. Clearly, this is far from an economic interaction which is expected to alleviate poverty.

Instead of bridging the gap, free trade has widened the gap between the rich and the poor since the increase of wealth is always followed by the increase of poverty. This does not mean that trade is necessarily detrimental to the poor. But it is because the rules of trade have been manipulated so that the rich benefit from them. Double standards have made it possible for the developed countries to access the market of the developing ones.

Indeed, for the sake of globalization, the developed countries impose the tariff reduction principles to advance the trade. But it is also true that the same countries are those who block the products of others -- especially the developing ones -- from entering theirs.

One such double standard in the agricultural sector is the case of the Common Agricultural Policy (CAP) endorsed by the European Union. The policy aims at subsidizing the farmers to lower their products' selling price. Oxfam International noted that in 2001, the total of euro 41.53 billion was given to the farmers in France (22.2 percent), Spain (14.8 percent), Germany (14.1 percent) and Italy (12.8 percent) -- among others.

As a result, for instance, the milk producing industry in both India and Jamaica could no longer compete with European milk producers, who benefited from the dumping policy of the CAP.

In the textile industry, a similar double standard is also applied through the scheme of Multi Fibre Arrangement (MFA) which has existed since 1974. The arrangement is simply a quota system which limits the entry of textile products into to Canada, the European Union and the U.S.

Despite its ambiguity, the arrangement has brought serious detriment to countries whose money comes from textile exports. The most severe casualty is Bangladesh who suffers from its inaccessibility to markets.

More than one-and-a-half million people, mostly women, were working for textile companies. As a result of the MFA, they lost their jobs. Such examples of the result of free trade and the global economic system has led to calls for a more fair and just trade system which benefits not only the rich, but especially the poor.

Thus the raison d'etre of the fair trade movement. For more than four decades, fair trade has aimed at fostering poverty alleviation and its concern has been based on siding with groups of poor and marginalized producers. Fair trade has spread all over the world, including Indonesia.

Supported by its three pillars -- dialog, transparency and concern, the movement would like be the alternative of the current unfair trade system.

Dialog means fair and open communication between producers and consumers so that the agreements (whether on prices or other items) can be achieved. Transparency is the basis of the work relationships, especially in information. Concern means a real care on the efforts to promote humanity in the trade system by shortening the marketing chain as much as possible so that consumers become aware of the culture, identity and the condition of the workers. Of course, concern for the environment is inseparable.

Fair trade imposes some principles that bind producers as well as consumers, like advanced payments, fair prices, public accountability and transparency.

Within the production of fairly traded products, producers are required to guarantee gender-balanced equality and no violence when child workers are involved, as well as a provision of safe and healthy working environment and an ecologically sustainable production system.

Yet the goods traded through a fair-trade system are still relatively small compared to overall global trade. At the end of the 1990s, for example, in West Europe, Australia and New Zealand, the total goods traded via the fair trade scheme was worth between just $400 million to $500 million annually and in the U.S. and Canada the value did not exceed $40 million.

The value was too small compared to overall world free-trade, which exceeded $4 billion in total in the same period.

This is the real challenge for those in favor of a fair and just world. If we can no longer hold on to the systems that bring ourselves to the brink of the collapse of our life, something must be done. Fair trade is one of the answers, but not the only one. Many more are still required.