A more just fair trade is needed

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.