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WORLD: More Questions About Fair Trade Practices

Julio Godoy

BERLIN, Nov 26 2008 (IPS) - So-called fair trade is booming in Germany but it is facing strong criticism from activists against neoliberal globalisation on the grounds that companies taking part in ‘‘fair trade’’ do not live up to its humanitarian and developmental principles.

An American researcher poses with fair trade baskets in Kampala, Uganda. Credit:  Wambi Michael/IPS

An American researcher poses with fair trade baskets in Kampala, Uganda. Credit: Wambi Michael/IPS

Fair trade refers to international trade that allegedly respects good development, environment and labour standards in the producing countries of the South.

A couple of months ago, on Sept 18, practically all children at school-going age in Germany ate ‘‘fair trade bananas’’, following a slogan which could come directly from the anti-globalisation movement: ‘‘Eat bananas for a better world’’.

The ‘‘banana day’’ was a proof of the success of fair trade in Germany. It celebrated the fact that one million fair trade bananas had by then been sold in the country. The celebration had been called for by Transfair, the umbrella organisation that unites all businesses in Germany that have made the fair trade campaign a growing success.

That day, as proof of the humanitarian engagements of Transfair, numerous organisations concerned with the well-being of children around the world – such as the United Nations Children’s Fund (UNICEF) – took part in the festivity.

‘‘Fair trade is booming in Germany,’’ Didier Overath, managing director of Transfair, told IPS. ‘‘In 2007, the trade with goods from the South that carry our label grew by almost 30 percent.’’ Actually, fair trade goods turnover in Germany has almost tripled since 2003, to reach 193 million euros (243 million dollars) in 2007.

This success is explained by the growing conscience among the industrialised countries' populations that the world trading system is flawed and that the small peasants and manufacturers in the countries of the South should benefit directly from the global turnover of the goods they produce.

In addition, fair trade guarantees that the production of goods so labelled respects good labour and environmental standards.

‘‘Under the fair trade label we sell mostly food,’’ Overath said. But, along with bananas, pineapples and cacao and groceries like coffee, tea, sugar, honey, rice, wine, juices and the like, Transfair also sells cotton products, music instruments, jewellery and other items.

In total, certified fair trade includes 750 different goods sold in over 800 special stores all over Germany.

At the banana day celebrations, Didier Overath recalled that Transfair pays one dollar above the market prices for each banana box. ‘‘This additional one dollar per box is exclusively devoted to pay for school and health programmes in the producing countries for the producing communities,’’ Overath said.

But, despite all this success, fair trade in Germany is facing severe criticism from anti-globalisation activists.

Transfair claims that it is ethically superior vis-à-vis usual trade practices. In a paper aimed at the press, Transfair affirms that ‘‘fair trade tackles the problems (of the world trading system, driven by profit maximisation for the few, regardless of labour standards, human rights and the environment) by putting people before profit’’.

Transfair also affirms that it offers its producing partners in the countries of the South ‘‘a fair price, long term cooperation, good working conditions, democratic working processes, and respect and promotion of human rights’’.

Transfair defines fair trade as ‘‘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, marginalised producers and workers – especially in the South’’.

But in some cases, its critics say, exactly the opposite happens.

On the one hand, Transfair established cooperation contracts in 2006 with the German discount supermarket Lidl – which has been accused of selling dumped goods and of violating their own workers' rights. Dumped goods are goods sold at less than what it cost to produce them.

On the other hand, Transfair is also cooperating with international corporations such as Nestlé which has faced charges of exploiting water sources around the world without paying attention to the rights of local populations or the environment.

The anti-globalisation organisation ATTAC called the Transfair cooperation with Lidl ‘‘purely cosmetic’’.

Kay Schulze, coordinator of the ATTAC campaign against Lidl, told IPS, that ‘‘of course, it is a good thing that Lidl finally reacts to the protests of consumers. But at the same time, given that Lidl continues to sell more than 1,200 dumped products, we have to consider the cooperation with Transfair as pure cosmetics’’.

Schulze also recalled that ‘‘a fundamental component of the fair trade idea is the respect for the workers' rights. And in this regard, Lidl has not substantially changed its conduct towards its own workers’’.

Another criticism against Transfair focuses on the lack of transparency of some of its labelling criteria and on the process of certification of the goods it sells.

Transfair's spokesperson Claudia Brueck told IPS that ‘‘the cooperation with Lidl is part of our general strategy to broaden the effect of fair trade in the German groceries' markets. We are a product certification group but we do not monitor the behaviour of corporations.’’

Brueck admitted that the cooperation with multinational groups such as Nestlé is ambiguous and can be considered simply the ‘‘green washing’’ of corporate identities.

‘‘Ten years ago, the fair trade idea was a project of a few,’’ Brueck said. ‘‘Now, it has become a giant market.

‘‘Corporations have also realised that consumers in the North are well informed and concerned about what is going on the countries of the South and that they do not want goods stained with the exploitation of children or produced under environmental and humanitarian questionable conditions.’’

Therefore, she said, corporations are changing their strategies.

More criticism emanated from a recent report: ‘‘Transfair is selling coffee from Mexican labelling organisations which puts pressure upon the small producers in places like Chiapas,’’ wrote Jan Braunholz, a German expert on fair trade.

‘‘Therefore, the opposition against fair-trade labelling is growing in (the Mexican Southern province of) Chiapas,’’ he added. Since the early 1990s Chiapas has been the centre of the Mexican peasants' opposition to neoliberal globalisation, and is the homeland of the Zapatista rebel movement.

According to Braunholz, one of the fair trade certificating organisations, the Fairtrade Labelling Organisations International (FLO) pays small Mexican coffee growers prices that are too low and demands high fees for the use of its labels. FLO also sources from African small producers.

The Mexican group Certimex, which stands for Mexican Certification Association for Organic Products and Processes, faces similar criticism, Braunholz said.

‘‘FLO gets close to large state owners and multinational corporations, to involve them in fair trade,’’ Braunholz added. ‘‘This rapprochement, and the high costs associated with the fair trade certification, is forcing small coffee growers in Mexico to deal again with the so-called coyotes, the middlepersons working for the big international coffee corporations.’’

In response to the issue of double costs of certifications for small producers, as in Mexico, Brueck explained that FLO has been working on a reform of the system of labels precisely to avoid double costs and aimed at accelerating the adjustment of prices for producers. ‘‘We hope we can start revising prices and reducing certification costs for producers in 2009.’’

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