Tuesday, September 25, 2007 Dossier: Fair trade By Bernie G. Villorente Datingbayan Foundation Inc.
IN recent years, a paradigm shift has been adopted by international aid and donor agencies by repackaging and rationalizing their assistance policies to third world and developing countries. The policies place more bias toward strengthening nongovernment organization (NGO) advocacy initiatives on much broader issues as diverse as fair trade, agro-tourism, poverty abatement, environmental disrepair/abuse, responsible public and corporate governance, transparency and enhancing women’s role in global business.
According to an International Trade Center update, government donors now direct 15 to 20 percent of their investment portfolio to NGOs’ trade facilitation projects which drew some $2.99 billion in OECD commitments in 2004 alone.
Fair trade organizations throughout the European Union (EU), North American Free Trade Association (Nafta), Latin America and Africa are taking a more active and pragmatic stand in proving that what poverty-stricken communities of the world need is trade not aid.
The fair trade movement was hatched in the United States in the late 1940s, with the first fair trade shop established in 1958. The United Kingdom followed with its First Trade Organization in 1967. Subsequently, the Netherlands created its importing organization, the Fair Trade Organisatie, in the same year. The network of European World Shops with 2,500 associated outlets in 13 European countries account for 660 million euros in yearly sales turnover, and growing at the rate of 20 percent annually. As consumers and big retailing chains increasingly develop appreciation of the philosophy beyond the movement, growth projections may be a bit conservative.
Despite the huge market potential, the Philippines has not moved relatively fast and seriously enough to cash in on these opportunities. Capabilities are now being built in the depressed areas in Africa, the Caribbean and Latin American regions which responded positively to challenges posed by the International Fair Trade movement to the extent that UNCTAD’s patient and enduring presence since 1968 have boosted the levels of success in trading activities of its supported NGOs.
How does fair trade work?
Fair trade organizations use the following tools to promote grass roots development:
* Price premiums. Fair trade products are sometimes priced higher than others. Part of the differences is ploughed back into producer communities to improve working conditions.
* Certification and labeling. Standards are set to improve product quality, working conditions, environmental sustainability, business development and training
* Advocacy is an important element in fair trade marketing, with branding and fair trade message found on virtually every package. But not only have the fair trade label organizations benefited, supermarkets also find the system useful for marketing to niche consumers who are willing to pay extra for coffee that guarantees producers a fair price.
To quote Natalie Domeisen, International Trade Forum editor: “If we advocate for trade as a force for development, can we afford to ignore nongovernment organizations? What remains is for international agencies, NGOs and governments to make the most of these signs of changes.”
