Fair Trade not Band Aids

FAIR TRADE

not

BAND AIDS!

FLO is a group of 24 organizations working

to secure a better deal for producers. It

owns the FAIRTRADE Mark - the product

label that certifies international Fairtrade

standards have been met.

Fairtrade standards are designed to tackle

poverty and empower producers in the

poorest countries in the world. The standards

apply to both producers and traders.

5 KEY OBJECTIVES:

1. ensure that producers receive prices that cover

their average costs of sustainable production

2. provide an additional Fairtrade Premium which can

be invested in projects that enhance social, economic

and environmental development;

3. enable pre-financing for

producers who require it

4. facilitate long-term trading partnerships and

enable greater producer control over the

trading process

5. set clear minimum and progressive criteria to

ensure that the conditions of production and trade of

all Fairtrade certified products are socially,

economically fair and environmentally responsible.

Principles specific to small producer organizations

….don’t depend on hired workers all the time, but run their farm mainly by using

their own and their family’s labour ……... Profits should be equally distributed

among the producers………. All members have a voice and vote in the decision-

making process of the organization.

Principles specific to hired labour

…. Forced labour and child labour is prohibited…… the right to join an independent

union to collectively negotiate their working conditions ….. Working conditions are

equitable for all workers. Salaries must be equal or higher than the regional average

or than the minimum wage. Health and safety measures must be established in

order to avoid work-related injuries.

In 2007 Fairtrade sales amounted to approximately €2.3 billion

worldwide, a 47 % year-to-year increase over 2006. At the end

of 2008 there were 872 Certified Producer Organizations in 58

developing countries. That represents more than 1.5 million

producers, about 7.5 million people, including dependents,

who are benefiting directly from Fairtrade.

Sources products from worker and

farmer owned cooperatives and

accredited fair trade factories

First non-food company in

Australia (and second in the world)

to be accredited fair trade.

Nick’s difficulties:

-Supplier suspended for 3 months b/c didn’t

address gender bias. But this is Pakistan!!!

Couldn’t find (willing) woman.

-Stitching centre min of 15 years, but Nick’s

manager’s daughter was 14 years. FLO

busted

PART 2

DEALING WITH THE ROOT CAUSES

OF UNFAIR TRADE

(a)Conventional neoclassical objections to

current Fair Trade initiatives

(b1) Geoist insights into Third World aid

(b2) Geoism’s True Cost Economics

(b3) The ultimate cause of sweat-shop

conditions – unemployment. And its

solution!

CONVENTIONAL NEOCLASSICAL OBJECTIONS TO

CURRENT FAIR TRADE INITIATIVES

•Price distortion

•Impact on conventional producers debate

•Bias towards cooperatives

•Retail pricing debate

CONVENTIONAL ECONOMIC ARGUMENTS

Price Distortion

Similar to other farm subsidies, fair trade

attempts to set a price floor for a good that is

in many cases above the market price and

therefore encourages, as fair trade opponents

claim, existing producers to produce more

and new producers to enter the market,

leading to excess supply, leading to lower

prices in the non-Fair Trade market.

CONVENTIONAL ECONOMIC

ARGUMENTS

Impact on conventional producers

debate

Fairtrade does not address the basic

problem, which is that too much coffee is

being produced in the first place. Instead, it

could even encourage more production.”

CONVENTIONAL ECONOMIC

ARGUMENTSBias towards cooperatives

Certification is predicated on political

assumptions about the best way to organise

labour. In particular, for some commodities

certification is available only to co-operatives of

small producers, who are deemed to be most

likely to give workers a fair deal when deciding

how to spend the Fairtrade premium. Coffee

plantations or large family firms cannot be

certified.

CONVENTIONAL ECONOMIC ARGUMENTS

Retail pricing debate

Retailers add their own enormous mark-ups to Fairtrade

products and mislead consumers into thinking that all of

the premium they are paying is passed on. The

Economist estimated that only 10% of the premium paid

for Fairtrade coffee in a coffee bar trickles down to the

producer. Fairtrade coffee, like the organic produce sold

in supermarkets, is used by retailers as a means of

identifying price-insensitive consumers who will pay

more.

THE GEOIST PARADIGM IThird World aid

If the poor don’t own the land on

which they live, what will happen to

their unavoidable rent when good

people from the First World try to

better their lot by building:

….. dams, wells and irrigation

infrastructure?

…. hospitals and clinics?

….. schools?

….. roads, bridges, trains,

telecommunications, electricity etc. etc.

etc.?!!!

THE GEOIST PARADIGM II

True Cost Economics and the

application of fully-costed

natural resource charges, thus

building in the proper costs

into the shelf prices

- Carbon emissions and other

pollutants

-Applying the full cost of water to such

underpriced items as:

Factoring in the full cost of petrol to things such as:

- addressing the food miles issue) -pollutants -noise -road

maintenance -traffic accidents & injuries -oil spills -unsightliness

of roads (compared to pedestrianised enclaves) -maintaining standing

armies to protect/invade oil fields etc.

- Applying natural

resource charges

on pesticides,

herbicides,

fungicides,

weedicides,

synthetic fertilisers

etc., depending on

their rated ill

effects

- hammering, through the tax system,

agricultural practices which lead to soil erosion

- Making producers and users of excessive packaging

pay for the resultant use (and perhaps pollution of) landfill

- As moral sentiments don’t seem to discourage many of those putting

our biodiversity at risk (GM, land clearing etc. ), let’s send them

monetary signals! The Monsantos of this world should also put up an

Ecological Security Deposit in case they bugger things up.

THE GEOIST PARADIGM III

The ultimate cause of sweat-shop

conditions – unemployment.

And its solution!

•Tax shift –

the double

incentivisation

•Tax shift – the double

incentivisation

•Reducing/

eliminating the

market price of

land and any

associated

borrowing

costs.

•Tax shift – the double

incentivisation

•Reducing/eliminating the market

price of land and any associated

borrowing costs.

•Slashing the

wastage of tax

compliance

and collection

costs

•Tax shift – the double

incentivisation

•Reducing/eliminating the market

price of land and any associated

borrowing costs.

•Slashing the wastage of tax

compliance and collection costs

•Practically

eliminating

tax evasion

(incl. foreign)

•Tax shift – the double

incentivisation

•Reducing/eliminating the

market price of land and any

associated borrowing costs.

•Slashing the wastage of tax

compliance and collection

costs

•Practically eliminating tax

evasion (incl. foreign)

•TCE - the cost of

employing labour

becomes a relatively

more affordable and

attractive input.

Resource efficient, not

labour efficient

•Tax shift – the double

incentivisation

•Reducing/eliminating the

market price of land and

any associated borrowing

costs.

•Slashing the wastage of

tax compliance and

collection costs

•Practically eliminating tax

evasion (incl. foreign)

•TCE - the cost of

employing labour

becomes a relatively more

affordable and attractive

input. Resource efficient,

not labour efficient

Boosting employment by self-funded

infrastructure rollout

But the *real* puzzle lies

unanswered…….

This one’s back

to you.

What, then, is the

real puzzle, the

great mystery,

the ultimate

head-f*cker, the

underlying

reason why

these proposals

haven’t been

adopted?