Countries / Territories

Ethical Trade: Does it Come at a Developmental Cost


    Consumer Conscience: How Environment and Ethics are Influencing Exports

    8 - 11 October 2008, Montreux, Switzerland

    SESSION SUMMARY: Friday, 10 October 2008                   Print-icon  Printer-friendly version  

    Plenary Debate

    Ethical Trade: Does it Come at a Developmental Cost

    PPatrick Low (WTO)
    Robin Cameron (Fairtrade)
    Khalid Sheikh (Clifton Packaging Group)
    Samira Ahmed 

    Incremental, not Revolutionary, Change

    Moderator Samira Ahmed posed the question, "Does ethical trade cost developing countries too much?" WTO Chief Economist Patrick Low said he is concerned that 'ethical trade' covers too wide a spectrum of activities - fair trade, environmental concerns and sustainability, organic foods, local campaigns, human rights, etc. - and "they do not sit well together." He posed five questions about ethical trade initiatives:
    • Do they successfully ensure a redistribution of resources?
    • Do they in fact achieve the goals for which they are designed?
    • Does purchasing food locally really lower the carbon footprint and/or does it merely exclude outsiders?
    • Are their achievements durable over the long term and/or do they depend on privileged arrangements?
    • Does the immediate feel-good factor obfuscate the need for more comprehensive and effective solutions?
    In assessing the practical impacts of ethical trade activities, the results can appear ambiguous at best, he observed. For example, organic farm methods can crowd out other land uses, leading to deforestation and other environmental issues.

    Whose perspective?

    Khalid Sheikh agreed, arguing that the question of ethical trade should be looked at from the point of view of the developing countries rather than the perspectives of the West. Take the example of coffee: out of the £280,000 per tonne that it costs consumers when they buy a cup in coffee shop, the African producer gets only £1,500, he said. "Africa is being robbed,"he stated. In his view, the remedies include education, access to Western markets, and the development of fit-for-purpose technologies. Finally, he believed, corporate social responsibility must be put into practice in a way that makes sense from Africa.

    Buying into trust

    Robin Cameron, Chief Executive Officer of the Fairtrade Labelling Organizations International (FLO) reported that whatever questions hang over other 'fair trade' products, his group faces challenges of where to expand rather than to simply maintain its share of retail trade. Fair trade products are thriving and expanding into new markets, despite today's economic crisis, primarily because of consumer trust in the independent international label, he said.

    Cameron described the economic recession taking root in the US and spreading across the world as reflecting a "fundamental failing of trust." But fair-trade organizations "offer trust to consumers - they trust independent labels such as ours," he said. "I believe there is a robust demand for fair trade products."

    FLO - the standards and certification body with 20 national labelling initiatives that license its label to industry - is now expanding in Eastern Europe. The Czech Republic, Slovakia and Slovenia were the first countries in Central and Eastern Europe where consumers could buy FLO-certified products. Manufacturers and retailers in Estonia and Hungary are now being licensed, and Cameron foresees "great demand" across the region.

    Cameron says there is "huge" potential for South-South growth in Fairtrade, being driven by a pilot project in South Africa. The Southern African Fair Trade network (SAFN), the new Fairtrade producers' support organization, was launched in 2007. The fledgling organization aims to explore market opportunities for FLO-products such as crafts, jewellery wine, coffee and tea.

    "The growth curve of the fair-trade labelled products market could level off in Europe temporarily, rather than experience a drop in sales. But there is plenty of scope for fair trade to grow," Cameron predicted.

    FLO trade directly benefits 1.5 million producers and workers in developing countries - 7.5 million including their families. Participants include individuals, cooperatives, labourers and landless workers. "There is a huge case to be made for the benefits fair trade can bring to landless workers," said Cameron. It is already working with large producers who use landless labour and Cameron considers this as a major growth area for FLO.

    Cameron pointed out that FLO is working with Fairtrade-certified producers in 58 countries. In 2006 Fairtrade generated €100 million in additional income for producers and workers in 2006. The estimated retail value of these sales is about €3.4 billion per year. Admittedly, a relatively small portion of the market, it experienced a 50% sales growth in 2007.