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Executive Summary
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Fair Trade: Overview, Impact, Challenges
The Fair Trade (FT) movement is dynamic and diverse. Although there is a lack of
consensus on definitions and criteria the FT movement is united by the view that
conventional trading relations between the South and the North are both unfair and
unsustainable. The core of the FT movement comprises southern producer
organisations, northern Alternative Trade Organisations (ATOs) that have their roots
in the NGO sector, their umbrella associations, and labelling organisations. The FT
movement is committed to the payment of minimum guaranteed prices and price
premiums to southern producers, to direct and long term trading relationships, and the
provision of pre-financing, information and training to southern producers and their
organisations. FT concentrates on smallholder crops, plantation crops, and smallscale
manufactured goods. There are significant overlaps between the FT movement
and initiatives aimed at other ethical dimensions of trade, and environmentally
sustainable trade.
The FT movement carries out four types of activity that are in practice closely linked,
but which are logically distinct.
♦ As market participants, FT organisations seek to challenge and outcompete
conventional profit-oriented competitors, and to create sustainable businesses.
♦ As agents of advocacy and awareness raising they attempt to secure changes to the
international trading regime.
♦ As agents of redistribution they aim to pas on the benefits of price premiums that
some consumers are prepared to pay to southern producers.
♦ As agents of empowerment, they aim to assist producers to develop their own
capacity to engage on more favourable terms in international trading relationships.
Over the past decade the FT movement's commercial value and profile has risen,
albeit from a low base. Since the early 1990s a number of trends in the FT movement
have become discernible, including;
♦ Pressures for increased efficiency;
♦ The harmonisation of definitions, criteria and monitoring at the European level;
♦ Marketing through supermarkets;
♦ Increasing professionalisation; and
♦ Increasing emphasis on quality assurance.
Market liberalisation and associated reforms have generally been favourable to most
export commodity producers, but there are significant problems with the way in
which these markets operate. Newly liberalised markets, while often highly