Global Fair Trade: Humanizing Globalization and Reintroducing the Normative to International Political Economy by



Download 117.97 Kb.
Page1/3
Date03.05.2016
Size117.97 Kb.
  1   2   3
Global Fair Trade: Humanizing Globalization and

Reintroducing the Normative to International Political Economy
by


Candace C. Archer

Bowling Green State University


Stefan Fritsch

Bowling Green State University





Abstract

Since the mid-1990s fair trade has gained consumers and public attention, but IPE scholars have had little to say about this new phenomenon. Since the fair trade concept is based on consumer behavior that incorporates moral and ethical choices, it can not easily be explained by mainstream IPE theories which are predominantly based on the rational actor model. This paper examines the fair trade movement, discusses its history, its impressive growth and the ethical and social agenda it promotes. Fair trade is an anomaly that cannot be explained by mainstream rationalist ontologies. Instead, we argue, IPE theories need to consider classical political economy works which reveal many valuable insights regarding moral and/or ethical concerns. By reintroducing normative considerations fair trade can reconnect consumer and producer, move our theories beyond merely rationalist ontologies and humanize globalization.

Keywords:

Fair Trade; Normative IPE; Globalization; Ethical Trade; IPE theory; underdevelopment



Global Fair Trade: Humanizing Globalization and

Reintroducing the Normative to International Political Economy
Introduction

Over the last decade the issue of “fair trade” has gained considerable attention among consumers and in the popular press (Featherstone 2007; Downie 2007). Today fair trade products are both more visible and more widely available. The general message of fair trade advocates is that international trade should be more sensitive to positive social values including fair labor practices, fair product prices, non-exploitative production methods and environmental sustainability.1 Fair trade attempts to guarantee more equitable prices for certain products, predominantly originating in developing countries, so that producers get more direct benefits from trade and communities can improve production standards and overall living conditions. Although gaining public prominence, fair trade is largely absent from theoretical discussions in International Political Economy (IPE).2 Two reasons might explain IPE’s neglect of this phenomenon. First, fair trade products mostly consist of commodities like coffee, bananas, cacao, sugar, honey, tea, or flowers. These agricultural products represent a small percentage of total global trade and fair trade labeled products occupy a small percentage of global agricultural markets. Fair trade’s volume, therefore, generates limited or even insignificant impact on global trade relations. However, as we will show, fair trade products represent a dramatically growing sector which indicates their increased relevance.



Second, fair trade does not fit neatly into the mainstream rational actor model on which most of contemporary IPE theory builds. The growth of fair trade markets around the world indicates that consumers are willing to spend more money and personal resources to assure that the products they consume are non-exploitative of humans and environmental resources. Thus, the logic of fair trade runs contrary to mainstream rationalist frameworks for understanding human behavior and global economic interactions. Most theories of IPE still depict market actors as rational actors concerned with the most efficient allocation of limited resources. The existence of fair trade presents an interesting anomaly that suggests a fundamental ontological weakness of IR / IPE which Frost has criticized as paying “overall insufficient attention […] to normative issues.”(Frost 2008:259). Mainstream IR / IPE theory is presented as objective social science focused on describing and understanding economic phenomena, “uninterested in and often hostile to moral concerns” (Wapner 2000:2). The existence of fair trade and the moral agenda of those who practice fair trade questions this underlying ontology.

Although theories based on rational ontologies have trouble explaining fair trade, normative concerns as such are not new to political economic writings. In fact, many of the formative voices of political economy can provide insight into this movement because historically, political economy scholars considered more than rationality in their discussions of market relationships and the institutions in which they are embedded. While this normative strain of IPE theory exists, it has been ignored in the contemporary discourse.

The goal of this paper is to examine the fair trade movement and by doing so, make a case for the re-incorporation of normative discussions in IPE to account for this anomaly. The underlying thesis is: The fair trade phenomenon represents alternative socioeconomic behavior which conflicts with concepts of rational action and most efficient resource allocation. Contemporary IPE theory has not adequately explained norm-based socioeconomic processes like fair trade. Instead, we argue that the re-reading and the reintegration of norm-aware classical political economy works could capture the normative nature of fair trade and extend explanatory frameworks for socioeconomic interaction beyond orthodox market mechanisms, based on supply and demand, and beyond the rational actor model, which assumes that human action is solely based on constant cost-benefit calculations and a drive for profit maximization. We will begin by discussing the development of the fair trade movement, its motives, its growth as well as applied instruments and possible consequences. After establishing the normative foundations of this type of trade, we will consider the theoretical implications of fair trade and demonstrate the utility of re-reading classical political economy literature for understanding this movement. Finally, we argue that fair trade represents an alternative way to understand globalization and re-connect the consumer and producer in a more humanizing way.
What Is Fair Trade? Some Comments on Terminology

Fair trade has been used in political discourse with several different meanings: The first and still more prominent understanding defines fair trade as establishing a “level playing field” between trade partners, mostly states (Balaam and Veseth 2008:109). In other words, trade is “fair” if all trade partners adhere to the same principles, norms and rules. Under this definition “unfair trade” practices would include the broad field of non-tariff barriers like subsidies or social, labor, health and environmental standards which lead to distortions in global trade relations and cause “unfair” advantages (Cohn 2008: 206; Goldstein and Pevehouse 2007: 321). However, as Cronin points out, “it [is] often hard to know where legitimate nontrade concerns end and trade protection [begins]” (Cronin 2002:373). Developed countries regularly invoke this definition for fair trade because they wish to protect their domestic markets from cheaper foreign imports. For example, lower labor costs or weaker environmental regulations in developing countries reduce product prices and thereby increase their competitiveness in global markets. These practices are often cited as undercutting the competitiveness of developed country producers and are used as an example for why developing countries’ producers are not trading “fairly.” However, from this point of view, the use of fair trade rhetoric seems rather synonymous with protectionism.3

Stiglitz offers a second and slightly different usage that has also gained some prominence. He argues that liberal trade, if truly absent of barriers, would lead to greater global welfare and development. The problem he cites is that trade is not “fair” because the system is inherently discriminatory. Not only do many developed countries break the rules of the liberal trading system, but the structural power relationships and political agreements do not lead to the full incorporation of the underdeveloped world into the global trading system. His solution to making trade “fair” is a combination of state policy, better adherence to liberal rules and a more participatory, redistributive global trading system (Stiglitz 2006:82; Stiglitz et al. 2005). Stiglitz’s reformist agenda is an attempt to make trade more “fair” for the global South, but this is a less common usage of fair trade.4

Neither of the definitions above accurately depicts our usage of the term. We wish to be clear; our interest in fair trade is confined to the global social movement committed to the values articulated in the following definition. Fair trade is

“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, marginalized producers and workers – especially in the South. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade” (FLO International 2008).
The fair trade movement argues for ethical trade and advocates improving the lives of producers in poor countries. Organizations that label or certify fair trade products have requirements that would help the producers benefit from trade directly and assure that products are produced in a non-exploitative and developmentally positive manner. The goal is to empower producers and their communities and help them become economically self-sufficient, thereby adding to the sustainability of economic growth within an underdeveloped state and reducing some of the negative consequences of globalization.

Buyers or consumers of fair trade labeled products are motivated by their desire to support fair labor practices and development in poorer states. Buyers make informed purchases based on a global justice and social development agenda. As Maseland and De Vaal explain, consumers consider it a “moral obligation” to purchase products that promote justice and redress the negative consequences of international trade (Maseland and de Vaal 2002: 251-53). Because fair trade products often cost more in the market place, it is difficult to argue that the most efficient allocation of resources is driving the consumer’s purchase and because they are often quite similar to non-fair trade products, consumers are not using superior quality standards to drive their purchasing. Fair trade purchases are instead morally based. In a fundamental way the movement re-connects producers and consumers. It overcomes the facelessness of global trade and production by creating a process that gives consumers more information on the products and those who produce them. Fair trade consumers may never meet the people who produced their purchases, see the working conditions or assure the profits end up in the worker’s hands, but they are more connected to the production process because they are guaranteed that their purchases are regulated to promote positive social values. This is a central issue in fair trade to which we will return in more detail below.


The Development and Growth of Fair Trade

The modern fair trade movement is often traced back to 1940s America when the Mennonite Church purchased needlework from Puerto Rican artisans and sold it through “Ten Thousand Villages” (Ten Thousand Villages 2008) and the Church of the Brethren imported wooden cuckoo clocks from Germany to assist post-war European refugees (SERRV International 2008). By the early 1950s more shops selling fair trade products opened in the US. In Europe, the earliest fair trade activities can be traced back to the UK during the late 1950s. Oxfam UK sold crafts produced by Chinese refugees in Oxfam shops (International Federation for Alternative Trade (IFAT) 2008). During the 1960s and 1970s, these relationships became consolidated and Southern NGOs established permanent links with their Northern counterparts. They formed relationships “based on partnership, dialogue, transparency and respect” with the goal of “greater equity in international trade”(International Federation for Alternative Trade (IFAT) 2008).

The most significant development in fair trade was the creation of labeling processes that would identify products as “fair trade certified” (FTC). This process emerged in the Netherlands in 1988 as a reaction to plummeting coffee prices. From there, many more local organizations created independent certification processes which are now being consolidated under the Fairtrade Labeling Organizations International or FLO. FLO is an umbrella organization that consists of independent state-based fair trade organizations attempts to provide one standard for fair trade certification through FLO-CERT. The consolidation and history of the fair trade movement provides an interesting example for networking activities of non-governmental organizations in global politics. From the 1970s on, domestically based fair trade organizations began to meet in informal conferences and workshops around the world, a process which became more formalized in the mid 1980s through the establishment of various associations in different regions of the world. In 2001, FLO, IFAT, NEWS! and EFTA established FINE, a collaborative effort to coordinate their fair trade activities such as advocacy, standards and monitoring.5 Currently there are hundreds of fair trade organizations in Northern and Southern countries.6 The remarkable growth of fair trade concerned NGOs, especially during the late 1980s and 1990s appears to go hand in hand with the general growth and momentum of an emerging global civil society which is critical of the negative effects of economic globalization, concerned about human, civil and labor rights and environmental protection. Famous public expressions of this emerging global and transnational civil society and its manifold socioeconomic concerns have been the street protests at the WTO Ministerial meeting in Seattle in 1999 or the establishment of the yearly World Social Forum as a counter initiative to the World Economic Forum (WEF).7
Growing Trade in Fair Trade Products

The development of the fair trade movement is directly responsible for the increase in FTC products and their growth in market share. By the 1990s more consumers were educated about the existence of fair trade products. Due to data quality, it is difficult to present a coherent picture of how this sector has grown since its earliest beginnings in the 1940s, however, the picture has become clearer since the late 1990s. All indications are that the market share of fair trade products is expanding dramatically. Since 1999 FTC product sales have increased by 319% in Europe and 440% in North America (see table 1).




Table 1: Development of Total Fair Trade Sales 2001-2006 (in million US-$)

Year

2001

2002

2003

2004

2005

2006

Growth 2001-2006 in %

Europea

326,9

n.d.

n.d.

597.00

747,63

1044,9

319,6

North Americab

125,2

180.00

276,1

358,9

378,9

552,8

441,5


aSource: (Krier 2001; Krier 2005)

bSource: (Fair Trade Labeling Organization 2006; The Fair Trade Federation 2005)
Coffee and Bananas are two of the oldest FTC products and provide an excellent example of fair trade increases in Europe. Since 1999, the market share growth of FTC bananas and coffee has been impressive. Table 2 shows the current market shares for both product categories. Although it is difficult to draw general conclusions about only two commodities, they nevertheless provide an example of the overall trends. They also raise questions about differences among similar countries in terms of their purchases of fair trade products, a question that is beyond the scope of this paper, but one that should

be investigated. What the tables do show however, is the significant growth in market share that fair trade products have experienced across Europe and the US over the last six years.



Table 2: Market Shares for Fair Trade Products in Europe 1999 & 2004

Bananas (in % of total)

Coffee (in % of total)

 

1999

2004

 

1999

2004

United Kingdom

15

47

United Kingdom

1,5

20

Switzerland

1

5,5

Switzerland

3

6

Finland

n.d.

5,5

Finland

0,3

0,4

Belgium

0,6

4,4

Belgium

1

1,7

Austria

n.d.

2,7

Austria

0,7

2,3

Sweden

1

1,8

Sweden

0,8

1

Denmark

0,9

2

Denmark

1,8

2

Norway

n.d.

0,6

Norway

0,3

0,9

Ireland

n.d.

0,5

Ireland

0,5

2

The Netherlands

n.d.

4,2

The Netherlands

2,7

n.d.

Luxembourg

n.d.

4

Luxembourg

3,3

n.d.

Italy

n.d.

1,2

Italy

0,1

n.d.

Germany

n.d.

1

Germany

1

1

Source: (Krier 2001; Krier 2005)
Although agricultural commodities represent the bulk of fair trade products, the list of products available as FTC continues to expand each year. FTC products now include processed goods such as soccer balls, beer and wine. In addition to the increase in labeled products, there has been a decided movement toward mainstreaming FTC products in the US and Europe. Consumers no longer need to go to specialty stores to purchase fair trade products because they are widely available in common retail outlets (Linton 2006). Fair trade coffee, and to a lesser degree produce, can be found in many diverse North American and European supermarkets and even in such ironic places as Wal-Mart which has recently launched its own fair trade certified coffee and carries fair trade certified flowers in its Sam’s Club stores.8 The growth of types of FTC products suggest the power of the movement continues to be driven by information campaigns that have caused a rising awareness of problems related to globalization regarding unequal market access and unfair price policies (Pelsmacker and Janssens 2007). According to a recent study, “[F]air Trade is entering a new stage. From modest beginnings in the 1950s it has now developed into a world wide movement, benefiting millions of producers and their families, farmers and workers in developing countries” (Krier 2005).
Overcoming the Harms of Globalization: Fair Trade Organization Strategies

The actual work of fair trade agencies has also grown since the beginning of the movement. To benefit producers, fair trade organizations pay higher prices for the products, assure more profits accrue directly to the producing communities, provide distribution networks in industrialized countries, strengthen local producer groups, and establish continuous and stable trading relationships between the developed and underdeveloped world. For producers, fair trade associations provide education regarding market demand and structures, consumer expectations, and production standards. They also try to prevent the exploitation of children by incorporating restrictive labour standards into the labelling process and to establish sustainable production methods. Fair trade associations also educate consumers about the positive effects of higher prices. Watson argues that this:

[…] involves a narrative strategy, through which campaigners tell stories about the lives of the producers who stand to benefit from the adoption of fair trade norms. This is not only about how such producers would benefit, and neither is it only about why it is ethically right that they should benefit. It is specifically focused on who benefits – putting names and faces to the process of global trade (Watson 2005:217)
As a result, these NGOs increase transparency and dialogue in international trade relations by reincorporating moral and ethical aspects and stressing the social aspects of trade and consumption. (Watson 2005:216). Fair trade organizations also create the networks through which production is monitored, thereby providing assurances to the consumer that strict production guidelines are being met. The applied certification schemes, visualized through various fair trade labels, assure that the mutually agreed production, social, health and development goals will be respected and controlled – or generally that the social and moral agenda that the consumer would endorse is met. As the fair trade movement has grown, consumers in industrialized countries have become knowledgeable about negative development and social practices linked to exported products. This information comes from many sources including fair trade advocates and has created a willingness by some consumers to pay slightly higher prices for FTC goods to assure that profits go directly to the small producers.

Thus, the fair trade movement has addressed two interrelated issues. First, the relationship between fair trade consumer and producer is a purely market-based relationship. There is no government intervention into choices of the consumer to purchase FTC products. The success of the fair trade movement is based on the more complete dissemination of information regarding the export of the product and the difference between where profits accumulate for non-FTC versus FTC products. The market operates by individuals having more complete information to make decisions about their purchases. Therefore, the fair trade movement has used the market to overcome the socioeconomic dislocation of producers in the developing world.

Second, while the market may be the primary mechanism for fair trade, the cost-benefit calculus of the consumer is not one of simple allocation of resources. There are normative considerations at work in the decisions to purchase fair trade products instead of their non-fair trade counterparts. The fair trade ideology highlights the fact, that peoples’ behaviour under specific circumstances, run counter to the metaphor of the impersonal market that follows the “natural” price mechanism and decisions are not based on crude utilitarianism. It is the social values or norms of the consumer that motivates them to purchase products that are often higher priced. This suggest that deliberately set action, strongly based on moral and ethical grounds, can alter existing trade relationships and create win-win situations on both ends of the production and distribution chain.

Fair trade also manages to overcome the de-connection of producers and consumers, one of the central features of globalization in its current form which is defined by transnational and global networks of production and distribution (Held et al. 1999). Technological progress in transportation and information and communication technologies has facilitated the creation of global production and distribution networks, often embodied in form of multinational corporations (MNCs), which connect far away markets and production sites. Production and consumption have been radically separated by time and space and are characterized by anonymity.9 For the consumer this means that he/she often has no idea where products originated and under which circumstances they have been produced (Linton et al. 2004:231). Fair trade tries to reconnect the “local”, (i.e. producers) and consumers, through transparent global trading networks. Although often based on geographical long-distance relations, this form of re-personalized trade has much in common with the environment in which Adam Smith made his observations regarding to the establishment and functioning of markets. In Smith’s time markets were localized and characterized by close personal relationships between seller and buyer (Heilbroner 2000:71). There also existed a strong sense for morally sound and legitimate business practices rooted in “social norms and obligations, of the proper economic functions of several parties within the community, which taken together, can be said to constitute [a] moral economy” (Thompson 1971:79). Socially and economically, fair trade resembles localized trade which works through global trade relations and – to borrow Rosenau’s term – represents a “distant proximity” (Rosenau 2003). However, to fully understand this movement our theories need to be able to understand the societal and normative contexts in which individuals make choices that run contrary to the simple rationality of economics. To do so, our theories need to consider the role of morality and values, which opens the door for reconsidering the ontological basis of our theories and revisiting the insights from classical political economy.




Share with your friends:
  1   2   3




The database is protected by copyright ©essaydocs.org 2020
send message

    Main page