Fair Trade ... more than charity ?

It is commonly accepted that the WTO (World Trade Organization) has been increasingly marginalizing small producers in developing countries. The small producers (craftsmen, farmers and converters) in these countries are excluded from the world’s main trading channels. As an alternative fair trade offers them the opportunity of finding alternative outlets for their products and generating a better income from the work they do (through offer of minimum conditions of trade).

It also intends to help develop alternative trade solutions between the countries of the North and those of the South and to demonstrate their viability.

Nevertheless, and despite all the unquestionable virtues of fair trade some question poped up in my mind. The first was what was the philosophy behind fair trade and the development in efficiency and quality of small producers?

Fair trade as it is commonly defined aims at developing small producers giving them access to better conditions that should enable them to in a sustainable fashion develop capabilities of competitively accessing global markets. If one thinks about it this is only one side of the coin, or even, a two-sided knife. It seems to me that if focus is solely on efficiency improvement and quality conformance ATOs are only preparing small producers to be able to pass value from their production to the large multinationals that explore the remaining steps on the value chain until retail. In other words, ATOs can be in a extreme and provocative perspective perceived as agents in service of multinationals ensuring their access to greater supply in terms of quality and price. Given this idea I believe that in a parallel fashion to ATOs initiatives in fair trading the issues about trade regulation and coordination should also be top priorities in the agenda in order to sustain long term enhancement of captured value on the production/extraction steps in the value chain. This, in my perspective, is particularly true for fair trade of agricultural products and extraction of raw materials.

An example of the importance of this side-line matters is the call for action from United Nations Secretary-General Kofi Annan at the UN Conference on Trade and Development in Sao Paulo. (http://news.bbc.co.uk/1/hi/business/3804007.stm)