For decades, non-governmental organizations (NGOs), retailers and consumers have formed networks to promote fair trade products. Simply, the consumers’ goal in purchasing fair trade products is to ensure that those involved in producing goods receive a living wage and benefit from improved working and living conditions. By purchasing rugs or running shoes not produced in sweatshops, or coffee, tea or chocolate not grown, picked and processed by slave or impoverished labour, consumers try to encourage businesses to improve working conditions and wages by demonstrating that they will pay higher prices for higher production standards, in effect reversing the drive towards hyper-efficiency inherent in free market capitalism. Because domestic minimum wage and labour standards legislation in many developing countries are lacking or ineffective in the global race to the bottom, and because there are no effective global enforcement measures of International Labor Organization (ILO) standards, civil society has essentially developed an alternative trade system whereby consumers abandon their “rational” choice to find the cheapest products available. Instead, they pay a social or moral premium for products that are certified as fairly traded. Various fair trade certifying and labeling organizations have been developed to provide standardized monitoring of production based on morally informed criteria.

But how effective is the fair trade movement at improving the standard of living for the poorest billions of people in the world? Certainly the movement is still young and in time it may significantly alter the global income disparity, but there is considerable debate about the effectiveness of this movement and whether it will be the most effective method of addressing systemic human suffering. Ultimately, the core issue is that the fair trade movement, though potentially profoundly effective at improving working people’s lives in a global free market, is likely not able to address the systemic aspects of global capitalism that will continue to impoverish billions and sustain a wide and potentially ever-growing disparity of income between the rich and the poor.

To examine the extent of the fair trade movement’s ability to address human suffering, it is important to examine the nature of the movement, from its origins to its present and likely future scope of influence, as well as the morality and goals underpinning its existence, and some key national and international organizations (IOs) involved in the movement. It is then important to explore the effect fair trade has had on the world in recent years. Then it is worth examining arguments why the movement has or has not been effective and likely will or will not be effective in the future. Proponents of various paradigms of political philosophy (liberal, feminist, environmentalist, Gramscian, dependency theory, world systems theory) would support the thesis that the fair trade movement can achieve meaningful results to alleviate human economic and social suffering. However, members of other paradigms (realist, Marxist) can soundly criticize the movement by pointing out limits to its widespread success. Further, there are alternative movements that may ultimately be more successful at improving the living and working conditions of the poor.

What exactly is the fair trade movement? It is an attempt to exchange “goods based on principles of economic and social justice”[1] Oxfam has pursued fair trade commerce “to overcome poverty by enabling poor producers or workers to access the market in ways which enable them to obtain a fair return for the goods they grow or make.”[2] Operating now in more than 100 countries, Oxfam is an international non-governmental organization (INGO) that works with many producers who are independent, self-employed workers paid by piece rate, while many other fair trade suppliers are organized into unions.[3] The Fair Trade Federation in the United States is an umbrella organization of fair trade producers, wholesalers and retailers who have pledged to pay fair wages [based on the local economic context], “provide equal opportunities”, encourage employment of the “most disadvantaged”, “engage in environmentally sustainable practices, build long-term trade relationships, provide healthy and safe working conditions, [and] provide financial and technical assistance to workers whenever possible.”[4]

Rose Benz Ericson thoroughly summarizes the many economic and social advantages to producers who participate in fair trade markets. Around the world, fair trade organizations (FTOs) (or alternative trade organizations (ATOs)) can be either for-profit or non-profit, wholesalers or retailers, or churches, catalog producers or websites. They attempt to ensure the price to producers will “cover material and labor costs, … [and] improve the standard of living of workers, their families, cooperatives and communities,” particularly through “increased income to feed, clothe, shelter, educate and provide health care for their families; [provide] access to loans to buy land, livestock and materials; training and technical assistance; ownership of the means of production; and respect for their cultural traditions and native environments.” Other advantages to producers often include safe, dignified and democratically run work environments, community development in appropriate technology, development of “environmentally sound business practices,” support for indigenous talents and traditions, leading to a decrease in urban migration[5] with all its attendant problems.

Further, retailers and wholesalers will often prepay for goods and embark on long-term contracts to minimize the cash flow volatility from the uncertainty producers are faced with when at the mercy of a highly competitive global market. Fair trade producers also benefit from long-term relationships as they can communicate with retailers to revise their product designs for specific or varying markets, or smooth logistics inefficiencies, develop bookkeeping and marketing skills to expand domestic markets and reduce their reliance on foreign customers.[6]

Retailers market not only fair trade products (“coffee, tea, food products, home furnishings, clothing, jewelry, toys and crafts”) but they also market the moral ideology of the movement to consumers by providing information about producers, their working and living conditions and FTO structure itself,[7] sometimes even using promotional material developed by fair trade producers in developing countries.[8] While independently produced handcrafted items comprise one kind of unique products available from FTOs, more traditionally commercially traded commodities like coffee are significant components of the fair trade movement.

FTOs often try to reduce the middlemen involved in global trade to maximize the funds available to producers. Coffee is a fine example of the value of removing intermediaries. In 1975 and 2001, world coffee prices were US$0.50/pound. Between those years though, frost, drought, labour strikes and the 1989 end of export quotas mandated by the London-based International Coffee Organization caused the price to fluctuate madly, reaching at times over US$3.00/pound. The last half of the 1990s saw global coffee production grow on average 3.6% each year. Consumption, though, rose by less than half that rate.[9] Volatility of prices and over-production undermine producers’ ability to plan, leaving them at the mercy of the global coffee commodities markets. Fair trade retailers and wholesalers, however, pledge to pay a floor price for beans, currently at US$1.26/pound,[10] with a premium to match the global market price whenever it happens to exceed that price,[11] and a further premium if the coffee meets certified organic standards.[12] Fair trade purchasing injects welcomed stability for coffee producers.

Certification by independent monitoring groups ensures for the fair trade consumer that the product meets their moral standards. Until the late 1990s, different countries developed various certifying and labeling organizations. Fair trade producers would pay fees for the certification process and the right to display the fair trade logo on their products.[13] Since 1997, Fairtrade Labeling Organizations International (FLO) has been the global umbrella organization to coordinate producer certification and monitoring, maintain a list of all certified fair trade exporting producers, and coordinate the 17 domestic labeling member organizations.[14]

In recent years, global corporations have developed corporate codes of conduct for suppliers to offset public pressure about poor working conditions, sweatshops and economically enslaving wages down through their supply chains. Despite the public relations value of such codes, independent monitoring and verification is critical for consumer confidence in the integrity of fair trade production processes. The Clean Clothes Campaign (CCC) has been critical of corporate codes. The CCC is “a network of coalitions—made up of non-governmental organizations, trade unions, human rights organizations, solidarity groups and researchers—that aims to improve working conditions in the global garment industry.”[15] The CCC asserts that many of these corporate codes are “vaguely defined, incomplete, not implemented or monitored, and not independently verified.”[16] Just like FLO, the CCC works to harmonize labour standards from diverse interest groups. They have tried to develop consensus on a model code that reflects European and Asian input where diverse stakeholders would be able to “speak with one voice to the companies and to show that a large number of people do agree that workers have these rights” (emphasis in original).[17]

The CCC’s code contains four areas. Section one describes the scope of the code, the context in which it rests and the developers’ expectations of the code as just one tool of many in a toolbox. Section two lists core labour standards involving “child labour, forced or bonded labour, discrimination, freedom of association and the right to collective bargaining plus provisions on hours of work, living wage, health and safety and job security.” Section three describes expectations of how companies are to implement the code, including translation and distribution, while section four asserts “principles for independent verification” that include collecting information reports from accredited independent organizations and local worker organizations.[18]

In contrast to the usually unionized garment industries that the CCC addresses, Oxfam has developed monitoring procedures that would be more appropriate for its many independent craft workers. Part of their focus was to work with producers themselves in a participatory monitoring process that they found to be more effective than an audit model.[19] Oxfam also had additional motivations in a monitoring process. They wanted to include producers in the process to help them understand and track advances in their local development.[20] They also wanted to expand the notion of monitoring from a business efficiency model to more of a social development model[21] in part because they found that top-down monitoring wouldn’t be successful if it is designed merely to meet the needs of those wishing to do the monitoring. Monitoring must benefit those being monitored for it to be effective and sustainable.[22]

With all the potential benefits the fair trade regime offers, is it successful? All of the FTO goals and priorities reviewed above have been met in numerous examples on all impoverished continents. According to the International Federation for Alternative Trade (IFAT), fair trade transactions accounted for $400 million in global sales in 1999.

Co-op America, an NGO that encourages consumer and investor mobilization for social change documents many fair trade successes. North America and Pacific Rim 2002 fair trade sales topped US$250 million, up over 37% from 2001. “Certified Fair Trade coffee demonstrated the greatest growth of any single Fair Trade product, with sales increasing by 54%, from…2001, to…2002.” The group also reports an increase in consumer desire to deal directly with fair trade producers and an increase in consumer awareness of global production.[23]

Chapters three and four of Kelly-Kate Pease’s International Organizations provide useful summaries of the main paradigms of political philosophy as they apply to IOs. Using her framework, it is easy to see which paradigms support the value of FTOs and which minimize their significance. The liberal perspective is validated in the fair trade movement. Civil society groups and socially-conscious consumers, acting without the need of traditional markets, state governments or inter-governmental organizations (IGOs) have taken advantage of growing networks to develop a system parallel to market-optimizing capitalism. We live in a world where IGOs like the UN’s International Labor Organization (ILO) have not been able to achieve 100% state ratification on even core labour standards. Clearly, civil society is networked enough to bypass states and IGOs that cannot meet our needs for moral standards in international trade. Indeed, in a world where IGOs like the World Bank (WB), International Monetary fund (IMF) and the World Trade Organization (WTO) are assaulting nations’ prerogative to enact NTBs, FTOs can be successful precisely because they are voluntary trading relationships over which those free trade IGOs have no sway.

The global fair trade regime clearly demonstrates that nonstate actors are important in the world as well as state actors. Further, domestic manifestations of the global fair trade regime demonstrate that the state is not united in its affairs, nor can it always behave rationally. When an impoverished country chooses (or is forced) to allow slave wages to further impoverish its citizens, rationality is undermined. Further socially conscious trade regimes demonstrate the importance of conflict and cooperation in the operation of international relations. First world consumers sacrifice (albeit marginally) bargains for the social good of others who live far away.

The liberal notion of moral interdependence is a fundamental tenet of the global fair trade regime. Fair trade ameliorates the traditionally low politics issues of social and economic development, which has security implications if a large proportion of impoverished populations can earn a more stable living wage; security threats can diminish. Liberals characterize regime and norm creation through functionalism, a gradualist approach to change in the world. The fair trade movement is a hallmark of that process. While liberal institutionalists see IGOs as making significant contributions to order in international relations, they should acknowledge how civil society-based IOs like FTOs and ATOs create stabilizing linkages in the world. Liberals see IOs as having the potential to develop shared norms and values. FTOs exist precisely to develop shared global norms that respect the dignity of those we trade with. Liberals who view IOs as a means of helping the poor in the world should recognize that FTOs began primarily through charitable and religious NGOs, thus validating their view.

The feminist paradigm of political philosophy can also claim validation with the global fair trade regime. While global capital often cooperates with elites in societies where women have not traditionally been economically empowered, fair trade systems have great potential to improve the opportunities of marginalized members of societies including women.[24] Since many NGOs working in low politics issue areas have larger proportions of female volunteers and employees than high politics groups, FTOs provide opportunities for women to contribute to highly meaningful global change. Further, from feminist perspectives that consider typically masculine traits dominate the global systems of conflict inherent in high politics, as FTOs grow in global significance, more cooperative, nurturing norms can expand as an alternative model to zero-sum games in international relations.

From an environmentalist perspective of political philosophy, FTOs clearly shine. Since our symbiotic global ecology cannot sustain the level of economic activity of the countries that are already industrialized, encouraging the majority world to meet our level of “progress” is foolish. FTOs enable producers to avoid contributing to urbanization. Higher incomes in fair trade provide economic incentive for producers to care for natural resources; they do not need to cut costs and squeeze all possible value out of their environment just to survive. Further, FTOs also encourage producers to develop organic and low ecological footprint economic activity.

The Gramscian perspective recognizes the value of FTOs’ attempts to develop through civil society, a base of new norms and ideals that can accumulate into a counterhegemonic force to challenge the often-unquestioned power of the global capitalist hegemon. FTOs, like Gramscians, recognize how elites are co-opted by the hegemonic worldview to the detriment of impoverished workers throughout the developing world. Similar to Gramscian acknowledgement of FTOs’ paradigm, dependency theorists would have some affinity with their outlook. FTOs recognize the effect on humans of neocolonial capitalist imperialism that enforces a global underclass to provide cheap goods to enrich corporations and wealthy global consumers. By appealing to neither the global hegemonic order nor the comprador classes of developing countries, FTOs address the needs of the exploited and contribute to networks and linkages that spread notions of an alternate norm. And as states perform cost-benefit analyses, then act based on the wishes of the most powerful, FTOs need to work outside their framework to address the needs of the victims of the dominant hegemonic order.

Finally, FTOs recognize world systems theorists’ explanatory paradigm in trying to undermine core countries’ exploitation of peripheral states by enhancing the standard of living of their workers. While newly industrialized countries (NICs) have formed a semi-periphery, the existence of that class of countries is a tormenting lure to peripheral countries; the global capitalist system cannot sustain all nations operating at economically dominant positions. If we used full-cost accounting practices to include all the environmental and social externalities we cannot (or do not) measure, then “in 1994 corporations in the United States were permitted to inflict $2.6 trillion worth of social and environmental damage, or five times the value of their total profits.”[25] Clearly, our planet cannot sustain even more semi-peripheral countries.

While anecdotal and quantitative evidence asserts the merit of the fair trade regime, do the successes matter that much at all? Surely, helping thousands of people out of poverty is immeasurably useful, but whither the remaining billions? FTOs have grown immensely, especially in recent years with the development of the Internet, which has enhanced more meaningful and functional linkages between industrialized country consumers and developing country producers. This educational process helps meet the FTO goal of developing understanding between those groups.[26] But do FTOs have the capacity to affect the lives of a majority of the working poor in the world, or will they remain a marginal boon? The year IFAT reported global fair trade sales of US$400 million, the total value of goods traded globally was US$3.6 trillion;[27] fair trade represented just over 0.011% of global trade. Does future growth in fair trade have the potential to sufficiently to absorb the total global trade that is not yet fair?

From a realist perspective, there is little likelihood of the global fair trade regime expanding to meet the living wage needs of the poorest billions on the planet. The mere fact that FTOs have developed outside the realm of states and IGOs indicates that their goals and motivations are not shared by states and their IGOs in their quest for getting, keeping and using power. The state is the dominant actor. The state and its IGOs enact their cumulative national interests. FTOs work in opposition to states, reinforcing the idea that states themselves do define the global playing field. Impoverished states that lure capital with cheap wages are merely exercising whatever power they have to survive: in the global context, to earn foreign capital. These state choices reflect their rational cost-benefit analysis of variables, with living wage legislation losing to the need for foreign exchange at the best possible terms. The realist perspective that the strong act to maintain their power by controlling the weak is unquestionably apparent in the global free market capitalist system. Economically strong nations use their power their IGOs to establish, maintain and improve favourable terms of trade, which inevitably means that weaker states will suffer under asymmetric power relationships. Conflict reflects the reality of global capitalism and the environment in which states must act to survive. Insolvent, failed states can provide little structure for any wages, let alone living wages.

Structural realist adherence to national self-help in a global system of anarchic international relations means developing nations should not depend on the long-term reliability of FTOs who present a somewhat informal alliance with workers. Socially conscious consumerism is a luxury many in the developed world can afford. Granted, an increasing number of first world consumers are embracing ethical purchasing, but it is hard to imagine everyone in the developed world committing to fair trade purchases. Further, economic hardship in developed countries may undermine much of the gains FTOs have made in recent decades, thereby leaving developing countries in the same position: self-help within global anarchy. Even state leaders with highly developed social morals may still race to the bottom of low wages to lure investment. Traditional realists with Hobbesian pessimism recognize the reality that not all (and indeed perhaps ultimately few) make selfless consumer choices.

FTOs seem to acknowledge the neorealist and neomercantilist view of the very existence of a politico-economic world order that is asymmetrically interdependent. States with dominant cash crops providing foreign currency must focus on developing that means of global monetary survival. Hegemonic stability theorists also recognize the asymmetric interdependence of international relations. The great capitalist powers fresh from their defeat of most of the communist nations representing the greatest opposition to free market capitalism have turned their IGOs’ (WB, IMF, WTO, FTAA, OECD, APEC, etc.) attention to impoverished countries to ask/lure/force them to compete with each other for the cheapest labour. Poor countries that do not submit will be isolated from global trade: monetary asphyxiation. Co-opting those nations’ elites ensures their compliance with the dominant hegemonic ideal. The fact that FTOs have established parallel trading networks means they have chosen not to participate within or challenge the hegemonic norms; FTOs are content to operate in the gaps. FTOs’ lack of relative global economic significance reflects the realist view that IOs operate to a marginal degree in the realm of low politics, without greatly affecting states’ behaviour. Indeed, FTOs intend to operate without needing to affect the governments of states they operate in.

While realist views marginalize the effect and potential of FTOs to accomplish their goals on more than a marginal level, it is the varying critical views in the Marxist camp that ultimately present the strongest critique of the global fair trade regime’s ability to make any meaningful difference in the lives of the world’s impoverished. Paradoxically, though, FTOs share some critical Marxist perspectives in their core presumptions. Like Marxists, FTOs recognize that high politics do not dominate low economics; rather, economics plays a primary role in the structure of global governance. FTOs also recognize how capitalism requires a zero-sum, conflict-based game that necessarily oppresses or disadvantages many for the sake of the power and wealth of the relatively few. Further, FTOs recognize how the dominant capitalist IGOs perpetuate capitalist exploitation, particularly today as the WB, IMF, and WTO and related free trade “agreements” pursue an agenda of dismantling domestic regulatory sovereignty in favour of unimpeded capital flow. But since FTOs try to establish an alternate global fair trade regime, they are trying to create IOs that do not serve exploitative capitalism. But the core Marxist criticism of FTOs rests in the fact that FTOs still sanction an economic system that is exploitative. Even if all the billions trapped in non-fair trade employment can earn living wages, there is no guarantee that a zero-sum capitalist system will allow everyone to live at a just, egalitarian standard of living. And even though FTOs like the European Fair Trade Association can fundamentally oppose neo-liberal bodies like the WTO by calling for a radical overhaul of its mandate,[28] FTOs continue to work within the capitalist system.

While FTOs may be trying to enact an antithesis to the capitalist thesis, their goal is not to arrive at anything beyond a modified capitalist global economic system. There is no expectation in FTOs that ultimately the wages that first world high technology knowledge workers earn will be met by West African fair trade cooperative cocoa pickers. At the same time, there is no reason to expect free trade interests to passively watch themselves be marginalized by FTOs. Indeed, 15-year-old Pakistani former rug factory bonded labourer Iqbal Masih was murdered in 1995, arguably by rug capitalists, soon after winning the (dubious) Reebok Youth in Action award for his four years of activism against children in bonded labour.[29] Further, even if all other corporations adopt wage levels that fair trade workers enjoy, the reduction of their profitability will be negligible. While this is a compelling pillar of FTO arguments, this small level of redistribution of wealth will not reverse oligopolistic, monopolistic or imperialistic capitalist tendencies that fuel radical global income disparity. “Trade, at present, is a feeble, often regressive means of distributing wealth between nations”;[30] in fact, trade may be a more effective means of acquisition than distribution. Further, higher wages may not guarantee that overproduction would cease; in fact, they may inspire overproduction.

So ultimately, if realists consider FTOs to be mostly impotent in forcing states to act, and Marxists see FTOs as condoning an inherently exploitative system, what alternatives to FTOs would have a better chance of improving the lives of more of the suffering people in the world? Two routes may be possible: to re-localizing (in essence, fighting and denying globalization with isolationism) or to democratize the globalizing process that is currently driving by unaccountable corporate interest.[31] This latter answer may lie in a re-visioning of the WTO, which has the potential to be a more democratic organization than with the WB or the IMF because each member country has an equal vote, unlike the G-5 voting dominance in the WB and IMF. Additionally, improving the degree of democracy in the WTO’s agenda setting process from the strict domain of the USA, Canada, the EU and Japan would be a profound improvement.[32] Linking ILO standards to WTO trade enforcement could solve many or all of the systemic inequities that FTOs address. Since FTOs initially mobilized to address unenforceable ILO conventions, using the WTO to enforce ILO standards can apply all labour conditions to all WTO member countries, with the potential benefit of increasing ratification of ILO conventions under a climate of meaningful enforcement. Essentially, the WTO would be enforcing what is currently a voluntary fair trade certification process, which already works.[33] In fact, “there seems no justification for global regulation to protect property rights, while claiming that the same type of international regulation cannot operate to protect basic human and trade union rights.”[34]

Furthermore, entrenching ILO labour standards within WTO enforcement mechanisms can result in an ironic re-regulation of the world. The current global free trade movement opposes state social regulation that affects capital flow, market access or profitability. As the pendulum shifts from state regulatory sovereignty to global capital freedom, re-visioning the WTO to enforce the same standards can end up with a greater proportion of the global workforce covered by regulations than ever before: “the aim of international labor standards should be to prevent and redress [social dumping] practices, that include child labor, prison labor, forced labor, unsafe and unhealthy working conditions, unfair wages, and discriminatory practices.”[35] Indeed, it is important to distinguish between a workers’ rights clause in the WTO as protective, not protectionist, since it doesn’t need to upset relative competitiveness if it applies to all corporations and all states equally.[36] Also, in an interesting twist on who uses protectionist tactics, we can posit that transnational corporations (TNCs) are protecting their rights at the expense of the ability of political jurisdictions to protect the rights and livelihood of their citizens: “the global economy is little more than a protectionist tactic used by TNCs and banks against any ability of communities to preserve their own sustainability or that of nature.”[37]

From a Marxist perspective, another example of fraternizing with an enemy paradigm is the growing trend of industry/union/NGO cooperation. The 1998 creation of the Ethical Trading Institute (ETI) promotes similar business practices as in the Clean Clothes Campaign code.[38] The ETI premise is that a “multi-stakeholder alliance of business and civil society” can help overcome the difficulties of implementing internationally derived standards throughout the supply chain.[39] Their data confirm significant success: despite a 50% rise from 1999 to 2000 in the overall number of suppliers to all ETI member businesses, the proportion of all the suppliers that were monitored went from 20% to 64%.[40] Ultimately, though, as Oxfam discovered, managers not committed to meaningful monitoring will impede efforts of even organized workers:[41] wisdom ETI ought to consider when it monitors its own monitoring.

At best, it would be disingenuous to argue that the global fair trade regime promoted by fair trade organizations is contributing little to alleviate global poverty just because it is not overhauling the global capitalist system. The anecdotal and quantitative data support FTOs’ effectiveness. If FTOs have been trying to improve labour standards throughout the world, particularly in countries that have not experienced strong domestic regulation, then a natural extension of the fair trade movement may actually be to support initiatives to insist that the WTO enforce labour standards along with free trade mechanisms. In fact, FTOs may be contributing useful new norms to a Gramscian counterhegemonic ideal that, when combined with anti-corporate globalization movements in the world, may soon provide sufficient impetus to succeed at converting the WTO into a tool of global justice, rather than a pawn of global capital. So, instead of the WTO underwriting irresponsible TNC behaviour, the WTO could soon insist that “a company would not be permitted to trade between nations unless it could demonstrate that, at every stage of production, manufacture and distribution, its own operations and those of its suppliers and subcontractors met the specified standards.”[42] But just because the fair trade movement may not completely supplant exploitative capitalism, we should not stop supporting it. It may represent the only feasible humane option in the near future.