26th September 2011

Fair Trade USA resigns from Fairtrade system

Fair Trade USA, until recently known as Transfair, has announced its resignation from membership of the international Fairtrade labelling system, effective from the end of December 2011.

“FLO and Fair Trade USA share a belief in the importance of empowering producers and workers around the world to improve their lives through better terms of trade. However, as we look to the future, we recognize that we have different perspectives on how best to achieve this common mission.”

- Fair Trade USA and FLO joint statement, Thursday 15th September 2011

The intention appears to be for Fairtrade International (FLO) and Fair Trade USA to collaborate as best they can to maintain continuity for producers and companies, but it is clear that most players in the movement would rather this had not happened.

In an open letter, Rob Cameron, CEO of Fairtrade International, wrote: “I, the staff at Fairtrade International, and the entire global Fairtrade network sincerely regret FTUSA’s decision to pursue its own approach, rather than continue working within the global system. It is a decision they have taken themselves, and we have to respect their choice.”

Twin have expressed concern about the move, pointing out that the US accounts for over 40 per cent of global coffee sales.

“Many of the smallholder farmer groups, with whom we work, are dependent on exports to USA Fairtrade markets (up to 80%). The full implications, however, of Fair Trade USA’s decision are not immediately apparent. For many producer organisations these changes have created a significant level of uncertainty.”

- Twin statement, Monday 26th September 2011

In its new Fair Trade for All strategy, Fair Trade USA cite the different needs of the US market as justification for the move. Fairtrade is well established in Europe, with consumer awareness of well over 80 per cent in many markets, but is much less well known on the other side of the Atlantic, with 34 per cent awareness and much stiffer competition from other labels like Rainforest Alliance.

In order to increase their share of the huge US consumer market and the potentially massive gains for producers this could unlock, they want to “make Fair Trade easier, less expensive and more scalable for our industry partners”.

One of the main proposals in Fair Trade USA’s new strategy is to extend the number of commodities open to large-scale farm and plantation production.

Currently only small-scale farmers organised into democratic cooperatives can sell coffee, cocoa or sugar into the Fairtrade system. In other categories like tea, flowers and bananas, production is dominated by large estates manned by hired labour so Fairtrade works by necessity to support workers on large farms and plantations. Fair Trade USA plans to “adapt existing international Fair Trade standards from tea, bananas and flowers, and apply them first to coffee and then to additional categories over time”.

There seem to be three broad causes for concern.

First, there is the “People’s Front of Judea” issue. There has always been a spirited debate within the fair trade movement between the pragmatists seeking to operate within established trading frameworks and the radicals urging a significant transformation of the market and consumer lifestyles. But overall, the public unity of the movement, within countries and internationally, has been one of its great strengths.

In the UK, the attempt has been to develop a kind of radical pragmatism, where an alternative trading system can be cultivated alongside the project of expanding Fairtrade into the mainstream. This debate has always been more polarised in the US and the fear now is that an approach prioritising breadth over depth will be pursued by Fair Trade USA.

Second, this move represents a dilution of the founding aims of Fairtrade, to deliver market access for organised small-scale producers and thereby transform the trading system. One of the early inspirations for Fairtrade was the international solidarity movement with Nicaragua in the 1980s, when small-scale farmer cooperatives exported bananas and coffee to a global network of activists in the first world.

Fairtrade was born out of their stories and their struggle, and in certain key commodities like coffee, the focus has remained on them. In the case of coffee, 70 per cent of the world’s supply is produced by smallholders. With less than half of the coffee produced by certified farmers’ groups being sold on Fairtrade terms, there is no need to bring large-scale farms and plantations into the Fairtrade system and in fact to do so would likely undermine the position of smallholders.

Fair Trade USA is also proposing to bring unorganised coffee farmers and workers into their new system. Yet a founding tenet of Fairtrade has been the need for farmers to be organised, so they can bring their own products to market and sit at the table to negotiate with buyers and retailers themselves. This is arguably the most transformative aspect of the Fairtrade system, with an impact far beyond the value of the products that are traded.

Third, there is the danger of fair trade in the US becoming “just another label”. Unlike many of the certification initiatives that have proliferated in recent years, Fairtrade has had to date the distinction of being genuinely rooted in a grassroots movement and a real challenge to business as usual.

The ambition of most other labels is generally to enforce existing international agreements and standards around issues like labour rights or conservation. They are directed at stopping things getting any worse. This is a worthwhile ambition in itself, but it’s not going to build a better world. Fairtrade actually attempts to raise the bar and increase social expectations of what is possible.

So watering down the existing Fairtrade standards in the US may turn out to be a good tactical move to achieve short term volume, but is it the best strategy for our times? It feels like a step backwards towards the “old economy” even as the “new economy” is looking more relevant than ever.

The scientific community has been warning for a number of years now that, in the words of the Millennium Ecosystem Assessment, “the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted”. Many commentators suspect that the next five to ten years mark the point when the planet’s capacity to support our global economy finally breaks down.

This will by necessity precipitate a massive re-organisation of our societies and economies. In order to survive we will shift away from consumerism, tackle poverty and inequality, and forge more localised economies and more equitable forms of global trade and co-operation.

At that point, Fairtrade – for all its present ambition – will probably look quite conservative. Even now, Fairtrade minimum prices are not as high as commodity prices were in the 1970s. Environmental and social sustainability will be an integral part of the commodity exchange of the future.

Now is in fact the time for the Fairtrade movement to stands its ground during these last years of the old economy, to raise the bar and demand more.

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