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FAIR TRADE AND SUSTAINABLE BUSINESS PRACTICES
By Anna L. Guyton
Presented to The Good Mule Conference 2010
B.A. International Studies, Global Economic Systems, International Business; UW 2008
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Fair Trade is an emerging movement in the global economy that is helping to reduce poverty and empower rural producers through ethical and sustainable business practices.
Thesis
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What is Poverty?Where is Absolute Poverty?Poverty Traps
Poverty
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What is Poverty?
3 degrees of poverty: Extreme/Absolute
poverty Cannot meet basic
needs Only in developing
countries Less than $1/day Approx 1 billion
people
Moderate poverty Basic needs met,
just barely $1-$2/day Approx 1.5 billion
people Relative poverty
Income < proportion of average national income
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Where is Absolute Poverty?
Percent of national populations living on less
than $1.25 per day. UN Estimates 2000-2007
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Where is Absolute Poverty?
Africa 48% absolutely poor (2001) Life expectancy 46 years and falling (AIDS) 1/5 of all children die before age 5
Colonialism Exploitation Corruption Failure of trade liberalization Natural resource curses
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Poverty Traps
No margin of income for future investment
Livelihood often unsustainable Deplete natural capital:
Cutting down trees Exhausting soils of nutrients Mining mineral, energy & metal deposits Overfishing
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“Fair trade is the essential first step toward an equitable and sustainable form of international trade that benefits industry, consumers, producers, and the Earth” (Nicole Chettero)
Fair Trade
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Why not Free Trade?What does “Fair” mean?DefinitionGoals
The Concept
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Why not Free Trade?
“Free markets, though more efficient and productive, produce distributional consequences and compromise other values” (Bruce E. Moon)
Income inequality Loss of tariff revenue
= less state capacity for building infrastructure, etc.
Free trade not always free Exploitation
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What does “Fair” mean?
Justice Do you agree?
If we can prevent something bad without sacrificing anything of comparable significance, we ought to do it;
absolute poverty is bad; there is some poverty we can prevent
without sacrificing anything of comparable moral significance;
therefore we ought to prevent some absolute poverty. Peter Singer, “Famine, Affluence, and Morality”
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Definition
Equitable trading systems Community support Transparent supply chains Sustainable production methods Protection from unstable prices Safe, healthy working conditions
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Goals of Fair TradeKeys to Poverty TrapsFair Trade PerksSustainable Business PracticesWin-Win-Win-Win Situation
Goals & Achievements
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Goals
Alleviate poverty Protect the environment Encourage sustainable development Create opportunities for capacity
building Promote gender equity
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Fair Trade Keys
Higher profits Investment in human
capital Investment in
business capital Investment in natural
capital Fair, constant wage
“Insurance” Access to new
technology Diffusion of
knowledge
Cooperatives Stronger
communities Networking
opportunities Pooling of
resources Stable
environment Environmental
protection “Shade-grown”
coffee Sustainability
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Fair Trade Perks
Fair trade standards quality Reinvest in cultivation, harvesting & post-
harvesting Feedback about quality control
Empowered rural producers Better solve local issues without need for
charity Raise standards of living Stronger communities Reduced exploitation
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Sustainable Business Practices Not just about climate change Sustainability has 3 factors:
Environmental Natural resource extraction and pollution
Economical Is the business viable? Can it turn a profit? Are
prices fair? Can the industry withstand fluctuating commodity pricing?
Social/Community Community development, fair labor practices,
cooperative networks Fair Trade addresses all 3
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Win – Win – Win – Win Situation
Producers are happy They have work, fair wages, and fair working conditions
Consumers are happy They have higher quality products and feel good about
the impact of their purchases Earth is happy
Less environmental degradation due to our consumerism Industry is happy
When all of the above are sustained, there is good business
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“Ending poverty is possible but not inevitable… It is one thing to know that people are suffering. But it is another thing to know that this suffering can go on indefinitely, is largely unnecessary, and that we could have done more to help—with potential benefits that could prove very significant for our own future” (Stephen Smith)
Conclusion