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What is Fair Trade and Why It is Important

What is Fair Trade and Why It is Important

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Published by Mitch Teberg

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Published by: Mitch Teberg on Sep 25, 2011
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Mitch Teberg, MAAssociate Member
Journey for Fair Trade: 
What is Fair Trade and Why is it Important?
In every developing country that has embraced the free market economy and entered the WorldTrade Organization (WTO), the first hit and hardest hit by the changes that follow are the ruralcommunities. Changes result from economic restructuring policies required to join the WTOwhich emphasize the removal of state protections and safeguards of local industry andagricultural sectors parallel to the privatization of government sponsored social services. Theresult has been detrimental to rural communities around the world.One of the most notable ways in which rural communities are harmed in entering the freemarket economy is the removal of state protections of the agricultural sector and statesponsored industries.When the state protections of a sector are removed a community suddenly finds itself facingchallenges it never faced before. Instead of a community working together for a common goal ofsustainable local livelihoods with an ability to maintain natural resources for the collective good,individuals are pitched against each other in an attempt to get ahead for private gains.Privatization of publicly owned or operated sectors encourages competition against one anotherrather than working together for the common good. Frequently this leads to an unfair advantageand favoritism for those who are politically connected or have access to finances in order to ownand cash-in on what were once community resources. This quickly depletes naturalresources of a community with complete disregard for the environmental, communal and socialconsequences, just to name a few.A prime example of area adversely affected by theremoval of state protections is in handicraft villagesthroughout Asia. Households find themselvescompeting to produce more crafts and accept lowerand lower payment for their labors because they arenow competing against each other rather thanworking together. This trend leads to theimpoverishment of entire handicraft-centeredcommunities
the cultural gems of countries likeVietnam and Thailand.
Mitch Teberg, MAAssociate Member
Here is how it works:
the low prices crafts-persons receive for handicraft products are dictatedby outside agents and there is no room for negotiation in the take-it-or-leave-it offer presented toa household. Like the coffee farmers around the world, there are multiple layers of middlemenbetween the crafts-person and the exporter, all of whom are squeezing a profit out of theirlabors while the laborer lives at a subsistence level. In my work in Vietnam, I found 7 - 12 layersof middlemen between the producer and the exporter. Simply stated, at the lowest level in the
value chain if they don’t accept what is offered they may lose their only income opportunity.
Again, these moves only divide communities and destroy what were once sustainablecommunity livelihoods; and handicraft villages are amongst the most vulnerable.Furthermore, there is frequently a gender-based discrimination that exists in much of thehandicraft production. Most of the labor in processing and preparation of materials to make ahandicraft goes unrecognized and unpaid because these are considered the labors of women ina household. Simply stated, it becomes a gender role. Just as housework and child rearing isall-too-often not regarded as "labor" despite the demands faced, a woman's work in support ofcraftsman frequently goes unpaid.Forming a local co-operative or community association based on Fair Trade principlesaddresses these gender disparities and unites a community of craftsmen and craftswomen frombeing disadvantaged in the local and global marketplace.
Whose Trade Organizationby Lori Wallach and Patrick Woodall
Fair Trade presents a social awareness not seen in the neo-liberal theories of trade emphasizedin the
 or in the economic reform packages forced ondeveloping nations in the Structural Adjustment Programs of the IMF and World Bank. There is
Mitch Teberg, MAAssociate Member
much to be said about the disastrous effects of narrowly focused vested interests ofinternational bankers in developing nations with development projects that primarily benefit theestablished elite. However, Fair Trade Advocates also need to understand the equallydestructive World Trade Organization (WTO). A highly recommended and reasonably pricedresource is
Whose Trade Organization 
by Lori Wallach and Patrick Woodall. This publication byPublic Citizen(http://www.citizen.org/ )is a well researched, comprehensive analysis of the organization, its function, and the secretive closed-door court system which enforcesinternational trade policies formed by Western governments in collaboration with the Multi-National Corporatocracy.The 
 with a global network of Fair Trade Organizationswith members in over 70 countries has established ten principle standards a Fair Tradeorganization must follow. In addition, a Fair Trade Organization is required to contribute to theircommunities in a manner that addresses their specific social needs.
10 Principles of Fair Trade - Updated June, 2011
Principle One: Creating Opportunities for EconomicallyDisadvantaged Producers
Poverty reduction through trade forms a key partof the organization's aims. The organizationsupports marginalized small producers, whetherthese are independent family businesses, orgrouped in associations or co-operatives. It seeksto enable them to move from income insecurityand poverty to economic self-sufficiency andownership. The organization has a plan of actionto carry this out.

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