Copyright 1996 The New York Times Company
Amid New Wealth of Trade, A Humanizing Movement
December 25, 1996 Freeing international trade has been the flavor of the closing months of 1996. President Clinton successfully pressed his campaign for zero tariffs on Information Age technology, first at the meeting of Asian and Pacific leaders in Manila late last month, and then at the meeting of the World Trade Organization in Singapore two weeks ago.
But another vision of international trade was also taking shape -- the kind that brings the most economic and social benefits to poor people and to developing nations.
This vision of fair trade has scored some modest advances recently:
In London last month, the World Federation of Sporting Goods Industries -- which includes household names like Nike, Reebok and Adidas -- bowed to pressure from development-oriented charities like Oxfam, Christian Aid and Unicef by setting a Feb. 14 deadline for agreeing to a code of conduct to end the abuse of child labor in low-wage Asian factories. This breakthrough came after the International Labor Organization, a United Nations specialized agency, estimated that 250 million children under the age of 14 were working in developing countries.
The Ford Foundation is providing two modest grants totaling about $75,000 to help the American Fair Trade Association publish a directory of North American fair-trade organizations and stores -- entitled "Sweatshops or Fair Trade? Now You Have a Choice!" -- and to offer a new brand of fair-traded coffee next year.
In Singapore, the World Trade Organization's 128 members affirmed their support for humane working conditions in factories and agreed to uphold "internationally recognized core labor standards," including the right to form unions. They also agreed not to exploit child labor.
But under pressure from the developing countries, the international trade forum also said that industrial nations must not close their markets to exports from the third world.
Advocates of fair trade, sometimes known as alternative trade, seek to help developing countries sell their goods abroad for as much as they can, while also promoting acceptable working conditions.
In Western Europe, Australia and New Zealand, fair trade is now quite big business, with total sales estimated at $400 million to $500 million a year. Europeans consume 12,000 tons of fair-traded coffee annually; Britain, Switzerland and the Netherlands all have small fair-trading supermarket chains. In London, Christian Aid and Oxfam are trying to persuade Britain's leading supermarket and clothing chains to carry fair-traded food and clothes.
In the United States and Canada, however, fair trade is still in its infancy, with annual sales no more than $40 million.
"American consumers are far less sophisticated than Europeans," said Mimi Stephens, executive director of the Fair Trade Federation, which includes 95 American organizations. "Most of them don't know where goods come from or what is going on in the rest of the world.
At first glance, fair trade looks like an attempt to interfere with the free play of market forces.
But most economists dispute this, arguing that the essence of a free market is a free choice for consumers and that fair trading actually offers them greater freedom by providing more information about merchandise for sale.
"Some people are prepared to pay a bit more for products produced in a socially responsible way," said Gary Hufbauer of the Institute for International Economics in Washington.
Jagdish Bhagwati, a trade theorist at Columbia University, agrees, saying: "Goods have an array of characteristics, which include how they were made. It is perfectly proper to give consumers this information."
Fair trade organizations operate in three broad ways. Some buy crafts, artifacts and clothing from cooperatives and factories in developing nations that follow acceptable labor practices. They sell these goods in industrial nations, returning any profit to the producers as bonuses, better tools, and services that help design new and better products.
Two American organizations that operate this way are Serrv International and Ten Thousand Villages, based respectively in New Windsor, Md., and Akron, Pa. The two groups, which are affiliated with Mennonite churches, import crafts, furniture and clothes from about 50 developing nations, selling them by catalogue and church-related shops.
"We insist on reasonable working conditions," said Paul Meyers, Ten Thousand Villages' director, "but while we don't buy products made through the exploitation of children, we don't object to children learning a trade in a family workshop or village cooperative -- provided they also go to school."
With total sales of around $17.5 million last year, these two groups account for almost half of American fair trade products.
Other organizations include Market Place: Handwork of India, based in Evanston, Ill., which uses a catalogue to sell clothing and housewares made by poor Indian women, and Pueblo to People of Houston, which sells clothes and household items produced in Latin America.
Another approach to fair trade, favored for tropical agricultural goods like coffee and pineapple, is to buy direct from the grower, cutting out middlemen, and then sell the produce under a label certifying that it has been harvested and packed by adults, paid a fair wage and working under reasonable conditions.
The largest American fair-trade coffee importer is Equal Exchange, based in Canton, Mass. which buys coffee from farmers' cooperatives in Latin America and Tanzania. And while it will sell only $3.5 million worth of coffee this year in a $7 billion market, it says that its sales have doubled in two years.
The greatest success for fair trade labeling was scored not by a development organization but by a San Francisco-based conservation group, the Earth Island Institute. Earth Island sued over the slaughter of dolphins by tuna fishermen, and in the process helped sensitize North American and European consumers to the point that more than 90 percent of the canned tuna sold in these countries now carry certifications that the fish was caught in nets that spare the dolphins.
A third approach, popular with groups like Oxfam or Christian Aid, is to shame industries with extensive factories in the third world, like big sporting-goods makers, into setting minimum standards -- banning the use of child or convict labor, for instance.
The planned code of conduct for sporting-goods makers is clearly an example of this, as is another recent agreement banning child labor in the production of soccer balls.
But many developing countries remain intensely suspicious of such agreements, fearing that the West may try to find a pretext for closing off their import markets.
At their insistence, the final World Trade Organization statement adopted in Singapore calls on all countries to enforce humane working standards but says that such standards must be set not by the world body but by the International Labor Organization, and that failure to observe them does not justify protectionist measures.
Home Page