Product certification Product certification and human rightsand human rights

LSJ/SIS 322LSJ/SIS 322

Fall 2009Fall 2009

Fair Trade

LSJ 410/SIS 470

Fall 2007

Fair trade: a case study of coffee

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Idea of “solidarity market” predates coffee crisis:

•Early efforts by religious and political groups to create niche demand in North for products lacking access to mainstream market:

1950s Ten Thousand Villages

1960s Oxfam “Helping by Selling” --> ATO (Alternative Trading Org.)

Creating a Fair Trade Label• 1988 Van DerHoff and colleagues:

attempt to go mainstream=> Max Havelaar Foundation in Holland

• Fair Trade Labelling Org. (FLO) created to set international standard for labelling

• In USA, Transfair– Co-ops pay to be certified– Transfair promotes product– Consumers recognize label

“Make the market work for small producers”

Fair trade certified coffee:

•Grown on co-ops

•Conforms to some environmental standards

•Co-ops paid $1.26 minimum price per lb. ($1.41 if organic) plus social premium

•If bears Transfair seal, has been independently certified

Alternative certification marks compete

Alternative Certification Marks

• “Fairly traded” Utz Kapeh, Rainforest Alliance

• Direct trade

• Starbucks C.A.F.E. standards

Fair trade as a movement, not a “solution”

1. Standards in flux; debate ongoing2. The conversation is expanding

– Colombian coffee growers’ federation– Ethiopian trademarking initiative

3. As the conversation expands, important not to lose sight of rigorous standards

4. Also important not to lose sight of consumer power– UW/Tully’s example

Fair Trade: strengths and Fair Trade: strengths and limitationslimitations

Questions remain about virtues and Questions remain about virtues and vices of mainstreaming and of vices of mainstreaming and of market-friendly approaches in market-friendly approaches in generalgeneral– Are we trying to reform capitalism? (i.e. Are we trying to reform capitalism? (i.e.

is there something wrong with is there something wrong with capitalism itself) or are we trying to capitalism itself) or are we trying to extend its benefits to more people?extend its benefits to more people?

Fair Trade: strengths and Fair Trade: strengths and limitationslimitations

FT has worked well in FT has worked well in coffeecoffee because because of characteristics of coffee marketof characteristics of coffee market– Today’s market places premium on Today’s market places premium on

qualityquality– Highest quality coffee made by small Highest quality coffee made by small

producersproducers– Among roasters, competition for best Among roasters, competition for best

quality coffee gives incentive to form quality coffee gives incentive to form relationships with producersrelationships with producers

Fair Trade: strengths and Fair Trade: strengths and limitationslimitations

With many other commodities, there With many other commodities, there are fewer small producersare fewer small producers

Ex. Fair Trade Certified Bananas:Ex. Fair Trade Certified Bananas:– Tries to promote co-ops, but also allows Tries to promote co-ops, but also allows

humane plantationshumane plantations– Standards include right to organize and Standards include right to organize and

bargain collectively on plantations, but bargain collectively on plantations, but does not require existence of uniondoes not require existence of union

– Minimum wage vs. living wage Minimum wage vs. living wage

Challenges in applying Fair Challenges in applying Fair Trade model to clothingTrade model to clothing

1. Workers are employees, not owner-1. Workers are employees, not owner-producersproducers

Therefore, paying a better price to Therefore, paying a better price to employer (factory owner) may mean no employer (factory owner) may mean no difference to workersdifference to workers

FT focuses on North/South consumer-FT focuses on North/South consumer-producer relationships; sweatfree focuses producer relationships; sweatfree focuses on employee-employer relationship on employee-employer relationship

Inescapably, talking about sweatfree Inescapably, talking about sweatfree clothes means talking about clothes means talking about organized organized laborlabor

Challenges in applying the Fair Challenges in applying the Fair Trade model to clothingTrade model to clothing

2. Production occurs in so many sites, 2. Production occurs in so many sites, constantly shiftingconstantly shifting

Inspections expensive, impractical, Inspections expensive, impractical, always shiftingalways shifting

Unlikely any company truly knows Unlikely any company truly knows how all its goods are producedhow all its goods are produced

Challenges in applying the Fair Challenges in applying the Fair Trade model to clothingTrade model to clothing

=> reluctance to even attempt to => reluctance to even attempt to certify anything as “sweatfree” when certify anything as “sweatfree” when likelihood of inaccurate information is likelihood of inaccurate information is highhigh

Widespread acknowledgment that Widespread acknowledgment that industry norm is exploitationindustry norm is exploitation

Fear of inducing consumer passivityFear of inducing consumer passivity Ideological opposition to market-Ideological opposition to market-

friendly approachesfriendly approaches

““Sweatfree” vs. “Buy Union”Sweatfree” vs. “Buy Union”

Disagreement over whether Disagreement over whether existence of union is essential for a existence of union is essential for a facility to be sweatfreefacility to be sweatfree

Insisting on unions ignores other Insisting on unions ignores other forms of worker forms of worker organization/empowerment organization/empowerment

Danger of company-controlled unionsDanger of company-controlled unions Who assesses what is legitimate Who assesses what is legitimate

worker representation?worker representation?

Globalization of apparel Globalization of apparel productionproduction

History of labor abuses in US garment industry History of labor abuses in US garment industry addressed through US labor movement, lawsaddressed through US labor movement, laws

Multi-Fibre Agreement 1974: system to protect Multi-Fibre Agreement 1974: system to protect domestic industry, established quotasdomestic industry, established quotas

MFA phased out 1995-2005 => more MFA phased out 1995-2005 => more production shifts to Asiaproduction shifts to Asia

In absence of laws to regulate global industry, In absence of laws to regulate global industry, companies self-regulatecompanies self-regulate– Corporate codes of conduct: strengths? Corporate codes of conduct: strengths?

Limitations?Limitations? Rodriguez-Garavito 2006: Codes of conduct Rodriguez-Garavito 2006: Codes of conduct

are useful, but are useful, but requirerequire action by NGOs, unions action by NGOs, unions to hold them to codesto hold them to codes

Attempts to improve code Attempts to improve code compliancecompliance

““Independent” monitors to ensure code Independent” monitors to ensure code compliancecompliance– Fair Labor Association 1999Fair Labor Association 1999– Workers’ Rights Consortium 2001Workers’ Rights Consortium 2001

Limited effectiveness becauseLimited effectiveness because– System reliant on worker complaints, yet w/ System reliant on worker complaints, yet w/

rampant abuse, this unreliablerampant abuse, this unreliable– Limited resources to monitor factoriesLimited resources to monitor factories– Pressure on brands, factories limitedPressure on brands, factories limited

By WRC’s own admission, in 7 of 12 cases with By WRC’s own admission, in 7 of 12 cases with significant WRC involvement helped establish union, significant WRC involvement helped establish union, now threatened by declining ordersnow threatened by declining orders

=> => Do market incentives favor exploitationDo market incentives favor exploitation??

Market incentives vs. codes Market incentives vs. codes of conductof conduct

Codes of conduct insist on respect for worker Codes of conduct insist on respect for worker rights, yet industry practices (esp. pricing rights, yet industry practices (esp. pricing and just-in-time production) create and just-in-time production) create environment ripe for abuseenvironment ripe for abuse

““Given currrent market dynamics in this Given currrent market dynamics in this industry, even if workers successfully industry, even if workers successfully organize, they cannot negotiate substantial organize, they cannot negotiate substantial improvements without rendering their improvements without rendering their company less competitive, so that it fails to company less competitive, so that it fails to get new contracts.” Athreya & Robinson get new contracts.” Athreya & Robinson 20052005

Designated Supplier Designated Supplier Program (WRC)Program (WRC)

Idea is to Idea is to change architecture of apparel change architecture of apparel economyeconomy (for university apparel only): (for university apparel only):– Designated factories comply fully with codeDesignated factories comply fully with code– Allow freedom of organization into Allow freedom of organization into

representative bodiesrepresentative bodies– Living wageLiving wage– Produce primarily for university marketProduce primarily for university market– Factories would be paid a higher price for goods, Factories would be paid a higher price for goods,

and promised ongoing ordersand promised ongoing orders A bold test of whether increased prices and A bold test of whether increased prices and

stable sourcing translate into improvements stable sourcing translate into improvements for workersfor workers

Will it work?Will it work? First, more universities must sign on; at present First, more universities must sign on; at present

only 2 of top 20 schools have done so (UW is fifth only 2 of top 20 schools have done so (UW is fifth largest to sign on so far)largest to sign on so far)

Second, licensees must agree to it; don’t know if Second, licensees must agree to it; don’t know if they willthey will

Third, WRC must administer it; don’t know if it Third, WRC must administer it; don’t know if it cancan

But the conversation is moving forward, and that But the conversation is moving forward, and that is hopefulis hopeful

Thank you!Thank you!