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The Fair in Fair Trade Thesis by : Birgitte Marie M. Christensen & Trine Ormhøj

Table of Content

1. Forewords and Acknowledgment 3

2. Abbreviation 4

3. Introduction 5

4. Problem Formulation 7

5. Definition of Central Terms 8

6. Method and Methodology 10

6.1 Method 11

6.2 Methodology 12

6.3 Critique of methodology 15

6.4 Delimitation 18

7. Theory 19

7.1 Definition of Free Trade 19

7.2 Classical Trade Theories 20

7.3 History and Definition of Fair Trade 23

7.4 Free Trade versus Fair Trade – the Argument Introduced 24

7.5 Fairness 24

7.6 Justice 31

7.7 Criticism of Theory 33

8. Empirical Material 34

8.1 Organizations Within the Field of Fair Trade 34

8.1.1 Fair Trade Denmark 35

8.1.2 Fairtrade-mærket 38

8.1.3 World Fair Trade Organization 39

8.1.4 Fairtrade Labeling Organization & FLO-CERT 40

8.2 Existing Systems and Comparisons 42

8.2.1 The Approval System of Fair Trade Denmark 44

8.2.2 The Approval System of the World Fair Trade Organization 46

8.2.3 The Certification System of FTM 48

8.2.4 The Certification System of FLO the FLO-CERT 49

8.2.5 The Certification System of FSC (Denmark) 51

8.2.6 The System of Ecocert FT 52

8. 3 Interviews 53

9. Analysis 61

9.1 Fairness in Connection to Fair Trade Principles 61

9.2 Theoretical Aspect of the Approval System of Fair Trade Denmark 64

9.3 Analysis of the Approval System of Fair Trade Denmark 65

9.4 The Current Approval System of Fair Trade Denmark 65

9.5 Alternative Systems 68

9.6 What System Can Fair Trade Denmark Realistically Obtain? 73

10. Conclusions and Recommendations for Fair Trade Denmark 79

11. Source Criticism 82

12. References: 84

1. Forewords and Acknowledgment

The background for this project was an inquiry from daily manager of Fair Trade Denmark (FTD), Ida Ljunggren. The external monitoring committee, that monitors and approve the members in FTD, had a desire to improve the current approval system. We thought it would be very interesting to work with a professional organization and experience that the outcome and findings of our work could actually be used and implemented in real life. Therefore, we have worked closely with FTD during this thesis writing and worked this project around relevant information based on the guidelines for research; we developed in cooperation in the beginning of the collaboration.

Therefore, the aim of this project, besides its relevance for our study at Aalborg University, is to provide some useful recommendations for the posed problem by FTD, respecting the resources and construction of the organization.

We would like to present our gratitude towards some persons, who has been very helpful and assisted in producing this project.

Daily manager of FTD, Ida Ljunggren, has supported us through the writing process by contributing with relevant information and links to empirical material. It has been rewarding in terms of knowledge, to work with an actual organization that is depending on our work and is going to use and hopefully, in their future work, implement our findings.

During our interview process, carried out during spring 2012, we have talked to some amazing, inspirational and intelligent people within their professional fields, which has been so rewarding both academically, but also in terms of insight.

Further, we would like to thank our supervisor Mammo Muchie for very inspirational and qualified guidance throughout the writing process. We have definitely enjoyed our meetings.

In general we would like to thank everyone implemented in this project for their invaluable help. We have learned so much during this process and we are very thankful for this knowledge and what we have accomplished.

We hope you enjoy our project.

2. Abbreviation

BAFTS: British Association for Fair Trade Shops

Danida: Danish International Development Agency – a part of The Foreign Ministry of Denmark

EFT: Ecocert Fair Trade

EFTA: European Fair Trade Association

EU: The European Union

FLO: Fairtrade Labeling organization

FLO-CERT: The Fairtrade labeling organization – certification (The certification body of Fairtrade)

FSC: An international non-profit labeling for tree and paper

FT: Fair Trade

FTAO: Fair Trade Advocacy Office

FTO: Fair Trade Organization (primarily used by WFTO to address their members)

FTD: Fair Trade Denmark (Concerning design and handicraft)

FTM: (Fairtrade-mærket) The Fairtrade-mark is a Danish FT organization concerning food products (generic commodities)

IFAT: The International Fair Trade Association

ISO: International Organization for Standardization

LI: Labeling Initiative

MERCOSUR: El Mercado Común del Sur

NAFTA: North American Free Trade Agreement

WFTO: World Fair Trade Organization

WFTO-Europe: World Fair Trade Organization Europe

WTO: World Trade Organization

3. Introduction

Vi har ikke tillid til jeres koncept og mærke mere, og vi er færdige med at købe såkaldte Fair Trade-produkter1 (Email to FTD).

In January 2012, the Danish radio channel P12, aired a documentary about how Kenyan flower workers are exploited by farm owners (DR, Homepage).

This documentary released a range of polemic in the media and since it appeared that this exploitation and lack of security on the rose farms was not only the case at conventional farms, but also happened at a farm producing Fairtrade roses, it instantly affected the Fair Trade (FT) movement. The quote above stems from an email Fair Trade Denmark, a trade organization for Fair Trade stores and importers in Denmark, received the day after the program had aired. This case shows the impact of bad press and the power of consumers.

FT products are approved and/or certified, in order to assure that the producers of these products are actually treated fair in several aspects. This is what makes the FT products attractive; the consumers buy a FT product based on the guarantee that the products are produced and traded under fair conditions. But systems are fragile; the narrative above is a great example of this. The approval system of FTD is fragile and currently the organization is working on improving the system to prevent a scandal, which would result in a decreased sale of FT products and ultimately less trade with marginalized producers in the South. If this base is ruined through bad press, the essence of FT is destroyed.
In 2010, BAFTS member, Shared Earth, asked wholesaler Namaste, one of its suppliers, if it could visit two of its producers in India and Nepal. Namaste refused. For six months, Shared Earth tried to obtain more details about Namaste's producers, but with no response. Shared Earth took action and suggested BAFTS not to renew the membership of Namaste, since there seemed to be no accountability or transparency and it was practically impossible to tell if their products were FT or not. This is an example of so-called commercial Fairtraiders that due to low resources are not monitored properly (Email from Ida Ljunggren).

Intern polemic, possibly culminating in public polemic through the media, can happen when an organization does not hold the resources to perform and maintain a transparent and secure system, carry out audits to secure the compliance with a set of standards. Where there is money, there is corruption and a scandal can devastate an industry. Concerning the FT industry, in order to secure that a product is actually fair, and that the purchase actually helps marginalized producers in the South, you need a responsible and transparent system. But if the resources are limited, creativity is needed to develop the perfect solution for a small organization. In this case FTD, an organization driven primarily by volunteers.

Indfør uanmeldte besøg, det er sandsynligvis det eneste profitmagerne kan og vil respektere3(Email to FTD, 2).

It is relevant for FTD, to reflect on how to outline a system protecting fairness and justice and that realistically can be implemented within the financial frames of the organization. But as stated in the quote, there are options to pursue. The focus in this project is to research what are the problems with the existing system of FTD and how the system can be improved. It is relevant for FTD, to examine what can be done to improve the existing approval system of the organization, in order to avoid being placed in the middle of a media storm. A small organization like FTD can possibly be blown away by one little media storm.

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