Local vs Fair Trade – NGOs and Competing Sustainable Development Narratives :Local vs Fair Trade – NGOs and Competing Sustainable Development Narratives Alastair M. Smith CPLAN/BRASS University of Cardiff


4 Key Points: :4 Key Points: Localisation’ is not the only narrative of ‘Sustainable Development’. A competing narrative takes a global perspective. Inter-Local and International Trade is essential to achieve global ‘Sustainable Development’ but needs to be ‘governed’ to promote desirable results The concept of Fair Trade provides a basis for ‘private systems of governance’ that claim to promote Sustainable Development through trade Evidence suggest Fair Trade has been effective at meeting some aims of SD but is far from perfect – research and reform are essential


What is Sustainable Development? :What is Sustainable Development? Three ‘equal’ pillars of SD: Social, Environmental, Economic Not ‘protection’ of the environment, but ‘preservation’ of the environment so as to ‘perpetuate’ its services for human needs (Anand and Sen 2000) Anthropocentric and essentially an issue of Social Justice (Langhelle 2000) Emphasises the aim to meet human needs, in particular: ‘the essential needs of the world’s poor to which overriding priority should be given’ (WCED 1987: 43)


SD in Global Context :SD in Global Context Many see inter and intra country inequality rising. Inequality of living standards is unlikely to be reducing. Bottom Billion. What seems clear is that current levels of inequality are unacceptable.


The Mainstream Policy Position? :The Mainstream Policy Position? Poorer countries should grow their economies And domestic redistribution Internal Efficiencies Profit from Trade


Importance of Trade :Importance of Trade Involvement in International Trade, particularly ‘export orientation’ correlates strongly with higher standards of living (Dollar and Krey 2004). One of the four ‘poverty traps’ experienced by the ‘bottom billion’ is being isolated from international trade (Collier 2008).


But not all ‘Trade’ is the same :But not all ‘Trade’ is the same The international economy is ‘organised’ – governed by systems of power that determine its nature …and outcomes! Milton Freedman -Market price systems as the most important system of governance


Slide 8:But markets are not everything… Markets. The essential point is that the costs of switching to new partners are low for both parties. Captive value chains. Small suppliers are dependent and thus captured by larger buyers. Relational value chains. Mutual dependence and high levels of risk sharing and cooperation over time.


Trade in Historical Context :Trade in Historical Context Development doesn’t happen in a vacuum: Global economy structured to improve living standards of a core but reduce those at the ‘margins’ Core Periphery


Global Division of Labour :Global Division of Labour Core Periphery


Slide 11:Diverging International Prices


Explaining Terms of Trade :Explaining Terms of Trade Many producers Numerous consumers Fewer local buyers Fewer Exporters Fewer Importers Fewer Retailers


Impact of global power structures :Impact of global power structures Price Pressure Environment Society Financial Labour Standards Demography


Case Study: Bananas in the Windward Islands :Case Study: Bananas in the Windward Islands Eastern Caribbean. Four independent nation states: all former British colonies 1833-1960! History of imperial structuring of the economy Bananas first seriously exported in 1925 under the direction of a Manchester based firm Farmers historically protected by a quota system Always had a system of minimum wages – but increasingly undercut from other areas Began to loose business – unable to diversify due to lack of assets and soil conditioning


Case Study: Bananas in the Windward Islands :Case Study: Bananas in the Windward Islands "The economy went down to zero because bananas are the heartbeat. Everything was going haywire - increasing crime, youth violence and delinquency, guns and drugs on the increase, families torn apart because there was no income and a real exodus from the island.“ (St Vincent Prime Minister Ralph Gonsalves) ‘Land scarcity causes negative environmental practices in farming. Cultivation on steep slopes results in soil degradation, and affects the fragile coastal and marine resources important for tourism and fishing’ (Melville 2003).


So… :So… Localised food systems at the core are not going to help marginalised countries in need of International Trade and currently specialising in agriculture. However, they need the right sort of trade…the right sort of governance…


What is Fair Trade? :What is Fair Trade? Post WWII numerous groups decided that trade needed organising to benefit the poor Instead of relying on price systems, Alternative Trade Organisations developed alternative internal governance: Place the interests of producers first Provided credit for production Paid as much as possible, not as little Established long term relations to offer security and stability


The Limitations of AT and birth of ‘Fair Trade’ :The Limitations of AT and birth of ‘Fair Trade’ Alternative Trade was limited: Only undertaken by socially orientated organisations Limited market for ‘Alternative’ retailers Buy my Alternative Coffee and be cool man Mainstream starting to introduce ‘ethic’ goods


The Birth of ‘Fair Trade’ :The Birth of ‘Fair Trade’ Dutch-Mexican partnership response was a system of governance external to the supply chain Companies meeting certain criteria were awarded the ‘Max Havelaar’ Label For the !first time! ‘Alternatively’ traded goods entered mainstream supply chains to be sold by mainstream Dutch retailers!


Fairtrade Develops :Fairtrade Develops Max Havelaar model reproduced: UK Fairtrade Mark administered by the Fairtrade Foundation (1992) All similar systems unified under one label with a universal set of standards underpinning the governance system in 1997 Range products expands


But FLO Fairtrade not the only interpretation of Fair Trade :But FLO Fairtrade not the only interpretation of Fair Trade


Fair Trade and SD :Fair Trade and SD Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South (F.I.N.E 2001). ‘Fair trade principles can contribute to the development of long-term sustainable development’ (Strong 1997).


Case Study: Bananas in the Windward Islands :Case Study: Bananas in the Windward Islands Windward Islands Farmers Association (WINFA) established in 1982 to promote the social and economic welfare farmers Late 1990s WINFA began working with Fairtrade Labelling Organisations International (FLO) Became a registered Fairtrade banana producer and started to ship Fairtrade bananas in July 2000.


‘Impact’ on financial capital :‘Impact’ on financial capital Farmers get US$5.75 per 18.14kg box for Fairtrade bananas. c. US$1.00 more per box vis-à-vis conventional market “A fair price might mean for the first time farmers can look forward to getting tertiary education. It could make the real difference between having a university education, it could make a real difference to society.” (Renwick Rose) WINFA receives an additional Fairtrade premium of US$1.75 per box to be invested in agreed business, social and environmental projects.


Social and Environmental :Social and Environmental Social Premium Bought ‘weed-eaters’ to control weeds with min use of herbicides. Improved packing shed to ensure clean, dry, hygienic practices and comply with supermarket quality standards. Revolving loan scheme Pit toilets on farms and incinerators to dispose of harmful plastic waste more efficiently Establishment of planted buffer zones will prevent chemical run-off contaminating water courses Improvement of feeder roads and bridges A range of social projects Chairs, tables and computers for schools Support of a rural clinic


2 Key Points: :http://www.youtube.com/watch?v=0DupFLYekYg&eurl=http://www.fairtrade.org.uk/resources/films/interview_with_conrad_james.aspx&feature=player_embedded 2 Key Points: Inter-Local and International Trade is essential to achieve global ‘Sustainable Development’ but needs to be ‘governed’ to promote desirable results The concept of Fair Trade provides a basis for ‘private systems of governance’ that claim to promote Sustainable Development through trade


Slide 27:Local vs Fair Trade – NGOs and Competing Sustainable Development Narratives Supplementary Reading List Citations in the power point can be followed up for further reading using these bibliographical details. I have grouped items by theme and all cited work is available through the Cardiff library or Athens systems. Sustainable Development: Anthropocentric and Social Justice Orientated Langhelle, O. 2000. Sustainable Development and Social Justice: Expanding the Rawlsian Framework of Global Justice. Environmental Values 9, pp. 295-323 Anand, S. and Sen, A. 2000. Human development and economic sustainability. World Development 28(12), pp. 2029-2049 Morgan, K. and Sonnino, R. 2008. The School Food Revolution: Public Food and the Challenge of Sustainable Development. London: Earthscan. Chapter One. The Importance of International Trade Dollar, D. and Kraay, A. 2004. Trade, Growth, and Poverty. The Economic Journal 114(493), pp. 22-49 Collier, P. 2008. The Bottom Billion: why the poorest countries are failing and what can be done about it. Oxford: Oxford University Press. The Importance of Appropriate Governance for Trade and Development Donaldson, J. A. 2008. Growth is Good for Whom, When, How? Economic Growth and Poverty Reduction in Exceptional Cases. World Development 36(11), pp. 2127-2143. Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System. London: Zed Book. Chapter 4, 5 & 6 (Only short and I’d encourage you to think about the relationships he describes as captive governance systems). Gereffi, G. et al. 1995. The governance of global value chains. Review of International Political Economy 12(1), pp. 78-104. Melville, Gary. 2003. CASE STUDY THE WINDWARD ISLANDS. UNCTAD http://www.unctad.org/en/docs/ditctncd20031p3_en.pdf Fair Trade and Sustainable Development Strong, C. 1997. The role of fair trade principles within sustainable development. Sustainable Development 5(1), pp. 1-10 Low, W. and Davenport, E. 2006. Mainstreaming fair trade: adoption, assimilation, appropriation. Journal of Strategic Marketing 14(4), pp. 315 - 327 Moberg, M. 2005. Fair Trade and Eastern Caribbean Banana Farmers: Rhetoric and Reality in the Anti-Globalization Movement. Human Organization 64 (1), pp. 4 – 15.