Fair Trade and Ethical Labeling

According to the World Fair Trade Organization (WTFO), “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 Developing World. Fair Trade organizations, backed by consumers, are engaged actively in supporting producers, raising awareness and campaigning for changes in the rules and practices of conventional international trade.

“Fair Trade products are produced and traded in accordance with the principles above and wherever possible are verified by credible, independent assurance systems.”[1]

The WFTO’s Charter for Fair Trade Principles identifies five Fair Trade goals:

  1. Increased market access for marginalized producers. Not only does Fair Trade provide ethically minded producers with access to consumer markets, Fair Trade shortens trade chains. In turn, producers earn a greater profit from their good than they would in conventional trade scenarios involving more intermediaries.
  2. Sustainable and equitable trading relationships. Terms offered by Fair Trade buyers enable producers to earn a sustainable living that not only provides for daily needs but also improves future conditions. In Fair Trade, prices and payment consider these needs rather than relying on current market conditions. In Fair Trade, both producers and buyers commit to long-term partnerships based on cooperation, sharing and planning.
  3. Capacity building & empowerment. Fair Trade relationships educate producers about market conditions to develop better understanding and resources to enjoy greater control and influence in their business dealings.
  4. Consumer awareness raising & advocacy. Fair Trade connects producers and consumers and raises consumer awareness around issues of social justice. Consumer support helps Fair Trade organizations to advocate toward a more just and equitable global economy.
  5. Fair Trade as a “social contract.” These principles rely on committed, ongoing relationships based on dialogue, transparency, and mutual respect. Fair Trade depends on an implicit “social contract” in which buyer and consumers agree to do more than is expected by conventional standards. This is not a charitable act but is a partnership for change as producers apply the benefits of Fair Trade to improve their economic and social conditions.[2]

The Ethical Trade approach differs from Fair Trade in three ways:

  1. Whereas Fair Trade focuses on producers and worker, Ethical Trade seeks to protect worker rights all along the supply chain.
  2. Fair Trade applies specifically to products, while Ethical Trade seeks to reform the behavior of retailers and suppliers to ensure these companies respect worker rights.
  3. Fair Trade has multiple certifying organizations with corresponding branding, but Ethical Trade is not dependent of consumer awareness. Therefore, Ethical Trade does not depend on a certifying label.

While each of these three points of the ethical trade approach are potentially commendable, companies who brand their products as “ethical” or “fairly traded” may simply be responding to increased consumer demand for ethical purchasing alternatives. Ethical trade may be nothing but a market ploy. Without the oversight of an independent agency, their standards and criteria may not be rigorous enough and unscrupulous companies seeking to capitalize on market trends may or may not live up to their claims. While Fair Trade’s impact is open for debate, in order for a label to carry any of the Fair Trade symbols, a company and its product must meet the standards of the certifying organizations. With ethically branded goods, it is unwise to blindly accept the ethical claims of any company. Their claims should be formal, quantifiable and should withstand public scrutiny.


[1] www.wtfo.com

[2] ibid.