The Global Fairtrade Phenomenon and the Global Ethics Issues

Discuss about the case study Company Law for Business and Operational Activities.

‘Fairtrade Labelling Organizations International’ that is also famous as ‘Fairtrade’ is a global certified organization. ‘Fairtrade’ was established in 1997 in order to protect better deals for the producers. Along with this, the standards of ‘Fairtrade’ are planned to deal with poverty and also give power to producers within the poorest nations of the world. The standards of ‘Fairtrade’ equally relate to both producers as well as traders (Fairtrade International. 2016). Moreover, ‘Fairtrade’ plays a significant role in order to develop global Fairtrade standards and strategies in an appropriate way. ‘Fairtrade’ endorses trade justice in order to give support to manufacturers all around the world. In addition to this, with the help of 3 marketing organizations, 3 producer networks, and 19 national labelling initiatives, ‘Fairtrade’ sponsors and promotes the Fairtrade Certification Mark around the world. On the other hand, this research paper is helpful to depict the global Fairtrade phenomenon and global ethics issues that Fairtrade wants to address in an effectual and a proper way (Fairtrade International. 2016). Moreover, the paper also reviews the criticisms that Fairtrade is facing into its broad ethical issues.

Currently, Fairtrade is working as a licensing agency and also executing its own fair trade labelling scheme within the nations. Along with this, Fairtrade also become a major subject of controversy because of its enclosure of autonomous smallholders as well as estates for all crops. Fairtrade is also providing benefits to the farmers in the south region. In addition to this, it is a social movement and the major goal of Fairtrade is to provide help to the producers in order to accomplish better trading conditions and to endorse sustainability within the nations (Stefanska, Nestorowicz and Stefanska, 2015). Moreover, there are a lot of acknowledged Fairtrade certifiers together with IMO, Fairtrade International, and Eco-Social. Apart from this, the nature of FairTrade puts together it a global phenomenon, for that reason, there are different motives in order to comprehend group formation that are linked to FairTrade. For case, first of all, loads of farmers around the world are unconscious about the FairTrade practices that they may carry out in order to make a higher wage (Fairtrade International. 2016).  

On the other hand, it should also be noted down that, in the last decade FairTrade has gotten substantial attention among the producers and consumers. For the reason, currently, FairTrade products are more visible and broadly available. In addition to this, the major motive that FairTrade wants to achieve is that international trade must be more perceptive to positive social values together with fair labor practices, non-exploitative production methods, fair product prices, and ecological sustainability (Moberg, 2010). Along with this, Fairtrade makes efforts to ensure more fair prices for certain products; as a result producers can acquire more through profits from trade and societies may improve production standards as well as living conditions in an effective and a significant manner. Moreover, in order to achieve public prominence, Fairtrade is mainly missing from theoretical deliberations in IPE (International Political Economy). This is also a global Fairtrade phenomenon.

Fairtrade’s Objectives

In addition to this, the other global phenomenon is that Fairtrade products generally consist of merchandise such as: coffee, cacao, flowers, bananas, tea, sugar, honey, and so forth.  These agricultural products demonstrate a small proportion of entire global trade; and as a result, fair trade labelled products absorbs a small fraction of global agricultural markets. For that reason, volume of Fair trade causes inadequate or of no consequence impact on international trade relations (Davies, Doherty and Knox, 2010). On the other hand, another global phenomenon is that fair trade does not athletic into the conventional rational model in which most of modern IPE theory puts up. Along with this, the expansion of fair trade markets all around the world points toward that consumers are enthusiastic to pay out more money as well as resources to reassure that the products they use are eco- friendly and fair. As a consequence, the judgment of fairtrade runs opposite to conventional rationalist frameworks in order to know human behavior as well as global economic interactions in an effectual and an appropriate manner (Reed, 2009).

Apart from this, there are a lot of objects that Fairtrade is trying to accomplish. For case, Fairtrade pays a high price for the products because of it wants to provide more and more benefits to the producers. Moreover, with the help of this, Fairtrade offers profits to the producing communities in a direct way (Low and Davenport, 2005). Fairtrade also wants to offer distribution networks in industrialized countries. It is because of with the help of this Fairtrade provides support to local producer groups  and also develops constant as well as secure trading relationships among the developed and underdeveloped globe. In addition to this, Fairtrade is also trying to provide education to the producers so they may understand the market demand & structures, production standards, and consumer expectations in an appropriate manner. Moreover, Fairtrade is also trying to put a stop to the abuse of children with the help of its restrictive labour standards as well as sustainable production methods (Varul, 2009).

Along with this, Fairtrade also builds strong networks in order to monitor the entire production process to improve the production competence in an effective way. Moreover, Fairtrade is trying to make promises with the consumer that producers’ has followed strict production guidelines to produce products in an effectual and an appropriate manner. In addition to this, Fairtrade’s applied certification schemes as well as fair trade labels points toward the mutually agreed production and social goals of the organization (Granville and Dine, 2012). Moreover, Fairtrade is also trying to address major consistent issues to improve the productions efficiency in an effective and a more comprehensive manner. For example, the major issue that Fairtrade wants to address is related to the relationship between fair trade consumer and producer. By addressing this issue, Fairtrade wants to develop a market-based relationship between producer and fair trade consumers’. The relationship would be beneficial to remove the government intervention or the consumers and for that reason they would be able to buy FTC products to fulfill their requirements in an appropriate way (Widdows, 2014). As a result, it is clear that, the motive of Fairtrade is to conquer the socioeconomic interruption of producers in an appropriate manner.

Fairtrade’s Production Process

In addition to this, Fairtrade also highlights the facts to understand the behaviour of peoples under the specific circumstances. For case, with the help of this, Fairtrade wants to know the facts that may create the situation of dissatisfaction among the customers. Fairtrade knows it very well that the social values as well as norms of the people inspire them to purchase high priced products. Moreover, these types of actions of Fairtrade play a significant role in order to develop win-win situations for producers and consumers (Arnould, Plastina and Ball, 2009). Along with this, Fairtrade is also trying to manage as well as conquer the de-connection and conflicts of producers and consumers. It is also making efforts to resemble local trade for the social and economic development of the nations.

Apart from this, Fairtrade is trying to separate production and consumption in a drastic way. It uses time and space that are categorized by anonymity in order to detach production and consumption in an appropriate way. The main motive of Fairtrade behind it is to make unaware to the consumer about the origin and circumstances in which a product is produced by the producers. Fair trade is also making efforts to reconnect the local producers and consumers all the way through apparent global trading networks (Roach and Simpson, 2016).  In this way, it can be said that, Fairtrade is trying to achieve the transparency between the relationship of producers and consumers. Fairtrade also wants to develop a strong relationship among producers, distributors, and consumers. Fairtrade wants to improve the productivity and profitability of producers and also wants to raise the standards of living of the consumers. Moreover, it should also be observed that, Fairtrade is also working for the economic developments of the nations.

On the other hand, Fairtrade is also trying to address global ethics issues in an effectual and an appropriate manner.  There are numerous ethical issues those are hazardous for nations, producers, and consumers. For case, inequality, human rights, poverty, child labour, workers’ rights, and climate change are the major global ethics issues that Fairtrade is trying to address in an effective and a more comprehensive manner. Fairtrade is trying to address the ethical issue related to the injustices or inequalities of conventional trade. The issue creates discrimination in opposition to the poorest as well as weakest producers (De Pelsmacker, Driesen and Rayp, 2005). Along with this, by addressing this issue, Fairtrade wants to facilitate the poorest and weakest producers; so they may improve their positions as well as standards of living in an effective and a more comprehensive manner. In addition to this, Fairtrade re-establishes an equitable link between producer groups and consumers in order to reduce the percentage creamed off that are generated by third parties. Moreover, Fairtrade gives a better deal to producers in the developing world; so they may earn higher profits in an effective and an appropriate manner. Also, to reduce the inequalities, Fairtrade restores an equitable relationship among consumers, retailers and producers (Low and Davenport, 2005).

Fairtrade’s Efforts to Manage the De-Connection and Conflicts of Producers and Consumers

In addition to this, Fairtrade is also trying to address the ethical issue that are related to the injustices of the prices of products. For case, to address this issue, it is establishing Fairtrade Mark that would be beneficial to address the unfairness of low prices and to ensure the producers that they will accept fair terms of trade as well as fair prices – no matter what the conventional market is.  Along with this, Fairtrade is also trying to provide living wages to workers in order to address the issue that is related to workers’ rights. A living wage will be beneficial for the workers in order to fulfil their basic needs and to offer some optional income to the workers. For case, it should be noted down that, the national minimum wages is insufficient in most of the countries. For that reason, workers are unable to provide a living standard to his/her family (Stefanska, Nestorowicz and Stefanska, 2015). In this situation, living wage would be beneficial to the workers in order to raise their living standards in an appropriate manner.

Along with this, Fairtrade is also trying to address the issue that are related to women’s rights, human rights and child labour. Moreover, to address these ethical issues, Fairtrade focuses on human rights due diligence. For case, the due diligence would be helpful in order to identify the actual and probable human rights risks for employees in the operations, the services, and supply chains of the business firms. In addition, Fairtrade is also empowering women workers and also providing them equal right as men workers. Fairtrade is also developing strict rules for the organizations so they would not be able use child labour for their profits (Webb, 2007). In this way, it can be said that, Fairtrade is trying to address the major global ethical issues in an effective and a more comprehensive manner.

Fairtrade also has become the subject of criticism in all over the word. The criticism of Fairtrade gives message to the people especially consumers and businesses that they should reject Fairtrade in order to socialize their economic decisions in an effective and a significant manner (Crane and Matten, 2007). For case, it should be noted down that, according to the CSR (Corporate Social Responsibility), most of the business organizations are implementing the rules as well as guidelines of Fairtrade in their product ranges and general operational practices. But, despite the fact, there is significant criticism of the states that are made by supporter of these socially as well as environmentally responsible goods.  For example, the major criticism is that FairTrade has not worked as per its name that it has been promoted. Moreover, it only used ambiguous and inadequate evidences to promote itself in the world (Hodges, 2015).

On the other hand, lots of critiques of FairTrade are always made due to the persistent issue related with the FairTrade. For example, these issues involve an inaccurate understanding of the governance of FLO, inappropriate evidences & theories about the benefits of FairTrade, an improper comparison between the FairTrade and perfect market models, and the conflation of the   core principles of FairTrade with other periphery issues (Clark and Ritson, 2013). Along with this, the rules of FairTrade make it a major subject of criticism. For case, the major concepts of FairTrade concentrate on the governance of the FLO that only focuses on the quality of businesses. It does not involve the employees and customers in its practices. Moreover, the other argument that is made with reference to Fairtrade standards is that it is supposed to facilitate only a few people at the expense of others people.  For case, under the governance of FLO, small farmers are not capable to take hired labour for their seasonal tasks in order to meet varying demands in an effective and a proper manner (Anderson, 2015). 

In addition to this, the other thing that makes it the subject of the critic is the exclusionary nature of FLO Fairtrade. It is because of the certification of Fairtrade only concentrates on the comparatively developed countries in place of lower income countries. In other words, it also can be said that, it mainly focuses on rich countries such as: Maxico instead of poor countries Ethiopia. These types of inequality create major differences in the incomes of the nations.  Apart from this, another criticism is that money that the consumers spend in goodwill is used by the FairTrade in the maintenance of the system (Blowfield and Murray, 2011). In other words, it also can be said that, a large amount of the profits of consumers that they earn by the Fairtrade prices is used by the co-operative bureaucracy for the development of the system. In this way, Fairtrade is becoming the subject of criticism on the regular basis.

In the same way, the criticisms of Fairtrade are also related to the global ethical issues. In one side, it is stated that, Fairtrade is trying to address major global ethics issues such as: inequality, poverty, human rights, child labour, workers’ rights, climate change etc. for the welfare of producers, employees and customers. But, another side the criticisms of Fairtrade are linked to these ethical issues. There are numerous reasons behind this. For case, the major reason is that Fairtrade itself is responsible to create inequalities among nations. It only provides support to nations those are well developed and prosperous (Herrnstein and Murray, 2010). Fairtrade does not focus on the poorer countries and also incompetent to provide money as well as other support to the poor countries that they need for the development. For that reason, it can be said that, fair-trade is providing support to the global ethical issues those are related to trade.

At the same time, Fairtrade also provide support to the slavery that have a negative impact on the human rights and also support to child labor. For case, in the annual reports of Fairtrade, it is mentioned that, just about twenty one million people (men, women and children) are still in some form of slavery (Hassoun, 2012). Apart from this, the nature of global supply chains is also becoming multifaceted and slavery can be discovered in any element of the supply chain of any country. Accordingly, it is assumed that, this also creates ethical issue and Fairtrade is not to address and condense this ethical issue in an effective and an appropriate manner. In this way, it can be said that, there are numerous criticism that are related to the Fairtrade. These criticisms create numerous issues in front of Fairtrade. The criticisms of Fairtrade are influencing the operations and practices in a negative way. These criticisms are also hazardous for the reputations and progress of Fairtrade (Hale and Held, 2011).

On the other hand, the criticisms that are related to Fairtrade are not valid. Most of the criticisms linked to the Fairtrade are inaccurate. There are numerous reasons behind this. For case, the major reason is that the major objective of Fairtrade is to provide protection to producers, workers, and customers. Along with this, it should also be noted down that, Fairtrade is a social movement that is established to provide help to producers in developing countries; so they may get superior trading conditions and also may promote sustainability at the global level (Cook and Ryan, 2015). Fairtrade also develops superior social as well as environmental standards for the welfare of the nations. Moreover, Fairtrade is obliged to present the prevalent and most recognized fair trade system of the world. Hence, Fairtrade is fair in real and the criticisms related to the system are invalid or counterfeit.

In addition to this, some critics also say that Fairtrade do not have quality controls the also reflect the practices of Fairtrade. The critic that is related to the quality control is also invalid. There are numerous reasons behind this (Patrick and Ralph, 2009). First of all, under the Fairtrade system, all the producers are obliged to trade the best quality products in the marketplaces. Moreover, Fairtrade emphasizes on the standards that improve the quality of products to fulfill the need of customers in an appropriate and a proper manner. Fairtrade clearly stated that producers need to create and maintain good quality products only. In addition, it should also be noted down that, Fairtrade offers incentives to farmers and producers only to increase the standards and quality of the products that they are offering to the customers. In this way, it can be assumed that, the criticism related to Fairtrade in invalid (Valiente-Riedl, 2012).  Fairtrade is doing best to improve the quality of products. Fairtrade is also spending increased income as well as social premiums only to quality control of the products.

At the same time, the criticism of Fairtrade that is related to inequality is also illogical. It is because of Fairtrade only works to endorse greater equity in global trading partnerships all the way through discussion, transparency, and respect. Moreover, it should also be noted down that, Fairtrade offers better trading conditions to promote sustainable development and to protect the rights of producers as well as workers in developing countries (Anderson, 2014). In addition to this, it is also observed that, FairTrade is situated on their core beliefs or principles. For instance, the first belief is that producers are obliged in order to express their harmony with consumers. The first belief is that, the world trade practices will promote the balanced distribution of possessions among nations. The third and last is that FairTrade believes that to buy a product from producer at a fair price is an effective way to promote sustainable development in developing countries (Forss and Marra, 2014). In this way, it can be assumed that, FairTrade works at the principle of equality and fairness in order to remove partialities or inequalities in an effective and a more comprehensive manner.

In the same way, the criticism that expresses that FairTrade does not work to protect the human rights is also forged. The main reason behind it is that, Fairtrade develops a variety of programs only to provide support and protection to farmers and workers. It is true that Fairtrade is in the favor of slavery. But, it provides support to modern slavery. Modern slavery works in the favor of workers. It is because of modern slavery is a social action that plays a significant role to recognize the rights of workers in an effective way (Roach and Simpson, 2016). Moreover, it also maximizes the transparency of supply chains in order to reduce hazards of slavery in the supply chains. Along with this, Modern slavery establishes improved enforcements as well as regulations to protect the rights of works in a proper way.  On the other hand, Fairtrade International developed a robust system to monitor all the aspects to ensure continuous improvement and to develop sustainability within nations. It also provides greater empowerment to farmers, producers and workers. In this way, it is clear that, the Fairtrade standards are planned to protect human rights, to tackle poverty, and to empower producers in the poorest countries. For that reason, the criticism that states that FairTrade only provide support to the richest countries does not make any sense. As a result, it can be said that, the criticisms of Fairtrade are not true and only influencing the processes and practices of Fairtrade in a negative way.

Conclusion

On the basis of the above discussion, it can be concluded that, Fairtrade is a fair organization that is obliged to improve fair trade practices within nations. Along with this, it is also observed that, Fairtrade is developing a lot of practise to reduce inequalities and to provide support to the producers. Moreover, Fairtrade is also making efforts to address the global ethical issues in effective and a more comprehensive manner. In addition, it is also concluded that, the criticisms that are related to Fairtrade are invalid and inappropriate. Finally, the major object of Fairtrade is to improve transparency, develop sustainability, and also protect human rights in an effective and an appropriate manner.

References

Anderson, A. (2015). A History of Fair Trade in Contemporary Britain: From Civil Society Campaigns to Corporate Compliance. USA: Springer.

Anderson, S.G. (2014). New Strategies for Social Innovation: Market-Based Approaches for Assisting the Poor. Australia: Columbia University Press.

Arnould, E.J., Plastina, A. and Ball, D., (2009). Does fair trade deliver on its core value proposition? Effects on income, educational attainment, and health in three countries. Journal of Public Policy & Marketing, 28(2), pp.186-201.

Blowfield, M. and Murray, A. (2011). Corporate Responsibility. UK: OUP Oxford.

Clark, J.P. and Ritson, C. (2013). Practical Ethics for Food Professionals: Ethics in Research, Education and the Workplace. USA: John Wiley & Sons.

Cook, D.T. and Ryan, J.M. (2015). The Wiley Blackwell Encyclopedia of Consumption and Consumer Studies. USA: John Wiley & Sons.

Crane, A. and Matten, D. (2007). Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. UK: Oxford University Press.

Davies, I.A., Doherty, B. and Knox, S. (2010). The rise and stall of a fair trade pioneer: The Cafédirect story. Journal of Business Ethics, 92(1), pp.127-147.

De Pelsmacker, P., Driesen, L. and Rayp, G., (2005). Do consumers care about ethics? Willingness to pay for fairâ€Âtrade coffee. Journal of consumer affairs, 39(2), pp.363-385.

Fairtrade International. (2016). About Fairtrade. Available At: https://www.fairtrade.net/about-fairtrade.html [Accessed On: 3rd October 2016]

Fairtrade International. (2016). HOME. Available At: https://www.fairtrade.net/ [Accessed On: 3rd  October 2016]

Fairtrade International. (2016). Standards. Available At: https://www.fairtrade.net/standards.html [Accessed On: 3rd October 2016]

Forss, K. and Marra, M. (2014). Speaking Justice to Power: Ethical and Methodological Challenges for Evaluators. Australia: Transaction Publishers.

Granville, B. and Dine, J. (2012). The Processes and Practices of Fair Trade: Trust, Ethics and Governance. NY: Routledge.

Hale, T. and Held, D. (2011). Handbook of Transnational Governance. Australia: Polity.

Hassoun, N. (2012). Globalization and Global Justice: Shrinking Distance, Expanding Obligations. USA: Cambridge University Press.

Herrnstein, R.J. and Murray, C. (2010). Bell Curve: Intelligence and Class Structure in American Life. USA: Simon and Schuster.

Hodges, C. (2015). Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Compliance and Ethics. Australia: Bloomsbury Publishing.

Low, W. and Davenport, E., (2005). Has the medium (roast) become the message? The ethics of marketing fair trade in the mainstream. International Marketing Review, 22(5), pp.494-511.

Moberg, M. (2010). Fair Trade and Social Justice: Global Ethnographies. UK: NYU Press.

Patrick, L. and Ralph, L. (2009). OECD Insights International Trade Free, Fair and Open?: Free, Fair and Open? USA: OECD Publishing.

Reed, D. (2009). What do corporations have to do with fair trade? Positive and normative analysis from a value chain perspective. Journal of business ethics, 86(1), pp.3-26.

Roach, A.P. and Simpson, J. R. (2016). Heresy and the Making of European Culture: Medieval and Modern Perspectives. NY: Routledge.

Stefanska, M., Nestorowicz, R.  and Stefanska, M. (2015). Fair Trade In CSR Strategy of Global Retailers. USA: Springer.

Valiente-Riedl, E. (2012). Is Fairtrade Fair? Australia: Palgrave Macmillan.

Varul, M.Z. (2009). Ethical selving in cultural contexts: Fairtrade consumption as an everyday ethical practice in the UK and Germany. International Journal of Consumer Studies, 33(2), pp.183-189.

Webb, J. (2007). Seduced or Sceptical Consumers? Organised Action and the Case of Fair Trade Coffee. Sociological Research Online 12(3), pp. 5.

Widdows, H. (2014). Global Ethics: An Introduction. NY: Routledge.