I recently gave a talk at a conference in Jersey, Channel Islands about how current trade favours certain countries and leaves the poor marginalised. I showed how trade trends can be changed if people and businesses thought and acted differently towards all the resources this world has to offer.
I naturally offered the ten principles of fair trade as the business model that can bring about that change. The fair trade principles seek to bring the people in the fringes back in the fold. We hear about the fair trade principles all the time but do we really understand them? Do we understand what work fair trade organisations do to follow these principles?
I would like to take you through a series I’m calling “The Heartbeat of Fair Trade”. I will try to show you what goes on behind each of the fair trade principles, starting with principle 1.
Principle 1 : Creating opportunities for disadvantaged groups in the developing world
Who are the UK’s favourite trading partners?
Because of the freedom of movement of goods within the European Union, you will expect that a lot of intra-European trade is done. The statistics above show that we trade most with Germany, France, Netherlands etc. Since our biggest imports are road vehicles, it’s understandable that Germany and France rank highly. We love our BMWs, Audis, Mercs, Peugeots, Renaults, don’t we?
Outside the EU, our biggest trading partners are the USA and China, by a large margin. Just looking at the product labels on the goods in our high street store, it’s clear that businesses like trading with China.
There are several reasons why most of our imports come from the same countries. Let’s take China as an example. The costs are cheaper than manufacturing here in the UK. What about manufacturing costs in less developed countries like India or Indonesia? China is still cheaper because they have achieved such high volumes that economies of scale are achieved. Economies of scale mean as you scale up, you reach point where it’s more efficient to produce and costs per unit are lower.
Another reason why businesses are happy trading along established routes is because the routes are familiar and secure. The supply is consistent. The supply chain is tried and tested. There are less nasty surprises along the way. There’s a system for designing goods for the UK, manufacturing standards are in place, quality control has been perfected and shipping runs like clockwork.
There is a strong business case for trading with our favourite partners. It makes complete sense. Until you think about the consequences on the rest of the world. Think about all the other businesses and producers in less developed countries. What about their skills? Are they not worthy of being included in global trade? Are villagers in Madagascar who make lovely bags not worthy of exporting their goods? Is a community in a leprosy colony to be left unemployed because their only skill is in weaving and they haven’t got a factory building?
If you put yourself in the shoes of the poor in under-developed or developing countries, you will see that they do not have a lot of choice. If they can make some products, they don’t tend to have a strong local economy in which to sell those goods for income. They need to participate in a global economy and tap into the riches of other countries. If they don’t, they will remain poor, living hand to mouth or dying of poverty.
SO WE HAVE A PROBLEM. THE PROBLEM IS THE POOR PRODUCERS NEED TO GET INTO GLOBAL TRADE BUT TRADE LEFT ON ITS OWN LIKES TO TRADE WITH MORE INDUSTRIALISED COUNTRIES.
One way forward to bridge the gap is for us to create opportunities for disadvantaged groups in the developing world. Fair trade principle 1.
Simply put, we should create trade opportunities with people who are otherwise overlooked. We should go to rural parts of the world and help disadvantaged producer groups access the world market. We should look to import goods from a wide variety of communities.
This is what Little Trove and other fair trade companies are doing. I travel to remote parts of India and Indonesia to look for communities that need income. If they can make some products that have potential, I will help them with design ideas, make modifications to existing products and give them whatever necessary advice to get good quality products to import to the UK. The goods are then sent to our trade customers who sell to the public. When our trade customers re-order goods, more orders and monies are sent to the producers. The producers can increase production, increase the number of people working and ultimately improve their lives.
Sure, it’s tough to have to do “extra” work helping people develop products. Sure it takes longer to develop items. But it’s the only way that people on the fringes can be brought into the global economy. Trade left on its own will not naturally gravitate towards these rural groups. Businesses have to consciously decide to do it despite the tougher challenges and higher costs. I believe strongly we cannot settle for a low cost economy. We must recognise that our fellow human beings in many parts of the world make products that will enhance our lives. We must create economic opportunities for the disadvantaged.
Owner, Founder, Managing Director