What is Fair Trade?What is Fair Trade?From Wikipedia: Implicit (and often explicit) in these approaches is a

criticism of the current organisation of international trade as being "unfair". When developing countries export to rich country markets, they face tariff barriers that are four times higher than those encountered by rich countries. Poverty campaigners claim that those barriers cost poor countries $100bn a year - twice as much as they receive in aid. Advocates of fair trade practices also hold that the fluctuation of commodity prices does not guarantee a living wage for many producers in developing countries, forcing many into crippling debt. Market prices may not properly reflect the true costs associated with producing the product due to economic externalities such as environmental and social costs. Although critics of so-called fairer trading practices charge that proposals for reform simply amount to protectionism, campaigners maintain that it is rich countries such as the United States and the European Union which operate expansive programmes that subsidise their domestic producers.

Ethical IssueEthical Issue

• Do we have an obligation or duty to ensure that everyone earns a living wage?

Ethical IssueEthical Issue

• Apply the Golden Rule. – I would like to earn a living wage so I should do what I

can to help others earn a living wage• Currently farmers are not earning a living wage• Fair trade provides a living wage• Therefore we should adopt fair trade taking on

the highest level of the hierarchy “Do Good”

Negative AspectsNegative Aspects

• Economic Impact– Pareto Improvement Criterion– Increased prices at the expense of the consumer

• Relativism – imposing values• Proximity

equity efficiency?

Got Subsidies?Got Subsidies?

Rock singer Michael Stipe is covered in milk to publicise Oxfam's campaign against unfair trade. "Every cow in Europe gets $2 a day in subsidies. This is more money than half the world's population get to live on each day."

Control behaviorControl behavior

• Develop Standards– Ex: Genetically modified foods vs. organic

• Clearly label products• No mixed products

Does Fair Trade Branding make a Does Fair Trade Branding make a difference?difference?

• 82% of purchasers says that it would make difference

• Fair trade only accounts for 5-6% of coffee sales

• There is capacity for much more

• Is this the consumer or the supplier who is stopping the purchase?

Increase AdoptionIncrease Adoption

• Public Awareness Campaign• Relevance – locality• Branding• Positioning• Placement/Accessibility