What Is Fair Trade? How Does It Work?

Running head: FAIR TRADE 1
FAIR TRADE 2

Fair Trade
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Fair trade stands as a social movement that focuses on helping producers in the developing countries to acquire better trading conditions and promote sustainability. Additionally, it advocates for exporters getting paid high prices and improved social and environmental standards. Recently, different criticisms have been raised regarding the fair trade system with relationships between different business and suppliers being the commonly overlooked aspects of business ethics. In a real sense, the contract between business and suppliers readily include substantial sums of capital thus implying that there is a possibility of ethics problems in the involvement of major brands in the fair trade movement. This paper examines how critics condemning the involvement of major brands such as Starbucks justified in the fair trade movement and the ethical basis of the decision.
Of course, the critics convicting the major brand’s involvement in the fair trade are justified based on the ethical sourcing as demonstrated in the book of ethics. In this, ethical sourcing can be defined as the social explicit inclusion, ethical and ecological criteria into the policies, procedures, and programs in the supply chain management. Some of the critics condemning the involvement of major brands such as Starbucks are that the trend suppliers in the fair trade movement are in a worse condition as a result of the recent huge profit and this might last forever. The other critic is that multinational corporation will marginalize the small suppliers as a result of the new regulations making the fair trade license fee too high to be afforded by the small stakeholders.
The book of business ethics quotes that “Firms like Starbucks make a huge contribution to fair trade USA through licensing fees (Crane, & Matten, 2007)” however, it is noted that there is currently no data concerning the recent contribution of Starbucks in the Fair Trade USA. This differs from the information in the annual report of Starbuck organization that indicates that its service fees accounted for the 83% of the movement’s total net assets. These kinds of complications are weakening the partnership between big companies such as Starbucks and even their dedication to social responsibility. Daniel Jaffe (2010) in the article “Fair Trade Standards” quotes that such kind of a partnership blurs the lines existing between the regulators further and raises queries regarding the ability of the certifiers to remain independent and rigorous in the business activities.
On the other hand, in the book of business ethics claims that compromise in standards normally weakens the original principles of a movement. In this case, Fair trade movement has opted to partner with the biggest agro-food retailers such as the Nestle Corporation and Starbuck. The corporate relationship is examined to have been established out of antagonism between the Equal Exchange and the coffee roaster. This approves the critics convicting the major brand’s involvement in the fair trade since the fair trade movement has compromised with most of the principles of the major brands. For instance, waive against Starbucks by the Equal Exchange campaign clearly represents one of the mechanisms through which organizations can be held accountable for their erroneous actions. Additionally, it is quoted that “the most prominent ethical problem to have come across under the spotlight is the labor and environmental conditions (Hockerts, 2005)”.
On the ethical basis of quality improvement of the producer’s living condition, sustainability can solve the ethical problem of labor and environmental conditions. This is whereby the sustainable development helps people meet the present needs without the consideration of the future generation ability to meet their personal needs. Crane and Matten quote that sustainability raises the consideration of intergeneration equity as it is divided into three components that include economic, social and environment (Crane, & Matten, 2007). This implies that sustainability is an important tool of ensuring a long-term maintenance of systems depending on the environmental, economic and social considerations. Additionally, other critics have been pointed out including that large supermarkets greatly benefit from the fair trade movement and hence there is a huge margin of the large corporation and very less profit goes to the suppliers. Ethically, fair trade movement should benefit both the supply and buyers so as to initiate a long-term partnership. For instance, following the information on Starbuck and Equal Exchange, it is pointed out that Equal exchange members appeared at the annual shareholder meeting of the Starbucks to demand that Starbuck purchased more fair trade certified coffee. At this time, the coffee crisis and the prices fall had led the farmers to experience increased poverty and established environmental issues within the regions producing coffee. On the ethical basis of improved quality and standards of the producers living conditions, high purchases of coffee should improve the environmental condition of the farmers and not setting more environmental crisis to them.
Conclusion
In an assumption, the critics condemning the major brand’s involvement in the fair trade movement have been justified. Taking an example of Starbuck Corporation as part of the major brands, it has experienced a number of issues in its partnership with fair trade movement and Equal Exchange. Some of the critics included that the partnership of fair trade movement with major brands has led to the worse position of suppliers and that multinational brands are marginalizing suppliers as a result of too high fair trade license and the threatens against the fair trade goals. All these decisions are on the ethical basis of improved quality and standards of the producers living conditions.
Reference
Crane, A., & Matten, D. (2007). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, USA.
Hockerts, K. (2005). The fair trade story. OIKOS Sustainability Case Collection, OIKOS Foundation for Economy and Ecology. Available online at: www. oikosfoundation. unisg. ch/homepage/case. htm (accessed on 18 April 2009).
Jaffee, D. (2010). Fair trade standards, corporate participation, and social movement responses in the United States. Journal of Business Ethics, 92(2), 267-285.