"The European Commission is committed to support fair trade and wants to lower the barriers for producers in the South trying to export to Europe". This landmark statement was made by Francesco Granell, director of European Commission's DGVIII, to Europarliamentarians attending the Fair Trade Day and was, undoubtedly, the most important political achievement for fair trade in 1994. For the several dozen Europarlia- mentarians (MEPs) listening, it meant that the Commission had evidently decided to implement the resolution in favour of fair trade adopted by the European Parliament in January 1994.
Thousands of fair trade producer organizations, hundreds of fair trade importers and marketing organizationsand thousands of World Shops together form a sizeable worldwide economic enterprise. From the political point of view, however, the value of their, as yet, marginal macroeconomic impact lies in their exemplary significance. Fair trade organizations can both give `the good example' of what fair trade looks like in practice and show that it `works'. Their economic performance is the basis of their political effort to get the principles of fair trade integrated into mainstream commercial trade. This chapter presents the strategies used and the results achieved and analyses the perspectives of the politics of fair trade.
With 632 billion US$ of imports and 565 billion US$ of exports a year, the countries of the European Union (EU) together form the world's largest trading block. And because the EU's member countries agree to have a common policy for their trade with countries outside of the EU, the European Commission and the Council of Ministers (which in the end takes the decisions), are the world's single most influential bodies regarding international trade. Their impact on trade between the industrialised and the developing countries is of the same magnitude, as the EU is also the South's largest trading partner. Consumers in several European countries directly sensed this impact for the first time when in 1994 the price of bananas suddenly jumped to unpleasant heights because of changes in the EU import policy regarding this tropical fruit.
Ever since the EU was founded, it has pursued a trade policy of protecting Europeean agriculture and industry to the detriment of Southern producers wishing to export to Europe. This policy includes limiting imports through quota (cf. the Multi-Fibre-Agreement); levying high import tariffs on products from outside the Union (rice, for example); tariff escalations (i.e. comparatively lower tariffs for raw/unprocessed products, relatively higher tariffs for processed products); and export subsidies for agricultural produce such as sugar. From a fair trade point of view, this policy implemented by an affluent North to protect its privileged position, represents unfair discrimination against producers in the South. The aim of the fair trade movement's political activity is the abolition of the lopsided terms of trade which the EU imposes in the South, and preferential treatment of fair trade by the EU.
Since the late 1980s there has been a general tendency in the EU for decisionmaking on international issues to shift away from national governments to European political bodies. Therefore, political activities for fair(er) trade in 1994 focussed on the European Parliament and Commission. Decisions of Parliament favouring fair(er) trade are important because since the Parliament's members are directly elected, such decisions have a high degree of democratic legitimacy. In 1993, the late Italian Europarliamentarian Alexander Langer took the initiative for the elaboration of an EP policy on South-North trade. The EP Committee on Development and Cooperation discussed his report in November 1993 and unanimously adopted the accessory motion of a "Resolution on promoting fairness and solidarity in North-South trade". This so-called Langer resolution was approved by the EP plenum on January 18th, 1994. It states thet the European Parliament, ..."aware that unfair trading conditions are a major factor in the structural imbalance between the world's North and South", expresses its support of fair trade";
..."calls for appropriate coordination, recognition and encouragement at EC level for the initiatives to promote fair and ethical trade which already exist in many member states";
..."calls on the Community, in its legislation and budget, to take proper account of the need to encourage fair trade and to provide appropriate support; and, among other things,
..."calls on the Community to include fair trade as an organic part of its development and cooperation policy and to work actively in international fora to promote the further development of this type of fairer, more socially and ecologically acceptable trade".
In lobbying the EP, fair trade advocates have discovered that the main obstacle to policies promoting fair trade is not so much political opposition to the idea, but a general lack of awareness and knowledge about fair trade among politicians. EFTA therefore has since 1992 organised annual Fair Trade Days in the European Parliament. During such Days MEPs are informed about fair trade, are shown a range of fair trade products and are invited to participate in developing political policies promoting the idea. The MEPs' attendance at the Days, organized in collaboration with the fair trade-labelling and World Shop organizations, increases every year.
The 1994 Fair Trade Day, held on November 30th in Brussels, was also attended
by M. Francesco Granell, director of the EC's DGVIII, who had been invited to
explain how the Commission is implementing the EP's resolution on fair trade.
That the Commission was willing to come to the EP at all was a minor victory
in itself, because the Commission is not bound in any way to execute EP-decisions.
Although the Commission can be considered the `government' of the European Union,
it derives its legitimacy and its power not from the elected Parliament but
from the national governments of its member states. Although it might be sensible
for the Commission to heed the recommendations of the EP, it is accountable
only to the EU's national governments.
Therefore, the European Parliament's favorable stance on fair trade, as a democratic recognition of the fair trade lobby's political aims, provides only a basis for efforts to influence political decisions on trade - but no more than that. The ultimate targets of the lobbying efforts are the European Commissioners. Generally speaking, there are two ways to reach these 'men at the top': firstly through the (ministers of) the EU's national governments and secondly through (high) EU functionaries. In the past, the fair trade lobby has used both - with varying degrees of success.
The Belgian fair trade organizations Oxfam-Wereldwinkels and Magasins du Monde-Oxfam made the most of the fact that Belgium held the EU presidency for the first half of 1993. They asked political friends in the Belgian government to call upon the Belgian Secretary of State for Development to study the EFTA proposals for a new International Coffee Agreement and for a Diversification Fund. Preliminary study results were discussed during a Study Day in the Belgian State Department of Development which produced a package of analyses and proposals which were circulated to all governments of EU member states by the Belgien Secretary of State, Derycke.
The feedback of the EU governments on the EFTA proposals concerning coffee led the Belgian Secretary to conclude in early 1994 that there was insufficient support for a major overhaul of the EU policy on the coffee trade. As an exhaustive round of trading policy reviews had just been concluded with the signing of the new GATT, most EU member states preferred to leave further changes in policy on international trade to the new World Trade Organization which would succeed GATT in January 1995. The EU states did agree with to improve the compensation to ACP countries for lost income caused by low prices on the world market for their commodities (coffee, cocoa, etc.) within the so-called Stabex framework (which is due to be reviewed in 1997). The EU member states, moreover, expressed themselves in principle in favour of allocating part of the EU budget for development cooperation for the stimulation of production, trade and retailing of fair trade products. In line with the results of the consultation of the EU governments, DG VIII's leadership has, since early 1994, been studying ways of making the promotion of fair trade a part of its policies and strategies for development cooperation.
Parallel to trying to influence EC policy on (fair) trade through the Belgian government, much effort went into convincing high functionaries within DG VIII to take an active interest in fair trade. Again, profitable use could be made of the presence within the Directorate of a few people who had been active in the fair trade movement in the past or who were already buying fair trade products. In 1993 and again in 1994, EU-grants were obtained for fair trade advocacy campaigns. Moreover, in various meetings, possibilities were discussed for the EC to promote fair trade both politically and finacially. In June 1994, the EU/ACP organization for advice on policy APROMA organized a study day on perspectives of fair trade coffee, to which both mainstream and fair trade coffee roasters were invited. Four months later, the Commission invited Belgium's major supermarket chains to a Round Table discussion on the same topic. Several other meetings followed in which the interplay between the fair trade organizations and the contours of a fair trade promotion policy were established. The tentative (as of May 1995) result is an in principle EC commitment to promoting fair trade, an EC promise to finance a multi-year program to support the development of fair trade producers, and a pledge to support and participate in the European World Shop Day on May 11th, 1996.
Politicians are today confronted with dozens of increasingly complex issues. On each issue, an immense amount of information exist - which is impossible for a person to cope with. In such a situation, a politician might well overlook important arguments when developing a standpoint on an issue. Lobbying is a way to put the spotlight on particular aspects of the fair trade issue - to make sure that the interests of millions of small farmers in the South are not overlooked by politicians who are influenced by corporations like Nestlé, Cadbury and Jacobs-Suchard. The criterion for a successful lobby should not be so much whether one `won' or `lost', but whether politicians heard the argument and took it into account.
In this sense, the fair trade lobby has been quite successful. In just a few years, a large and increasing number of politicians, both national and European, have made consulting the fair trade movement on trade and development issues a standard element of their repertoire. Fair trade principles are increasingly being recognised as valid. And more and more policymakers find the fair trade arguments sound.
The EFTA/NEWS cocoa campaign |
A few years ago, when the current World Bank director Ms. Herfkens was still `just' a Dutch MP and the president of the Dutch Fair Trade Organisatie, she regularly pointed out that, with its three thousand stores, fifty thousand volunteers and millions of customers, the fair trade movement is one of the few really European and truly popular movements. Ms. Herfkens insisted that with appropriate action models, the movement could become a political force with which policy makers would be forced to reckon. Since then, a great deal of energy has gone into developing the action model which is today being put to effective use. The gist of the model is the combination of mass action with the lobbying of those in power, and national campaigns with a focus on Brussels and the EU. The latest example of this multipronged approach is the EFTA/NEWS campaign to keep chocolate from being `polluted' with up to 5% non-cocoa fats. This `pollution' is currently allowed in the U.K, Ireland and Denmark and in the new EU member states Sweden, Finland and Austria, but is prohibited in all the other European countries. The EU wants a to `harmonize' the chocolate market by issuing a directive on chocolate. Southern cocoa producers oppose the 5% pollution because it would decrease the demand for cocoa and consequently decrease cocoa prices on the world market - the same reasons which are given by the chocolate industry for allowing the chocolate pollution.
EFTA/NEWS picked up the issue in 1994, not only in support of small-scale cocoa farmers, but also because it can be used to illustrate to a broad public why fair trade principles are so important for the sustainable economic development of the South. Allowing non-cocoa fats in chocolate might lower the price of chocolate products in Europe by a few cents or pennies and it would certainly lead to higher corporate profits - for which millions of small cocoa farmers would pay a high price. They risk losing their means of subsistence. This would be a calamity for the South's economic development - and potentially for the North as well, since these farmers may well come to the North seeking the subsistence of which they have been derived. Cynical as the argument is, it currently is d'actualité, and not as far-fetched as it may sound. Respected economists have recently identified direct links, in particular for Africa, between deteriorating terms of trade for the South, loss of means of subsistence by producers in the South, and Southern migration from these regions to the North.
Since the autumn of 1994, hundred of thousands of brochures and pamphlets on the chocolate issue have been distributed to world shop customers. By writing their name on campaign posters, the customers indicated their opposition to the chocolate-pollution. At the same time, EFTA and NEWS national member organizations contacted their own government officials, MPs and MEPs to explain to them the negative effects of allowing the pollution of chocolate. On April 19th, EFTA/NEWS organized a `Working Lunch' (prepared with fair trade products) in the European Parliament and discussed the issue with two dozen MEPs and their assistants. In letters and meetings, Community officials were asked to take into account not only the interests of the chocolate industry, but also those of small cocoa farmers. The EFTA/NEWS campaign model targets both the political centres of power in Brussels and in Europe's capitals, and the voters who elect them. The politicians are confronted with their voters' opinion when, just before the final decision on the EU chocolate directive is to be taken, the thousands of petitions, each carrying a hundred signatures are taken to Brussels and presented to the EC decision makers.
Towards a European fair trade policy |
| Jan 1994 | The European Parliament adopts the "Resolution on promoting fairness and solidarity in North-South trade". |
| Feb 1994 | The European Commission publishes its "Memo on alternative trade" in which it declares its support for strengthening fair trade both in the South and the North and its intention to establish an EC Working Group on fair trade. |
| June 1994 | APROMA, an EC/ACP think tank on commodities, invites mainstream coffee roasters and fair trade organizations to a meeting on "Coffee: Alternative Trade - Status and Outlook". |
| July 1994 | The Belgian Minister for Development Cooperation Eric Derycke commissions Prof. Berlage (Leuven University) to study the EFTA proposals on fair trade in coffee. |
| Oct 1994 | EFTA publishes "Possibilities to develop fair trade in Belgium, Germany and Italy, 1994-97", a 30-page report to the Belgian Minister Derycke and to the European Commission with a broad range of proposals for political support of fair trade. |
| Oct 1994 | Meeting on "The state of affairs and perspectives of fair trade in Europe and in particular in Belgium" organized by the EC. Participants: representatives of Belgium's major supermarket chains, of the fair trade organizations, of the Belgian government and 6 different EC departments. |
| Sep-Nov 1994 | EFTA/NEWS European-wide coffee campaign. Over 43.000 world shop customers sign the `bean-book' to call on industry, their national government and the EC to promote fair trade coffee. The `bean-books' are presented to EC-director Granell at the Fair Trade Day. |
| Nov 1994 | Nearly 30 MEPs, EC-representatives and four dozen fair trade activists participate in the third EFTA Fair Trade Day in European Parliament in Brussels. |
| Sep-Dec 1994 | EFTA/NEWS join hundreds of European NGOs to campaign against the plans to allow chocolate to contain up to 5% non-cocoa fats. |
| Dec 1994 | The Parliament of Luxemburg voted unanimously to ask its government to support fair trade on a national and European level and to use fair trade products in all the State administrations. |
| Apr 1994 | Two dozen MEPs and their assistants participate in the EFTA Fair Trade Working Lunch in the European Parliament to discuss the chocolate-issue and the promotion of fair trade policy by the World Trade Organization. |
| May 1995 | EFTA publishes an inventory of fair trade in 14 European countries. |
| Oct 1995 | EFTA publishes first Fair Ttrade Yearbook |
Proposals for a fair trade policy |
In recent years EFTA, often in cooperation with other fair trade initiatives, has launched various proposals for the principles of fair trade to be taken into account in EU policy on sustainable development, international trade and consumer affairs. The most important proposals are detailed below.
After the collapse of the last International Coffee Agreement (ICA) in 1989,
the so-called 'hog cycle' hit the world coffee market. In such a cycle (first
analysed in the Chicago hog market during the last century), a collapse of prices
leads farmers to neglect their means of production (the coffee bushes), in subsequent
seasons the coffee supply therefore falls, leading to a rise in prices. The
price rise encourages farmers to start increasing production again until the
market saturates and prices collapse once more. The cycle is 8-10 years long
and extremely disruptive for the small coffee farmers.
Because, for the time being, a new ICA is a political illusion, EFTA propose
a ECA with the same aim of stabilizing the market through price controls. In
this system a Diversification Fund should be included to provide capital for
coffee farmers who wish to upgrade their coffee or to convert to other crops.
As mentioned in the main article, the EC did not adopt the ECA outright, but, in collaboraton with the Belgian government, wishes to study further and wants to include the ECA-proposals in the Stabex-review in 1997.
Most major commodity agreements are still concluded between governments. This is a relic of the times when governments controlled the strategic economic sectors of their countries. Moreover, it excludes the producers i.e. the directly affected by the agreements. EFTA advocates producer participation in international negotiations on commodity trade. For example, they believe that the Latin American association of small coffee producers Frente Solidario should have a seat in the International Coffee Organizaton and that producers should be represented on the policymaking bodies of the WTO and other influential organisations.
EFTA believes that the most effective way to promote the principles of fair trade in mainstream commercial dealing is not through obligation or through sanctions in case of transgression, but by making the adoption attractive and by rewarding such a steps. Examples of possible incentives are the abolition of EU import tariffs and/or quota for products with a fair trade seal, giving tax breaks to companies which trade fairly, or (financially) supporting campaigns to promote fair trade.
In striving toward European integration, the EC has in recent years been pursuing a policy of setting uniform product standards, and authorizing national certifying organizations to award seals or labels to products which satisfy those standards. EFTA suggests that the same policy should be applied to fair trade. The EC (and WTO) should recognize the existing fair trade seals, promote their adoption and make their criteria and registers of certified producer organizations the practical basis for EU/WTO policies regarding fair trade. This approach has the advantage of leaving certification and monitoring in the hands of non-governmental independent institutions, and implies that policies to promote fair trade can be implemented immediately, without tedious preliminary debate about fair trade criteria.
There is a plethora of means by which access to European markets by products from the South is restricted: EU import tariffs mean, for example that sugar from non-ACP countries is heavily taxed, while the EU subsidises the export of EU sugar. Tariff escalations is the way in which higher import tariffs are imposed on processed goods commodities than on raw commodities, for example, 4% on green coffee versus 16.5% on roasted decaffeinated coffee. There are also non-tariff barriers such as import quotas and complicated import regulations. EFTA has repeatedly requested the European Parliament and the Commission to abolish all these obstacles and live up to their claim that Europe is not being turned into a `fortress' where products from the South are concerned.
In conjunction with cocoa producers, the cocoa industry and consumers associations EFTA is putting pressure on the EU to prohibit the use of non-cocoa fats in chocolate in the new EU chocolate directive.
All the suggestions above concern the adoption of fair trade principles in
international trade. Fair trade of course also represents a strategy for development
of the South, one that is based on promoting the people's use of their own potential
for self-reliant development. Instead of donating - sometimes unbelievably large
- sums of money for `projects', a fair trade development policy involves assisting
small-scale producers in establishing a sustainable economic base for themselves
and their social environment. This market-oriented policy is cheaper, less risky
and far more effective in promoting sustainable development than bailing out
Southern governments with large budget deficits or constructing mammoth dams
(to name just two contemporary no-future development strategies).
