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Fair Trade and non-governmental trade-related sustainability assurance schemes

Fair Trade makes an essential contribution to sustainable development. The European Union (EU) encourages diversity in the schemes certifying and awarding labels.

ACT

Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee of 5 May 2009 - Contributing to Sustainable Development: the role of Fair Trade and non-governmental trade-related sustainability assurance schemes [COM(2009) 215 final – Not published in the Official Journal].

SUMMARY

Following the 1999 Communication on Fair Trade, the Commission presented a report on the developments in the sector.

Since then a single international brand has replaced national Fair Trade certification labels in the Member States. The introduction of this brand has strengthened consumer confidence and recognition of Fair Trade products. In 2009 between 60 % and 70 % of global sales of Fair Trade products were made in the European Union (EU).

The growth of the sector has encouraged the development of new sustainability schemes. Fair Trade * is based on economic, environmental and social development. Private trade-related * sustainability schemes are based on at least one of these three pillars.

The definition of Fair Trade is based on common criteria, which form part of an integrated approach to sustainable development. They concern:

  • the definition of a fair price which covers the costs of sustainable production and living and the possibility for part payments to be made to producers in advance;
  • the establishment of long-term relations between producers and distributors;
  • transparency and traceability throughout the supply chain;
  • compliance with the International Labour Organization’s (ILO) core conventions, specifically with regard to decent work, trade union freedom and labour standards;
  • respect for human rights, the environment and traditional methods;
  • building production capacity and developing market access for producers;
  • raising the awareness of stakeholders and consumers on the aims and operation of Fair Trade;
  • establishing a certification process;
  • impact assessments of Fair Trade activities.

Private trade-related sustainability schemes also offer possibilities for growth and sustainable development. The Commission considers that certain measures could improve their results. It seems necessary to preserve the non-governmental nature of the organisations setting up these schemes in order to encourage synergies between the different schemes and to increase their visibility. It is also necessary to reach a common definition of the basic requirements of these schemes and to develop impact assessment criteria.

Private sustainability schemes are compatible with the principles of the multilateral trading system. The World Trade Organization (WTO) and EU trade policy support the integration of developing countries into the global economy. However, the awarding of Fair Trade labels should comply with the WTO obligations concerning the principles of transparency and non-discrimination.

Public procurement contracts represent 16 % of the EU GDP. Their procedures should comply to a greater extent with the principles of sustainable development. In 2009, the Commission published a Communication on Green Public Procurement. In addition, a guide on social procurement is currently being produced. It recommends that Fair Trade criteria be considered in public tenders.

Through its development cooperation instruments, the EU supports non-governmental organisations carrying out Fair Trade activities. Between 2007 and 2008 the EU provided

funding of EUR 19.466 million for actions specifically related to raising awareness of Fair Trade. Such actions are also carried out under the framework of support for developing agricultural, rural and trade sectors through the Special Framework for Assistance to traditional ACP suppliers of bananas and signatory countries to the Sugar Protocol.

In the coming years, additional efforts should enable EU aid for the development of Fair Trade schemes to be increased. The Commission proposes to improve the current interventions by evaluating the assistance provided, carrying out impact assessments and promoting market transparency.

Key terms
  • Fair Trade: a term which applies to organisations whose operations comply with standards established by the international standard setting and conformity assessment organisations, that are members of the International Social and Environment Accreditations and Labelling Alliance (ISEAL).
  • Private sustainability assurance schemes: a term used to describe labelling schemes that aim to inform consumers about the sustainability of the production of the product.
Last updated: 11.09.2009
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