Key Principles of Fair Trade

*The principles below have been developed by IFAT-registered Fair Trade Organisations.

Creating opportunities for economically disadvantaged producers:

Fair Trade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers who have been economically disadvantaged or marginalized by the conventional trading system.

Transparency and accountability:

Fair Trade involves transparent management and commercial relations to deal fairly and respectfully with trading partners.

Capacity building:

Fair Trade is a means to develop producers' independence. Fair Trade relationships provide continuity, during which producers and their marketing organizations can improve their management skills and their access to new markets.

Payment of a fair price:

A fair price in the regional or local context is one that has been agreed through dialogue and participation. It covers not only the costs of production but enables production which is socially just and environmentally sound. It provides fair pay to the producers and takes into account the principle of equal pay for equal work by women and men. Fair Traders ensure prompt payment to their partners and, whenever possible, help producers with access to pre-harvest or pre-production financing.

Gender equity:

Fair Trade means that women's work is properly valued and rewarded. Women are always paid for their contribution to the production process and are empowered in their organizations.

Working conditions:

Fair Trade means a safe and healthy working environment for producers. The participation of children (if any) does not adversely affect their well-being, security, educational requirements and need for play and conforms to the UN Convention on the Rights of the Child as well as the law and norms in the local context.

The environment:

Fair Trade actively encourages better environmental practices and the application of responsible methods of production.

The Millennium Development Goals of Fair Trade

1) Eradicate extreme poverty and hunger

2) Improve maternal health

3) Achieve universal primary education

4) Combat HIV/AIDS, malaria, and other diseases

5) Promote gender equality and empower women

6) Ensure environmental sustainability

7) Reduce child mortality

In the globalised world of the early twenty-first century, trade is one of the most powerful forces linking our lives. It is also a source of unprecedented wealth. Yet million of the world’s poorest people are being left behind. Increased prosperity has gone hand in hand with mass poverty and the widening of already obscene inequalities between rich and poor. World trade has the potential to act as a powerful motor for the reduction of poverty, as well as for economic growth, but that potential is being lost.

Trade liberalization, which is being imposed on developing countries by the World Bank, and IMF and locked in by the World Trade Organisation, is purported to create a ‘level playing field’ in the interests of increased competition. In reality though, fledgling businesses in developing countries are increasingly struggling to compete against the market power of multinationals. Furthermore, rich countries continue to heavily protect key sectors of their economies, so when developing countries export to those countries, they face tariff barriers that are four times higher than those encountered by rich countries. Those barriers cost them $ 100bn a year-twice as much as they receive in aid.

Oxfam’s Make Trade Fair campaign seeks to change world rules in order to realize the potential of trade to reduce poverty. The campaign aims to mobilise over 100 million people worldwide to press governments, institutions and multinationals for a fair deal for the poor.