Labels, lies and the law: opportunities and challenges in mainstreaming fair trade.

• Author: Verdier-Stott, Juliette

Contents Abstract 1. Introduction 2. The Foundations of Fair Trade 2.1 What is Fair Trade? 2.2 The Operation of the Fair-trade system 2.3 Fair trade in the Global Economy 2.4 Theoretical Perspectives 3. Tensions with Transformatory Trade 3.1 Mainstreaming Fair-Trade 3.2 Actors, Convention and Networks 3.3 Labels and Lies? 4. Labour behind the Label 4.1 Case study one: The Bishopston Trading Company 4.2 Case study two: Cafedirect 4.3 Case study three: Nestle Partners Blend Coffee 5. The Future of Fair Trade 5.1 Towards Fair Trade and Global Legal Pluralism 5.2 Strengthening the Label 5.3 Beyond the Label 6 Concluding Remarks Endnotes References 1. Introduction

This paper examines the development of fair trade, demonstrating that the situation of fair trade 'in and against the market' (1) implies a number of intrinsic contradictions. The focus of this paper concentrates on the inconsistencies in fair trade arising from, or magnified by, 'mainstreaming'--a move which has recently been facilitated by the development of a Fair-trade label.

The purposes and evolution of the fair trade movement are first examined, evaluating these against the background of wider changes that have taken place within the global economy. Various theoretical frameworks are outlined, which are then built upon in subsequent discussion. Here, the role of convention in purchasing fair trade goods is explored, as is the ' social embeddedness' of fair trade, the governance of fair trade networks and the use of signs and symbols in fair trade marketing. Contradictions arise as network structures, means of co-ordination between actors and the motivations and practices of those involved in fair trade networks undergo transformation as a result of mainstreaming. The paper focuses on the example of supermarkets and fair trade to illustrate how mainstreaming can thus entail potentialdilution of fair trade values.

These issues are further explored by means of a case study comparing the practices of three firms whose products have been awarded the Fair-trade label. In doing so, the contradictory effect of the label is explored. However, the discussion illustrates that the choices open to actors in fair trade networks do not lie along a single spectrum. No single ' trade-off' exists between purist marginality and mainstream growth--or between recognition and redistribution. The choice to mainstream fair trade does not automatically entail a dilution of fair trade values and hijacking of the movement. Rather, many avenues of choice are open to actors, with regulatory initiatives impacting upon the potential of fair trade to achieve its lofty goals.

For this reason, the last part of the paper considers a number of legal and other regulatory measures to examine if and how the advantages of fair trade can be protected as its benefits are disseminated more widely. In considering these, it is demonstrated that regulation is not always a straightforward means to protect fair trade's core values. Just as in the case of labelling schemes, regulatory action can at times have incongruous effects. Nevertheless, the paper concludes that certain regulatory initiatives can help to defend fair trade principles, and that these and other measures must be considered if fair trade is not become a powerful tool in the hands of the very corporations and systems the movement hoped to transform.

2. The Foundations of Fair Trade

   2.1 What is Fair Trade?

   The origins of what we today term fair trade can be traced back to various initiatives such as the emergence of 'worldshops' in the late 1950s. The labelling of these types of product began in 1988 under the 'Max Havelaar' label in the Netherlands. National fair trade labelling initiatives then developed and in 1997, seventeen initiatives formed an umbrella body, Fair-trade Labelling Organisations International (FLO) which later developed a unified logo (2). Today, twenty national labelling initiatives make up the FLO, with the logo experiencing high consumer recognition (3).

   There have been many attempts to define 'fair-trade', and to date there is no legal definition (4). However the FINE (5) in 2001 developed the following widely-accepted definition (6):

   Fair trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers--especially in the South. Fair trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade. According to Moore (7), this definition illustrates two basic visions at the heart of fair trade. The first is to provide an alternative model of trade, that improves producers' well being, promotes development and sets an example of equitable partnership. The second is to directly challenge contemporary business orthodoxy, via awareness raising, campaigning and other action.

   In both cases, 'fair' trade defines itself in distinction to conventional market practices which are perceived to be inequitable. Organisations such as the Fair-trade Foundation have pinpointed a number of problems in current trading systems (8). These include; low and volatile commodity prices, multinational dominance of markets, lack of producer access to markets, information and credit and harsh working conditions. Particular commodities may also face specific problems, e.g. the global overproduction of coffee beans in the past decade.

   2.2 The Operation of the Fair-trade system

   Whilst acknowledging that the causes of these conditions are complex and multi-faceted, an examination of Fairtrade mark criteria illustrates how this system attempts to address market weaknesses. All licensees using the mark agree to adhere to a set of core standards (9):

   paying a price directly to producers covering costs of sustainable production and living paying a premium that producers can invest in development partially paying in advance signing contracts allowing for long-term planning and sustainable practices. Fairtrade products command a social premium on top of market prices, and the FLO has also stipulated a minimum price floor for various commodities. Environmental, labour and health standards also need to be met by producers (10). Standards are developed and reviewed via the FLO Standards Committee, with input from producers, traders and other stakeholders.

   Essentially, the mark operates as a license, with the FLO retaining control over logo use. Adherence to standards is legally binding after partners sign a contract with the FLO (11), with an affliated but separate body, FLO-cert Ltd. responsible for certifying producers and traders. However, the FLO has repeatedly emphasised that logo use indicates approval of a product and not a company, so the mark cannot be used to suggest corporate endorsement (12). Producers and traders pay an annual fee to the FLO to be licensed, including application, certification and inspection charges.

   2.3 Fair trade in the Global Economy

   The development of fair trade must be understood within the long-term evolution of global production processes and their associated regulation. Many authors (13) have outlined a major shift that has taken place in contemporary methods of accumulation. This can be broadly summarised as a move from ' Fordist' mass-production methods to flexible, 'just-in-time' production networks, dispersed across the globe.

   Alongside these far-reaching changes in accumulation methods, regulation has undergone dramatic transformation. The Keynesian 'social contract' underwrote Fordism, but with the neo-conservative project of the late 70s, deregulation and privatization began to characterise policy-making. Changes in industrial organisation resulted due to these measures and also in an attempt to respond to a more diversified and volatile world market.

   Many authors have read such changes as implying a far-reaching transition in societal organisation, not only economically but also socially and culturally. For Castells, networks are now the new social morphology of society (14), with Benkler claiming the emergence of a new modality of production (15) alongside traditional models; a decentralised, non-market mode based on social relations rather than market logic (16). Meanwhile, the state has undergone a profound restructuring and change of role, alongside the emergence of multiple non-state 'nodes' of global governance. As a result, the subjects and spaces of fair trade fall under a variety of regulatory frameworks, as part of an emerging global legal pluralism (17).

   How can we situate fair trade within these extensive changes? Essentially, fair trade can be read as a manifestation of, and a response to, the wider developments outlined above. As the state's role is restructured, organisations such as the FLO could be viewed as taking partial 'regulatory responsibility' upon themselves where the state can or will no longer do so. Tying back to Moore's two basic visions of fair trade, we encounter a paradox at the heart of the movement--the expression of dissatisfaction with current commercial systems, yet simultaneous engagement with these systems as fair trade operates both 'in and against the market' (18).

   Secondly, the reorganisation of production has meant that it is often difficult for actors within a 'chain' (see below) to be informed about other segments of a chain. With increasing use of outsourcing and network forms of organisation, firms can 'hide' behind multiple layers of ownership (19) or be unaware of who is producing the goods supplied to them. In this context, fair trade can be read as seeking to 're-connect' actors within dispersed networks (20).

   Furthermore, the central logic of competitiveness in a post-Fordist framework is no longer...