Fair Trade helps eradicate poverty: Mallikarjuna

By d-sector Team
January 2010

I. Mallikarjuna, Executive Director of Fair Trade Forum-India

Fair Trade as an idea and a movement has begun to take roots in India. Fair Trade Forum–India is a large network of fair trade grassroots organisations of the country. I. Mallikarjuna, Executive Director of Fair Trade Forum-India, has long been active in the development field and has worked hard for the rights of physically challenged people, livelihood security of traditional artisans and other marginalized sections, women empowerment and tribal welfare. Kuldeep Ratnoo, editor of d-sector.org, talked to him to know more about the ideology, actions and organisations behind the Fair Trade Movement.


Q. To begin with, kindly tell us about the concept of Fair Trade.

A. See, Fair Trade is basically a trading partnership, based on transparency and mutual respect, that seeks greater equity in international and domestic trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the Southern Countries.

Fair Trade organizations have a clear commitment to Fair Trade as the core principle of their mission. Backed by consumers, fair traders are engaged actively in supporting producers, in raising awareness and campaigning for changes in the rules and practices of conventional international trade.

However, Fair Trade is more than just trading: it proves that greater justice in world trade is possible and shows how a successful business can also put people before profit.

Q. Is it a relatively new concept or it has evolved from sustained movements?

A. It is not a new concept. In fact many parallel initiatives in the world converged to launch Fair Trade movement.

It all started in the United States, where ten thousand villages (formerly Self Help Crafts) began buying needlework from Puerto Rico in 1946 and SERRV International began to trade with poor communities in the South in the late 1940s. The first formal "Fair Trade" shop opened in 1958 in the USA.

In Europe it began in the late 1950s when Oxfam UK started to sell crafts made by Chinese refugees in Oxfam shops. In 1964 it created the first Fair Trade Organization. Parallel initiatives were taking place in the Netherlands and in 1967 the importing organization, Fair Trade Original, was established.

At the same time, Dutch third world groups began to sell cane sugar with the message "by buying cane sugar you give people in poor countries a place in the sun of prosperity". These groups went on to sell handicrafts from the South, and in 1969 the first "Third World Shop" opened.

During the 1960s and 1970s, many NGOs and individuals from Asia, Africa and Latin America felt the need for fair marketing organizations to help the disadvantaged producers. Many such Southern Fair Trade Organizations were established, and links were made with the like-minded organizations in the North.

Parallel to the citizens' movements, the developing countries put forth their demand for "Trade not Aid", in the second UNCTAD conference in Delhi in 1968. The emphasis was put on the establishment of equitable trade relations, instead of North appropriating all the benefits and returning only a small part of these benefits in the form of development aid.

From the late 60s onwards the growth of Fair Trade, or alternative trade as it was called earlier, has been associated primarily with development trade. Some development and religious agencies from European countries put the focus on marketing the craft products from the South as a response to poverty and sometimes disaster. These NGOs, in tandem with their counterparts in the South, assisted to establish Southern Fair Trade Organizations to organize producers and production, provide social services to producers, and export to the North. Alongside the development trade there was also a branch of solidarity trade.

During mid 70's all these Fair Trade Organizations started to meet occasionally and in late 80's International Federation for Alternative Trade, (IFAT) was initiated. Then WFTO-Asia at the Asian level and Fair Trade Forum was established as the National forum in the year 2000.


Q. How did World Fair Trade Organisation come into being? Was it created as an antidote to WTO, which failed to provide sustainable development to the world?

A. Actually, the World Fair Trade Organization (WFTO) was formerly known as IFAT. The WFTO was born out of the International Fair Trade Association on 15 October 2008 as a well considered response to the extraordinary issues of our time: the failure of global bodies to impact the imbalance in trade, the failure of governments and businesses to tackle climate change and the failure of the global financial system.

Today, WFTO is a global representative body of over 350 organisations committed to Fair Trade. It aims to enable producers to improve their livelihoods through Fair Trade. It provides market access for its worldwide membership through policy, advocacy, campaigning, marketing and monitoring.

Today WFTO operates in 70 countries across 5 regions: Africa, Asia, Europe, Latin America, and North American and the Pacific Rim. It is the only global network whose members represent the Fair Trade supply chain from production to sale.


Q. Tell us more about WFTO's organisational set-up?

A. The WFTO has a well structured organization. Its Board of Directors is responsible for developing and implementing the plans agreed by the members at the Annual General Meeting.
Each region is represented by its own elected Board members. The Board members act as a point of contact for members in each region, and are involved in the co-ordination of the members' National and Regional platforms.
WFTO members are organisations committed to Fair Trade by eradicating poverty, pioneering social and environmental policy and continual reinvestment in marginalised producer communities.

Q. But do you think WFTO is relevant in a world becoming increasingly corporatized dominated by modern technologies connecting the world?

A. I think it is more relevant than ever. Globalization has brought many opportunities along with many more challenges. WFTO has shown that trade can be an effective tool for poverty alleviation if 'fairness' in the trade is ensured.

Q. India's socio-economic condition is vastly different from the developed world, where the concept of Fair Trade originated. How does Fair Trade Forum-India attempt to make it useful here?

A. This is an interesting question to understand the relevance of Fair Trade in India. Though the popular perception is that Fair Trade concept originated in the West, it is interesting to know that Asian countries played an important role in structuring and strengthening the Fair Trade movement.

The Fair Trade movement had its inspiration from Gandhian principles of self reliance, self empowerment and emancipation. It aims to reduce poverty by ensuring the participation of the marginalized artisans and small farmers in the global trade on an equitable basis. The consumer consciousness in the West matched with the aspiration of the producers from the Southern countries to initiate the movement.

India has a special role in strengthening the movement including evolving Fair Trade principles like creating opportunities for disadvantaged producers, payment of fair wages, gender equity, protection of child rights, better working conditions etc.


Q. What major activities FTF-I undertakes in India?

A. Fair Trade Forum-India is a national network of the artisans, producer groups, trading organizations and intelligentsia who believe in fair trade.
It represents its member organizations & federations all over India to grow Fair Trade visibility & standards through advocacy, training, monitoring & certification. It also works to facilitate producers' capacity building for better market access. FTF-I also stands for a united global Fair Trade face and supports the international Fair Trade movement.
Registered in the year 2000, at present FTF-I is working with more than 90000 artisans/ producers through our 75 Fair Trade organization members. Its board comprises of seven elected representatives from all over India.

Q. What are the criteria for membership to FTF-I?

A. The membership is open to all eligible NGOs, Trusts and Cooperatives, firms, producer and marketing organizations subscribing to the objects and rules of the Forum. Individuals can seek associate membership but cannot become a full-fledged member of the Forum. A minimum three years existence in their respective area of working is required for getting membership of FTF-I.

Q. Other than trade, what are the main issues FTF-I is involved in?

A. FTF-I's mission is to eradicate poverty by creating visibility, acceptability, adaptability, marketability and sustainability to Fair Trade movement and its member organizations in India.

Q. Does FTF-I work in isolation or in association with other organisations?

A. FTF-I works in close collaboration with many national and international organizations including consumer networks, MFIs, livelihood promoting organizations, government departments, management institutions, colleges and social entrepreneurs. In fact 2010 is the year of collaborations for FTF-I and we will be entering into more collaborations this year to make Fair Trade more visible, credible and acceptable in India.

Q. What are the challenges and opportunities of working in development sector in India?

A. Development sector is very vibrant in India and in fact many purposeful initiatives are in place. However, the sector needs convergence of ideas, thoughts & leadership. Inclusive Development, Sustainable Development and Livelihood Promotion of the marginalized need to be realized in action and Fair Trade can been seen as an effective tool in achieving this. As of now Fair Trade organisations are more export oriented and this year onwards we will witness many Fair Trade initiatives in India.

Besides the other common challenges, FTF-I's biggest challenge is to communicate with Indian consumers in an appropriate way about the necessity to buy fairly traded products and also to demonstrate the grassroots producers that their aspirations will influence the buying power of the emerging middle class in India.

Legitimacy of WTO hangs by a thread

By Michelle Pressend
30 Nov 2009

WTO Ministerial at Geneva is an opportunity for the world leaders to bring transparency and balance in the working of the institution, which has long been favouring developed nations and their multinational corporations.

I'm in Geneva, Switzerland and wrote this article on the eve of the 7th World Trade Organisation (WTO) Ministerial meeting taking place from 27 November to 2 December 2009 at the WTO's head quarters.

I've also just returned from a protest march against the WTO here in Geneva, attended by many people, including activists from many parts of the world.

The march was, unfortunately, marred by a handful of violent protestors on the fringes of the main demonstration. They've been getting the lion's share of media attention. But to set the record straight, the majority of the 2,000-strong crowd participating in the protest march against the WTO was good-natured, well-organized and have legitimate concerns.

This WTO Ministerial meeting is different from previous ones. Ministers are coming together, not to negotiate, but to "take stock" of the WTO as the international trade organization governing multilateral trade rules.

The main theme that the meeting is being conducted under is "WTO the Multilateral Trading System and the Current Global Economic Environment." The agenda will be examining the state of play of the Doha Round of negotiations and a way forward; the role of the WTO in protectionism stemming from the global financial and economic crisis and finally, there will be an important focus on the need for reform in the WTO.

Since its inception in 1995, the rules and negotiations of the WTO have been littered with controversy. Indeed, the very nature of WTO policies, based on trade liberalization and deregulation, are central to the current global economic crisis.

This WTO Ministerial meeting is different from previous ones. Ministers are coming together, not to negotiate, but to "take stock" of the WTO.
The WTO is one of the most powerful multilateral institutions in the world. Its trade rules are binding. Once governments' commit their countries to WTO agreements, they are bound to its rules at the national level. If countries wish to renege on their commitments because they may, for example, be in conflict with national development priorities, these countries must pay a compensation fee and/or face dispute settlement.

These rules are unbalanced and biased in favour of developed countries and their multinational companies. They have gained much under this global trading system. Moreover, they are seeking further market access in developing countries, not only for trade in goods, but also in services. Developed countries increasingly come up with new rules or concepts to commit developing countries to further opening up their markets.

They tend to ignore the fact that they have a competitive advantage built on years of support from subsidies, tariffs and other economic instruments. Basically, developed countries 'over produce' and since their markets have become saturated; are constantly seeking new avenues to extend these markets into developing countries.

Developing countries pay a heavy price through job losses, a decline in the manufacturing industries and productive sectors, as well as losing revenue to huge capital outflows.

Thus, the neoliberal policies of the WTO accelerate the process of premature de-industrialisation in developing countries and the extremely high inequality that many of these countries experience.

The neoliberal policies of the WTO accelerate the process of premature de-industrialisation and extremely high inequality in developing countries.
Moreover, it is widely acknowledged that rich countries, which have been the rule-makers at the WTO, are also the rule-breakers. These governments continue to subsidize their agricultural sectors and were quick to bail out their banks during the financial crisis.

The fear of protectionism is of major concern to the WTO machinery in terms of measures to address the economic crisis and some developing countries, including South Africa, are calling for an assessment of stimulus packages, as they may be contravening the General Agreement of Trade in Service (GATS) rules.

This assessment seeks to determine whether disciplined measures should be considered and is a tactical intervention, which could expose how the major powers are potentially contravening the very own rules they were instrumental in creating.

But there are other challenges related to the nature of the GATS rules, including the ability of governments' to regulate service policies. Thus, the assessment of the stimulus packages and the extent to which trade in services are affected should be used as an opportunity for transformation, rather than an attempt to beat the major players at their own game.

Many countries are also bent on a "speedy and successful conclusion of the Doha round." This is despite the fact that Doha commitments, particularly tariffs cuts, will destroy developing countries' industrial sectors as well as prevent the development of industrial policy.

Some members will use this opportunity to call for commitments for liberalization in energy services to address climate change. But countries should desist any such discussion. Environmental goods and services should not have been in the WTO in the first place. The environmental goods and services sector (EGS) is notably amongst the most rapidly growing industries in the world and access to new markets is vital to developed countries. WTO disciplines in the energy sector could reduce the flexibility and 'policy space' needed by countries to make an effective transition from a dependence on fossil fuels to cleaner and more renewable energy sources.

The environmental goods and services sector (EGS) is notably amongst the most rapidly growing industries in the world and access to new markets is vital to developed countries.

"If completed on current terms, the Doha Round will aggravate the problems of our economies. It will also take away the very policy instruments needed (and being applied) to address the current crises and to prevent similar crises in the future," argued the Africa Trade Network, a network of African civil society organizations in their statement of positions and demands, at their preparatory meeting in Cape Town in the run up to the WTO meeting.

Finally, concerning the institutional reform of the WTO. This is a necessary discussion, particularly in terms of shifting the balance of power as well as producing greater transparency in decision-making processes.

It will be a missed opportunity if this meeting does not discuss a process for addressing the fundamental principles and rules that maintain the unbalanced nature and inequities of this institution, which privileges developed countries and their multinationals.

The world needs a multilateral trading system, but one based on justice and equity. It should also be one which ensures that the interests of developing countries are met and that development policy space is guaranteed, especially the economic incentives needed to shift our economies in favour of the productive sectors.

Global image, not poor farmers, is India's concern

By Devinder Sharma
04 Sep 2009

Lately, Indian negotiators in WTO have become extremely accommodating to the interests of the rich and industrialised world, even to the extent of sacrificing livelihood security of its crores of poor farmers.

Actually, Mr Pascal Lamy is right. When he said at the inaugural of the ongoing WTO mini-Ministerial in New Delhi yesterday that 80 per cent of the issues of the Doha round have been resolved, he was telling the truth. Whether we like it or not, the fact remains that those who are negotiating on our behalf, and I am talking of all the developing countries, are in reality keeping us in dark with their statements (which mean nothing) aimed only at pacifying the public galleries back home. The fundamentals and the broad contours of the Doha round especially in agriculture and NAMA have all been agreed upon.

India's Commerce Minister Anand Sharma, the host of the New Delhi confabulations, has mastered the art of saying nothing in as many words as possible. When he said: "In some quarters, it has been suggested that most issues have been settled and we are almost in the 'endgame'. However, if we look at the text modalities on agriculture and non-agriculture market access (NAMA) alone, it would be apparent that there are still gaps and a number of unresolved issues," he only meant that we have to fine tune by tightening the nuts and bolts of the agreement, and rest everything is almost settled.

You couldn't have expected anything better from Mr Anand Sharma. He knew that thousands of farmers were pouring onto New Delhi streets, and any guffaw could have boiled into an unsavoury situation. But those of us who have followed the developments in the run-up to the mini-Ministerial can easily decipher the real motive and objective of the Indian government. New Delhi was particularly perturbed at its global image of a 'bad boy' in the trade negotiations, and therefore was keen to give a message that it has now learnt to wag its tail. And that in future it will behave like a lapdog.

I am told that only a few days back, the Commerce Secretary Rahul Khullar, had actually used the term 'looney fringe' for all those who are opposing the Doha round. It is however another matter that it is because of the 'lonney fringe' elements that India has been able to put up a strong front at successive Geneva negotiations. If it was not for the 'looney fringe' India would have been made to sign the Doha Agreement much earlier. Perhaps there would have been no need for the Doha round, and India's former chief negotiator, Anwar Hooda, who had switched sides to become a deputy Director General of WTO, would have been more than happy to conclude the agricultural negotiations during his tenure.

The New Delhi meeting is not about 'substantive' issues but on the process itself, meaning on how to take the Doha negotiations to its logical end. The Doha Ministerial declaration of Nov 14, 2001 had explicitly stated: "We shall continue to make positive efforts designed to ensure that developing countries and especially the least developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development." This mandate is the bedrock of the Doha round, says a discussion paper for senior officials meeting (which was held a day prior to the Sept 3-4 mini-Ministerial).

This mandate has somehow been relegated to the background. While I am not sure about the gains accruing to the least developed countries, I do not even know what is the gain in agriculture and NAMA for India from the Doha round. Although the Commerce Ministry says that it has the calculations ready, I doubt if they can establish that the Doha round would be in any way beneficial for Indian agriculture, and the livelihood security of its 600 million farmers. I am willing to challenge them for an open debate, and they can also bring along their backroom boys from the International Food Policy Research Institute (IFPRI), Consumer Unity & Trust Society (CUTS), Indian Council of Research in International Economic Relations (ICRIER) and the Indian Institute for Foreign Trade (IIFT).

That agriculture is being sacrificed for the sake of services was clearly and loudly brought out by a delegation of the agitating farmers of BKU which had met Mr Anand Sharma a day before the conclave. The delegation had made it abundantly clear that Special Products and the Special Safeguard Measures (SSM) that are on the negotiating table, do not protect the interest of Indian farmers. Mr Sharma had merely repeated what he and his predecessors have been saying for long: We will not compromise on agriculture.

In fact, in a high-level closed door dialogue that happened a week earlier, the message that came out very clearly was that agriculture and NAMA were through (except for some modalities that need to be worked out), and India was pinning hopes by putting services on the table now. This is the right time to get something in services, a senior bureaucrat had said. If we don't get anything now, we will never be able to extract anything significant. As far as my understanding goes, this in itself was a flawed assumption. This is not the right time to seek any headway in services sector.

The US and EU are already grappling with economic recession, and any commitment at this stage on services would be politically suicidal for them. They are however looking at the developing countries to bail them out of the recession by providing more market access in agriculture and industry. And this is exactly what India is trying to help them with, by bringing in like-minded developing countries who are willing to walk an extra mile to appease the masters.

It was however really heartening to see more than 50,000 farmers converging in New Delhi yesterday in a show of solidarity and strength. New Delhi has not seen such a disciplined and strong protest for a number of years now. While the farmers who came to New Delhi may not understand the nitty-gritty of the negotiations, but what they know for sure is that it is their future and survival that is being placed on the chopping block.

I sometimes wonder what has happened to the brilliant minds that we often talk about. What has happened to all those economists, researchers and analysts who at least used to express their scepticism and doubts in their essays and analysis. They were truly the watchdogs of society. Today, I find the breed of lapdogs growing at a phenomenal pace. The media too, more importantly the pink media, has joined the tribe. You hardly find any article that is even remotely critical of WTO or FTA. You will of course see the backroom boys of the Ministry of Commerce dominating these pages. Didn't I say the lapdog breed is multiplying??

I remember at the time of the Hong Kong WTO Ministerial, Pascal Lamy had said that Special Products is a carrot that he is dangling before the developing countries. These SPs are temporary measures, and have to be phased out over a period of time. The SSM is so complex in implementation that I doubt if we can ever use that instrument to stop import surges. What is more important is that while all these measures have to be gradually phased out, none of the developing countries have ever talked of asking the rich and industrialised countries to draw a phase out plan for their agriculture subsidies.

When will the Green Box, which houses 80 per cent of the farm support, be phased out? Do we know when will US and EU remove their subsidies under the Blue Box or even the Amber Box? The answer is that the developing countries have never emphasised on these subsidies. Even the Indian negotiators are not willing to open up the pandora box of subsidies. Which means that in essence the developing countries have ensured that agriculture in the OECD countries remains protected for posterity. Isn't this a betrayal of the interests of the developing country farmers? Shouldn't our negotiators be held accountable for allowing this to happen?

The subsidies (in these boxes) we are talking about is something close to $ 374 billion every year. In reality, the subsidy is much higher, if we include the implicit support also.

The G-20 has failed us. The G-33 has failed us. The G-77 has failed to point a finger at the inequalities in farm trade. Unless these blocks are able to bring back the issue of farm subsidies on the negotiating table, they should be asked to return back to their respective countries. Let it be clear: no deal is better than a bad deal.

Child labour -- The ugly side of American agriculture

By Devinder Sharma
12 May 2009

Child labour in American Agriculture? You must be kidding!
That's exactly what I thought when I first heard about it. I mean I had never even visualised that American agriculture could employ children on the farm. All the reports/studies and the stories we had heard about American agriculture always talked about big machines, big business, sophisticated technologies, and of course monumental agricultural subsidies. Exploiting children as farm labour, some as young as 10 years of age, has never been talked about in the international media. At least, I had never read about it.

At the ongoing WTO negotiations, the US and Europe have often accused India of employing children in agriculture and industry, and some countries have used the social clause (a non-tariff barrier) to stop exports of carpets for instance from India. We have been often accused of turning a blind eye to the curse of child labour. As a nation, I agree, we need to hang our head in shame for not being able to send these children of a lesser god to schools, and instead force them into labour because of poverty. For any nation, whether it is a developed or a developing economy, those exploiting child labour cannot and should not be pardoned.

But I see no reason why America, the world's biggest economy, and which never gets tired of preaching us about the social cost of child labour, be using children in its own heavily mechanised farms. This ugly face of American agriculture had remained hidden from public glare all these years.

How many children are employed in American agriculture? Well, there are about 2 to 2.5 million farm worker families in the United States, most of them are migrating from one county to another, and carry their children along. A large number of these children have to work on the farms to enable these families to survive. An average migrant family in a medium wage category does not earn more than US $ 16,000 a year. The pressure on children to work therefore is great. No wonder, about 65 per cent of these children drop out from schools, and never return for formal education.

According to David Strauss, Executive Director of the Association of Farmworker Opportunity Programs, a lot of the children working on the farms suffer from pesticides poisoning and injuries from machines. They live under stress, perform all the dangerous jobs on the farm, and also aspire to go to school like other children. David Strauss was talking to Michael Olson on The Food Show radio programme on child farm labour (http://www.metrofarm.com/).

David said that around this time (this programme was broadcast last week) thousands of families are packing up and moving up north from south Texas. They will be working in the crop fields in summers and up to November, and their children too would be accompanying them. Child labour is particularly severe in Texas, California, Washington, Michigan, North Carolina, and the Midwest. "Agriculture is the most dangerous place for children," he says.

I can understand about the children of farmers working on the farm. This happens everywhere, including India. I wouldn't however approve of it. The reason being that these children need to be like other children, go to school and go for higher education before opting for farming, if need be. But the children of migratory workers cannot be placed in the same category. David says that some of these children are made to work till midnight after they come back from the school, and often work 70-80 hours a week. This is really treacherous.

The US is following an outdated 1938 labour law that does not prohibit children below the age of 14 to work on the farms. Interestingly, while children below 14 are not supposed to be employed in offices, educational institutions or industries, there is no such regulation for children in agriculture. The Association for Farmworker Opportunity Programs is fighting for regulating child labour in agriculture and is trying to create more awareness about this hidden and ugly underbelly of American agriculture.

Most of these migratory workers come from Mexico. Some come from Latin America, Africa and I know many Indian and Pakistani families who work on the farm. That should make it obvious for you to know why the US doesn't care about child labour in agriculture. So much for a country that believes in ethnic equality and does not believe in racial discrimination.