Fair trade is international trade that provides greater equity to workers and small businesses in developing countries. Fair trade products are made and traded according to standards that protect workers, businesses, and consumers.

The fair trade movement focuses primarily on products exported from developing countries to developed countries. The fair trade movement promotes sustainable development by offering higher pay and better working conditions in producing countries. Fair trade organizations, backed by consumers, raise awareness of deficiencies in conventional international production and trade, and they use fair trade to improve economic, social, and environmental conditions for producers and workers.

Three sets of standards distinguish fair trade: One set applies to producers, a second set to workers on farms and in factories, and a third set to consumers, especially those living in developed countries.

Fair Trade Producer Standards

Fair trade includes a set of producer standards designed to advance a number of economic, social, and environmental goals. Critics of international trade charge that only a tiny percentage of the price a consumer pays for a good reaches the individual in the developing country who is responsible for making or growing it. Someone in India sewing clothing for the U.S. market, for example, earns less than 1 percent of the retail price of the garment, according to the National Labor Committee (Figure 10.11.1). The rest goes to wholesalers, importers, distributors, advertisers, retailers, and others who did not actually make the item. In contrast, fair trade returns on average one-third of the price to the producer in the developing country.

\fFigure 10.11.1 FAIR TRADE TEXTILE FACTORY GUARANTEES BAL ORGAN A BETTER DEAL FOR PRODUCERS FAIRTRADE FLO ID : 4581 CU CERT 803805 ASSIS Tiruppur, India