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What Is Fair Trade?

In our globalized economy, trade is a primary means of impacting financial markets—and consequently, communities—worldwide. As the U.S. confronts its own shifting economic tides and we begin reevaluating our spending, many of us are pausing to consider what really matters. So as you make financial adjustments, consider the effects of your spending on the global economy, particularly on people and natural resources in developing countries. Looking for Fair Trade products is one way to ensure that your dollars reflect your values and use your consumer power to shift the global marketplace.

Fair Trade is an international trade model that aims to build just, equitable, and sustainable business practices by linking producers in developing countries directly to purchasers in the global north. Fair Trade purchasers work directly with cooperatives and other small scale producers, eliminating the middlemen present in conventional trading and ensuring that producers receive a higher percentage of the price.

The Fair Trade movement was developed as a means of holistically addressing inequities in conventional development and trade models. In addition to setting a minimum floor price for commodities, which aims to cover the cost of production and cost of living in a local context, Fair Trade aids producers by requiring fair labor conditions, safe environmental practices, and fostering community development. The Fair Trade principles, to which all producers, importers, and exporters must adhere to receive certification, include:

  • Fair Prices: Democratically organized farmer groups receive a guaranteed minimum floor price, plus a premium for certified organic products. Artisans and producers of non-commodity items are guaranteed a living wage in the local context.
  • Fair Working Conditions: Laborers are guaranteed safe and healthy working conditions, a living wage, freedom of association, and opportunities for advancement. In particular, women’s leadership and participation in cooperatives is encouraged. Human rights and child labor laws are enforced and upheld to the most stringent standards.
  • Direct Trade: Fair Trade importers purchase directly from farmer and artisan cooperatives, thereby building long-term relationships and sustainable business practices.
  • Transparency: All Fair Trade businesses are open to public accountability and must maintain records of their environmental and business practices. 
  • Democratic Organizations: Fair Trade supports cooperative systems in which each producer is a stakeholder in the business, participates democratically in decision-making, and benefits equally from generated revenue.
  • Community Development: A “social premium,” a set sum given to the cooperative for each Fair Trade item sold, is invested in a business or organization in the local community democratically selected by the cooperative.
  • Environmental Sustainability: GMOs and certain agrochemicals are strictly prohibited, and organic practices are encouraged and rewarded. Fair Trade products are also required to adhere to practices that maximize use of raw, sustainable materials, and promote water and soil conservation, reforestation, species diversity, and environmental education.

What Types of Fair Trade Products Can I Buy?

Currently, Fair Trade coffee, tea, chocolate, and crafts are widely available in North America, and bananas, sugar, honey, vanilla, olive oil, rice, and flowers are increasingly making their way into U.S. markets. Fair Trade cotton, sports balls, wine, and beer are marketed in Europe.

How Do I Know That an Item is Fair Trade?

Two certifying bodies label Fair Trade items in the United States:

The TransFair label is currently only for food products.

The Fair Trade Federation certifies handcrafts and artisan work.






Purchasing an item with one of these two labels guarantees that the product has been manufactured, sold, and transported in a socially and environmentally just manner. Membership in a Fair Trade Organization (FTO), a body that works with low-income artisans, is another indicator that a product has been fairly traded. While FTOs are not certifying bodies, they screen prospective members through a self-reporting process. The Fair Trade Federation (FTF) and International Fair Trade Association (IFAT) are two of the most widely recognizable FTOs.

However, it is important to remember that certification systems do not yet exist for all products. The mission of empowering farmers and artisans in developing countries and shifting the global marketplace in favor of low-income producers sometimes requires looking beyond a label and investigating the trading relationship of a given business or organization.

For more information on Fair Trade, see "The History of Fair Trade - Buying and Selling of Product"

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