Friday, June 3, 2011

From Principles to Practices - Part II

Contracting with producers on their business practices is especially important in Fair Trade. In my experience, local producer groups generally do not have a high level of knowledge on how to operate an ethical business, so typically they base business practices on what their experience has been in the local context. This definition seldom focuses on fairness, sustainability or preservation, but on maximizing profit at any expense. When we begin to reflect on this concept of "business," it is not hard to find out where it originates and how it filtered down to local communities. 

Frankly stated, it is a brand of capitalism run amok which is extremely destructive to the community and environment it operates in. The far right Neo-Conservatives and their cohorts, the poorly informed, FOX News-manipulated Tea Party movement in the United States call it Free Market Capitalism; academics and economists around the world label it neo-liberal economics; Libertarians claim it as their own; and anyone with an iota of concern for the future call it exploitative, abusive, careless, excessive, destructive and unhealthy in so many ways. 
Unfortunately for the world's poor, institutions like the World Trade Organization, World Bank and IMF embrace neo-liberal economics. As for the Asian Development Bank, don't be fooled; it lines up directly with the unholy trinity despite its attempt to seem more "Asian". Regardless of the institutional efforts to whitewash the truth, people in "developing countries" see and learn from their practices of favoritism, elitism, and blatant corruption. People not only see, but directly experience the ongoing disregard for human rights, labour rights, indigenous rights, and land rights in the name of economic development where "sacrifices have to be made for the greater good." Oddly enough, they are never the sacrifices of a nations elite or ruling powers. And not to leave out the careless destruction of the environment in various "development" projects. There are countless publications on the catastrophic impacts of these institutions. One highly recommended for those interested in an introductory publication is Unholy Trinity: The IMF, World Bank and WTO by Richard Peet.  A paperback copy is available.

If you want an in-depth examination of the flawed economic theory of neo-liberalism and the lasting impacts it has when forced upon national economies, I highly recommend Naomi Klein's scathing, Shock Doctrine: The Rise of Disaster Capitalism. Simply repeating their mantra of Deregulation, Privatization and Free Trade without examining the social and environmental impacts has made it clear that neo-liberalism is not based in reality. Considering the influence that this model of capitalism has on defining Business as Usual, it is not hard to understand a local adaptation of the same practices. As a result, concepts such as respect for human rights, social responsibility and environmental sustainability are seldom heard locally. 

But imagine just for a moment, if the inverse were true: 

Imagine if the global institutions of the WTO, World Bank, and the IMF did put human rights, social responsibility and environmental sustainability first and foremost above privatization, deregulation, corporate profits and stock market gains. National development of "developing nations" would have to be an inclusive, participatory and democratic affair...  

Now imagine the impact such a model would have on the concept of Business as Usual!

Understanding the influence these institutions have in setting business practices and standards, I would like to examine the importance of contracting with producers, particularly when the aim is to introduce another paradigm altogether. In this contract, we want to address the current imbalances in buyer-producer relations; in other words, to level the playing field. However, it is not just to balance the relationship between buyers and producers, but keep them accountable to one another as well. As I mentioned in the last post, The Basic Question I sought to answer in creating a contract between Helvetas and their producers : 

How to break down principles to practices while maintaining a fair disposition that equalizes the traditional imbalances between producers and buyer? 
As we know, Fair Trade operates on 10 principles. Helvetas has adopted those same principles:

1.    Creating Opportunities for Economically Disadvantaged Producers

2.    Transparency and Accountability

3.    Trading Practices

4.    Payment of a Fair Price

5.    Child Labour and Forced Labour

6.    Gender Equity and Non Discrimination
7.    Safe Working Conditions
8.    Capacity Building
9.    Promotion of Fair Trade 

10.  Environmental Protection

My focus in the drawing up the contract was as follows:
  1. To provide clear definitions for common understanding
  2. Assign clear and practical areas of responsibility to both the producer and the buyer for each principle. A Fair Trade contract cannot be one sided!
  3. Reference the relevant United Nations and ILO Conventions, thereby integrate a Rights-Based Approach into the contract
  4. Create a platform for in-depth discourse to develop common understandings that overcome social and cultural barriers between the buyer and the producer

To provide clear definitions for common understanding
One lesson we had in the Helvetas Workshop was about translation. Admittedly, some things can be lost or misinterpreted and there was a need for discourse to provide clarity. For example, in Vietnamese, the term accountability in contrast to responsibility was a challenge to translate to a common language. Additionally, the term transparency when applied was of concern to the producers. To what extent was transparency to be carried out? There was concern about information being utilized to start a competing enterprise that would endanger the first, so how far does this principle go and where is it applied? It took some explaining and examples to address this in the workshop. However, taking the lessons learned there, I decided to address those in the contract so I inserted simplified definitions that were easier to translate. For example:

Accountability is both responsibility and answerability.

Transparency implies openness, clear communication, and accountability. In practice transparency with workers includes open meetings, clear and inclusive decision making processes; information about product orders and delivery dates; and providing buyer information and end destinations. Transparency with buyers includes financial disclosure statements and audits to gauge if and how workers and local communities benefit from Fair Trade 

Assign clear and practical areas of responsibility 
Balancing responsibilities was done through careful analysis of each principle and viewing it from both the perspective of the producer and of the buyer. One example of balancing responsibilities between the buyer and the producer is in the Promotion of Fair Trade. Typically, it is thought that only the buyer is responsible for this since they are engaged in foreign markets. However, this can no longer be the case if Fair Trade is to be sustainable and truly global:

Promotion of Fair Trade

Responsibility of producer
·         Producer raises awareness of the aim of Fair Trade through their business dealings with contracted suppliers and within their communities.
·         Producer provides buyers with information about itself and the members that make or harvest the products. 
·         Producer advertising and marketing techniques are honest.
·         Producer actively searches to diversify markets through efforts to expand Fair Trade in local, national and regional markets.
·         Producer actively supports and participates in local, national and regional Fair Trade movements, networks and campaigns.
Responsibility of buyer
·         Buyer raises awareness of the aim of Fair Trade and of the need for greater justice in world trade through Fair Trade.
·         Buyer provides customers with information about itself, the products it markets, and the producer organizations or members that make or harvest the products. 
·         Buyer advertising and marketing techniques are honest.
·         Buyer seeks means for Producer to increase access to local, national, regional, and international markets.
·         Buyer actively supports, and when possible participates in local, national and regional Fair Trade movements, networks and campaigns.

Here producers are expected to act as catalysts for change by challenging the concept of Business as Usual in their dealings with suppliers. A simple question has to be asked in an example: How can a producer making bamboo handicrafts claim to be practicing Fair Trade if his supplier is sending children enslaved in debt-bondage into forests to haul out illegally cut bamboo and contributing to deforestation? To be a Fair Trade producer means more than just benefiting from the trade, but passing on the principles with their suppliers and in their communities. 

This example also shows the realistic future of Fair Trade is in the lessening dependence on the traditional trade flow from global south to global north. This can be done through the expansion of Fair Trade into local, national and regional markets; and it is the responsibility of the buyer to support these efforts as well.

Integrate a Rights-Based Approach into the contract  
Integrating the Rights-Based Approach is more than simply referencing the Universal Declaration of Human Rights or the International Labour Organization (The UN specialized agency which seeks the promotion of social justice and internationally recognized human and labour rights). For example, in the section on Gender Equity and Non Discrimination, I included Article 1 of the United Nations Convention on the Elimination of All Forms of Discrimination Against Women, which is the only convention to provide such a clear definition of discrimination!

"‘Discrimination against women shall mean any distinction, exclusion or restriction made on the basis of sex which has the effect or purpose of impairing or nullifying the recognition, enjoyment or exercise by women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil or any other field.” – United Nations Convention on the Elimination of All Forms of Discrimination Against Women, Article 1 

Create a platform to develop common understandings
To utilize this contract as a platform for discourse between the buyer and the producer as a means to overcome social and cultural barriers is very important, especially when assumptions can go unspoken. For example, in the principle addressing issues of Child Labour and Forced Labour there is a lot of room for misunderstandings if not addressed directly.
  • Buyer provides the Producer with at least a summary of the UN Convention on the Rights of the Child in the national language, and local language if applicable. 
  • Buyer works with Producer to ensure a common understanding of Child Labour versus the passing on of traditional craftsmanship and culture.

Making the provision of information like UN Conventions the responsibility of the buyer is a good way to reflect the buyers vested interest in the social issues of the producers community. Besides, a little research is good for establishing relations with local Rights-Based NGOs and UN Organizations. In past training programs that I have conducted, I went to the in-country offices UNDP, UNICEF and UNIFEM for pamphlets, handouts, copies of conventions, printed resources and posters on relevant issues. These organizations have a budget for printing materials in national and local languages, and more often than not, they are in search of partner organizations which would provide these materials to project beneficiaries at local levels. I have always had positive receptions and received material support when I went to meet officers and in-country directors. After all, we have the same objectives when Fair Trade integrates a Rights-Based Approach. 

Another approach for buyers to support producers is to contact local Rights-Based NGOs or other Fair Trade support organizations if the buyer is conducting business dealings from abroad. Contract them to conduct a training on child rights or women's rights. I have also conducted these training programs, and it can really impact a group in positive ways! However, I must say that if the buyer has never set foot in the country of the producer a visit would be a healthy connection, and stop by the UN offices for materials on the way! For buyers going to the producer and seeing their community firsthand it completely changes your perception of Fair Trade because it is no longer an abstract idea or purpose; Fair Trade becomes up close and personal. 

Fair Trade is real; it is about people and communities!

I would like to add a special thanks to Helvetas Vietnam ( for permitting me to write of our work together to make the world a better place. Recognition also goes to my partner and greatest supporter, Chou. We are currently residing in Ho Chi Minh City, Vietnam where I will continue to keep up this blog delving into relevant issues as I write about our Journey for Fair Trade.

For Fair Trade Organizations, Non-Government Organizations, socially conscious businesses, producers or Fair Trade advocates interested in more information or assistance to create a Fair Trade contract, feel free to contact me directly. I am available for consulting and training, to include Training of Trainers in the fields of:
  • Fair Trade; 
  • Sustainable Community Development; 
  • Human Rights and Child Rights; 
  • Women's Rights and Gender

Other areas I conduct training in are Organizational Development, Results-Based Management,  Monitoring and Evaluation, Project Proposal Writing, and Management and Leadership.

Note: Special thanks to Dr. Sabam Malau for his comment and reminder below. The next post will focus on means of verification. Feel free to add your comments, thoughts or ideas below or catch me on facebook.

Mitch Teberg, MA


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  2. With the US debt crisis looming, plus what is happening in Greece and other European companies hasn't the penny dropped yet....this focus on maximizing profit at any expense is leading us into troubled waters. The only constant now is uncertainty.

    It seems as if Fair Trade offers a solution.....OK, within a social and broader context the focus on on fairness, sustainability and preservation is fine, but from our perspective & experience Fair Trade is a powerful business model, and perhaps more emphasis should be placed on this. Yes, adopting Fair Trade practices can be profitable in addition to delivering social justice.

    About time for business moguls to wake up.