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Fair Trade Standards and Compliance

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Two routes to the market have resulted in two sets of standards. But there's more to Fair Trade than just a label on the product.

The two sets of standards

Fair Trade products are essentially marketed through two different routes. The traditional route is where goods are produced, imported and/or distributed by specialized Fair Trade Organizations who have Fair Trade at the core of their mission and activities.

The other route to market is through Fairtrade labelling and certification. In this case, goods (mainly food products) are Fairtrade certified by an independent third party verification body to guarantee that their production chains respect Fairtrade standards. The importers and traders can be traditional commercial companies, and the distribution channels can be regular retail outlets.

The existing Fair Trade standards respond to the needs of these two approaches. International standards for Fair Trade Organizations have been developed by WFTO (the World Fair Trade Organization), and for labeled products by Fairtrade International (formerly Fairtrade Labelling Organizations International). Both systems are based on a joint Fair Trade definition and agreed principles.

WFTO and Standards for Fair Trade Organizations

The WFTO is the global network of Fair Trade Organizations. WFTO's mission is to improve the livelihoods and well being of disadvantaged producers by linking and promoting Fair Trade Organizations, and speaking out for greater justice in world trade.

Around 400 Fair Trade Organizations in over 70 countries form the basis of the WFTO network, and membership is growing steadily. Approximately 65% of members are based in the South (that is: Asia, the Middle East, Africa and South America) with the rest coming from North America & the Pacific Rim and Europe.

WFTO members have the concept of Fair Trade at the heart of their mission and at the core of what they do. They come in many shapes and sizes and represent the Fair Trade chain from production to sale. They are producer co-operatives and associations, export marketing companies, importers, retailers, national and regional Fair Trade networks and financial institutions, dedicated to Fair Trade principles.

WFTO members have developed 10 international standards for Fair Trade Organizations (FTOs), namely:

- Creating Opportunities for Economically Disadvantaged Producers
- Transparency and Accountability
- Trading Practices
- Payment of a Fair Price
- Child Labour and Forced Labour
- Non Discrimination, Gender Equity and Freedom of Association
- Working Conditions
- Capacity Building
- Promotion of Fair Trade
- Environment

Each standard is accompanied by a definition and a set of measurable indicators and compliance criteria. FTOs in compliance with these standards can acquire the right to use the FTO Mark for their organisation.

To ensure compliance with WFTO standards, a three-tier monitoring system was initially developed, with:
- biannual self-assessments, carried out by each member
- peer reviews, usually carried out by the trading partners and
- random audits of 10% of organizations every year, by qualified external auditors.

Currently WFTO is redesigning their monitoring and assessment systems to provide greater certainty to consumers, and to take into account the extraordinary needs and more difficult circumstances of some of the smaller member organisations. While the standards will not change, the way compliance is assessed and the work involved to gain accreditation is beinf modified. After many years of work, it is planned to adopt the new system in 2013, and details will be posted here.

Fairtrade International and Fairtrade products

Fairtrade International (formerly FLO), established in 1997, is an association of around 20 national Labelling Initiatives that promote and market the Fairtrade Certification Mark in their countries. Fairtrade International is the leading Fairtrade standard setting body for labeled products. Its affiliated company FLO Cert regularly inspects and certifies over 500 producer organizations in more than 50 countries in Africa, Asia and Latin America.

Fairtrade Standards are developed by the Fairtrade International Standards Committee which is composed of Fairtrade International's labelling initiatives, producer organizations, traders and external experts. Producers and traders need to comply with the applicable Generic and Product Standards. Generic Standards have been developed for both small farmers’ organisations and for hired labour. They cover:

- Social Development, including democracy, participation, transparency and non‚Äêdiscrimination
- Economic Development, including the Fairtrade Premium
- Environmental Development and
- Standards on Labour Conditions, including compliance with the ILO core labour rights (applicable if the organization employs a significant number of workers)

Product standards have been developed for dozens of food and non-food products, ranging from coffee, tea, sugar, cocoa, rice, and fruit to flowers, cotton and sport balls. The product standards specify the minimum price and premium as well as other product-specific requirements. Certification of compliance with these standards is done by the independent organization FLO Cert.

The Fairtrade International Certification Process consists of three phases:
- Application
- Initial Certification and
- Renewal Certification
(Renewal Certification Cycles vary between one year and 3 years. If serious non‚Äêcompliances are detected, Corrective Action is issued and a follow‚Äêup inspection may be carried out which could lead to de-certification if compliance cannot be achieved.)

Recently the US National Initiative has split from the international body in a move that has created much controversy among other members and producers. You can read comments about this development on the New Internationalist blogs here and here.

Informal Fair Trade

Outside the formal Fair Trade compliance systems above there are many, often small, organisations worldwide who are practicing Fair Trade principles, but who for a variety of reasons do not participate in the programs developed by either WFTO or FLO. Some of New Internationalist's suppliers fall into this category. Where we are unable to visit and check such organisations ourselves, we usually assure ourselves of the Fair Trade credentials of these suppliers through visits and/or audits carried out by third-party organisations, such as other highly respected and long-serving members of WFTO. These may be either the organisation's buyers from the developed world, or other FTOs in their home country who can attest to their compliance with Fair Trade principles.

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