The fair trade movement arose out of the dissatisfaction with free trade. Supporters of free trade argue that it leads to faster economic growth and less poverty by offering more varied goods and lower prices. Critics say that it helps only the rich countries, and increases the inequality between states. As a solution, they proposed fair trade.
The simplest definition is this: trade in which fair prices are paid to producers in developing countries. It is based on the idea that international trade can be just for all participants, regardless of where they come from or the size of their business. It is part of the larger sustainable development program, by ensuring the rights of small producers and workers.
The main advocate is the World Fair Trade Organization (an alternative to the World Trade Organization). Its policy has 10 principles (which, in time, have become associated with the general concept of fair trade).
1. Creating opportunities for economically disadvantaged producers; people in Third World countries have very few opportunities to escape the poverty cycle; the WFTO offers solutions through its various programs
2. Transparency and accountability; providing relevant information to all partners involved, keeping commercial relations open on all levels of the supply chain
3. Fair trading practices; includes respecting the cultural identity and traditions, promoting fair competition, compensations on case of delays or canceling of orders, payments made on time(connected with the fourth principle)
4. Payment of a fair price; offers socially acceptable remuneration (in the local context); it takes into account the equal payment of men and women for equal work(connected to the sixth principle)
5. Ensuring no child labor and forced labor
6. Commitment to non discrimination, gender equity and freedom of association; people may not be discriminated because of their race, nationality, religion, disability, gender, sexual orientation, age, HIV status, union or political membership; women and men should be paid equally for the same type of work
7. Ensuring good working conditions; it ensures that health and safety conditions are respected in all working places
8. Providing capacity building; the people involved in the programs are helped to develop their skills and abilities so that they can run their businesses properly(connected with the first principle)
9. Promoting fair trade; awareness campaigns are held regularly through various media means in order to educate people about its principles, methods, results etc; 12th of May has been declared the World Fair Trade Day
10. Respect for the environment; fair trade uses different methods to minimize the impact on the environment: technologies that use less energy or renewable energy, better waste management, low use of pesticides, usage of recyclable or biodegradable materials, shipping by sea