fair trade, a trading arrangement intended to provide more equitable international trade by creating better conditions for disadvantaged or marginalized producers of goods. Fair trade practices include paying fair wages, supporting participatory workplaces and environmentally sustainable production, and developing long-term and supportive buyer-producer relationships, typically between a buyer in a developed nation who is purchasing products from a producer in a developing country. Fair trade results in a smaller margin of profit for (or the complete elimination of) the middleman, while the producer or grower of the product receives a larger portion of the product's ultimate price. The increased income producers and growers earn is intended to enable them to move from economic vulnerability to greater self-sufficiency and from powerlessness in relation to their products to greater involvement and empowerment.
Fair trade practices also are intended to promote sustainable development and to suppress exploitive working conditions, providing a safer and healthier working environment, ideally one in which women's work is valued and children's labor prohibited. Fair trade transactions often involve the sales of agricultural products such as coffee, cocoa, and grains by an independent farmer or agricultural cooperative, or the sales of handmade goods such as crafts or clothing, frequently by individual artisans or members of a cooperative workshop. Much of international fair trade is overseen by the Fairtrade Labelling Organizations International, an umbrella group (est. 1997) that sets trade and product standards, certifies products, and provides other kinds of support to producer organizations.
Fair trade had its beginnings in the United States in the mid-1940s when an American group began buying needlework from Puerto Rican craftsmen. In 1958 the organization, later named Ten Thousand Villages, opened its first fair trade retail shop. In Europe, the movement began in the 1950s when Oxfam UK imported and sold handicrafts produced by Chinese refugees. In 1964 Oxfam established its first fair trade organization. In 1967 Fair Trade Organisatie was founded in the Netherlands to buy and sell cane sugar produced in Dutch colonies. In 1973 it began to import coffee from Guatemala and later it added tea, cocoa, and other foods to its product roster. Actively supported by a growing group of consumers, fair trade expanded as labeling began (1988) and international standards were established, as more alternative trade organizations were created worldwide, and as new fair trade products were introduced.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
More on fair trade from Infoplease:
See more Encyclopedia articles on: Economics: Terms and Concepts