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Principles of Fair Trade Cheat Sheet by

Trade Principles defined by World Fair Trade Organization
principles     trade     fair


WFTO prescribes 10 Principles that Fair Trade Organi­sations must follow in their day-to-day work and carries out monitoring to ensure these principles are upheld.

Principle 1: Creating Opport­unities

Creating Opport­unities for Econom­ically Disadv­antaged Produc­ers
Poverty reduction through trade forms a key part of the organi­sat­ion's aims. The organi­sation supports margin­alised small producers, whether these are indepe­ndent family busine­sses, or grouped in associ­ations or co-ope­rat­ives. It seeks to enable them to move from income insecurity and poverty to economic self-s­uff­iciency and ownership. The organi­sation has a plan of action to carry this out.

Principle 2: Transp­arency and Accoun­tab­ility

The organi­sation is transp­arent in its management and commercial relations. It is accoun­table to all its stakeh­olders and respects the sensit­ivity and confid­ent­iality of commercial inform­ation supplied. The organi­sation finds approp­riate, partic­ipatory ways to involve employees, members and producers in its decisi­on-­making processes. It ensures that relevant inform­ation is provided to all its trading partners. The commun­ication channels are good and open at all levels of the supply chain.

Principle 3: Fair Trading Practices

The organi­sation trades with concern for the social, economic and enviro­nmental well-being of margin­alised small producers and does not maximize profit at their expense. It is respon­sible and profes­sional in meeting its commit­ments in a timely manner. Suppliers respect contracts and deliver products on time and to the desired quality and specif­ica­tions.

Fair Trade buyers, recogn­ising the financial disadv­antages producers and suppliers face, ensure orders are paid on receipt of documents and according to the attached guidel­ines. For Handicraft Fair Trade products, an interest free pre-pa­yment of at least 50 % is made on request. For Food Fair Trade products, pre-pa­yment of at least 50% at a reasonable interest is made if requested. Interest rates that the suppliers pay must not be higher than the buyers’ cost of borrowing from third parties. Charging interest is not required.

Where southern Fair Trade suppliers receive a pre payment from buyers, they ensure that this payment is passed on to the producers or farmers who make or grow their Fair Trade products.

Buyers consult with suppliers before canceling or rejecting orders. Where orders are cancelled through no fault of producers or suppliers, adequate compen­sation is guaranteed for work already done. Suppliers and producers consult with buyers if there is a problem with delivery, and ensure compen­sation is provided when delivered quantities and qualities do not match those invoiced.

The organi­sation maintains long term relati­onships based on solida­rity, trust and mutual respect that contribute to the promotion and growth of Fair Trade. It maintains effective commun­ication with its trading partners. Parties involved in a trading relati­onship seek to increase the volume of the trade between them and the value and diversity of their product offer as a means of growing Fair Trade for the producers in order to increase their incomes. The organi­sation works cooper­atively with the other Fair Trade Organi­sations in country and avoids unfair compet­ition. It avoids duplic­ating the designs of patterns of other organi­sations without permis­sion.

Fair Trade recogn­ises, promotes and protects the cultural identity and tradit­ional skills of small producers as reflected in their craft designs, food products and other related services.

Principles of Fair Trade

Principle 4: Payment of a Fair Price

A fair price is one that has been mutually agreed by all through dialogue and partic­ipa­tion, which provides fair pay to the producers and can also be sustained by the market. Where Fair Trade pricing structures exist, these are used as a minimum. Fair pay means provision of socially acceptable remune­ration (in the local context) considered by producers themselves to be fair and which takes into account the principle of equal pay for equal work by women and men. Fair Trade marketing and importing organi­sations support capacity building as required to producers, to enable them to set a fair price.

Principle 5: Ensure no Child & Forced Labour

The organi­sation adheres to the UN Convention on the Rights of the Child, and national / local law on the employment of children. The organi­sation ensures that there is no forced labour in its workforce and / or members or homewo­rkers.

Organi­sations who buy Fair Trade products from producer groups either directly or through interm­edi­aries ensure that no forced labour is used in production and the producer complies with the UN Convention on the Rights of the Child, and national / local law on the employment of children. Any involv­ement of children in the production of Fair Trade products (including learning a tradit­ional art or craft) is always disclosed and monitored and does not adversely affect the children's well-b­eing, security, educat­ional requir­ements and need for play.

Principle 6: Commitment to ....

Comm­itment to Non Discri­min­ation, Gender Equity and Women’s Economic Empowe­rment, and Freedom of Associ­ation

The organi­sation does not discri­minate in hiring, remune­ration, access to training, promotion, termin­ation or retirement based on race, caste, national origin, religion, disabi­lity, gender, sexual orient­ation, union member­ship, political affili­ation, HIV/Aids status or age.

The organi­sation has a clear policy and plan to promote gender equality that ensures that women as well as men have the ability to gain access to the resources that they need to be productive and also the ability to influence the wider policy, regula­tory, and instit­utional enviro­nment that shapes their liveli­hoods and lives. Organi­sat­ional consti­tutions and by-laws allow for and enable women to become active members of the organi­sation in their own right (where it is a membership based organi­sat­ion), and to take up leadership positions in the governance structure regardless of women’s status in relation to ownership of assets such as land and property. Where women are employed within the organi­sation, even where it is an informal employment situation, they receive equal pay for equal work. The organi­sation recognises women’s full employment rights and is committed to ensuring that women receive their full statutory employment benefits. The organi­sation takes into account the special health and safety needs of pregnant women and breast­-fe­eding mothers.

The organi­sation respects the right of all employees to form and join trade unions of their choice and to bargain collec­tively. Where the right to join trade unions and bargain collec­tively are restricted by law and/or political enviro­nment, the organi­sation will enable means of indepe­ndent and free associ­ation and bargaining for employees. The organi­sation ensures that repres­ent­atives of employees are not subject to discri­min­ation in the workplace.

Principle 7: Ensuring Good Working Conditions

The organi­sation provides a safe and healthy working enviro­nment for employees and / or members. It complies, at a minimum, with national and local laws and ILO conven­tions on health and safety.

Working hours and conditions for employees and / or members (and any homewo­rkers) comply with conditions establ­ished by national and local laws and ILO conven­tions.

Fair Trade Organi­sations are aware of the health and safety conditions in the producer groups they buy from. They seek, on an ongoing basis, to raise awareness of health and safety issues and improve health and safety practices in producer groups.

Principle 8: Providing Capacity Building

The organi­sation seeks to increase positive develo­pmental impacts for small, margin­alised producers through Fair Trade.

The organi­sation develops the skills and capabi­lities of its own employees or members. Organi­sations working directly with small producers develop specific activities to help these producers improve their management skills, production capabi­lities and access to markets - local / regional / intern­ational / Fair Trade and mainstream as approp­riate. Organi­sations which buy Fair Trade products through Fair Trade interm­edi­aries in the South assist these organi­sations to develop their capacity to support the margin­alised producer groups that they work with.

Principle 9: Promoting Fair Trade

The organi­sation raises awareness of the aim of Fair Trade and of the need for greater justice in world trade through Fair Trade. It advocates for the objectives and activities of Fair Trade according to the scope of the organi­sation. The organi­sation provides its customers with inform­ation about itself, the products it markets, and the producer organi­sations or members that make or harvest the products. Honest advert­ising and marketing techniques are always used.

Principle 10: Respect for the Enviro­nment

Organi­sations which produce Fair Trade products maximise the use of raw materials from sustai­nably managed sources in their ranges, buying locally when possible. They use production techno­logies that seek to reduce energy consum­ption and where possible use renewable energy techno­logies that minimise greenhouse gas emissions. They seek to minimise the impact of their waste stream on the enviro­nment. Fair Trade agricu­ltural commodity producers minimise their enviro­nmental impacts, by using organic or low pesticide use production methods wherever possible.

Buyers and importers of Fair Trade products give priority to buying products made from raw materials that originate from sustai­nably managed sources, and have the least overall impact on the enviro­nment.

All organi­sations use recycled or easily biodeg­radable materials for packing to the extent possible, and goods are dispatched by sea wherever possible.

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