MYP Individuals & Societies Fair Trade Notes

How Do Rules, Prices, and Power Make Trade Fairer?

1. In everyday language, "fair trade" can mean any ethical trading practice.
2. In many markets, Fairtrade (capital F) refers to certified schemes with a specific label and standards.

Why Does Trade Exist?

1. Trade exists because societies need exchange, but exchange isn't automatically fair.
2. Humans have traded for thousands of years. Early societies may not have relied on simple barter in the way people often imagine.
3. Some anthropologists argue that many communities shared and stored goods collectively, and later developed systems of promises and credit to represent value.
4. As societies grew, so did the need for more sophisticated ways to exchange goods and services within and between communities.
5. Modern global trade connects consumers and producers who will never meet.
   1. A shopper buying a chocolate bar, a phone, or a T-shirt is connected to farms, factories, logistics firms, and retailers spread across multiple countries.

What Does Fair Trade Focus On Anways?

1. Fair trade focuses on supply chains where producers have low bargaining power.
2. This is because globalization has made supply chains increasingly complex because multinational or transnational corporations can choose where to source materials, where to manufacture, and where to sell.
3. This complexity can make it difficult for consumers (and sometimes governments) to know:
   1. where a product was made,
   2. who worked on it and under what conditions,
   3. how much the producer was paid,
   4. who is responsible when something goes wrong.
4. Unethical behavior can occur across borders, and problems are often discovered later through investigations, whistleblowers, or government action.

How Does Fair Trade Work in Practice?

1. Standards for labor rights and environmental protection.
2. Price rules designed to reduce extreme income instability for producers.
3. Democratic organization, often through cooperatives for smallholder farmers.
4. Traceability and auditing to check claims.

Minimum prices and income stability

1. Commodity markets (such as coffee, cocoa, tea, cotton) can have volatile prices.
   1. When global prices drop, small producers may be forced to sell below the cost of sustainable production, or take on debt.
2. Fair trade schemes often include a minimum price (a floor price) or similar pricing rules to reduce the risk that producers are paid extremely low amounts.