European Parliament resolution on Fair Trade and development (2005/2245(INI))
Date: 2006-07-06
Institutions: European Parliament
Subjects: developing countries, development aid, environmental standard, fair trade, public awareness campaign, social norm, sustainable development, trade policy

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P6_TA(2006)0320

Fair Trade and development

European Parliament resolution on Fair Trade and development (2005/2245(INI))

The European Parliament,

— having regard to its resolution of 2 July 1998 on fair trade (1),

— having regard to its resolution of 10 April 2003 on the crisis in the international coffee market (2),

— having regard to the communication from the Commission to the Council and the European Parliament
of 12 February 2004 entitled ‘Agricultural Commodity Chains, Dependence and Poverty — A proposal
for an EU Action Plan’ (COM(2004)0089),

— having regard to the communication from the Commission to the Council of 29 November 1999 on

‘fair trade’ (COM(1999)0619),

— having regard to the opinion of the European Economic and Social Committee of 27 October 2005 on

Ethical Trade and Consumer Assurance Schemes (3),

— having regard to the Declaration and plan of action on African Commodities adopted by the Conference

of Ministers of Trade of the African Union held in Arusha on 21 — 23 November 2005,

— having regard to São Paulo Consensus, Eleventh Session of the United Nations Conference on Trade and

Development (UNCTAD), held in São Paulo on 13 — 18 June 2004,

— having regard to Articles 177 to 181 of the EC Treaty,

— having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific
Group of States of the one part, and the European Community and its Member States, of the other part,
signed in Cotonou on 23 June 2000 (the ‘Cotonou Agreement’) (4), and amended in Luxembourg on
25 June 2005 (5), and in particular Article 23(g) thereof,

— having regard to the Compendium on co-operation strategies to the Cotonou Agreement, issued by the

Commission in 2001,

— having regard to the Handbook on environmental public procurement of the European Commission

entitled ‘Buying Green’ of 2004,

— having regard to the report of AFNOR (Agence française de normalisation) entitled ‘Les critères applic-

ables à la démarche de commerce équitable’ of 9 December 2005,

— having regard to Rule 45 of its Rules of Procedure,

— having regard to the report of the Committee on Development and the opinion of the Committee on

International Trade (A6-0207/2006),

A. whereas Fair Trade has proved to be an effective way of promoting sustainable development,

B. whereas Fair Trade and other independently monitored trading initiatives contributing to raising social
and environmental standards have in common their ambition to market, sell and promote trade in
products which comply with certain social, environmental and development criteria,

C. whereas Fair Trade and other independently monitored trading initiatives contributing to raising social
and environmental standards are important instruments for achieving the Millennium Development
Goals (MDGs), particularly the eradication of poverty and the global partnership for development,

(1) OJ C 226, 20.7.1998, p. 73.
(2) OJ C 64 E, 12.3.2004, p. 607.
(3) OJ C 28, 3.2.2006, p. 72.
(4) OJ L 317, 15.12.2000, p. 3.
(5) OJ L 287, 28.10.2005, p. 4.

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D. whereas prices for many of the main agricultural exports of developing countries, such as sugar, cotton,
cocoa and coffee, fell by 30 to 60 % between 1970 and 2000 forcing small farmers to sell their goods
below the cost of production and reducing the revenue of many of the poorest countries in the world
and whereas Fair Trade can provide solutions,

E. whereas Articles XXXVI-XXXVIII of

the General Agreement on Tariffs and Trade (GATT) commit
members of the World Trade Organization (WTO) to take joint action, where appropriate, to achieve
the stabilisation of commodity prices; whereas the African Union insists that the commodity issue be
part of the ongoing WTO negotiations,

F. whereas Article 23(g) of the Cotonou Agreement stipulates support for the promotion of Fair Trade and
the Compendium on co-operation strategies to the Cotonou agreement specifies in paragraph 64 of
Section 2.6.3. that ‘Co-operation shall provide support to both producer groups in developing countries
and NGOs within the EU through budget headings and EDF resources. This support shall be used to
finance the launching of new product lines, consumer awareness campaigns, educational activity and
capacity building’,

G. whereas Fair Trade pursues two inseparable objectives: on the one hand, to provide opportunities for
development for small-scale producers and workers in developing countries, and, on the other, to encou-
rage the international trading system and private undertakings to operate in a way which is fairer and
more conducive to sustainable development; whereas the international Fair Trade movement pursues the
latter objective by setting an example and by exerting pressure on governments, international organisa-
tions and businesses,

H. whereas a number of other independently monitored trading initiatives contributing to raising social
and environmental standards pursue objectives which both support sustainable development for produ-
cers and workers in developing countries and are designed to enable private companies to become
actively involved in and to support sustainable development,

I. whereas Fair Trade organisations play an important role in raising awareness in relation to North-South
relations, particularly through public campaigns and the strengthening of citizen-to-citizen cooperation,
as well as through the concept of Fair Trade towns and universities,

J. whereas Fair Trade sales have been growing in Europe by on average 20 % per year since 2000, with
more than one million producers and their families benefiting from them and proving that European
consumers are increasingly interested in responsible purchasing; whereas growth in such trade differs
between the Member States, and the overall market share of Fair Trade is still small but developing
rapidly, while international trends are similarly encouraging,

K. whereas an increasing number of European retailers make significant efforts to support Fair Trade and
other independently monitored trading initiatives contributing to raising social and environmental stan-
dards by communicating their values and offering their products in their outlets,

L. whereas millions of producers want to join the Fair Trade system and other independently monitored
trading initiatives contributing to raising social and environmental standards and whereas there is a huge
potential for further growth; whereas international trade and agriculture policies cause difficulties, parti-
cularly for small and medium-sized enterprises in developing countries, including Fair Trade producers,

M. whereas awareness needs to be raised among European consumers about the positive impact of Fair

Trade on the socio-economic situation of producers and their local communities,

N. whereas producers and consumers benefit from a single identifiable Fair Trade certification mark, as is

already in place,

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O. whereas, in the context of Fair Trade, particular attention should be paid to the role of women, who are

the main economic agents in sustainable development,

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P. whereas Fair Trade has proven to be an effective tool in supporting indigenous people and has given
them the opportunity to sell their goods directly on European markets while pursuing traditional ways
of life and production,

Q. whereas Fair Trade products are marketed under two different routes: the integrated route, whereby
products (mainly crafts) are imported via Fair Trade organisations and distributed mainly in specialised
Fair Trade shops (worldshops), and the labelling route, whereby goods are labelled by specialised Fair
Trade certification agencies to certify that their production chains respect Fair Trade principles,

R. whereas internationally harmonised voluntary standards for labelled and non-labelled Fair Trade
products and organisations have been developed over the last five decades by the international Fair
Trade movement, namely the
following organisations: FLO (Fairtrade Labelling Organizations
International), IFAT (International Fair Trade Association), NEWS (the Network of European Worldshops)
and EFTA (European Fair Trade Association),

S. whereas, in view of the success of Fair Trade and the lack of legal protection, there is a risk that the
concept may be abused by companies that enter the Fair Trade market without complying with the rele-
vant criteria; whereas this may reduce the benefits for poor and marginalized producers in developing
countries, may also reduce transparency for consumers and may infringe consumers' rights to appro-
priate product information,

T. whereas some Member States have started legislative processes to regulate the use of the term Fair Trade

and the criteria for qualification as a Fair Trade organisation,

U. whereas the Commission has no clear policy as regards Fair Trade and other independently monitored
trading initiatives contributing to raising social and environmental standards, and whereas there is no
structured co-ordination between its different Directorates-General in this regard,

V. whereas assistance and support for Fair Trade, Fair Trade organisations and other independently moni-
tored trading initiatives contributing to raising social and environmental standards in Europe is currently
limited and fragmented,

W. whereas Fair Trade products are increasingly being offered in the EU institutions,

X. whereas there are means by which governments can support Fair Trade which are compatible with

WTO rules, provided that they are non-discriminatory between WTO Member States,

1. Urges the Commission to issue a recommendation on Fair Trade, recognising that a non-binding legisla-
tive act is the appropriate form of act at this point in time and would not carry the risk of over-regulation,
and to consider issuing a recommendation on other independently monitored trading initiatives contributing
to raising social and environmental standards;

Believes that, in order to eliminate the risk of abuse, Fair Trade needs to meet a number of criteria,

2.
which are defined by the Fair Trade movement in Europe as being the following:

a) a fair producer price, guaranteeing a fair wage and covering the costs of sustainable production and
living. This price needs to be at least as high as the Fair Trade minimum price and premium, where they
have been defined by international Fair Trade associations;

b) part payments to be made in advance, if so requested by the producer;

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c)

long-term, stable relations with producers and involvement on the part of producers in Fair Trade
standard-setting;

d) transparency and traceability throughout the supply chain to guarantee appropriate consumer informa-

tion;

e) conditions of production which respect

the eight

International Labour Organization (ILO) Core

Conventions;

f)

respect for the environment, protection of human rights and in particular women's and children's rights
and respect for traditional production methods which promote economic and social development;

g) capacity building and empowerment for producers, particularly small-scale and marginalised producers
and workers in developing countries, and their organisations, as well as for the respective communities,
in order to ensure the sustainability of Fair Trade;

h) support for production and market access for producer organisations;

i) awareness-raising activities about Fair Trade production and trading relationships, the mission and aims

of Fair Trade and the prevailing injustice of international trade rules;

j) monitoring and verification of compliance with these criteria, in which Southern organisations must play

a greater role, leading to reduced costs and increased local participation in the certification process;

k) regular impact assessments of Fair Trade activities;

3.
Stresses that the most significant part of the increase in Fair Trade sales has been achieved with respect
to labelled products, and that Fair Trade labelling initiatives have been developed in most European
countries;

4. Notes that Europe is the biggest market for Fair Trade products, with an estimated 60 % to 70 % of
global sales, and that it has potential for further growth;

5. Recalls that the establishment of a free and fair multilateral trading system constitutes the best tool for
achieving the effective management of globalisation, for the benefit of all; recalls, moreover, that the Fair
Trade system has proven to be an important tool for poverty reduction and sustainable development and
believes that, in the long term, it could facilitate the equitable participation of developing countries in the
multilateral trading system, guarantee them stable and sustainable access to the European market and raise
consumer awareness;

6. Recalls that, while international trade agreements fail to deliver for poor countries, the Fair Trade
system has proved to be effective in poverty reduction and sustainable development; believes that, in the
long term, it could allow developing countries to fully participate in the multilateral trading system;

7. Calls on the Commission and the Council to promote Fair Trade and other independently monitored
trading initiatives contributing to raising social and environmental standards as effective tools for achieving
the MDGs and to recognize the important role of Fair Trade organisations and other independently moni-
tored trading initiatives contributing to raising social and environmental standards in supporting small and
marginalised producers in developing countries and in increasing the awareness of European consumers
with regard to sustainable and ethical North-South trading relations in general and to Fair Trade in
particular;

8. Recalls that European trade policies must improve market access for small producers in the South;

9. Calls on the Commission to undertake a study to examine how Fair Trade could develop into a model
for sustainable trade policy which would be capable of stimulating balanced North-South trade, and to iden-
tify the obstacles to trade which impact most seriously on the world's poor;

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10. Calls on the Commission to recognise that there are also other credible schemes that, alongside the
Fair Trade movement and under the umbrella of the International Social and Environmental Accreditation
and Labelling Alliance (ISEAL), contribute to defining social and environmental standard-setting in third-
party certification;

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11. Calls on the Commission and the Member States to take appropriate measures to ensure that consu-
mers have access to all information they need in order to make informed choices; believes that consumers
must have the right to quick access to product information, which must be easily comprehensible and
presented in a transparent way;

12. Calls on the Commission to liaise with the international Fair Trade movement in supporting clear and
widely-applicable criteria against which consumer assurance schemes can be assessed, underpinning
consumer confidence in such schemes and consolidating the Fair Trade product sectors;

13. Calls on the Commission to launch specific calls for proposals in relation to Fair Trade targeted at
raising consumer awareness, supporting assurance schemes and labelling and systematic data collection and
assessment of effects across the EU;

14. Calls on the Commission to improve coordination of its activities in the field of Fair Trade and other
independently monitored trading initiatives contributing to raising social and environmental standards by
the different Directorates-General responsible for Development, Trade, Employment and Social Affairs,
Consumer Protection, Internal Market and Agriculture and to make Fair Trade and other independently
monitored trading initiatives contributing to raising social and environmental standards integral parts of its
policies in these areas;

15. Asks the Commission and the Council to study and to consider implementing a low VAT rate for Fair
Trade products and to eliminate import duties on Fair Trade products from developing countries; stresses
that any products on which a low VAT rate are levied should be closely monitored in order to avoid abuse;

16. Urges Member States that are currently developing Fair Trade legislation or legislation that may affect
Fair Trade organisations and other independently monitored trading initiatives contributing to raising social
and environmental standards to base any relevant criteria on the knowledge and experience of the relevant
stakeholders, including the international Fair Trade movement, and as a first step thoroughly to assess the
risk of over-regulation as well as the possible impact of such regulation on small and marginalised
producers;

17. Urges the Commission to implement Article 23(g) of the Cotonou Agreement and the provisions as
laid down in the Compendium on co-operation strategies to the Agreement, in particular paragraphs 61 to
64 thereof;

18. Calls on the Commission to establish an internal contact point to ensure regular coordination on Fair
Trade issues between its different services;

19. Calls on the Commission to provide ‘Aid for Fair Trade’:

a)

in developing countries, including therein measures to develop new Fair Trade products, provide technical
assistance and capacity building (for instance to meet the European Sanitary and Phyto-sanitary (SPS)
standards, rules of origin and the growing number of corporate standards), encourage moves into manu-
facturing (value-adding), support capacity building and empowerment programmes, support pre-finan-
cing for Fair Trade producers and assist in the distribution of Fair Trade products on local markets, with
a special emphasis on projects implemented by women;

b) within the EU, including therein measures to support Fair Trade awareness-raising programmes, public
campaigns and advocacy activities, research on impact and best practice, supply chain analyses, trace-
ability and accountability assessments, Fair Trade marketing support and practical
for
worldshops;

support

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c) within the EU and in developing countries, with a view to promoting the work and role of Fair Trade

organisations.

20.
Invites the Commission, after having consulted stakeholders, to present a proposal to Parliament for
appropriate action and funding in the area of Fair Trade and other independently monitored trading initia-
tives contributing to raising social and environmental standards;

21. Asks the Commission to look into means of further raising awareness in relation to Fair Trade and
other
independently monitored trading initiatives contributing to raising social and environmental
standards;

22. Calls on public authorities in Europe to integrate Fair Trade criteria into their public tenders and
purchasing policies and asks the Commission to promote this by, for example, producing guidelines for Fair
Trade procurement;

23. Recalls that regional authorities in particular make major investments in relevant product markets;
consequently calls on these bodies,
in their calls for tender, to give special consideration to Fair Trade
products;

24. Welcomes the increased efforts of Parliament in particular to offer Fair Trade products, and stresses
that all EU institutions should use Fair Trade products in their internal services;

Emphasises that Fair Trade and other independently monitored trading initiatives contributing to
25.
raising social and environmental standards can be successful tools for making enterprises socially aware and
socially responsible;

Stresses the importance of making European policy on corporate social responsibility more inclusive
26.
through the continuation and intensification of multi-stakeholder fora, including fora where Fair Trade orga-
nisations are present;

27. Urges the Commission to support mechanisms for the participation, where feasible, of producers in
price determination, as provided for in paragraph 63 of the Compendium on co-operation strategies to the
Cotonou Agreement;

28. Urges the Commission to support the African Union to include as a matter of priority the issue of
commodity prices in ongoing global trade negotiations in accordance with its WTO commitments, in par-
ticular GATT Articles XXXVI — XXXVIII;

29. Calls on the Commission to take action, in accordance with paragraph 2(a) of GATT Article XXXVIII,
to devise measures designed to stabilise and improve market conditions for primary products of particular
interest to less-developed countries ‘including measures designed to attain stable, equitable and remunerative
prices for exports of such products’;

30. Welcomes the introduction of special social and environmental clauses under the Generalised System
of Preferences + (GSP +), but sees the need for reinforcement of the monitoring mechanism;

31. Urges the Commission to develop a coherent policy for the promotion and protection of small and
marginalised producers, including Fair Trade producers, representing their views, as well as those of produ-
cers associated with other independently monitored trading initiatives contributing to raising social and
environmental standards, in bilateral, regional and multilateral trade negotiations, such as the Economic
Partnership Agreements;

32. Calls on the Commission to take the Fair Trade and other social and environmental trading approaches
into account when formulating EU trade policy;

Instructs its President to forward this resolution to the Council and Commission as well as to the ILO,

33.
the United Nations Environment Programme, UNCTAD and the WTO.