| Summary
Fair trade has been recognised by the European Parliament as a key tool for development, helping poor producers capture more of the gains from trade and trade their way out of poverty. It does this by offering producers a price which covers the cost of production, and providing long-term contracts which assist predictable planning.
Growth in awareness of fair trade in the UK has led to increased demand for fair trade products and an increase in the number of companies and retailers offering them. Fair trade has also had an impact on raising levels of corporate social responsibility across the board. However some retailers in the UK are engaged in fierce price competition to gain a greater share of the market. This takes place amidst reports of low wages and poor working conditions for many workers and farmers supplying UK retailers and raises questions about whether the monitoring of such standards is sufficiently robust.
The costs and benefits of international trade are unevenly distributed with Africa gaining a smaller share of world trade now than it did 20 years ago. Recognising that African countries face severe supply side constraints in increasing their capacity to trade, the Commission for Africa called for increased investment to expand opportunities for developing country producers to enter fair trade markets. While fair trade is not a panacea for an international trading system which serves the interests of developing countries, it can deliver benefits in terms of access to and knowledge of international markets.
The fair trade movement has made enormous progress in recent years: growing beyond expectations in terms of product coverage as well as increasing engagement of consumers, especially in the UK. But there is still room to grow. Fair trade could expand its activities, for example by developing standards for garment manufacturing. Additionally fair trade could have a deeper impact on poverty if it were to target more consciously the poorest of the poor. Such initiatives require investment. The Government has declared its support for fair trade, and for working more closely with the private sector in development. It now needs to reassess how it can best advance both these objectives.
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