Our inquiry
4. We have previously emphasised that agreement on
a development round in the World Trade Organisation (WTO) may
be the most important gain for developing countries, and we continue
to encourage the Government to put trade at the service of development.[13]
In the absence of a WTO agreement which prioritises the needs
of developing countries we decided to begin an inquiry into fair
trade to examine the contribution of fair and ethical trade to
poverty reduction and sustainable development.
5. Fair trade has been recognised by the European
Parliament as a key tool for development.[14]
In March 2006 Gareth Thomas, Parliamentary Under Secretary of
State at the Department for International Development said, "fair
trade can make a real contribution to helping poor people trade
their way out of poverty […] Fair trade is helping poor producers
capture more of the gains from trade, which is a key objective
of the Department for International Development."[15]
Given the growing awareness of fair trade, and the declared commitment
to fair trade by the UK Government and other donors, we decided
the inquiry should examine how best donors, in particular the
UK's Department for International Development (DFID), can support
fair trade in their development assistance.
6. The growth in the number of 'ethical' labels in
the market place has created confusion for consumers. In this
context a recent report by the Development Committee of the European
Parliament called on the Commission and member states to "take
appropriate measures to ensure that consumers have access to all
the information they need in order to make informed choices."[16]
Our inquiry has therefore also sought to identify examples of
best practice among supermarkets and other retailers with a view
to helping consumers to make those choices.
7. We began the inquiry in February 2007 holding
our first evidence session at the start of Fair Trade Fortnight.
We held a total of four public sessions in which we took evidence
from the Government, the Prime Minister of the Republic of Dominica,
the Fair Trade Foundation, trade unions, non-governmental organisations
(NGOs), fair trade organisations and companies, retailers, supermarkets
and corporate organisations. We received written evidence from
31 organisations and individuals many of whom are engaged in fair
trade.
8. The report is structured as follows: Chapter 2
provides an outline of what fair trade is and compares the approach
of fair trade with other ethical schemes. This Chapter also looks
at the growth in fair trade, in terms of the growth in the number
of products being certified as fair trade and the number of producers
using the fair trade label, as well as the growth in consumer
awareness and sales in the UK market. Chapter 3 looks at the UK
Government's approach to fair trade which it sees as a small but
significant part of its international trade policy. Chapter 4
assesses the impact of fair trade on producers, consumers and
companies. Chapter 5 looks at the challenges and limits of fair
trade in terms of the range of products certified as well as the
number of producers who benefit from it. Chapter 6 asks what the
Government's response should be and whether or not donors should
play a role in supporting initiatives such as fair trade.
9. The report's recommendations are primarily for
the UK Government but there are also recommendations directed
at the Fairtrade Foundation, supermarkets and other retailers.
We also hope that consumers reading this report will be made more
aware of the ways in which fair trade benefits producers in developing
countries, as well as the contribution of other ethical schemes
to poverty reduction.
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