| 1. | The rise in ethical labels demonstrates that both retailers and consumers are interested in ethical sourcing. It is important that fair trade organisations do not assume they have a monopoly on this although fair trade can be said to represent a gold standard in terms of trading relations with producers. With many different schemes pursuing different objectives it is vital that consumers are given the correct information in order to make informed choices. (Paragraph 15)
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| 2. | We believe that fair trade labels have helped consumers to be reassured about the way in which fair trade products are traded. This is an important achievement for which the Fairtrade Foundation in the UK and the Fairtrade Labelling Organisation internationally are to be commended. (Paragraph 20)
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| 3. | It is right that questions should be asked about the engagement of big companies in fair trade. It is relatively easy for them to tick the "fair trade box" for specific products without necessarily changing the way in which they do business with most of their other developing country suppliers. Fair pricing should not be restricted to a few beneficial but limited niches for either supermarkets or multinationals. We were particularly impressed with the efforts of Marks & Spencer to engage directly its producers and to use the FAIRTRADE mark for those products where direct engagement is not possible. (Paragraph 32)
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| 4. | The drive for cheaper produce is neither desirable nor sustainable if such low prices involve the exploitation of labour abroad. We accept that developing countries have a competitive advantage in cheaper labour and they should be able to take advantage of this, but we do not accept that workers should be paid less than the national minimum wage where one exists. Nor should fundamental labour rights be dependent on levels of economic development. (Paragraph 33)
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| 5. | The Government has acknowledged the achievements of the fair trade movement and has made public statements in support of it. It has also provided funding for specific projects and initiatives. However, the Government's approach tends to confuse projects specifically concerned with promoting the fair trade movement with other initiatives associated with more ethical trade and respect for international labour standards. There is merit in supporting a number of different initiatives that are effective in reducing poverty. The Government could, however, do more to promote the fair trade movement specifically if it was clearer in recognising the different contributions that different kinds of initiatives can make. One way of doing this would be to assign a senior DFID official to be responsible for fair trade within Government and for this responsibility to be properly publicised and supported. This may also help to encourage greater coordination in the promotion of fair trade through public procurement, as we recommend in Chapter 6. (Paragraph 40)
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| 6. | Development Awareness Funds have been extremely useful to the fair trade movement and have contributed to continuing growth in awareness of fair trade in the UK. This level of awareness will have knock-on effects in other sectors as consumers begin to demand a greater level of responsibility from companies and retailers. It could also act as a catalyst for greater support for the work of DFID in general. But Development Awareness Funds could be better publicised and the application process made less complicated, especially for those who are applying for the first time or who have no experience of working with DFID. We recommend that DFID address these two issues. (Paragraph 43)
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| 7. | We consider that Challenge Funds are a good means of supporting innovation in the private sector and believe that the Africa Enterprise Challenge Fund is a useful initiative which has the potential to improve trade capacity and competitiveness in Africa. We expect DFID to update us on progress in establishing this Fund. (Paragraph 49)
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| 8. | The Government's approach to funding ethical and fair trade projects does not take advantage of opportunities to learn from previous experience and at present there is no formal mechanism for doing this. The lessons learned from the various individual initiatives which DFID has funded should be drawn together and best practice shared. (Paragraph 51)
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| 9. | We believe there should be increased systematic analysis of the impact of fair trade on poverty and would urge DFID to contribute to this process. (Paragraph 53)
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| 10. | In the context where some supermarkets are putting pressure on suppliers to reduce prices below the cost of basic wages, or when commodity prices are low, the guaranteed fair trade price is extremely valuable for farmers. (Paragraph 55)
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| 11. | The benefits of fair trade to producer groups, and often their wider communities, through the social premiums, are clear. Fair trade targets disadvantaged producers who have either been excluded from the export market or who may not be benefiting from it. Fair trade helps to build up their capacity to trade effectively in the market place and offers a stable income. In this respect it has a positive development impact which reflects some of the objectives of the Government in relation to trade-related capacity-building. (Paragraph 61)
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| 12. | If Ethiopia is allowed to trademark its speciality coffees in the US, it would then have the potential to add significant value to its product. Such innovative strategies should be encouraged by multinational companies. (Paragraph 65)
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| 13. | The fair trade towns campaign has been extremely successful and we commend Wales and Scotland on their initiatives to become fair trade nations. That communities and nations are willing to engage with fair trade to this extent demonstrates the success of fair trade awareness-raising campaigns as well as growing interest in development issues. (Paragraph 68)
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| 14. | Whether or not companies are involved in fair trade, we believe that they should all be engaged in a process of ensuring their supply chains are socially sustainable. Companies need to be particularly aware of the impact of their purchasing policies on small producers. Fair trade offers an excellent means of ensuring purchasing has a positive impact in the categories where fair trade standards and products are available. (Paragraph 73)
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| 15. | We believe that the largest supermarkets in the UK should be leading the way in corporate social responsibility and setting an example for smaller competitors. The performance of some large retailers in this regard falls below standards we consider acceptable. (Paragraph 78)
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| 16. | We question whether the Government is doing all it can to make the Ethical Trading Initiative (ETI) a credible one which genuinely promotes corporate social responsibility. It should not be the responsibility only of NGOs to investigate and monitor the behaviour of UK companies abroad. As we suggested in our report on Private Sector Development, the ETI could be expanded into a monitoring mechanism that ensures more independent scrutiny of companies. The Government should encourage the Ethical Trading Initiative board to investigate the potential for the Initiative to be enhanced in this way. (Paragraph 79)
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| 17. | The current Competition Commission inquiry into supermarkets offers an opportunity to investigate whether their business practices undermine attempts to improve ethical standards in supply chains in developing countries. (Paragraph 85)
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| 18. | The garment industry is one which involves large numbers of low-paid workers in developing countries and is a sector where improved standards would be particularly beneficial. The development of fair trade certification for the manufacture of fair trade cotton garments will assist in ensuring higher standards of traceability along the supply chain as well as better working conditions for garment workers. Fair trade standards will not, on their own, improve working conditions for the majority of garment workers but could provide a model of how an ethical garment industry can work and could contribute to raising standards across the wider industry. This is a specific area where we believe DFID could make a useful contribution and we recommend that it actively seeks out projects in this sector where it can support the private sector. (Paragraph 87)
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| 19. | We believe that fair trade should become more pro-poor and help the most disadvantaged producers in the poorest countries. We recommend that this pro-poor focus becomes a key area for future Government funding for fair trade. (Paragraph 89)
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| 20. | As part of its role in raising awareness of development DFID should consolidate its learning and create a formal mechanism to promote an exchange of information between the fair trade movement, mainstream companies and donors. (Paragraph 91)
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| 21. | We agree with the European Parliament Development Committee's recommendation that product information on the conditions of production should be displayed in such a way as to ensure that it is easily understood. (Paragraph 93)
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| 22. | The FAIRTRADE mark has achieved a significant level of recognition in the UK but only covers a limited range of products. There are many other credible certification schemes with social and environmental objectives. Consumers should be given sufficient, and easily accessible, information about products made available under these schemes to enable them to make informed choices. We recommend that the Government commission research on the feasibility of creating a labelling scheme which gives consumers information on the share of the retail price that producers receive for a product. Supermarkets already know how much farmers are paid for each kilogram of fruit or vegetable they sell, and companies know how much they pay per kilogram of coffee, or for each tee-shirt. Passing this information on to consumers should not be a difficult task. (Paragraph 94)
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| 23. | If companies and public bodies are finding it difficult to interpret the Office of Government Commerce guidance, and if other EU member states are interpreting EC procurement rules differently, there is obviously a lack of clarity which the Government must address. We are pleased that DFID has made a start on this and look forward to the review of the guidelines. We expect to be advised of the probable end date for such a review. (Paragraph 97)
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| 24. | Government Departments seem to be less advanced than public authorities and the general public in the procurement of fair trade products. We believe the Government should be leading by example in this regard. We recommend that DFID be much more proactive in encouraging other Government Departments to procure fair trade goods. (Paragraph 100)
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| 25. | We believe that there is a crucial role for the Government to play in helping the poorest producers access international markets and that fair trade is one means of doing this. We recommend that DFID encourage and fund proposals for the expansion of fair trade where such proposals demonstrate that the outcomes would be beneficial to the very poorest farmers. (Paragraph 103)
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| 26. | DFID says it is working to encourage the private sector to invest in innovative supply chains which deliver more returns to small scale farmers and farm workers. We regard this as a valid policy objective and one which should be vigorously pursued. (Paragraph 104)
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| 27. | Given that fair trade already has the commitment of major UK companies, it provides an easy conduit for engaging the private sector in development by investing in innovative supply chains with a focus on small scale farmers and workers. We recommend that the Government regularly reassess the balance between levels of funding from the private sector and from donors to the Fairtrade Foundation to determine how Government support can best add value to the fair trade movement and its scope, in the context of a rapidly changing market-place. (Paragraph 105)
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