Examination of Witnesses (Questions 285
- 299)
TUESDAY 17 APRIL 2007
MR GARETH
THOMAS MP, MR
OWEN BARDER,
MS LAURA
KELLY AND
MS AMANDA
BROOKS
Q285 Chairman: Minister, good morning,
we are a little early but thank you for being available. We allowed
ourselves time to debate a report, but we are such a harmonious
committee that it took rather less time than we had provided.
Thank you for coming; perhaps you would care to formally introduce
your team.
Mr Thomas: For the record Laura
Kelly and Owen Barder from DFID and Amanda Brooks is from the
DTI, Europe and World Trade Department.
Q286 Chairman: Thank you. Obviously,
as you will appreciate, you are giving us the final evidence on
the inquiry we have been doing into fair trade. It would be fair
to say that the Committee has been impressed by the speed and
scale by which fair trade has developed from being rather more
than a niche market to a quite significant component of the retail
market. Obviously, there is still a huge way to go, but nevertheless
it is clear that it has moved and is continuing to move at a rapid
rate. In that sphere, can you say whether the Government—it
does cut across departments but obviously your department is central
to it—has a unified strategy in supporting fair trade; how
do you view fair trade; how does the Government respond and what
is the Government's view about how it can help it to develop—making
the assumption that you want it to develop and think it is a good
idea? If you do not, you had better say now.
Mr Thomas: Sure. If I may just
put fair trade into context we, as I am sure the Committee do,
recognise the huge potential that there is for trade to lift people
out of poverty and help us reach the millennium development goals.
In order for us to realise that potential we see the need for
a much fairer international trading system to help increase the
access of poorer countries to international markets in particular
and we see the need to make those international markets work much
better for the poor and then, thirdly, we recognise that we have
a role in developing countries themselves to help more poor people
become producers and to trade. Within that context we see fair
trade as having a role to raise awareness about the unfairness
of the international trading system at the moment, certainly to
play a role in helping some producers get access to international
markets and certainly to help some poor people in poor countries
to have the ability to trade and sell goods. What are we doing
then to try and expand the range of fair trade goods that there
are or the fair trade initiatives that there are? We have given
some £8.5 million in support of a variety of different fair
trade schemes, be they for fair trade certification schemes or
be they for initiatives to try and mainstream fair and ethical
standards, sustainable standards, across the supply chain or to
raise awareness about trading issues since 1997. We are just beginning
a conversation with perhaps the most well-known of the fair trade
market, the Fairtrade Foundation, about what we do next time—if
indeed we do do anything next time and I am sure we will do—with
the Fairtrade Foundation.
Q287 Chairman: That is fine and we
have, obviously, a breakdown of how that money has been allocated,
but it does not explain what is the strategic thinking behind
it—in other words has the Department responded to various
initiatives that have been presented to it and said yes, that
is fine, we will support it or, allowing for what you have said
about a fair trade deal which this Committee has made clear the
Doha Round should have delivered and should be delivered, which
is a much bigger outcome, what is the strategy within the Department?
Is there a proactive strategy to say fair trade has a role to
play in helping producers get a fairer price and get better social
provision and possibly improve the quality which strengthens their
place in the market? Is there a strategy and how does that relate
to the DTI; who actually leads on this? We have taken evidence,
mostly from retailers, who probably look to the DTI as their normal
lead department so what is the interaction between the DTI and
DFID and what is the strategy; is it actually to have any objective
about increasing the fair trade share of overall trade?
Mr Thomas: Our strategy, for want
of a better word, has been to support the various initiatives
that have come forward, and there are many different initiatives
that have come forward in this area. The Fairtrade label is perhaps
the most well-known, but there is a variety of others and there
is a variety of individual fair trade initiatives by different
supermarket chains, for example. We have responded to various
requests as they have come forward and we have specifically recognised
that we need to do more to raise awareness across supply chains
about fair, ethical and sustainable trade; we are working specifically
with the food industry to scope out a challenge fund to help in
that purpose. We provide £3 million a year to the Ethical
Trading Initiative, again to help with the mainstreaming of improved
standards, be they labour standards or fair trade standards et
cetera across the supply chains as well.
Q288 Chairman: The Ethical Trading
Initiative as I understand it is about labour standards rather
than trade standards but, if I may say so, Minister, there is
nothing untoward about what you are saying other than it sounds
very reactive rather than proactive. Yes, you have responded to
various initiatives, but we have taken evidence obviously from
retailers who seem to have a very strategic view of their place
in the market and the Fairtrade Foundation clearly has a strategy
and is delivering on it. I am left wondering whether or not the
Department, in conjunction with the DTI, should be doing more.
Perhaps you have been taken by surprise and perhaps understandably
you have been taken by surprise that fair trade has taken off
more than people expected, but do you not think there should be
a more proactive role?
Mr Thomas: I do not think we have
been taken by surprise, it is something we welcome, and our attitude
has been to try to encourage a thousand flowers to bloom, to coin
a phrase, and we have seen a whole series of initiatives being
developed by different players, be they the Fairtrade Foundation,
be they the Rainforest Alliance, be they individual initiatives
by particular sectors like the coffee sector, for example. I do
not think it is for us to try to discriminate between individual
initiatives, we want those initiatives to develop and succeed
and to make progress and if there are other initiatives by other
sectors or by other bits of industry or by other NGOs coming forward
to develop their own initiatives, then we would want to encourage
on that. There is more that we can do as a government; I am just
about to write around to other government departments to encourage
them to have a look at what else they can do in terms of contracting
and using fair trade and fair trade goods. As I say, a series
of suggestions has been put to us by the Fairtrade Foundation
and we are just beginning a conversation with them, so I would
accept that there is more than we could do, but if by strategy
you mean we should pick particular organisations to back then
I do not think we should do that.
Q289 Chairman: No, I understand that
and I can understand why you would not want to do that, but you
could promote a kite-mark kind of approach that says we would
welcome independent assessment of fair trade standards. One of
the problems we have is that supermarkets, retailers and others
are all saying we are promoting fair trade; the Fairtrade Foundation
has been very successful in a sense almost at monopolising the
symbol of fair trade and they have got a lot of credit for that,
but if Marks & Spencer or whatever says there are things we
will do which we think are fair trade but do not meet the logo,
what they would want is some independent assessment that that
is the case. Is that not something the Department could encourage?
Mr Thomas: One of the things Defra
has done is to try and give some guidance to shoppers about green
labels and the differences between the different green labels
that are around; there is perhaps scope for us to look at doing
something like that. The difficulty with a kite-mark as such is
that there is a danger that you are starting to pick between particular
initiatives and that kite-mark then becomes the lowest common
denominator and it might discourage initiatives in particular
sectors. Up to now we have been reluctant to go down the kite-mark
route or the regulation route but, as I say, there is more we
could do to explain the different types and the differences between
the different types of certification schemes. I would hesitate
around a kite-mark, although on the basis of the evidence you
have had before you, Mr Bruce, if that is a recommendation that
emerges from the Committee then I will obviously look at it very
seriously again.
Q290 John Battle: Can I ask you about
the integration of the Department's approach to fair trade and
pro-poverty policies? I just want to explore whether there is
not a kind of view that the Department has put out reports on
trade, if trade goes okay, we increase trade, we understand the
need to increase trade and trade is a much greater factor than
aid in development, but are we relying on the old trickle-down
theories that if trade in general increases then it will reach
the poor, or how do you reconcile a very strong pro-poor approach
and good trade policies?
Mr Thomas: As I say, there are
a number of different elements to it but we do have to try and
get a fairer international trading system so that trade in general
can increase, but then you have to make sure that those expanded
markets can work better for both the poorest nations themselves
but also the poorest people within those nations. One of the things
that we have done to try and make sure that the very poorest people
can become producers and can trade, is to try and increase the
access of people to finance. We fund a whole variety of micro-finance
initiatives which obviously help people to get very small loans
so that they can buy the goods, the assets, that they need to
start trading in the first place, and together with the Treasury
we are hosting at the request of the Commonwealth finance ministers
a meeting in June to look at best practice on access to finance
and what else we can do. That is one very tangible way in which
we try and, if you like, build the ability of the very poorest
people in the developing country to have access to those greater
markets.
Q291 John Battle: That is encouraging,
particularly the link to the Treasury, but that is on micro-finance.
Can you encourage me a bit more and say that there are meetings
with the Treasury and the DTI on trade policy in general at the
macro level, not just in terms of sorting out the WTO—we
know there are issues there—but to ensure that even things
such as pricing structures, undercutting prices, sorting out which
markets are exploited and which are not—and I use that word
deliberately. Is there any conversation between DFID, the DTI
and the Treasury about the macroeconomic structure, suggesting
that there should be some intervention—if I dare use that
word—to ensure fairer trading all round and, more particularly,
to ensure that the poor and the poorest communities get a greater
look in?
Mr Thomas: There is considerable
discussion across Government departments about how we work together
on international trade and each of us in different ways will commission
and fund research into particular aspects of international trade
negotiations so that we can support our position of helping developing
countries. We work very closely with the DTI, with Defra, with
FCO and with the Treasury on planning our position and planning
the different elements of our work which each government department
will do.
Q292 Hugh Bayley: My question is
to the DTI: what responsibility does the DTI think that the private
sector, both corporate suppliers and retailers, has to ensure
that their sourcing policies when sourcing from developing countries
have a pro-poor dimension. Do they have any responsibilities or
is it just a matter of commercial practice?
Ms Brooks: We work very closely
with DFID to try and ensure that we have a consistent Government
line across the piece on these issues, but we do have a team within
the DTI who focus on the retail sector specifically and we also
have a team that works more widely on corporate social responsibility
issues, not just about how they interact with developing countries
but also domestically too. We work very closely with these teams;
I see my own role as a link between the DFID work in this area
and others working in the DTI to ensure that these kinds of practices
are encouraged with large corporates.
Q293 Hugh Bayley: Thank you. If your
corporate social responsibility team were sitting down with, shall
we say, a major supermarket chain and talking about the sourcing
of some product or other, what advice would the Government give
about the need for them to take account of pro-poor development
in their sourcing?
Ms Brooks: It would be advice
along the lines of encouragement to consider standards and the
various initiatives available in this area and to consider whether
they are applicable in their own commercial environment. I have
to say, although I have not been part of the corporate social
responsibility team myself, I am not sure to what extent companies
really discuss detailed sourcing decisions with us, but I would
say that we would talk in general terms around encouragement to
make contact with key organisations such as the Fairtrade Foundation
on this kind of issue.
Mr Thomas: Mr Bayley, if I could
just come in, one of the areas where there is overlap and where
there is joint work between DTI and DFID is on engagement with
the corporate sector. I gave the specific example of how we are
working with the food industry as a result of meetings that the
Secretary of State had with the major players within the food
industry on looking at how we could use a small amount of government
funding to catalyse greater use of fair and ethical standards
across the supply chains of the food industry. We have not yet
launched that, we are still scoping out what that challenge fund
will look like, but that is one of the ways in which we work closely
with the DTI to engage with the domestic industry here.
Q294 Hugh Bayley: If your officials
or colleagues in the DTI were meeting one of the major retailers
and they said "But why should we do this?" what would
the Government's answer be?
Mr Thomas: We would point to the
obvious imbalance in the international trading system and the
way in which we need trade to help to work for the benefit of
poor people; equally, we are not going to get involved in the
individual commercial decisions that each business will have to
make. What we do want to do is try and catalyse a number of key
businesses, be it through the Ethical Trade Initiative or through
this food industry challenge fund that we are in the process of
setting up in order to think more deeply about how they can source
products in a fair and ethical way and how in those ways they
can raise the standards and the incomes of poor people in developing
countries.
Ms Brooks: If I can add to that,
the other thing we would do is also point to the interest of UK
consumers in this, the growing visibility of the FAIRTRADE mark
to them and their growing demand to buy products that are fair
trade sourced. We would therefore encourage them to think of it
from that perspective too, not just from the perspective of the
developing countries per se.
Q295 Chairman: If you are a bit cynical
though you can take the view that the Fairtrade Foundation has
been very successful in creating a brand that consumers want to
buy and as long as that is the case the supermarkets are interested
because it is profitable and it actually increases their share,
it is not because they are deeply caring about the poor. I am
not saying they are not, but I am not sure how caring they would
be if the profit was not there.
Mr Thomas: There must be an element
of truth in that but if the Fairtrade Foundation or other initiatives
are catalysing a change in practice by business that is something
we should laud. There is some indication that at least in some
sectors—and I would not want to overstate this—fair
trade goods are being sold at the same price as other goods, which
is clearly encouraging too. As I say, I do not want to overstate
that, but there have been some encouraging statements.
Q296 John Bercow: I note, Minister,
your use on several occasions in the last few minutes of the term
"catalysing" and I appreciate that one might juxtapose
catalysing against imposing or regulating. To a considerable extent
for my own part I must say I am quite sympathetic to the rather
cautious approach that you are taking because there is frequently
an all too enthusiastic rush to regulate where it may not necessarily
be the best thing to do. That said, I do have an overall impression
that in terms of, for example, the approach to supply chain management—which
is a very important question which could have real ramifications
for the world's poor—there is not a particularly clear or
specific view emanating from DFID, and I also have a sense that
you as a Department do fund rather ad hoc and on a project basis
fair trade and DTI initiatives but you do not perhaps do a lot
more than that. Can I just put it to you that there would be something
to be said for you taking the lead as a department in facilitating,
on a fairly formal and systemic basis, a greater exchange of information
about, and lessons to be learnt from, fair trade and ETI schemes
with a view not perhaps to imposing some sort of rule or creating
some sort of official standard, but simply maximising the information
available in the marketplace so that we know what is good and
in particular we can judge for ourselves what is good for whom.
Mr Thomas: I do not agree with
your opening premise, but I do agree with where you have ended
up if you like. There is more that we can do and, as I said, I
am quite attracted by the way in which Defra have sought to explain
and offer more information to consumers about the variety of different
green labels that are out in the market and there is certainly
something that we can do there. On your opening point about suggesting
that there is not significant engagement with the private sector,
there is growing engagement with the private sector. The work
that we are doing with the food industry is an indication of progress.
We work through the Ethical Trading Initiative with a variety
of companies, with NGOs and trade unions who want to work together
in this sector and then our individual country offices will support,
through private sector development work, one or two other initiatives
in different ways. I accept that there is more we can do, but
I think we have stepped up our engagement in this area.
Q297 John Bercow: Could I just, as
a supplementary, Chairman, ask either you, Minister, or perhaps
Amanda Brooks whether you feel there might be a role within Government
for trying to hold to account, or even now and again to take to
task, commercial operators who issue what to all intents and purposes
are really misleading advertisements for their own wares in terms
of fair trade? It is in the nature of things that any company
will make its best commercial boast and if it thinks people are
attracted by fair trade then it will put the best spin on it,
but the public have got to be pretty discerning, have they not,
because quite a lot of the time we are finding that what companies
say about their trading policies on fair trade, as in a number
of other respects—additives and all the rest of it—does
not bear very close scrutiny. Is there not a role for the Secretary
of State for the DTI—I with my beady eye looking at Ms Brooks—to
get involved in this kind of thing and admonish those who mislead?
Mr Thomas: I will let Ms Brooks
answer for the Secretary of State for Trade and Industry but let
me just give an opening answer. As Government we need to be very
careful about this issue; there is not an agreed definition of
fair trade as such, but there is a variety of schemes which have
their own definitions. There is a role for us to try and make
more information available about how those different labels are
formed and what factors are taken into account, but if we start
admonishing and going out of our way to try and point to particular
companies that we think are not operating in a particular way
we would like we risk getting into all the issues around regulation,
albeit in a different way. I am not sure that that is a role for
Government, particularly as there is not a definition and particularly
as there is not a law that would be broken. Obviously we would
caution any company to be careful about how they present what
they do, and I suppose that comes from experience of the difficulties
that politicians get into when on occasion in the past things
have not been perhaps as clearly presented as they might have
been.
Q298 John Bercow: Making misleading
claims.
Mr Thomas: The Government 10 years
ago, Mr Bercow, had some problems.
Ms Brooks: It is not something
I have discussed explicitly with the Secretary of State so I do
not want to necessarily speak for him directly. There is an interesting
thing here, building on what Mr Thomas has already said, about
the role of the trading standards officers who operate within
local government; it is not a DTI responsibility. They already
have certain responsibilities more generally about how companies
operate and what they claim that could be explored further.
Q299 Ann McKechin: Minister, given
that much of your staff who are involved with trade are focusing
on the international trade perspective—WTO, the EU and EPAs[1]—I
just wonder to what extent you believe that within your own staff
you have the right skill set to deal with the private sector in
respect of these initiatives that we are talking about in relation
to fair trade—the developments on the food line, for example—and
to what extent are your staff co-ordinating with staff in the
DTI who clearly have a particular expertise of the private sector
in the UK and the way in which new products could be developed
under a fair trade initiative?
Mr Thomas: We have got good staff
who have done and do do a very good job in this area. One of the
things that makes them good is that when they recognise that they
need to get access to additional expertise they either go to other
departments or they turn to expertise in consultancy or they turn
to experts within the NGO or civil society world. One of the reasons
why we are having a discussion with the Fairtrade Foundation is
obviously because there is considerable expertise within that
organisation, as there is within some of the other organisations,
about how fair trade can be moved forward. We would see organisations
like the Fairtrade Foundation in a sense taking the lead on the
development of new fair trade products, and where there is more
that we can do in terms of mainstreaming fair trade through the
supply chain we obviously look at particular areas which have
most potential such as the food industry and we get involved in
that way. There is a private sector development advisers group
within the Department that meets on a regular basis to share their
experiences in country programmes, with other Government departments
and with civil society et cetera, so there is an opportunity for
that expertise that there is to be shared.
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