 People's Recovery, Empowerment and Development Assistance Foundation, Inc. Introduction: At the very beginning, consumers of Fair Trade products knew the importers and distributors personally. The guarantee that those goods had been purchased on the basis of certain ethical principles was essentially, therefore, a question of trust between acquaintances. As a result of Fair Trade's growth, the direct and personal link between producers and consumers has often been broken. Today, the assurance that Fair Trade standards are respected is a determining factor for success. But what should these standards be? Many organisations have been working individually to develop their own criteria and standards. The time has come for the Fair Trade movement to take responsibility for developing overarching international standards for all fair trading organisations. This document is an attempt to do that. However standards alone are not enough; they need to be linked to indicators that provide evidence of their achievement and a monitoring system that assures all concerned people that Fair Trade standards are carefully respected by their practitioners, along the whole of the Fair Trade chain. In general, "monitoring," means the regular scrutiny and control of an activity so as to check whether it proceeds according to plan and to rules previously agreed upon. In our case, 'monitoring" refers to the activity necessary to verify whether Fair Trade standards are observed in practice. Why the monitoring of Fair Trade standards is so important:
IFAT has been working with its members all over the world for several years on defining the essence of Fair Trade and the core criteria at its heart. This document is inspired by that work. In particular, it was discussed in regional meetings and international conferences in 1999 and 20001. With the FINE2 group, IFAT has begun to create a framework for an integrated, harmonised monitoring system for Fair Trade. The aim of this document is to propose the main building blocks of part of such a system. The document is divided into three sections. The first presents the standards (it has two parts: Part A, Core Standards; and Part B, Standards for which indicator's need to be developed regionally). The second section discusses the monitoring process and the related organizational issues. The final section lists a number of issues that need further development. Does monitoring standards mean additional work? Most indicators require written documentation and to some extent this is an unavoidable outcome of greater accountability. It must be emphasized, however, that this is a means and not an end in itself. What we want in the indicators is to capture a mechanism that would deliver greater democratic processes and accountability.3 The following standards and indicators are intended as a reference for all Fair Trade organisations North and South, whether primary producers, intermediary Southern organisations, Northern importers or world shops. ________________________________________________________________________ 1 Milan (in 1999), Kampala, Manila, Quito, Tokyo, and Wuppertal
(in 2000). Full documentation available from IFAT.
The Standards are divided in two parts: A. The "Core" which all Fair Trading organisations commit to attaining. Fair Trading organizations are able to provide evidence of this commitment whether they are in the North or South, whether they are a producer, intermediary, importer or retailer. The standards are accompanied by a homogeneous set of indicators. B. Standards for which indicators need to be developed regionally or locally, according to the social and cultural context. Part A: CORE STANDARDS 1. Commitment to Fair Trade The organisation's mission must be poverty reduction through trade. The Organisation deliberately should be supporting disadvantaged, marginalized, or poor producers; and/or associations or co-operatives of such people. Fair Trade is a development process through which producers move from a position of powerlessness to empowerment, from vulnerability to security and from material poverty to income and assets. The Organisation is committed to developing a plan of action to enable this to happen. Indicator 1.1: Mission statement. The mission statement or Organisation purpose should evidence commitment to working for the benefit of producers who are poor, disadvantaged or marginalized. Indicator 1.2: Awareness of mission statement. Producers and/or employees show awareness of the organization mission. Indicator 1.3: Record of suppliers. The Organisation must hold a directory of the producers, intermediaries, and/or importers with whom it works. This would include a description of each and its own mission or purpose. Indicator 1.4: Existence of a development plan that outlines what it does to promote sustainable development for producers either directly or through other players in the supply chain. 2. Transparency and Accountability The Organisation is transparent in management style and accountable to all its stake holder's, including IFAT, and in its commercial relationship with other IFAT members. It has good, open communication channels through all levels of the supply chain. The Organisation finds appropriate, participatory ways to involve employees and producers in its decision-making processes. Indicator 2.1: Records or minutes of meetings. The Organisation must hold periodic meetings to discuss economic and social issues about the business and the welfare of employees and/or producers. There must be specific mechanisms in place to ensure that employees' or producers' opinions are taken into account. Indicator 2.2: Evidence that the Organisation reports to stakeholders on financial, trading and social/ development activity. In most cases this will be an annual report of activity with financial accounts, in which the organization's progress against its plan is discussed. For some it may be, for example, a documented series of presentations to key stakeholder groups. Indicator 2.3: Information about the way prices are set. The Organisation will provide information on the method or formula and rationale it uses to set prices. Indicator 2.4: Use of surpluses. The Organisation provides evidence of how its surplus (if any) is used to benefit producers, and their involvement in this decision-making process wherever possible. 3. Payment of a fair price Prices should be set not to maximize profits but to maximize the welfare of producers and their families, taking into account the realities of the market. Fair Trade producers should receive an income which is socially acceptable taking into account: (i) the cost of satisfying producers' basic needs (to feed, clothe and house their families adequately, send girl and boy children to school, and access affordable health care); (ii) the desirability that prices paid to producers are equal or greater than those paid by mainstream buyers in similar products; (iii) the need to provide an income which is equal or greater than the minimum wage (or local wages for similar work). and (iv) the principle of equal pay for equal work by women and men. Indicator 3.1 Information about prices paid at every level. The Organisation should keep records of payments, whether wages or orders - to producers, intermediaries, importers, employees. Written records should cover: 1. Payments to producers, employees, and suppliers; 2. Advances (if required); and 3. Social benefits paid by the Organisation IFAT does not impose any particular model of record keeping. Organisations should be recording this data as a matter of course and their own reporting system will be acceptable. Indicator 3.2 Producer incomes. The Organisation - wherever it is in the supply chain - will describe the steps it takes to ensure that producers receive an income that is socially acceptable. This indicator must be defined locally.
Part B: STANDARDS FOR WHICH INDICATORS NEED TO BE DEVELOPED REGIONALLY 4. Protection of children Organisations working directly with informally organised producers document the involvement of children in production and use meetings with producers to discuss issues of children's physical and mental well-being, and need for education and play. The participation of children (if any) does not affect their health, security, and educational requirements. It respects the UN Convention on the Rights of the Child and is according to the law and social norms in the local context. 5. Improving the situation of women The organization provides opportunities for women and men to develop their skills and actively encourages applications from women for job vacancies. Women employees are provided with leadership training and encouraged to seek leadership roles. Organisations working directly with producers ensure that women's work is properly valued and rewarded. Women are always paid for their contribution to the production process. 6. Working Conditions The Organisation is taking steps to ensure that producers work in a safe and healthy environment and takes into account the special health and safety needs of pregnant women and breast-feeding mothers. Training is provided on health and safety in the workplace and the prevention of accidents. Any Organisation working directly with producers takes steps to ensure that producers have clean water to drink, adequate sanitation, and access to essential "First Aid" medical support. The daily working hours are in line with the maximum established by the law and ILO convention. 7. The Environment The Organisation, if a producer, commits to using raw materials and packaging from sustainable managed sources where these are available. The Organisation, if a buyer/ importer, commits to buying products made from raw materials and packaging from sustainable managed sources where these are available and to encouraging its suppliers to seek out such materials. The organization promotes use of environmentally friendly, appropriate technology, and creates awareness of environmental hazards. 8. Capacity building, long term relationships and market access The Organisation seeks to develop producers' skills. It develops specific activities to provide assistance to producers and commits to providing continuity in its trading relationships with its partners in the supply chain, South and North, over an agreed given period. The Organisation commits to assisting producers and/or Southern marketing/exporting organisations to improve their access to export, regional and/or local markets, both Fair Trade and mainstream as appropriate 9. Advocacy and Campaigning The IFAT member Organisation raises awareness of Fair Trade and the need for greater justice in world trade with producers/ employees, consumers and other producing organisations, and participates in campaigning activity in country, regionally and internationally to the extent that it is able to do so. Format for presenting the indicators The format for presenting the indicators will incorporate the experience developed by Fair Trade organisations. See Appendix 1. As important as the definition of standards, is the definition of who monitors and how. At the IFAT biennial conference in Milan, 1999, it was agreed that the monitoring system would be carried out in three steps:
It was agreed to start the process with work on members' own self-assessments, and this work has developed from that agreement. The experience with members' self-assessment has been positive, in the sense that it has created an opportunity for Fair Trade organisations participating in the exercise to examine their own practices. This experience has also shown:
1. Self Assessment Self-assessment creates an opportunity for Fair Trade organisations to examine their own practices and set targets for improvement. In future self-assessment for fair trade organisations should be against the standards for fair trading organisations. Each Fair Trade Organisation uses a process, involving stakeholders, to check whether the Fair Trade standards are being met. 2. Mutual control The buyer oversees the seller and the seller oversees the buyer at every level of the Fair Trade chain. Buyers are responsible for providing their producer partners with copies of their self-assessment reports. Producer organisations are responsible for providing their buyer partners with copies of their self-assessment reports. Tools will be developed to help standardize indicators and exchange data. Data on self-assessments will be kept in a database accessible to Fair Trade organisations and will itself represent a form of mutual control. 3. Random verification Each year IFAT will choose, at random, a number or organisations whose self-assessment processes will be verified by independent consultants or NGOs working in that region. There is a possibility that FLO (Fair Trade Labeling Organisations International), as the existing Fair Trade certifying body, could coordinate this process. The number of Fair Trade organisations to have their self-assessments verified each year would be between (5% to 1 0%) of the total. I FAT would apply for external funding to carry out this task. One clear message emerging from the regional meetings in 2000 is that external verification can be managed at the local/regional level. The co-ordination would be done centrally but the external verifiers would be found in the regions. 4. Monitoring Committee The aim of this body, which will be a sub-committee of the IFAT Executive Committee, is to oversee the overall process of monitoring and check that the three mechanisms defined above (mutual control, self assessment and random verification) are being used. It will help IFAT members in the monitoring of their activities and may act as a Committee of Appeal in the case of problems or discrepancies. It will also define the participation of regional bodies in the verification process.
Acknowledgements The preparation of the Standards would have not been possible without the support and valuable contributions of a large number of individuals and organizations. The document was jointly prepared by Rudi Dalvai (CTM Altromercato), Raul Hopkins (IFAD) and Carol Wills (IFA 7). An important source for this work were the discussions and minutes of IFA T year 2000 round of regional meetings which took place in Ecuador (Latin America region), Japan (North America and Pacific region), Germany (Europe region), Uganda (Aftica region) and the Philippines (Asia region). Organizations and individuals providing useful advice and suggestions, included Katherine Anderson (IFA7); Hans Bolscher (Max Havelaar); Paolo Bticheffi (CTM Altromercato); Diana Gibson (Oxfam Fair Trade Company); Nunil Islam (ECOTA Forum); Marlike Kocken (EFTA); Safla Minney (Global Village People Tree); Gerd Nickoleit (GEPA); Imam Pituduh (Pekertf); Loraine Ronchi (Economics Subject Group, University of Sussex); Vinita Singh (IRF7); Phil Wells (Fair Trade Foundation); Peter Williams (Oxfam Fair Trade Company); and Rachel Wilshaw (Oxfam GB). The IFAT Monitoring Working Group (to which many of the above belong) was consulted throughout the process, which IFAT gratefully acknowledges the generous contributions of these persons and institutions; none of them is responsible for the views presented in this document or any limitation, which may remain.
Appendix 1: Format for Monitoring Standards for Fair Trading Organization's5
The Layout of this table is similar to the format developed by Rachel Wilshaw at Oxfam Fair Trade. Please
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