Fair Trade – Resources

In February 2005 Nelson Mandela said:

In this new century, millions of people in the world’s poorest countries remain imprisoned, enslaved and in chains. They are trapped in the prison of poverty. It is time to set them free. Like slavery and apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings.

And overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life. While poverty persists, there is no true freedom.

The steps that are needed from the developed nations are clear. The first is ensuring trade justice. I have said before that trade justice is a truly meaningful way for the developed countries to show commitment to bringing about an end to global poverty. The second is an end to the debt crisis for the poorest countries. The third is to deliver much more aid and make sure it is of the highest quality.

Nano Nagle was committed to changing the social and political conditions of her time. She listened to the voices of those who were poor and denied their basic human rights. Presentation Sisters today continue to respond to the cries of the poor and the oppressed. One way we do this is through IPA’s commitment to eliminating poverty through debt cancellation and fair trade.

When two parties are in very unequal positions, their mutual consent alone does not guarantee a fair contract; the rule of free consent remains subservient to the demands of the natural law … trade relations can no longer be based solely on the principle of free, unchecked competition, for it very often creates an economic dictatorship. Free trade can be called just only when it conforms to the demands of social justice.

Pope Paul VI, Populorum Progressio #59

The rule of free trade is no longer able to govern international relations.
Freedom of trade is only fair if it is subject to the demands of social justice.

Pope Paul VI, Populorum Progressio #58, 59

The promotion of justice is at the heart of a true culture of solidarity. It is not just a question of giving one’s surplus to those in need, but of helping entire peoples presently excluded or marginalised to enter into the sphere of economic and human development. For this to happen, it is not enough to draw on the surplus goods which in fact our world abundantly produces; it requires above all a change of lifestyles, of models of production and consumption, and of the established structures of power which today govern societies.

Pope John Paul II, World Day of Peace Message 2001 #17

Trade Justice

A Way out of Poverty

Imagine a game of Snakes and Ladders between two children where one player can make the rules. That player, no doubt, would make sure that they could go up the snakes as well as the ladders. They would make the other player go down the ladders as well as the snakes. This of course is not fair.

So that the children’s parents do not get suspicious and intervene, the rule maker occasionally lets the other player go up a ladder, especially when the parents might be watching. In this way the unfair rules can be maintained without challenge. The rule maker may even be praised for their generosity.

The “game” of international trade is played in much the same way with the rich countries setting the rules. They say that they are in favour of free trade and then do the opposite especially when it comes to agricultural products. They set the rules to “free trade” then pay their own farmers billions of dollars every year to give them an advantage over the producers in the developing countries.

This means that those in poor countries cannot fairly compete on the world market and thus are deprived of a real opportunity to work themselves out of poverty. Poor countries are effectively locked out of the world market for many agricultural products.

At the same time, these same rich countries give aid to poor countries. It is estimated by the United Nations that the poor countries lose around US$700 billion each year because of the unfair trade rules. This is about 14 times what they receive each year in aid.

So the rich countries give with the one hand and take back 14 times as much with the other.

Brazilian cotton farmers last year brought a case to the World Trade Organisation (the organisation that is meant to keep the trade rules fair) complaining about the US$3.2 billion paid in subsidies to US cotton farmers. The Brazilians along with some West African cotton producing countries said that this was not fair. The World Trade Organisation (WTO) agreed.

The US did not, however, stop the payments. They appealed the decision. Once again, the WTO this March declared the payments to be illegal under the trade rules. The US still has not stopped the payments.

This story is repeated in a similar way for milk producers in Jamaica, for sugar producers in South Africa and Thailand, for Asian rice farmers and for countless others. Down the snake, down the ladder and miss a turn.

This, however, is a game of life and death for millions of the most vulnerable people in the poorest countries in our world and the rules need to be changed.

Used with permission from OzSpirit – Caritas Australia’s social justice e-newsletter

International Aid is also called Overseas Development Assistance (ODA). The UN Millennium Development Project estimated that it would take an additional US$70 billion each year to reduce the number of people living in poverty by 2015. This seems an impossible amount until we realise that the US military budget for 2005 was US$450 billion.

In 1992 rich countries agreed to spend 0.7 percent of their gross national product (GNP) on ODA. Only a small number of countries give this much – Norway, Denmark, Sweden, the Netherlands and Luxembourg.

Poor countries with enormous amounts of debt are called Highly Indebted Poor Countries (HIPCs). The burden of foreign debt means that money is constantly flowing out of the country to pay off the debt or the interest on the debt and there is no money left to invest in basic services for people within the country.

For every US$1 received in aid the world’s most highly indebted poor countries pay US$13 on old debts.

Global poverty kills as many people each week as were killed in the 2004 tsunami. The burden of debt payments, unfair trade rules and lack of money to develop self-sustaining projects keep countries from getting out of the poverty trap.

GATS

GATS is an international trade agreement within the World Trade Organisation (WTO). GATS treats services as if they were commercial goods for sale instead of social goods that are necessary for people’s lives. In developed countries services are the fastest growing part of the economy. In developing countries, agriculture is the largest part of the economy. In both developed and developing countries essential public services are being privatised and being traded for profit. Because these services become so expensive, people who are poor (the majority of people in developing countries) are excluded from services such as education, health and other essential social services.

There was one small glimmer of hope for the poor at Hong Kong WTO Ministerial Conference, December 2005. While rich countries fought hard to preserve their privileges, developing countries showed increasing assertiveness. The previous ministerial conference in Cancun, Mexico, two years ago, was marked by the emergence of the G20 – a group of large developing countries such as Brazil, India, South Africa and China. While the early demise of this group had been widely predicted, on the contrary, it has gone from strength to strength. In Hong Kong, the G20 joined with other developing countries, including the very poorest, to articulate their demands for a righting of the rigged rules and double standards that plague international trade.

Andrew Hewitt, Executive Director, Oxfam Australia

Our economic system has the sole aim of generating growth. It is not economic growth alone that will reduce poverty. We must also find ways to ensure equitable distribution of income within countries and between countries and environmental sustainability.

Economists say that growth, like a rising tide, lifts all boats. They ask why share the cake more evenly when we can bake a bigger one? But now sea levels really are rising, as a result of global warming driven by the pollution from economic growth. And millions of the poor have no boats to rise in. And the massed ranks of orthodox economists have yet to find the ingredients, or even a recipe, to bake a spare planet to share among the world’s population.

David Woodward and Andrew Simms

Jeffrey Sachs wrote in The Economist in May 2004:

On anybody’s list – the World Bank, Freedom House, Transparency International – a growing and significant number of African countries has the quality of leadership and governance to achieve economic development and to fight terrorism. But these countries lack the means… They lack the roads, electricity, health care and teachers needed to break out of poverty. Without this basic infrastructure, these countries cannot reliably feed themselves, much less attract investors for the long term.

For countries such as these, it is not a question of either trade or aid, but of how trade and aid are both essential to poverty reduction. Foreign aid builds capacity in countries that lack basic infrastructure. An extract from the NGO (Non Government Organizations) Statement to the Commission on Sustainable Development (CSD-13) states:

Unconditional debt cancellation will free up domestic resources. Poor countries spend US$100 million a day on debt repayment. Selling 15% of the International Monetary Find’s (IMF’s) gold reserves at US$425 per ounce could raise US$7 billion and write off 100% of the debt. Fair Trade would free US$700 billion for development. Trade liberalization per se will not. What countries give in aid they should not rob in trade! Unfair trade practices like dumping and subsidies, rob poor countries 14 times of the amount they get in aid.

A Heart for the World

Let us consider Nano as a woman whose vision embraced the whole world. Though it was the needs of her own people that first spoke to Nano’s heart, there grew in her a longing that the whole world might know, might experience God’s saving love in their lives. Coming up the river Lee right into Cork city were the ships that would be loaded with cargo for distant places, particularly the American colonies. Perhaps Nano was looking out at them as she wrote to her friend Eleanor: “My schools are beginning to be of service to a great many parts of the world – this is a place of such trade – they are heard of, and my views are not for one object alone. If I could be of any service in saving souls in any part of the globe I would willingly do all in my power.” This is a cry of a heart reaching beyond boundaries imposed by circumstance to a universal vision. Nano’s wide-ranging longing spoke to the hearts of the Presentation missionaries who left Ireland for far places – even for ends of the earth like Tasmania. This vision speaks to us in ever new ways as we look at the world of which we are a part.

One of the great world movements of our times is the yearning for peace among and within nations, the questioning of and resistance to war as an acceptable way for human beings to solve their differences. Linked to it is the movement for justice on a world scale, for real development of peoples now bearing a grossly unfair share of the burdens of the world’s economy. This cannot be something of no concern to us. The struggle for the kingdom values of justice, love and peace belongs to our Christian struggle precisely because it belongs to our human struggle. And so our eyes search out the possibilities, search for our point of entry, the small, possible and manageable action we can do.

Raphael Consedine pbvm (for the 125th Anniversary of St Mary’s College, Hobart Tasmania)