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L'Economie Politique n°39 Pour un nouveau modèle de consommation - 2008

Special edition of the French monthly magazine Alternatives Economiques

Series Trends in Social Cohesion
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Fair Trade
Fair trade legislation

The findings of the questionnaire show that fair trade has a higher application in different countries than ethical finance. Fair trade initiatives are available in 44% of the member states of the Council of Europe, while legislation supporting fair trade exists in 24% of member states.

The legal initiatives, which up to now exist only in western European countries, (1) take place at national, regional and local level. At European Union level several legal initiatives have been set up in all three legislative categories.

Concerning the quality of commitment, existing fair trade legislation is summarised below.

a. Initiatives which recognise the fair trade sector

In this category different regulations can be found that pick out fair trade as a central theme and express the need for support for the sector. They can be found, for example, in declarations of different public authority organs (2), in fair trade resolutions (3) and in legislative proposals (4). Advanced examples for regulations in this category include resolutions in Austria, Belgium and Spain where legislation has been introduced at local, regional and national level. The national Belgian initiative (5) sets out concrete, detailed strategies on how to further the sector. In addition to an analysis of the situation of the fair trade sector, the initiative points out the lessons which can be learned from the past to promote strategies to support the sector and develop a plan of action. The proposed Italian law (mentioned above) could become important as an example for Europe if it comes into force as it covers the fair trade sector as a whole.

The European Union, which stated in the Treaty of the European Community (Article 177) its aim to foster the sustainable and economic and social development of developing countries, has expressed in many other documents the need to support the fair trade sector. These include the development of fair trade labelling initiatives, financial support and promotion of fair trade activities (6), the demand of assistance for fair trade bananas (7) and fair trade coffee (8), the plan to set up a working group on fair trade (9) and the provision of different proposals (10) to improve the functioning of the fair trade sector. In the Resolution of 2 July 1998 the European Parliament stated that fair trade is the most efficient way of promoting development. A “Sustainable Trade Action Plan” of the European Commission, which was discussed in a meeting on 2 July 2003, includes further measures to promote sustainable and fair trade. Fair trade also forms part of the considerations of the Commission concerning the Report of the World Commission on the Social Dimension of Globalisation 2004. la mondialisation.

b. Regulations which provide legal support for the fair trade sector

At this level of legislation states have decided to actively support the sector. They do this by providing either financial support or supplying different favourable legal frameworks for the sector.

The financial support comes from local, regional and national public authorities and is primarily directed to the following purposes: awareness- raising, private and public campaigns, supporting fair trade associations, support for fair trade labels, creation of new fair trade labels, support for “fair weeks”, development and market introduction of new fair trade products, support for national and international structures of fair trade, for fair trade conferences, for research (handbooks) or for different fair trade projects (11). Germany distinguishes itself as exemplary in this class as it is currently investing strongly in the fair trade sector. The Programme of Action 2015 comprises numerous initiatives to give financial support (e.g. € 6,48 million for 2003-2005) to the sector and aims to double fair trade consumption in Germany.

As different favourable legal frameworks the following may be mentioned: communications which help fair trade products to be introduced into public procurement (12), conventions which guarantee the transactions of the fair trade sector (13), special tariffs for fair trade advertisements on television (14), state recognition of fair trade organisations (15), ombudsman consumer guidelines and social label legislation (16), and regulations for social enterprises and non-lucrative organisations (17). Belgium may be seen as a leader in this field as it provides many kinds of favourable legal frameworks (public procurement, guarantees, social labels) with high commitment to the fair trade sector. It is followed by France, which offers official state recognition of a fair trade organisation and the privileged promotion of fair trade on television.

The European Union has until now basically supported the fair trade sector by providing financial means for awareness-raising campaigns, for research or for the improvement of the structure of networks (18). If the Sustainable Trade Action Plan of 2003 is put into practice other support will also be available such as: the establishment of a European Unionlevel system of accreditation/recognition of sustainable, fair and ethical trade labels, the promotion of sustainable and fair trade criteria in public procurement in the European Union, and support to increase developing countries’ exports of sustainable products.

c. Commitment of public authorities to the fair trade sector

The last class comprises local, regional and national decisions through which different public authorities (19) demonstrate that by consuming fair trade products they are engaged in the sector. The legal initiatives differ with regard to the number of products chosen (20), the amount consumed and whether consumption takes place regularly or only at special events. Moreover, some public authorities (21) commit themselves to the long-term promotion of fair trade. Belgium and Germany may be mentioned here as their public authorities consume fair trade products at local, regional and national level. Bamberg in Germany buys flowers, from the region if possible, otherwise it buys from “fair” production. The United Kingdom stands out in having around 1000 local councils consuming fair trade products (22).

The European Union adopted a resolution in 1991 on coffee consumption and the introduction of this coffee within the community institutions as a means of active support for small Third World coffee producers.

From Esther Petridis, Trends in Social Cohesion n°12, "Ethical, solidarity-based citizen involvement in the economy : a prerequisite for social cohesion", Council of Europe publishing, 2004, pp. 94/99

Categories of available information
Ethical and solidarity-based finance
Fair Trade
Responsible consumption

1) Fair trade activities have already started in some eastern and southern European countries such as Albania, Hungary, Poland and Slovenia, but there is no corresponding legislation yet.
2) Austria: concepts for the implementation of a fair local procurement; Belgium: Law of 25 May 1999; Federal, National Plan for Sustainable Development 2000-2004; France: Common Declaration; Germany: Coalition Agreement; Report of an Enquete-Commission; Answers for Parliamentary Requests; the Netherlands: parliamentary request concerning a sustainable purchase policy; Spain: Law on International Development Cooperation 1998; Switzerland: Report of the Commission for Foreign Policies – 18.2.2002; the United Kingdom: strategy for sustainable development; framework for sustainable consumption and production; report on sustainable development in public procurement 2002.
3) Fair trade resolutions of public authorities are available, either at national, regional or local level, in the following countries: Austria, Belgium, France, Germany, Italy, Liechtenstein, Norway (local), Spain, Switzerland and the United Kingdom. Norwegian fair trade organisations have lobbied for a fair trade resolution at national level – until now without success.
4) XIV Legislatura, 14.4.2003, Camera dei Deputati No. 3892: This – not yet adopted – Italian law proposal envisions amongst other advantages (e.g. Art. 7: creation of special funds in favour of fair trade) different fiscal incentives for the fair trade sector (Art. 4: fiscal regime incentives for fair trade; Art. 5: tax reduction for fair trade products; Art. 6: reduction of the turnover tax of fair trade products from 20% to 4%).
5) See Note Stratégique transsectorielle, 14.11.2002.
6) Labelling initiatives: Economic and Social Committee on the European fair trade marking movement – CES 538/96 E/as; European Parliament Resolution on social labelling; financial support: Regulation of the European Commission No. 856/1999 – 22.4.1999; promotion: EU’s Partnership Agreement with African, Caribbean and Pacific countries, Cotonou, 23.6.2000; Council Resolution on development education and raising, European public awareness of development co-operation, 8.11.2001; Communication from the Commission to the Council and the EP, Agricultural Commodity Chains, Dependence and Poverty, Proposal for an EU Action Plan, 12.2.2004.
7) Resolution EU-ACP Joint Assembly 1997.
8) European Parliament Resolution on the crisis in the international coffee market, P5-TAPROV( 2003)0189.
9) European Commission: Document on Alternative Trade.
10) European Parliament: Fassa Report 1998, A4-0198/98, PE 225.945.
11) Such financial support can be found for example in Austria, Belgium, Finland, France, Germany, Luxembourg, the Netherlands, Norway, Portugal, Spain and Switzerland.
12) Austria: expert opinion concerning the introduction of fair trade products into public procurement; Belgium: law for public procurement (24.12.1993) changed through the law programme of 8.4.2003 (Article 16), which allows, with regard to the tender, to take social, ethical or environmental aspects into consideration; State Secretary Circular letter concerning “responsible procurement” in the form of an internet website : www.guidedesachatsdurables. be; Germany: Decision of the Munich Council that certain products have to be tendered with respect to the ILO Convention (2002); Italy: regulations concerning the integration of fair trade products into public procurement in Rome; the United Kingdom: Guidelines of the Office of Government Commerce which show how government procurement offices can source fair trade foods (March 2004).
13) Convention between the Belgian state and the “Coopération Technique Belge”, which sets up a mechanism to guarantee the transactions of fair trade (2003).
14) Letter of the French Prime Minister, which offers a special tariff for advertising fair trade in the public media.
15) In 2003 the French state awarded to the Max Havelaar association the label “campagne d’interêt général”.
16) The Belgian law for the promotion of socially responsible production (27.2.2002) distinguishes products with a public label, which follow a socially and environmentally responsible production process. The Consumer Guidelines of the Norwegian Ombudsman state when companies can use the expression ”ethical” and “fair trade” (2003).
17) The Italian laws on social enterprises (November 2003), on non-lucrative organisations (Decree 460/1997) and concerning the organisations for voluntary service (1991) privilege among others fair trade organisations, for example with fiscal advantages.
18) A description of the activities of the European Union in support of the fair trade sector can be found in the Communication from the Commission to the Council on fair trade, 29.11.1999, COM(1999)619.
19) Such as the federal chancellor’s offices, offices of prime ministers, offices of presidents, ministries, national and regional parliaments, parties of the parliament, federal states, senates, chambers, kings, queens, local municipalities, mayors, general and regional councils, city councils or national universities.
20) The most frequently chosen products are coffee and tea. Other products available include bananas, honey, cacao, sugar, fruit juices, rice or jam.
21) For example, many local authorities in the United Kingdom.
22) JO C 280, p.33, 51991IPO228 -28.10.1991.