As we noted in our last installment of this series exploring fair trade apparel, factory social audits are not authentic fair trade (FT). Another issue with the focus on factory social audits is that it does nothing for marginalized small-scale farmers.

Small and family scale farmers the world over increasingly becoming endangered species. Small farmers face unfair trade agreements, climate change, GMOs, land grabbing, and a whole host of challenges to their livelihood.

The United States government subsidizes US cotton growers to the tune of billions of dollars each year to produce and export cotton below the price of production. This practice is also referred to as “dumping.” Small cotton producers, particularly those in severely impoverished countries in West Africa, are unable to compete and subsequently fall deeper into poverty.

Fair Trade USA’s apparel program does not require the use of fair trade cotton for a product to carry the fair trade seal. Patagonia’s new fair trade line will not include any fair trade certified fibers, like cotton, but will only have one step of the supply chain, “cut and sew” certified. Small cotton growers will be excluded from the potential positive benefits of a fair trade marketplace. While Patagonia will source organic certified cotton for its new line, organic alone does not ensure that farmers receive fair trading terms, much less that the cotton was not grown under exploitive conditions. From Burkina Faso to Uzbekistan, forced labor, child labor and human rights violations are not uncommon. While Patagonia is generally regarded as an innovation leader in the apparel sector, the FTUSA program does not ensure that future companies will source organic and/or fair trade cotton. In fact, there is no safeguard to prevent genetically modified organism (GMO) cotton being used in future fair trade products.

History has shown that uncommitted manufacturers will exploit weak standards in other product categories. For example, FWP has repeatedly underscored the rubber-stamping of FT chocolate products that contain no FT sugar, despite the commercial availability of fair trade sugar. If uncommitted companies are allowed the leeway to not purchase FT ingredients and maximize their own profits, at the expense of FT producers, they do.

As a recent consumer survey, “Fair Trade Labeling Research Findings from a nationwide survey of 1003 Americans aged 18 and over” demonstrates, consumers expect and demand that products certified as Fair Trade be majority fair trade ingredients. FTUSA is creating a deceptive model that neither supports small farmers, nor meets consumer expectations. In other words, FTUSA “cut and sew” label and standard is like selling conventional coffee as “fair trade” simply because the facility that bagged the coffee was certified as “fair.” Or perhaps more clearly, FTUSA “cut and sew” is certifying approximately less than 10% of a given product’s supply chain. Producers, workers and consumers demand more.

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In our intro exploring fair trade apparel, we explained we are exploring issues with ethical and fair trade apparel generally, and Fair Trade USA’s (FTUSA) apparel program specifically.

Because one of our critiques is that the claim of “fair trade” is misleading when placed on a product that has merely passed a social audit at one stage of production, here we explore the difference between a social audit and authentic fair trade.

“Social audits,” are either in-house or 3^rd party audits that review a set list of social criteria, including financial information, workplace health and safety, among other criteria. Of late, “Corporate Social Responsibility” and “social accounting” have become popular tools for companies to publicize their largely voluntary social and environmental contributions. However, as highlighted by the recent tragedies in Bangladesh, where over 1,200 apparel workers were killed in factory disasters, social audits do not ensure minimum health and safety requirements are met, much less fair trade principles. Rana Plaza, where 1,129 workers died in the building collapse in April and Tazreen Fashion, where 112 workers burned to death last November, repeatedly had “passed” audits by the brands and third-party monitors. FTUSA’s apparel standard is by and large analogous to the SA 8000 standard. The SA 8000 standard was the same standard that the Rana Plaza factory passed just weeks before the April tragedy.

Fair trade has historically focused on partnering with democratic, producer-led cooperatives. Organized farmers and artisans are better equipped to negotiate with buyers than individual producers. Subsequently, the many positive impacts of fair trade are deepened with the existence of a democratic organization. FTUSA’s foray into apparel undermines and dilutes the essence of fair trade with its focus on factories where workers often lack independent forms of organization such as worker-ownership or democratic unions. Considering near universal low-minimum wage laws and lack of institutional protection for workers, third-party certification alone cannot ensure living wages and adequate worker protection in piece work or for- hire scenarios in the majority of the world. So-called “Fair Trade Committees,” established to distribute the fair trade premium to beneficiaries, are not an adequate substitute for independent workers organizations and are often controlled by the undue influence of management and other company representatives on the committee.

Ultimately what distinguishes social audits from fair trade is that social audit system and process is largely top down, focusing on a very minimum set of criteria (minimum wage laws, health and safety, etc) and not meaningfully engaged in worker empowerment or transforming the supply chain and trading terms. Fair trade premiums in the apparel sector, ranging from 1-10%, are a poor substitute for living wages and empowered workplaces. Expanding fair trade to the apparel sector without coordination with major labor movement advocates or trade unions, and in fact in spite of labor organizations expressing concern about the program moving forward, undercuts the deep and transformative impact that distinguishes fair trade from other social auditing programs.

To the extent that social audits may extend some benefit to workers over “business as usual,” established options already exist, such as Social Accountability International. To truly improve the lives of factory workers on a large scale will take more than voluntary measures or market place solutions. And to achieve fair trade as originally envisioned, empowered and democratic workplaces must be a baseline requirement.

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For more information on the limits of “social audits,” please see the AFL-CIO’s report, “Responsibility Outsourced.”

Posted on November 19, 2013

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Fair Trade USA (formerly TransFair USA) and its initiative, Fair Trade For All, aims to expand fair trade certification beyond small organized farmers to agriculture and factory workers, including the apparel sector. Fair World Project (FWP) has chronicled Fair Trade USA’s poor track record in recent years, including the decision to unilaterally change its name, resignation from the international fair trade system, imposing fair trade coffee plantations on the market, fair washing in body care, and multi-ingredient products.

FTUSA’s apparel program

Fair Trade USA moved ahead with their apparel program that relies heavily on a hired worker audit in factory setting despite the fact that they had no labor groups on their advisory committee and in fact several labor groups voiced serious concern about the substance and accountability to stakeholders. In addition, there was limited farmer representation on the advisory committee. FTUSA is creating a solution for a problem that never existed. A number of ethical apparel programs already exist (Ethical Trading Initiative, Workers Rights Consortium, World Fair Trade Organization, Social Accountability International, etc.). At the same time, they do not adequately solve a program for which fair trade exists, that is creating market opportunities for impoverished small-scale farmers and artisans. FTUSA standard and services do not improve upon existing hired labor factory programs, but dilute fair trade and confuse consumers.

Not only was feedback from core stakeholders like labor unions and anti-sweatshop activists largely ignored, FTUSA’s two pilot factories, Rajlakshmi, and Esteam, received scathing reports from the Workers Rights Consortium. Both reports can be found here and here.

FWP released a statement November 5^th, 2013 about FTUSA’s “Apparel Program” highlighting key problems with the program’s operation and scope, specifically no requirement for fair trade raw materials, sub-par standards, and only limited portions of the supply chain covered despite claims to the contrary. We’ll explore each of these critiques further in a series of blog posts next week, starting with the premise that social audits are not fair trade. Stay tuned.

Posted on November 15, 2013

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