The Fair Trade Movement

Trade exists on our planet since people wanted to exchange things in order to satisfy their first needs. Historically the first trade was so called barter trade, when one good was exchanged for another, usually not equivalent one. Till today the process of trading goods still keeps, but in more complicated and completely different way (Litvinoff et al., 2006, p.7). International trade made people enjoy a wide range of products, after that the theory of comparative advantage was developed. This holds that each country will gain if it specializes in producing those goods and services for which it is best suited and then trades them with other countries (Krugman, Obstfeld & Melitz, 2012, p.25). It is thought that trade is supposed to be good, because it helps us to get what we need, but every system has its own good and bad sides. Fair trade appeared to improve trade and make it less harmful (Jaffee, 2007, p.11).

Fair Trade can be described as self-dependent activity, which is not related to a particular government. It aims to promote "sustainable and ethical trade" (Lee & Vihinen, 2005, p.5). In the research paper of Golding and Peattie, Fair Trade is described as a partnership between producers and consumers, which is supposed to be transparent and respectful (Golding & Peattie, 2005, p.2). It attempts to protect developing countries, negatively impacted by trade and help them to participate in their international trade by creating a new producer-consumer relationship model (Lee & Vihinen, 2005, p.2). According to Litvinoff and Madeley, it is a way to help poor producers while shopping (Litvinoff et al., 2006, p.14). Colding states: " Fair Trade seeks to change society's norms and values by making visible the invisible hand of the market for consumers". It also aims to earn higher earnings for developing country producers that will allow them to cover production costs and improve low labour standards (Golding & Peattie, 2005, p.2).

Fair-trade movement has appeared since the post-war time when the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) were being created (Jaffee, 2007, p.12). It was an attempt to improve living standards and help people to escape from hunger and starvation. Also it seeks to coordinate consumers in making purchasing choices. Without the help of organizations which promote fair trade worldwide it would be impossible to do. All the organizations that legally exist have to be Fair Trade certified (Litvinoff et al., 2006, p.15). There are some popular Fair Trade groups: Max Havelaar Foundation (Netherland), FLO (Britain), TransFair (USA, Canada). They seek several goals, such as honesty of the Fair Trade mark and certification process, as well as they aim to make the business of Fair Trade easy by helping to match supply and demand; to support producers and help them in their business strategies (Nicholls et al., 2005, p.8). Fairtrade Labelling Organizations International (FLO) includes 19 national Fair Trade certification initiatives, this number may vary from time to time. FLO is responsible for setting fair trade standards, for certifying production and for the labelling of products. According to those standards producers such as small farmers have to receive price that covers their costs of production and living, to get premium that could be invested in development. Also contracts have to be signed for a long-term, so that producers can plan their production for the future (Litvinoff et al., 2006, p.28). Buyers should cover at least one harvest cycle if it is required by producers. Usually poor farmers in developing countries organized in a small groups, then these groups organized in democratic structures such as cooperatives. Example of small-scale production systems can be coffee farming and large-scale as tea plantations (Walton, 2012, p.2). FLO guarantees that each product sold in the world will be marked by Fairtrade. But for example in the UK not all the Fair Trade products bear this mark, the majority of its products are without it. The reason for this could be high costs for acquiring the mark (Nicholls et al., 2005, p.11). Buying the product with Fairtrade Mark consumer can be sure that this purchase will provide extra income for farmers which can be used to improve their lives and their positions in the world markets will become stronger. Generally this trade mark may be considered as a link that put consumer and producer closer to each other (Litvinoff et al., 2006, p.16).

Today Fairtrade Mark can be found on many products, there are now over 2000 on the market such as coffee, bananas, tea, sugar, muesli, flowers, sport balls, babyfood, cotton products and cocoa. These products are usually more expensive due to the particular structure of their value chain.