Fair trade as a strategy for international competitiveness

Abstract

SUMMARY At the centre of the debate surrounding sustainable development is a recognition that companies can make a major contribution by being environmentally and socially responsible and that tools associated with these concepts can enhance the competitiveness and economic performance of the firm. In this paper we go further in arguing that in a world of globalisation it is equally important to look at issues of international trade. In an examination of free trade we argue that it is neither fully consistent with sustainable development nor to the benefit of business. We point to a new imperative to develop sound sourcing, and equitable and fair trading relationships. We identify issues associated with fair trade (including issues of human rights, fair wages, sustainability reporting procedures and codes of conduct on ethics) and associated tools of analysis (guaranteed prices, codes of conduct and end price audits). The paper argues that in a world of globalisation with greater transparency and information availability it will be important for companies to be clear about their policies on supply chain management and trade. Indeed, with the growth of an active and sophisticated civil society, it will be argued that policies associated with sound sourcing, equitable trade and fair trade could provide companies with a new competitive strategy based on ethical standards communicated to the consumer through a strategy of differentiation. We explore strategies for the integration of fair trade policies, strategies and standards, and the opportunities for new markets and niches that this presents. It is argued that the integration of fair trade into a business strategy can enhance competitiveness.