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The European Union and Fair Trade: Hands-off?

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Since the Lisbon Treaty (2009), promoting ‘free and fair trade’ has explicitly become one of the objectives of the European Union’s (EU) relations with the wider world (TEU art 3.5). In addition, the latest trade strategy of the EU, ‘Trade for All’ (2015), emphasises the need for a value-based trade policy. It refers to the promotion of sustainable development, human rights and good governance through trade and suggests several instruments to achieve this objective, including ‘fair and ethical trading schemes’.However, it remains rather unclear what the EU’s position concerning fair trade exactly is. The academic literature on the EU’s common commercial policy rarely refers to fair trade policies. An important obstacle for clearly understanding what the EU’s approach to this topic would be is the ambiguous meaning of the concept ‘Fair Trade’. Since there are divergent interpretations of Fair Trade, ranging from labelling of products, over support to the social movement, to the reform of the trading system, and even trade defence instruments, there is no established answer to that question. The aim of this chapter is twofold. First, on a conceptual level, a framework is developed to unravel the diverse meanings of ‘Fair Trade’ and to structure the debate. Second, from an empirical point of view, this framework is used to interpret the EU’s position and how it has evolved over time.
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Final version of chapter published in S. Khorana & M. García (Eds.) (2018), Handbook on the EU and International
Trade. Cheltenham: Edward Elgar
15. The European Union and Fair Trade: hands off?
Deborah Martens and Jan Orbie
15.1 INTRODUCTION
Since the Lisbon Treaty (2009), promoting ‘free and fair trade’ has explicitly become one of
the objectives of the European Union’s (EU) relations with the wider world (TEU art 3.5, see
Box 15.2). In addition, the latest trade strategy of the EU, ‘Trade for All’ (2015), emphasises
the need for a value-based trade policy. It refers to the promotion of sustainable development,
human rights and good governance through trade and suggests several instruments to achieve
this objective, including ‘fair and ethical trading schemes’ (European Commission, 2015, p.
25).
However, it remains rather unclear what the EU’s position concerning fair trade exactly is.
The academic literature on the EU’s common commercial policy rarely refers to fair trade
policies. An important obstacle for clearly understanding what the EU’s approach to this topic
would be is the ambiguous meaning of the concept ‘Fair Trade’. Since there are divergent
interpretations of Fair Trade, ranging from labelling of products, over support to the social
movement, to the reform of the trading system, and even trade defence instruments, there is no
established answer to that question.
The aim of this chapter is twofold. First, on a conceptual level, a framework is developed to
unravel the diverse meanings of ‘Fair Trade’ and to structure the debate. Second, from an
empirical point of view, this framework is used to interpret the EU’s position and how it has
evolved over time.
The chapter is structured as follows: first the complexity and ambiguity of the term ‘Fair
Trade’ is briefly introduced, followed by an explanation and schematisation of its sometimes
complementary, sometimes opposing ideological and philosophical meanings. Once the
conceptual confusion associated with this concept is clarified, a historical overview of
the EU’s positions and initiatives concerning Fair Trade is given, enabling a better
understanding of where the EU Fair Trade policy is coming from and where it could be
going. Finally, the framework developed in the first part will serve as a heuristic tool to map
the EU’s position on the matter, followed by conclusions.
15.2 WHAT’S IN A NAME?
‘Fair Trade’ is a complex and multi-dimensional concept (Miller, 2017). There are several
opinions on what fairness actually stands for and how it should be attained. In this regard,
special attention should be given to the various spellings and the corresponding meanings of
the term (see Box 15.1) as this distinction will also be used throughout the chapter.
In addition to ‘Fair Trade’, other terms such as alternative trade, ethical trade, social trade,
trade justice and sustainable trade are used. Even though these terms often remain undefined
and are used interchangeably, each of them could be given a specific meaning.
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BOX 15.1 VARIOUS SPELLINGS OF FAIR TRADE
Fairtrade one word refers to products certified by Fairtrade Labelling Organisations International
(World Fair Trade Organization et al., 2011).This product label is what most people will know as fair
trade and has become the most popular and accessible model of fair trade to date.
The term fair trade two words and lowercase is used to refer broadly to the social movement,
concept and market, while FairTrade two words, capitalised is the umbrella term for the philoso-
phies and practices committed to fairness in global trade (Valiente-Riedl, 2013).
Respectively ‘fairtrade’, ‘fair trade’ and ‘Fair Trade’ move from a very narrow to an extremely
broad interpretation, a distinction that will be addressed hereunder. These spelling rules
are confirmed by other authors (for instance Fisher, 2009), however the notations are often mixed
up, requiring a clarifying context.
For instance, sustainable trade also includes organic products, and social trade is focused on
ensuring that working conditions in global value chains meet minimum international standards,
mainly referring to the adoption of codes in the context of Corporate Social Responsibility
(CSR) (Smith & Barrientos, 2005).
Whereas all variations of Fair Trade have in common that they refer to achieving greater
equity in international trade, there is no consensus on how this should be organised, what it
should look like, or which actors should be involved. In the conceptual framework set out
below, we will map the different interpretations of the concept ‘Fair Trade’. These range from
the narrow and pragmatic approach of fairtrade labelling schemes and CSR practices to a
broader interpretation of changing the international trading rules, which is often referred to as
‘trade justice’. Moreover, we will indicate that, parallel to this narrow and broad interpretation
of Fair Trade, different roles in scope and substance can be reserved for governments and/or
market players.
These extremes are gathered in a matrix that we will use to structure the debate (see Figure
15.1). The framework consists of two axes. The first axis makes a distinction according to
the extent of systemic change necessary to achieve fair trade, and ranges from a reformist to
revolutionary view (partly based on Walton, 2010). The second axis distinguishes the required
role of the government or public sector versus the market or private sector, in other words
whether interventionism or neoliberalism prevails. Since these axes represent a continuum
between the opposite extremes, there is no watertight seal separating them and gradations
within each of the quadrants are possible.
15.2.1 Reformist Fairtrade
The reformist approach is pragmatic and narrow in the sense that the solutions put
forward to gradually achieve greater equity in international trade do not challenge the
functioning of the current, market-oriented trading system (in particular the rules of the World
Trade Organization [WTO]).
Two distinct forms are included in the reformist approach. The first, ‘fairtrade’, is the most
well-known interpretation of ‘Fair Trade’, as it constitutes a concrete practice that can easily
be visualised through the product-certification route (e.g. Oxfam label) or through the
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The EU and Fair Trade: hands off? 283
Reformist
Regulated
fairtrade
Market-
based
fairtrade
Interventionist Neoliberal
NIEO Fair
Trade Undistorted
free trade
Revolutionary
Figure 15.1 Conceptualisations of Fair Trade
integrated-supply route (e.g. world shops) (Cremona & Marín Durán, 2013). The most
commonly used definition of this notion of fair trade has been put forward by the fair trade
movement and reads as follows:
Fair Trade is a trading partnership, based on dialogue, transparency, and respect, that seeks
greater equity in international trade. It contributes to sustainable development by offering
better trading conditions to, and securing the rights of, disadvantaged producers and workers
especially in the South. Fair Trade Organisations, backed by consumers, are actively engaged in
supporting producers, awareness raising and in campaigning for changes in the rules and practice
of conventional international trade. (World Fair Trade Organization et al., 2011)
The fair trade social movement has put much emphasis on the marketing of fairtrade and it has
been relatively successful in doing so (Murray et al., 2006). However, the impact of this notion
of fairtrade has often been questioned (Dragusanu et al., 2014), not least because it is doubtful
to what extent fairtrade can have any impact if it continues to be a small (albeit growing) niche
market. Also, the question whether fair trade should be mainstreamed or not has been strongly
debated (Fridell, 2006; Jaffee, 2012; Murray et al., 2006; Raynolds, 2009). In addition, as the
criteria underlying different labels can vary greatly, the lack of transparency between different
labels has been criticised (Kolk, 2013; Raynolds et al., 2007).
When combining this narrow interpretation of fair trade with the second axis, namely
interventionist (government dominated) versus neoliberal (market dominated) approaches,
different ways to achieve the ‘fairtrade’ objective can be discerned. Governments can actively
support fairtrade labelling schemes and sales volumes. For instance, they can engage in the
development of state-led public labels, which for instance already exist at EU level for organic
products. Here, governmental actors would be in charge of setting the criteria, issuing the
certification and providing the necessary follow-up. Governmental actors could also be
involved in ensuring the credibility of private fairtrade labels, which is currently under
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pressure, by monitoring and following up on their implementation. In addition, public
authorities can develop supportive public procurement rules enabling the consumption of
fairtrade products. Constituting important players in procurement markets, governments could
influence the market and set an example by putting ethical principles at the forefront of their
purchasing practices. In addition, governments could decide to install beneficial market access,
i.e. low or no import tariffs, for fairtrade labelled products.
The extent to which governments intervene in the creation and monitoring of labelling
schemes, and link these to procurement rules and import tariffs, will move them further into
the ‘regulated fairtrade’ quadrant of the matrix. Alternatively, moving away from more
interventionist initiatives and allocating a bigger role to market actors, governments can limit
themselves to the promotion of fairtrade products through awareness and information
campaigns. Proceeding towards the neoliberal end of the spectrum, the business of labelling
can be left entirely in the hands of private actors and remain voluntary. Governments then take
a hands-off approach. Consumers’ demands and reputation determine which labels are credible
enough and worth purchasing. The law of supply and demand decides to what extent some
fairtrade labels may be more successful than others.
The promotion of CSR, which has become an increasingly important buzzword in
international business over the past decade, represents the second form of the reformist
approach. CSR refers to businesses taking responsibility for their impact on society,
reconciling their economic, social and environmental ambitions. CSR policies are self-
regulatory, defined at company level (mostly via a corporate code of conduct or third-party
certification [including fairtrade]), whereby certain principles, rules and systems should
ensure that the company’s actions are not only legal but also ethical (Hendrickx et al., 2016).
Even though several definitions of CSR exist, Dahlsrud (2008) identified five consistently
recurrent dimensions, namely the environmental, social, economic, stakeholder and
voluntariness dimensions. Due diligence is a central concept for CSR, referring to the
identification and management of risks and the steps that a reasonable and prudent company
should take in order to avoid them and reduce its liability (Bright, 2016). In the context of
responsible business conduct, due diligence refers similarly to the steps taken by a business to
identify, prevent and mitigate any adverse effects of their activities on environmental, labour
and human rights throughout their entire supply chains. By doing so, trade along the supply
chain becomes fairer for those involved. Companies have been increasingly active in setting
up CSR policies. However, research has shown that these have in general brought only limited
improvements (Lund-Thomsen & Lindgreen, 2014). The main criticisms against CSR
commitments concern their lack of enforceability as well as the limited transparency and little
of efforts done by businesses to disclose the impact of their activities.
Even though CSR is originally a business-led practice, more interventionist options can also
be envisaged. Governments could expand the existing legal obligations for businesses,
especially the liability of the parent company in their home state for the impact of their own or
their subsidiariesactivities abroad. Other avenues by which governments could steer and
shape CSR include setting rules for more transparency, multi-stakeholder initiatives to closely
monitor certain sectors and companies, and interacting with private initiatives. The Kimberley
Process Certification Scheme, initiated in 2003 by the United Nations to stop the trade in
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conflict diamonds and to ensure that this trade was not fuelling violence by rebel movements,
illustrates a potential approach (European Commission, 2014). Another example is the
Bangladesh Sustainability Compact (see Box 15.3). Deviating less from the neoliberal part of
the axis, governments can agree upon and manage to different degrees the implementation of
non-binding principles that should be adhered to. The OECD Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business and Human Rights are cases in point.
Similar to fairtrade labelling, however, governments often limit themselves to promoting
awareness of CSR principles, relying on the self-regulating force of ‘ethical consumerism’.
Walton (2010) suggests that fair trade is best characterised as an attempt to establish a form
of ‘interim global market justice in a non-ideal world’ (p. 441). ‘Interim’ refers to the fact that
fair trade is a second-best proxy in the absence of the wider implementation of justice at the
global level. This insight brings us to the revolutionary side of our conceptualisation, where,
in contrast to the fair trade option outlined above, structural changes to the current trade system
are envisaged.
15.2.1 Revolutionary Fair Trade
On the other side of the vertical axis, the revolutionary approach is ideological and broad. Here,
we find two opposed interpretations of ‘Fair Trade’: the first one focuses on the fairness of
the outcome of international trade practices, whereas the other interpretation looks mainly into
their procedural fairness. We label both of them as revolutionary because the realisation of
their core objective requires a structural change of the current trading system.
First, ever since the emergence of the fair trade movement in the 1960s, the pragmatic
strategy mentioned above was supposed to be a component of a larger agenda to make the
international trading system fairer. In this context, the fair trade movement can be seen as a
countermovement of de-commodification and social re-embedding (Raynolds, 2000) and as
resistance to the hegemonic global capitalist market (Shreck, 2005). In other words, the broader
objective is to counter the trend of unequal growth in favour of the West and to oppose the
prevailing practice of treating the world and its resources merely as products to be sold or
bought. The origins of the fair trade movement coincide with the calls within the UNCTAD
and G77 for a New International Economic Order (NIEO) that would radically restructure the
world trading system and abolish the structural dependence of the South on the North
(Rothstein, 1979). In this context commodity arrangements were launched providing high and
stable prices for producers in the South and protective measures to insulate them from
international competition and foster industrialisation. Ideologically, the pleas for a NIEO can
be seen as the globalisation and radicalisation of the ‘embedded liberalism’ compromise
between states and markets that characterised the post-war economic consensus in the North.
Here, fairness in trade depends on the consequences of a trading practice on the countries
and their population. If these consequences are not fair, then the practice should be changed.
Two issues are central in evaluating the outcome of trade. First, there is the issue of (global)
distributive justice that handles the allocation of resources in societies (Boda, 2001; de Bres,
2016; Miller, 2017; Rawls, 1999; Rescher, 2002; Risse, 2012). This topic has caused much ink
to flow, and the much-debated distinction between equality and equity is particularly relevant
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when assessing the meaning of Fair Trade. Whereas equality refers to an equal distribution of
wealth, equity puts this amount into perspective, adjusting the distribution to the needs of the
actors (de Bres, 2016; Starmans et al., 2017). A second pertinent issue concerning the outcome
of trade is its intergenerational dimension (Boda, 2001). Here, the fairness of trade is assessed
through the impact of trade on sustainable development (De Schutter, 2015). Scholars and
activists have argued that trade should not only be more regulated in terms of social and
environmental standards, but also reduced in absolute terms since current trade practices
inherently impede long-term sustainability.
Since public authorities at the national and international level are indispensable for
the realisation of such systemic change, this interpretation is clearly located at the
interventionist end of the horizontal axis. What this new trade system would look like is up for
discussion, it would however allow countries, and especially developing and least developing
countries (LDCs) to transform the rules in favour of their needs, enabling them to develop their
economies according to their own preferences. It would drastically enlarge the ‘policy space’
of national (or regional) authorities in the South and in the North for the pursuit of sustainable
development objectives (Heron, 2011; Shalden, 2005; UNCTAD, 2014).
Second, and radically diverging from the previous notion, Fair Trade can be seen as a
synonym for undistorted free trade. Trade should be freed from barriers and discrimination.
The role of governments is limited to guaranteeing the ‘level playing field’, for instance
through competition policies. Accordingly, in trade policy circles, the term ‘fair trade’ has
traditionally been used as a reference to certain trade protection instruments such as anti-
dumping and anti-subsidy. One could wonder why this interpretation is not simply tagged as
free and unfree trade.
According to the classical neoliberal view on international trade, the rules of the
WTO are seen as the best guarantee for fair trade, whereas ‘unfair trade’ is typically
characterised as violations of these rules. From this perspective, the development towards a
completely liberalised trading system is thus necessary. Even though this approach is in line
with current developments, the full realisation of this objective would still represent a radical
change, for instance by prohibiting agricultural subsidies, import tariffs and other market
interventions that are still allowed by the WTO. Importantly, free trade advocates are not
necessarily opposed to (fairtrade) labelling, as long as this happens in a non-discriminatory
and transparent way. When it comes to social clauses in international trade, free traders have
always argued that voluntary and non-binding approaches such as labelling are more effective
and less prone to protectionist abuses (Bhagwati, 2002).
In this view the rules and procedures aiming at the creation of a level playing field are
paramount, in contrast to focusing on the outcome of the trade practice discussed above.
Nozick’s Entitlement Theory (1974) allows us to interpret a norm of conduct (of traders in our
case), claiming that we can tell whether a distribution of goods is just or not by looking at its
history: if goods were acquired and transferred legitimately in our case, in line with WTO
rules then the resulting distribution of goods is just. If they were not, then we have to ask
whether the injustice was rectified (Green, 2009).
In this interpretation of undistorted free trade the role of governments is limited to creating
an enabling space for the market to function freely. For this purpose further liberalisation
between states is necessary, both in terms of tariffs and non-tariff barriers. In addition, the free
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trade agenda needs to be deepened. This entails the inclusion of domestic regulatory matters
that have a, direct or indirect, impact on trade in liberalisation negotiation. The more this free
trade agenda can be realised, the more trade relations will be considered ‘fair’.
15.3 AN EU FAIR TRADE POLICY?
After clarifying the different interpretations of the concept of Fair Trade, the question of the
EU’s position on the matter can now be addressed. Before structuring the EU Fair Trade policy
according to the framework introduced above (see Figure 15.1), we provide a historical sketch
of the EU’s trade policy and relevant initiatives.
15.3.1 NIEO-inspired Trade Initiatives
Since the EU’s creation, trade and aid relations with the EU member states’ (former) colonies
(later grouped as the African, Caribbean and Pacific [ACP] countries) have always
received special attention. These relationships, formalised through the Yaoundé (1963, 1969)
and Lomé conventions (1975, 1980, 1985, 1990) and the Cotonou Agreement (2000), have
always been larded with an ethical development discourse (Langan, 2009). In the context of
the scarcity of some commodities and the oil crises, as well as the growing assertiveness of
newly independent developing countries, the EU (then still the European Community)
developed a number of initiatives that somewhat approached the ‘NIEO Fair Trade’ quadrant.
For instance, the EU was the first to create a Generalised System of Preferences (GSP) in
1971, thereby enhancing Asian and Latin American countries’ access to the European market
in a non-reciprocal way. In the same NIEO spirit, the first Lomé Convention established
relatively ambitious trade-and-aid schemes aimed at intervention in international commodity
markets such as Stabex, a compensatory finance scheme to stabilise export earnings of ACP
countries, which was later extended to Sysmin for mining products and commodity protocols
providing fixed quotas and prices for bananas, sugar and rum. Lomé also established non-
reciprocal market access for the ACP countries. Despite significant limitations in design and
obstacles in implementation, these initiatives at least partly echoed the NIEO demands for
redressing the unequal distribution of benefits in favour of developing countries (Orbie, 2007).
15.3.2 Neoliberal Shift
These mechanisms were however gradually eroded through the 1980s and 1990s,
demonstrating a shift towards more neoliberal EU trade policies. This culminated in the
negotiation of the Cotonou Agreement, which abolished Stabex and Sysmin and introduced
reciprocity in EU-ACP trade relations through Economic Partnership Agreements (EPAs). In
line with a number of WTO verdicts and internal agricultural reforms, the banana and sugar
protocols were effectively abolished. Even though trade was still being linked to development
and other value-based objectives, regulated and market-based fairtrade clearly became the
most-favoured approach.
First, this approach took shape through a number of highly symbolic trade-related initiatives
that are located between the ‘NIEO Fair Trade’ and ‘undistorted free trade’ quadrants: the
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first social GSP clause introduced in 1994, linking market access for developing countries
to labour standards; ‘Everything but Arms’ (EBA) since 2001, providing duty-free and
quota-free market access for the least-developed countries (LDCs); the elaboration of the
GSP system with sustainable development and governance trade conditionality (GSP+) in
2005; and the EU Aid for Trade Strategy in 2007. While underpinning the EU’s image of an
ethical actor towards the Global South, these initiatives also endorse a neoliberal logic to EU
trade relations with developing countries (Orbie & Martens, 2016).
Second, the ‘market-based fairtrade’ interpretation has secured a place on the EU’s agenda.
Especially the European Parliament paid attention to the calls of the fair trade movement and
the first fairtrade label, Max Havelaar, which was launched in 1988. The Parliament
issued several resolutions on the matter (in 1991, 1994, 1998, 2005), covering several
pertinent Fair Trade themes, including structural imbalances, the WTO negotiations, policy
coherence and coordination in the EU, and issues and suggestions concerning certification.
The Commission then replied with rather descriptive Communications (in 1995, 1999, 2009)
in which it elaborated on the concept of fair trade, adopting the fair trade movement’s
definition mentioned above, and gave a brief outline of the situation at that time. The EU’s
commitment to the aims and objectives of the WTO such as transparency and non-
discrimination are always emphasised, indicating that fair trade initiatives should respect these
prescribed principles. As will be confirmed below, this ‘hands-offs’ approach is still
maintained today. In general, both the Parliament’s resolutions and the Commission’s
Communications on fair trade have mostly addressed fair trade in the narrow and pragmatic
sense (cf. market-based fairtrade).
Finally, in the same period, during the development of the European Constitutional Treaty,
within the discussions of the Working Group on External Action in 2003, fair trade was also
included among the EU objectives in the wider world. This would subsequently be taken over
into the Lisbon Treaty (see Box 15.2). Manners (2010) pointed to the apparent contradiction
in the pursuit of ‘free and fair trade’. He considers the reference an interesting innovation and
leaves the question of whether it is a meaningful declaration of principle or not open.
According to Eeckhout (2011) this reference should be read as an instruction to take account
of the interests of developing countries in the international trading system and not as a sign of
support for trade defence measures (cf. undistorted free trade), because the reference is
juxtaposed with ‘the sustainable development of the earth’, ‘solidarity and mutual respect
BOX 15.2 ARTICLE 2.5 IN THE TREATY OF LISBON, AMENDING
THE TREATY ON EUROPEAN UNION AND THE
TREATY ESTABLISHING THE EUROPEAN COMMUNITY
(2008)
In its relations with the wider world, the Union shall uphold and promote its values and interests and
contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable devel-
opment of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication
of poverty and the protection of human rights, in particular the rights of the child, as well as to the
strict observance and the development of international law, including respect for the principles of
the United Nations Charter. [Emphasis added]
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among peoples’, and ‘eradication of poverty and protection of human rights, in particular the
rights of the child’. Interestingly, this novelty does not lean towards a more neoliberal trade
order. However, as mentioned in the introduction, there is no univocal answer to the question
of how the EU aims at realising this objective. However, rather than heralding a NIEO-style
shift, we believe the reference indicates a growing preference for reformist approaches to fair
trade.
These initiatives can be understood in the context of increased activism from transnational
advocacy groups and the growing discontent of developing countries faced with intensified
international trade liberalisation. Growing anti-globalisation protests, such as the ‘Battle of
Seattle’ in 1999, have made it clear that the legitimacy of the world trading system depends on
its ability to incorporate developing country demands and address issues of global trade justice
(Stiglitz, 2006; Summers, 2001). Anti-EPA protests in the 2000s, and more recently anti-TTIP
and anti-CETA activism (against the EU trade agreements negotiated respectively with the
United States and Canada) throughout the EU, have only further illustrated the rising concerns
with the fairness of the EU’s trade policy.
However, around the mid-2000s, it seemed that the commitments to Fair Trade had barely
been implemented. The Commission had engaged in a more radical free trade orientation
through the EPAs, where the Commission increasingly emphasised the need for reciprocal
market access and deep trade liberalisation. The EPAs have experienced a rough start and
serious delays; however, more and more ACP countries have succumbed to the EU’s pressure
and are in the process of finalising negotiations. Dicaprio and Trommer (2010) note that by
signing EPAs, developing countries, and especially LDCs, engage more than ever before
in international trade law. One third of the LDCs involved in EPA negotiations were not even
WTO members in 2009. Through the EPAs they have been included in the neoliberal global
trade regime and are more prone to WTO legislation.
This trend towards neoliberal trade policies manifested itself even more clearly when the
‘Global Europe – Competing in the World’ trade strategy for the EU was launched in 2006 by
the then Trade Commissioner De Gucht. The basic message of the Global Europe strategy is
that trade relations, and new trade agreements accordingly, should foster (EU) competitiveness
and should therefore be pursued with emerging markets. ‘Fairness’ is mentioned several
times, but only in the context of trade defence (cf. undistorted free trade). The implementation
of the Global Europe strategy has been quite successful in terms of bilateral free trade
agreements (FTAs). No fewer than nine trade agreements have been concluded since the
strategy’s launch (South-Korea [2010], Central America [2012], Peru and Colombia [2012;
with Ecuador joining in 2016], Canada, Ukraine, Georgia, Moldova and Singapore [2014]
and Vietnam [2016]), whereas several negotiations are advancing fast at the time of writing
(such as with Japan, Mercosur and the modernisation of the agreement with Mexico). Other
negotiations are stalled but not cancelled (India, Indonesia, Malaysia, Thailand, Philippines
and the United States). Finally, more trade negotiations are in the pipeline, such as with New
Zealand and Australia.
15.3.3 Piecemeal Approach
In addition to the continuation of the (revised) initiatives linking trade and development
launched in the 1990s and early 2000s, the EU has tried to combine its neoliberal trade
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orientation with several ad hoc initiatives to curb certain negative consequences of trade.
These can be grouped into four clusters: the chapters on ‘trade and sustainable development’
(TSD) in EU bilateral trade agreements; the recent ‘Trade for All’ strategy; several initiatives
addressing issues concerning human rights or sustainable development in a specific supply
chain; and a continuing promotion of fairtrade in the narrow sense.
All the new generation trade agreements, starting with the EU-Korea FTA, contain a TSD
chapter. Here, adherence to key international labour and environment standards and
agreements, the prudent use of natural resources such as timber and fish, and the promotion
of practices intended to favour sustainable development such as fair trade and CSR are
included. These chapters also establish a monitoring mechanism which involved civil society
of both parties. However, the TSD chapters have been criticised for being too weakly
implemented and not enforceable. There is currently a reflection exercise ongoing within the
Commission to address these criticisms and improve the functioning of these chapters
(European Commission, 2017).
The ‘Trade for All’ strategy (European Commission, 2015), Global Europe’s successor,
which was published when the EU’s trade policy was increasingly politicised mainly
due to the negotiations of the Transatlantic Trade and Investment Partnership (TTIP), aspires
to be a more responsible trade and investment policy. It therefore dedicates a chapter to a trade
policy based on such values, in which it commits to a trade agenda promoting sustainable
development, human rights and good governance. Several avenues are suggested to achieve
this goal, including the improvement and implementation of existing trade instruments such
as GSP+ and the TSD chapters mentioned above, fair and ethical trade schemes, and
responsible management of supply chains. Even though the commitments described in this
new strategy are very ambitious, it is currently too early to tell how successful and meaningful
these will be.
Moreover, the EU has developed several initiatives to address the negative consequences of
specific products and supply chains (see Box 15.3). These are based on a mix of policies (trade,
development, internal market and environment) and approaches (trade conditionality,
reporting obligations, multi-stakeholder dialogue) and aim at improving social, environmental
and human rights causes. These initiatives touch upon sensitive and complex issues and most
of them display implementation difficulties.
Finally, the EU’s, and that of the Commission in particular, hands-off approach’ towards
fairtrade labelling has remained on the agenda. The EU does not intend to play a role in the
elaboration of fair trade criteria and their monitoring, since, according to the Commission, their
interference would jeopardise the dynamism that private fair trade labelling initiatives have
displayed (European Commission, 2009; Malmström, 2015). However the EU seems willing
to create a supportive environment for the advancement of fairtrade. First, fairtrade has been
given more attention to in the EU public procurement policy. Dynamics created by EU member
states that proved to be more ambitious in including fair trade criteria in public tenders and a
number of European Court of Justice rulings in favour of this approach (Cremona & Marín
Durán, 2013) have led to clearer provisions on social criteria in the latest 2014 EU public
procurement regulations. Second, the Trade for All strategy dedicated considerable attention
to promoting fair and ethical trade schemes. As such, DG Trade has committed to the
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BOX 15.3 SUPPLY-CHAIN-SPECIFIC EU INITIATIVES
Timber: The FLEGT (Forest Law Enforcement, Governance and Trade) Action Plan adopted in
2003 comprises development cooperation, trade agreements between the EU and timber-producing
countries, public procurement, private sector and civil society involvement and more, in order to
combat illegal logging and strengthen forest governance. Concrete progress has been slow, as most
interested timber-producing countries are still in the negotiation phase. So far only Indonesia,
Cameroon, Central Africa, Ghana, Liberia and the Republic of Congo are implementing the trade
agreements enabling the FLEGT Action Plan.
Garment industry: Following the Rana Plaza tragedy in 2013, the Bangladesh Sustainability
Compact was launched, involving the EU, Bangladesh, the US, Canada and the ILO. Its
aim is to improve respect for labour rights, factory safety and responsible business conduct in the
sector. If successful, this distinct, multi-stakeholder approach might become exemplary in a
context where increasing attention is given to the need for sustainable supply chains. However, so
far tangible results are few and critical voices have highlighted the failure of Bangladesh to comply
with the compact and the absence of changes on the ground. In April 2017, the European
Parliament called for binding legislation and has urged the Commission to deliver on its objectives.
Conflict minerals: Regulation (EU) 2017/821 of the European Parliament and the Council of 17
May 2017 (OJ L 130, 19.5.2017, pp.120) aims at breaking the vicious cycle between trade in
minerals (more specifically tin, tantalum, tungsten and gold) and the financing of conflicts. The
resolution results from a balancing act between the positions of the European Commission and
European Council (voluntary guidelines) and the Parliament (binding rules). It contains a mixed
approach with binding requirements for upstream companies (mines, processors, traders, smelters
and refiners) and recommendations for downstream companies (EU manufacturers).
In addition, measures are being taken to fight wildlife trafficking and trade in tools for torture and
executions.
promotion of fairtrade through EU FTAs, the EU Aid for Trade strategy and EU delegations.
Market data related to fairtrade are to be gathered and more awareness-raising activities will
be developed. In this context an ‘EU cities for fair & ethical trade award’ is currently being
developed.
In essence, the EU has radicalised its neoliberal free trade orientation while at the same time
initiating several initiatives to offset the negative consequences of such free trade. Current
Trade Commissioner Malmström recently summarized this approach during a speech (2017)
by stating the following:
Our trade and investment policy helps a fair global system. For trade to be fair, all players need
to play by the rules. By engaging with our partners, we try to set those common rules, and shape
globalisation. It helps the poorest on the planet to develop, through the economic partnership
agreements and asymmetric preferences we provide.
It helps to anchor our values. We have a new EU regulation on trade in conflict minerals,
and in products used for torture and the death penalty.
And our trade agreements include significant, binding commitments to strengthen
labour rights and environmental protection. . . .
For trade and investment policy to be open and fair, it must be conducted in a transparent
and responsible manner. (p. 3)
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292 Handbook on the EU and international trade
This citation clearly contains references to both the revolutionary undistorted free trade
position as well as the reformist regulated fair trade position. The latter is implemented through
a piecemeal approach in which ad hoc initiatives are set up rather than a coherent and consistent
policy.
15.4 CONCLUSION
In order to better understand the diverse meanings of Fair Trade, we developed a framework
depicting how narrow reformist ‘fairtrade’ and broad revolutionary ‘Fair Trade’ views on the
one hand, and limited or larger roles for governmental intervention on the other hand, result
in four different interpretations: regulated fairtrade; market-based fairtrade; NIEO Fair
Trade; and undistorted free trade (see Figure 15.1).
This framework has served as a heuristic tool to interpret the EU’s position concerning Fair
Trade (see Figure 15.2). Whereas the EU briefly flirted with the NIEO Fair Trade option
through beneficial market access, export stabilisation and commodity protocols in the 1970s,
the general neoliberal shift in Western politics in the 1980s and 1990s was also translated into
EU trade policy. Around the hinge of the new millennium, the EU started to profile itself as
the leading force in favour of a more ‘harnessed globalisation’ and as a development-friendly
international actor. However, the initiatives put forward fitted mostly in both reformist and
revolutionary neoliberal trade policy, in which trade rules would not fundamentally challenge
the status quo. Besides, the commitments made in EU policy documents and the discourse
engaged in towards ‘fairtrade’ and ‘Fair Trade’ were not translated into concrete action. This
Revisionist
Public
procurement
rules
Regulated
Hands-o
approach to certi
cation & CSR
Market-
Interventionist
fairtrade
Ad hoc product
speci c
initiatives
Lisbon
Treaty?
GPS(+)
based
fairtrade
T&SD
Neoliberal
market access
Aid for
Trade
NIEO Fair EU
chapters
Undistorted
Trade
Commodity
protocols & export
stabilisation
position
Doha
round
free trade EPAs & New
generation EU
FTAs
Revolutionary
Figure 15.2 EU positions on Fair Trade
Reformist
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The EU and Fair Trade: hands off? 293
neoliberal tendency became radicalised from the mid-2000s until today, resulting in an ever-
greater emphasis on trade liberalisation and reciprocity. Even though Fair Trade objectives,
and especially those related to sustainable development, are still part of the EU’s trade agenda,
these follow a piecemeal approach and do not question or challenge but rather reinforce the
prevalence of the neoliberal trade system.
At first glance the combination of ‘undistorted free trade’ with ‘regulated’ and ‘market-
based fairtrade’ might seem paradoxical. However, this development can be interpreted in two
different ways. First, the current hotchpotch of initiatives might be considered to be a
steppingstone towards a more coherent and effective approach to achieving Fair Trade.
Second, the combination of increased emphasis on sustainable development and the creation
of different initiatives to achieve this objective through trade combined with a compelling
neoliberal trade policy might represent two sides of the same coin. In this case the sustainable
development discourse and ad hoc initiatives are just palliative measures which help to
legitimise the neoliberal trade policy.
Time will tell whether references to ‘fair trade’ in the Lisbon Treaty and the ‘Trade for All’
strategy will eventually contribute to a radical change in the current neoliberal trade system,
and otherwise whether the current reformist fair trade policy approaches will be considered
fair by the population in Europe and its trading partners.
SUGGESTED FURTHER READING
Cremona, M. & Marín Durán, G. (2013), ‘Fair Trade in the European Union: Regulatory and Institutional
Aspects’, in B. Granville & J. Dine (Eds), The Processes and Practices of Fair Trade. Abingdon:
Routledge. de Bres, H. (2016), ‘Justice and International Trade’, Philosophy Compass, 11(10), 570
579.
De Schutter, O. (2015), Trade in the Service of Sustainable Development: Linking Trade to Labour
Rights and Environmental Standards. Oxford: Hart Publishing.
Holden, P. (2017), ‘Neo-liberalism by Default? The European Union’s Trade and Development Policy
in an Era of Crisis’, Journal of International Relations and Development, 20(2), 381407.
Miller, D. (2017), ‘Fair Trade: What Does It Mean and Why Does It Matter?’, Journal of Moral
Philosophy, 14(3), 249269.
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