TOP hosted an afternoon tea and panel discussion in parliament yesterday along with the Ethical Trading Initiative (ETI) and the Fairtrade Foundation. We were joined by Rt Hon Alan Duncan MP – the Minister of State for International Development, Ivan Lewis MP – Shadow Secretary of State for International Development, Mike Gidney – Executive Director of the Fairtrade Foundation, and Chris Gilbert-Wood of Finlays Horticulture (an ETI member and Fairtrade company). The event was chaired by Baroness Falkner – foreign affairs spokesperson for the Liberal Democrats in the House of Lords.
Smallholders and factory workers often face unfair trading practices, power imbalances, corruption, infrastructural and investment deficits, poor working conditions and lack of skills training. This was a chance to hear the views of parliamentarians, business and civil society on the place of trade in development and the role of the private sector in ensuring secure working conditions, job creation and investment. What needs to happen if we are to see best ethical practice applied in supply chains linked to UK markets, and see such supply chains deliver poverty reduction and development gains?
On 24th April this year, an eight-story commercial building, Rana Plaza, collapsed in Dhaka, Bangladesh killing 1,129 people – a stark reminder of the human cost behind the plentiful supply of affordable goods on Britain’s high streets. Following the disaster, which involved British retailers Matalan and Primark, more than 50 brands have signed up to a legally binding building safety agreement. The Minister praised the work that has already been done as the private sector has been galvanised into action by this catastrophe, but emphasised that the momentum and focus must not be lost. Now is the opportunity to turn the issue of supply chains and trade as a development tool into a mainstream issue.
Following the Minister’s visit to Dhaka last month – where he announced various initiatives that DFID will be funding to bring buyers, manufacturers, workers, NGOs and governments together to agree a set of common standards for worker safety
Baroness Falkner highlighted that we had chosen a serendipitous day for an event on this theme – the first day of the EU-US Transatlantic free trade negotiations. As we attempt to create the largest trading bloc in the world at a time when global value chains are altering the dynamics of global trade (UNCTAD estimates that 80% of world trade now passes through global value chains), it is vital that the private sector is kept at the centre of development discussions to ensure that these chains are functioning in a way that supports sustainable economic development.
Ivan Lewis echoed the Minister’s call to use the Rana Plaza tragedy as an opportunity to take action and ensure that responsible capitalism becomes a central part of the post-2015 development agenda. The world is changing – development spending from OECD countries fell by 4% in 2012 following a 2% drop in 2011, developing countries absorbed half the world’s FDI last year and 75% fo the world’s poorest now live in middle income countries. Aid is becoming an increasingly small part of the solution to creating an economically prosperous world and we now have a unique opportunity to bring together the agendas of sustainability, poverty reduction and responsible capitalism.
Ivan highlighted that to have a successful society you need to have an entrepreneurial and dynamic private sector – the aid and development industry have denied this for too long, but is a reality and must be accepted as absolutely essential to creating jobs and growth. The private sector often reaches parts of the world that aid simply cannot – Unilever alone reaches 2 million people every day. The debate is therefore not about the importance and centrality of the private sector to development – this is now a given – but how we can best capitalise on the opportunities that this new world context offers.
He called on DFID to have a more meaningful and sophisticated relationship with business and a better strategy for directing aid and development policy through the private sector. He also raised the importance of joined up government to creating a truly holistic global policy – DFID must not be siloed, but should be working with BIS, the Treasury, DECC, FCO and DEFRA to ensure that development is at the heart of UK foreign relations.
Through Chris Gilbert-Wood of Finlay’s Horticulture (an ETI member and Fairtrade certified), attendees also heard from companies committed to improving conditions for employees in developing countries. Chris cautioned against the proliferation of ‘marketing-driven’ standards and the duplication of audit and verification activity and called instead for a greater focus on improving conditions on the ground. He also echoed calls for the Government to publish its eagerly anticipated strategy for implementing the UN Guiding Principles on Business and Human Rights.
The Executive Director of the Fairtrade Foundation, Mike Gidney, gave an impassioned speech on another fundamental supply chain issue – access to markets. The tag lines for the three host organisations – fighting poverty through trade, respect for workers, and let the poorest countries prosper through trade – are so easy to say, but why are they seemly so difficult to do? Surely fair market access, a fair crack at the whip and a level playing field so that you can compete fairly on the open market is not too much to ask?
In Mali, one of the big four cotton producers in Africa, has a primary school enrolment rate of just 43%, but in areas where they are part of Fairtrade (getting fair market access and a fair price for their produce) the rate is 98%. At the WTO Ministerial in 2005, the then DFID Secretary of State Hilary Benn (a co-chair of Trade Out of Poverty) said that cotton was an iconic test of making trade fair. Only now, nearly 10 years later, are we looking at the US dismantling their subsidies for American cotton farmers, even though this practice was judged illegal by the WTO in 2004. To ensure that trade begins to bring real benefits to the poorest, consumers must vote with their wallets and businesses must put social development on their balance sheets. Small holders are not charity cases, but active participants in the global trading system and must be treated as such.