A/HRC/13/33 cocoa, tea, sugar, and other fruits and juices, it covers an increasingly large number of commodities and mechanisms.54 Where it has been introduced, fair trade has brought significant improvements to the farmers benefiting from the scheme.55 In contrast to other certification schemes, such as SA8000, the Rainforest Alliance or UTZ, fair trade (as defined in the Charter of Fair Trade Principles)56 not only ensures that environmental and social conditions are complied with in the supply chain: in addition, it guarantees a floor price to the producer that may be significantly above the conventional world market price. The minimum price is calculated to be sufficient to cover the costs of sustainable production and living. Fair trade contracts are long-term, allowing planning and sustainable production practices.57 47. The fair trade movement now faces three main challenges. First, the proliferation of labels related to environmental and/or social “sustainable” practices has created confusion among consumers, who may not always be well-informed about the specificity of fair trade.58 The Special Rapporteur identifies signs of a “Gresham’s law” at work in this area: among the vast array of schemes boasting sustainability in supply chains, the less effective labels — those which offer the fewest benefits to producers while reassuring the consumer at the supplier’s expense — may be crowding out the best ones. Second, the supply of fair trade goods outstrips consumer demand.59 Accordingly, while fair trade bodies may guarantee a minimum price for the produce that is sold, they cannot guarantee that the produce will in fact be sold. This leads to concerns that buyers may choose among their suppliers, generally preferring those with whom they have an established relationship, with potential new entrants facing insuperable obstacles. Third, fair trade schemes may lock producers into a dependent relationship where they provide raw materials, instead of being provided with the tools to progressively diversify, process, package and directly market their products, thereby capturing more of the total value created along the chain. 48. Both retailers and governments should do more to promote fair trade and find, in negotiation with smallholders, ways to overcome the challenges identified above. States should clarify the legal meaning of fair trade and prohibit any abuse of the label. The existing confusion among consumers surrounding the various certification schemes should be dispelled by information campaigns which highlight the respective merits of the different schemes. States could also develop incentives to encourage demand, such as the lowering of import tariffs on products that are fair trade certified, and they could support 54 55 56 57 58 59 18 See L.T. Raynolds, D. Murray and J. Wilkinson, eds., Fair Trade. The Challenges of Transforming Globalization (London and New York, Routledge, 2007). Although the mandate of fair trade was initially focused on disadvantaged small producers, it has now moved also to protect labourers on large-scale plantations, leading to the inclusion of new certification criteria such as democratic worker representation and good labour conditions. Nevertheless, consistent with the historical origins of fair trade, it is examined in this report in the section dedicated to smallholders. This Charter was adopted jointly by the Fairtrade Labelling Organizations (FLO) and by the World Fair Trade Organization (WFTO), the two main standard-setting organizations for fair trade. Sununtar Setboonsarng, “Can ethical trade certification contribute to the attainment of the Millennium Development Goals? A review of organic and fair-trade certification” (2008), Asian Development Bank Institute, discussion paper No. 115. L.T. Raynolds, D. Murray and A. Heller, “Regulating sustainability in the coffee sector: a comparative analysis of third-party environmental and social certification initiatives”, Agriculture and Human Values, vol. 24, No. 2 (June 2007), p. 147. Joni Valkila, Anja Nygren, “Impacts of Fair Trade certification on coffee farmers, cooperatives, and laborers in Nicaragua” Agriculture and Human Values (2009); D. Murray, L. Raynolds and P. Taylor, “The future of Fair Trade coffee: dilemmas facing Latin America’s small-scale producers”, Development in Practice, vol. 16, No. 2 (April 2006) p. 179. GE.09-17776