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309. Fair Trade and governance, revisited

The Fair Trade Certification system has been convulsed since Fair Trade USA broke ranks with Fairtrade International more than a year ago, introducing its ambitious Fair Trade for All initiative and changing the rules of the game.  The substance of the decision rankled coops and Fair Trade pioneers.  But what seemed to really unite opposition to FTUSA’s decision was the process by which it was reached, which opponents repeatedly characterized as a violation of the Fair Trade principles of transparency and dialogue.  In the wake of FTUSA’s decision, I suggested that governance matters.  But the truth is that FTUSA has been the only game in town since it opened its doors in 1998, and its governance practices haven’t mattered much as far as its bottom line is concerned.  Until now.

In recent weeks, a number of Fair Trade licensees based in the United States — including one of the most respected brands in coffee — have broken with FTUSA and become licensees of Fairtrade Canada, which is authorized to certify coffees sold in the United States.

But Fairtrade Canada’s involvement in the U.S. market has always been a stop-gap measure — a temporary fix until FLO could mobilize a more permanent solution.  That time is upon us.

FLO is recruiting an Executive Director and calling for nominations to the Board of Directors for Fairtrade International USA — a new Fair Trade certifier that will be aligned with Bonn and compete directly with FTUSA for the business of Fair Trade licensees in the United States.  Given the timing of FLO’s decision last fall to turn half of the seats in its General Assembly over to representatives of producer networks (it came on the heels of FTUSA’s break with FLO and charges of unilateralism), and the tone of FLO’s outreach to U.S. Fair Trade movement stakeholders over the past year (which has emphasized dialogue and consultation), FLO seems to be betting that a more inclusive governance structure and stakeholder consultation can be sources of competitive advantage in a marketplace roiled by FT4All and the way it came to be.

FLO and FT Canada need to have a value proposition that goes beyond good governance, of course: they need to deliver services their licensees value at competitive prices.  If they do, it may be harder for FTUSA to brush off long-standing critiques about its decision-making processes.  In short, governance may start to matter after all.

 

 

 

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