Brussels, 2 December 1999
Commission adopts Communication on "Fair trade"

The European Commission has adopted a Communication on  fair trade. Fair trade touches many areas of Commission activities from development policy, general aspects of trade, the environment and employees' rights through to consumer choice and assurances on label  claims..  It is the first step in the process of defining new Commission policy. This document is intended to encourage a debate between all interested parties and stakeholders so as to enlighten the  Commission in the designation of an appropriate and relevant European Union (EU) policy for the next century. It provides a consolidation of what is understood by fair trade, how it operates in general and  outlines existing Commission activities in support of fair trade. While proposals are not given at this stage, it gives an indication of issues to be addressed when considering further EU support of fair  trade activities. This is a timely document on the eve of the new Millennium Round of trade talks where the EU hopes to include discussion on social and environmental issues.

What is fair trade?

The fair trade concept has been developing in western nations throughout the past 40 years or so, in response to a growing recognition that benefits accruing from trading and trade growth are not  necessarily shared by all countries and all layers of the population within each country in a comparable manner.
Fair trade is a complement to conventional international trade. It aims to benefit  marginalised producers and communities in less developed countries by providing sustainable development through improved trading conditions.

Areas covered by the Communication

The  Communication gives a broad description of the development of fair trade and how it works in practice. It then details both the commercial and policy activities within the European Union (EU).
For the  first time, the document also brings together all of the current EU activities in support of fair trade, both financial and legislative. In fact, the EU is the first trading entity to introduce legislation  in the broad area of fair trade. Under the EU's scheme for generalised tariff preferences (GSP) those countries which demonstrate the application of certain minimum social and environmental standards may  benefit from reduced tariffs when selling to Europe. 

Finally, the Communication details the issues to be taken into account when considering further EU support for fair trade activities. These  issues include: the development of fair trade, the fact that there is no legal definition of fair trade, fair trade criteria and monitoring, consumer protection, WTO compatibility of any fair trade  initiatives, and the establishment of a formal platform for dialogue with the fair trade movement.

Background

In June 1998 the Commission gave an undertaking to provide a Communication  on fair trade. This undertaking was originally linked to the (1998) reform of the Common Market Organisation for bananas. However, in preparing the Communication it was apparent that there were many  Commission activities linked to fair trade and that fair trade bananas could not be treated in isolation.  A thorough review of the subject was therefore carried out. The Communication also responds to  the Parliament report on fair trade (Fassa report).