Making Fair Trade Principles Work: Lesson Learn from Mitra Bali

Putu Wahyu Mila Sari

Universitas Airlangga, International Relations Department

Keywords: Fair Trade, Fair Trade principles, Mitra Bali Fair Trade, Sustainable Development

Abstract: Fair Trade is a trading partnership based on dialogue, transparency, and respect, which seeks greater equity

in international trade. It contributes sustainable development by offering better trading conditions to and

securing the rights of, marginalized art producers and workers – especially in the South. Fair trade emerges

as an alternative and response to the negative impact of free trade. Mitra Bali Fair Trade is one of the

organizations that have the vision to empower all of handicraft and jewelry artisans in Bali. Unpredictable

revenues and frequent irreplaceable capital cause artistans to struggle economically. For that reason, Mitra

Bali is present as a place for artistans to work by using the principle of fair trade in order to get more profit,

fair and sustainable. The purpose of this paper is to illustrate how fair trade is implemented in the economic

and everyday life of society, which is beneficial not only for human, but also the natural environment, and

future life. The methods used by the author are the literature review and interview. There are some programs

that Mitra Bali has been doing: giving a soft loan to the art producers, building good lavatory and

sanitation, providing a loan program called Cow Advocacy. Mitra Bali also supports reforestation by

supplying artisans with softwood tree seedings, promotes the preservation of ancient craftsmanship in Bali

and combines them with modern design. The art producers receive a reasonable price, which they do not get

from domestic market. In addition, Mitra Bali does voluntary social services as well, such as environmental

protection, advocacy, lobbying, and promoting.

1 INTRODUCTION

The Sustainable Development Goals (SDGs),

otherwise known as the Global Goals, are a

universal call to action to end poverty, protect the

planet and ensure that all people enjoy peace and

prosperity. There are 17 goals build on the successes

of the Millennium Development Goals, while

including areas such as climate change, economic

inequality, innovation, sustainable consumption,

peace, and justice, among other priorities. Those

goals are related to each other and to achieve the

SDGs requires the engagement of governments, the

private sector, civil society, and also citizens.

Climate change, economic inequality, poverty,

innovation, peace, and justice have the link to one

activity, it is trading. Trade is the action of buying

and selling goods and services thus trade involves

many aspects of human being. But, what if trade

activities give a lot of problems rather than the

benefit? There are some problems that International

Trade have, and mostly are social and environment

problems. International trade is unfair for poor or

small company who can not fight along with giant

company, it also can make who are already rich get

richer and who already poor get poorer. The

competition in international trade can not be fair

seen so no one can control or watch. Beside it can

give bad impact to social economy, international

trade also can be harsh to the environment. The

exploitation aims to get more benefits. There is no

sustainable projects to keep the resources stay

longer. Not forget to mention of unorganic materials

which mostly used by the products. And there is a

alternate system as a win win solutions in the

conventional international trade.

Fair trade, as an alternative trading system of

free trade, introduces moral values on its activities

which are useful not only for producers and

consumers but also the environment. Fair Trade is a

trading partnership, based on dialogue, transparency,

and respect, which seeks greater equity in

international trade. It contributes to sustainable

development by offering better trading conditions

and securing the rights of, marginalized producers

and workers – especially in the South. The aim of

fair trade is make trade activity more than just

trading, like making justice in world trade,

highlighting the need for change in the rules and

practice of conventional trade and shows how a

284

Sari, P.

Making Fair Trade Principles Work: Lesson Learn from Mitra Bali.

DOI: 10.5220/0010276000002309

In Proceedings of Airlangga Conference on International Relations (ACIR 2018) - Politics, Economy, and Security in Changing Indo-Paciﬁc Region, pages 284-288

ISBN: 978-989-758-493-0

successful business can also put people first, and

also give tangible contribution to the fight against

poverty, climate change, and economic crisis.

There are 10 principles of Fair Trade, i.e. 1)

opportunities for disadvantaged producers, 2)

transparency and accountability, 3) fair trade

practices, 4) fair payment, 5) no child labor and no

forced labor, 6) no discrimination, gender equity,

freedom of association, 7) good working condition,

8) capacity building, 9) promote fair trade, 10)

respect for the environment. These principles are

getting along with the economic activity especially

trade.

The author takes some lessons from Mitra Bali.

Mitra Bali is an organization who runs the business

using fair trade principles as well. Since 1993, Mitra

Bali has been actively participating in Bali's

economic and social development by working to

empower a large group of handicraft producers.

Mitra Bali is located in Ubud, Bali. Bali is well-

known for the tourism, and also impact the demand

for souvenirs product. The one who will get the

benefit is supposed to be the artisan, but the fact, the

middleman take more benefits rather than the

artisans. Therefore, Mitra Bali is actively involved in

assisting the marginalized craft producers to

understand and develop a fair trade model to gain

more benefits.

2 METHODS

Literature review and interview are used as the

method for this paper. The informants are Mr.

Agung Alit as the founder of Mitra Bali and activist

Fair Trade Indonesia also with his artisans.

3 STATEMENT

Author argument in this paper is fair trade principles

can run well in business as well as give benefit for

people, environment, and future.

4 LITERATURE REVIEW

4.1 Globaization and Sustainable

Development

The International Monetary Fund (IMF) describes

globalization as the growing economic

interdependence of countries worldwide through the

increasing volume and variety of cross-border

transactions in goods and services and of

international capital flows, and also through the

more rapid and widespread diffusion of technology

(IMF, in Wolf, 1997). As Globalization itself define

as a term that has become very popular and used in

many different contexts (Powell, 2015). Amavilah et

al (2014) defines globalization as the increasing

integration between the markets for goods, services

and capital. Those in support of the globalization

wave see it as an opportunity for economic growth

while opponents perceive it as a threat to economic

prosperity, political sovereignty, and cultural

integrity (Amavilah et al(2014). Although

globalization has brought considerable benefits to

many economies worldwide, its impact on the

competitiveness of companies in developing

countries remains a great challenge (Baffour &

Amal, 2011). It is suggested that globalization's

effects depend on the capability of firms to learn,

innovate, and also on the institutional structure in

these countries (Baffour & Amal, 2011). For

example, access to new markets, lower costs for raw

materials and the increased necessity to improve

competitiveness are some key benefits of

globalization (Julien and Joyal, 1994).

Sustainable development has been adopted by

the United Nations as a guiding principle for

economic, environmental, and social development

that aspires to meet the needs of the present without

compromising the ability of future generations to

meet their own (United Nations 1987). In this

context, sustainable development demands the

protection of the environment and natural resources

as well as to provide social and economic welfare to

the present and to subsequent generations (Elliott,

2012).

4.1.1 Fair Trade

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,

marginalized producers and workers – especially in

the South. Fair Trade organisations have a clear

commitment to Fair Trade as the principal core of

their mission. They, backed by consumers, are

engaged actively in supporting producers, awareness

raising and in campaigning for changes in the rules

and practice of conventional international trade. Fair

Trade is more than just trading: It proves that greater

justice in world trade is possible, It highlights the

Making Fair Trade Principles Work: Lesson Learn from Mitra Bali

285

need for change in the rules and practice of

conventional trade and shows how a successful

business can also put people first., and It is a

tangible contribution to the fight against poverty,

climate change and economic crisis.

Fair Trade today is a truly global movement.

Over a million small-scale producers and workers

are organized in as many as 3,000 grassroots

organisations and their umbrella structures in over

70 countries in the South. Their products are sold in

thousands of World-shops or Fair Trade shops,

supermarkets and many other sales points in the

North and, increasingly, in sales outlets in the

Southern hemisphere. The movement is engaged in

debates with political decision-makers in the

European institutions and international fora on

making international trade fairer. On top of that, Fair

Trade has made mainstream business more aware of

its social and environmental responsibility. In short:

Fair Trade is becoming more and more successful.

There are many stories about the history of Fair

Trade. It all started in the United States, where Ten

Thousand Villages (formerly Self Help Crafts)

began buying needlework from Puerto Rico in 1946,

and SERRV began to trade with poor communities

in the South in the late 1940s. The first formal “Fair

Trade” shop which sold these and other items

opened in 1958 in the USA.

The earliest traces of Fair Trade in Europe date

from the late 1950s when Oxfam UK started to sell

crafts made by Chinese refugees in Oxfam shops. In

1964, it created the first Fair Trade Organisation.

Parallel initiatives were taking place in the

Netherlands and in 1967 the importing organisation,

Fair Trade Original, was established. At the same

time, Dutch organisations began to sell cane sugar

with the message “by buying cane sugar you give

people in poor countries a place in the sun of

prosperity”. These groups went on to sell handicrafts

from the South, and in 1969 the first “Third World

Shop” opened. World Shops, or Fair Trade shops as

they are called in other parts in the world, have

played (and still play) a crucial role in the Fair Trade

movement. They constitute not only points of sales

but are also very active in campaigning and

awareness-raising.

During the 1960s and 1970s, Non-Governmental

Organisations (NGOs) and socially motivated

individuals in many countries in Asia, Africa and

Latin America perceived the need for fair marketing

organisations, which would provide advice,

assistance and support to disadvantaged producers.

Many such Southern Fair Trade Organisations were

established, and links were made with the new

organisations in the North. These relationships were

based on partnership, dialogue, transparency and

respect. The goal was greater equity in international

trade.

Parallel to this citizens’ movement, the

developing countries were addressing international

political fora such as the second UNCTAD

conference (United Nations Conference on Trade

and Development) in Delhi in 1968, to communicate

the message “Trade not Aid.” This approach put the

emphasis on the establishment of equitable trade

relations with the South, instead of seeing the North

appropriate all the benefits and only returning a

small part of these benefits in the form of

development aid.

The growth of Fair Trade (or alternative trade as

it was called in the early days) from the late 60s

onwards has been associated primarily with

development trade. It grew as a response to poverty

and sometimes disaster in the South and focused on

the marketing of craft products. Its founders were

often the large development and sometimes religious

agencies in European countries. These NGOs,

working with their counterparts in countries in the

South, assisted to establish Southern Fair Trade

Organisations that organize producers and

production, provide social services to producers, and

export to the North. Alongside the development

trade there was also a branch of solidarity trade.

Organisations were set up to import goods from

progressive countries in the South that were both

politically and economically marginalised.

In the early days of fair trading, Fair Trade

Organisations traded mostly with handicrafts

producers, mainly because of their contacts with

missionaries. Often, handmade crafts provide

supplementary income to families. They are of

crucial importance to households headed by women

who have limited employment opportunities. Most

Northern Fair Trade Organisations focused on

buying these products and sold them through World

Shops. The market reception of the handmade

products in the World Shops was enormous. World

Shops became popular for selling products from

developing countries, and enjoyed upward sales turn

over for many years.

In 1973, Fair Trade Original in the Netherlands,

imported the first fairly traded coffee from

cooperatives of small farmers in Guatemala. Now,

more than 30 years later, Fair coffee has become a

concept. Meanwhile, hundreds of thousands of

coffee farmers have benefited from Fair Trade in

coffee. In Europe, Fair Trade coffee became a

popular choice for many consumers. Presently,

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between 25 to 50 % of turnover of Northern Fair

Trade Organisations comes from this product. After

the success of coffee, many fair trading

organisations expanded their food range and started

selling commodity products like tea, cocoa, sugar,

wine, fruit juices, nuts, rice and spices. Consumers

welcomed these products like coffee.

Food products enable Fair Trade Organisations

to open new markets, such as institutional markets,

supermarkets and bio shops. In addition to these

food products, other non food products such as

flowers and cotton have been added to the Fair

Trade assortment.

The Fair Trade movement came to being to raise

awareness on trade injustices and imbalances of

power in the conventional trade structures, and to

advocate changes in policies to favour equitable

trade. Sale points of Fair Trade products became one

of the effective methods of campaigning. It was the

Fair Trade shops that started including producer

stories in product packaging to raise awareness on

Fair Trade. World / Fair Trade Shops mobilised

consumers to participate in campaigning activities

for more global justice.

The first European World Shops conference took

place in 1984. This conference set the beginning of

close cooperation between volunteers working in

World Shops from all over Europe. The Network of

European World Shops (NEWS!) was formally

established in 1994 and now represents

approximately 3.000 World Shops in close to 20

European countries. NEWS! coordinates European

campaigning activities and stimulates the exchange

of information and experiences about development

of sales and awareness raising work.

In the course of the years, the Fair Trade

movement has become more professional in its

awareness-raising and advocacy work. It produces

well-researched documents, attractive campaign

materials and public events. It has also benefited

from the establishment of European structures that

help to harmonize and centralise its campaigning

and advocacy work. An important tool was the

establishment of the FINE Advocacy Office in

Brussels, which focuses on influencing the

(European) policy-makers. It is supported, managed

and funded by the whole movement, represented in

FLO, IFAT(now WFTO), NEWS and EFTA – hence

its acronym FINE.

Fair Trade and Fair Trade Organisations have

been recognised repeatedly by European Institutions

as well as national and regional governments for its

contribution to poverty reduction, sustainable

development and consumer awareness-raising. The

European Parliament passed several resolutions on

Fair Trade (in 1994, 1998 and 2006) and many

European ministers and prime ministers have

publicly endorsed Fair Trade. Ever more public

institutions are serving Fair Trade products and local

authorities include fair and sustainable criteria in

their public tenders. Thousands of towns,

universities and churches have applied for Fair

Trade status, committing to promote Fair Trade and

to contribute to overcoming poverty and exclusion.

Increasingly, representatives from developing

countries promote Fair Trade because it enables

small and marginalized producers in their countries

to live and work in dignity. Fair Trade is

increasingly on the agenda of policy makers

throughout the world.

5 RESULT AND DISCUSSION

The tourism in Bali begins popular as well as the

handicrafts, but the craftsmen (the artisan) do not get

much benefit. Poverty faces their life, and tourism

does not help much. The middleman of trade also

takes more benefit from the artisans. On average, a

craftsman on Bali earns 950,000 Indonesian Rupiah.

For this reason, activist Agung Alit founded a fair

trade organization in Bali, which aims to ensure a

better income for artisans. Mitra Bali was initially

supported by the Indonesian Fair Trade Organization

Pekerti in Jakarta, which sold the products abroad.

As the result, Mitra Bali has many programs to

implement the fair trade principles, there are like

giving a soft loan to the producers, built a good toilet

and sanitation, create a loan called Cow Advocacy to

helps artisan's capital. Mitra Bali see this as a very

important program, because most small artisans have

difficulties in getting financial assistance, either

from banks or any other financial institutions, facing

daunting bureaucracies and demands for collateral.

Mitra Bali provides cash shortfalls and small

business development, such as equipment purchase,

raw materials, workshop repairs and upgrade. Mitra

Bali emphasized the culture of cleanliness by

building toilet and sanitation facilities for some of

the artisans. Cow Advocacy is used as the method of

Mitra Bali to help artisans in financial emergencies;

the cow can useful for borrowing money from

neighbors. When a cow, furnished by Mitra Bali,

bears a calf, the first off spring goes to the artisans

and the second to Mitra Bali, and this cycle

continues. Meanwhile, Mitra Bali also gradually

held a meeting and gathering with its artisans to

discuss new trends, regulations, or hearing their

Making Fair Trade Principles Work: Lesson Learn from Mitra Bali

287

difficulties. The artisans feel comfort has business

relations with Mitra Bali since they can make money

through fair trade. Mitra Bali Fair Trade pays an

average of 14 percent more for each product than

commercial traders. They also can monitor the

capital share, benefits, and has the chance to export

their products. As their vision, Mitra Bali is an

artisan cooperative formed to help independent

craftspeople find new markets outsides of Bali. The

cooperative works only with producers who

emphasize gender equality, provide safe working

conditions, use environmentally sustainable raw

materials, and do not exploit woman or children.

Since many of their craft are made of wood, Mitra

Bali support reforestation by supplying artisans with

softwood tree seedings. As fair trade actor, Mitra

Bali Fair Trade promotes the preservation of ancient

craftsmanship in Bali and combines them with

modern design. The producers receive a reasonable

price, which they do not receive on the domestic

market. In addition, Mitra Bali also does voluntary

social services, there are such as environmental

protection, advocacy, lobbying, and promoting.

Mitra Bali active in the promotion of women and the

renouncement of child labor are essential for the

groups with which they work together. Mitra Bali

Fair Trade also makes lobbying for fair trade in Bali

and promotes ecological awareness, for example

organizing seminars for children and young people

on ecology. The last but not least, Mitra Bali is one

of the activists Fair Trade Indonesia and actively

involved in the network of Indonesian Fair Trade

Organizations. These fair trade principles and the

implementation from Mitra Bali can be regulation's

reference to trade in Indonesia. These projects of

Mitra Bali have some potential difficulties. As they

help artisants and craftman make money by making

some fair trade products, they have to keep

monitoring to make sure the artisants and craftman

do as their standards. But overall, until today, Mitra

Bali can overcome all the problems and run the

business as well as implented the fair trade

principles.

6 CONCLUSION

Implementation of fair trade principles can be seen

in Mitra Bali. Mitra Bali is organizations that used

fair trade principles to empower the handicraft and

jewelry artisan in Bali. And there are programs that

Mitra Bali has been doing: giving a soft loan to the

producers, built a good toilet and sanitation, create a

loan called Cow Advocacy, Mitra Bali also support

reforestation by supplying artisans with softwood

tree seedings, promotes the preservation of ancient

craftmanship in Bali and combines them with

modern design. The producers receive a reasonable

price, which they do not receive on the domestic

market. In addition, Mitra Bali also do voluntary

social services, there are such as environmental

protection, advocacy, lobbying, and promoting.

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http://www.gepa.de/fileadmin/user_upload/Produzenten/D

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