Economy and Society

Brazil Leads the Pack on “Fair Trade” Policies

Vince Carducci is a doctorial candidate in sociology at the New School. In his post, he highlights an important development in trade policies–one that was ignored by the mainstream Western press.


Brazil is fast setting the pace for both developed and developing nations by declaring itself the world’s first “Fair Trade” nation, an announcement that comes on the heels of the election of its first woman president. Scholars and advocates have taken note. But while Dilma Rousseff’s election has been reported, the Fair Trade story has gone unnoticed in the mainstream Western media.

On November 17, President Luis Ignacio “Lula” da Silva, whose tenure ends at the end of this year, signed a decree formally establishing a National System of Fair Trade. At the same time, he initiated a national business incubator network to encourage grassroots economic development. The actions continue the evolution begun in 2004 with the establishment within the Ministry of Work and Employment of the National Secretary of Solidarity Economics to liaise with federal government bureaus, local municipalities, and civil society organizations in developing policies and programs that foster economic and political equity and social inclusion in Brazil.

What is “Fair Trade?”

To better understand this event, one must distinguish between the concepts of Fair Trade and solidarity economics. Fair Trade is more commonly known to American consumers and entails a specific set of exchange practices. These include: pricing floors, living wages, long-term financing guarantees and purchasing agreements, profit sharing, community reinvestment, and the like, the costs of which account for the extra two bits or so one pays at the local coffeehouse for an “ethically sourced” cup of cappuccino.

Fair Trade is sometimes called alternative trade because it seeks to circumvent prevailing market transactions, especially those espoused under neo-liberalism and the process of globalization. For reformers like Joseph Stiglitz, Fair Trade is a viable model for international development in that it advances “trade not aid” as the solution to growing global inequality. Yet Fair Trade has also been criticized as a new form of dependency, tying the livelihoods of Third World producers to the largesse of privileged consumers in the First World.

Solidarity economics encompasses much broader ideas of cooperative exchange. These include: unpaid labor and household provisioning exchanges, bartering systems, production and purchasing collectives, local currencies, gift economies, “freecycling,” and regional reciprocity coalitions. Radical interpretations of solidarity economics foresee the end of capitalist economics and politics whereas more moderate views hope to simply negotiate a “humanizing” intervention within the existing market system.

According to a 2006 report by the ICLEI (Local Governments for Sustainability), efforts to promote solidarity economics in Brazil actually date back to the 1970s. These initiatives occurred under the auspices of several mostly faith-based international NGOs that organized rural workers into collectives to make and export handicrafts for sale to an emerging cadre of “conscientious” consumers, initially in Europe and now throughout North America and beyond. These efforts continue today through the government-sponsored Brazil Handicraft Program and associated social entrepreneurs such as EcoArts and Brazilianas Handicraft.

By contrast, Brazilian Fair Trade seeks to develop an internal market for domestically produced goods and services. In this regard it’s a potential move toward autarky and ultimately independence from the forces of free-market globalization. (Though at this point the investment is minimal in relation to Brazil’s GDP.) The system of university-based incubators, harnessing the intellectual capital of researchers and students and marrying it to popular local knowledge, has the makings of a cultural revolution presumably without the severe dislocation (not to mention the brutality) of the Maoist “sent down” program.

Writing in The Nation, Kenneth Rapoza characterizes the election of Rousseff, Lula’s handpicked successor, as a refutation of the Washington Consensus that presribes privatization and so-called open markets as the pather to success for lesser-developed countries. Fair Trade Brazil marks yet another step down a road less traveled.

5 comments to Brazil Leads the Pack on “Fair Trade” Policies

  • This seems to be a marginal phenomenon in Brazil. It is really not possible to sustain 190 million people at the level of consumption that Brazilians aspire to with handicrafts. Just to give one number, there are now more than one cellphone per person in Brazil. Each one of them uses American, European, Japanese, and S Korean technology, principally manufactured in East Asia. They are paid for by massive exports of industrial products, raw materials, and agricultural commodities.

    To mention other points where the comment is divorced from Brazilian reality, Lula’s economic policies have been rather conservative, and so have his and Dilma’s presidential campaigns. No one in Brazil is interested in autarky – not university graduates looking for every opportunity to study and work abroad, much less the poor.

    I am a big freeycler by the way, both in the US and in Brazil, and I frequent handicraft fairs. I love the concept, but that’s not enough to sustain an economy.

  • I agree that scale is an issue. There were some folks on the Solidarity Economics Network who were pretty hot on this issue. And my perception was that there might be more smoke and mirrors than substance at play here. What interests me, however, is the fact that something like this has gotten some traction in an institutional context. The social movement aspect of conscientious consumption (my specific interest) as it has been working out in contemporary situations seems to me to be noticeably lacking in this regard. In the US, it’s been pushed onto the individual as a matter of consumer choice. If we go back to the Progressive Era, we can see that part of the effort in state making had to do with putting just exactly these kinds of regulation in place (i.e., interstate commerce oversight and the Pure Food Drug and Act). Another milestone would be the New Deal efforts of Frances Perkins. The after the Second World War, the so-called consumers’ republic of the social welfare state. The potential role of the new Consumer Financial Protection Bureau is another interesting example of how the political sphere ultimately has a role in mediating the private but with the influence of civill society. The comment about autarky and the Cultural Revolution was really a reference to a lot of speculation on the right of Lula as a Maoist dinosaur. It’s ridiculous of course. Though following Alain Badiou, I personally don’t want to give up on what he calls the “communist hypothesis” simply because it’s realization in actually existing practice so far hasn’t been what we might hope for. To quote Christopher Hitichens on the Bush Administration’s misadventure of Iraq: “Right idea, wrong execution.”

  • I am not sure I get your point so I can’t comment further.

    But on another hand, I had never heard about Badiou until this morning in a discussion about an article by Vladimir Ilitch Safatle of USP, who apparently is an acolyte of his. If that is so, then it is likely that you are following the wrong path. This Safatle fellow is rather clueless about Brazil. The newspaper column where he expounds his tiranophilia seems to be written in an alternate universe.

    The idea of Lula as an extremist is, as you say, complete nonsense. It comes from a separate alternate universe, which has as little contact with ours as Ilitch Safatle’s. IMHO both are intimately connected though. Maybe one could try to figure out how the idea of autarky is present in both extreme-right and extreme-left discourse in Brazil when it’s completely alien to Brazilian culture or economy. But why bother?

  • Michael Corey

    It will be very interesting to see how these new economic and social models develop.

    I was involved with the oversight of one of Brazil’s leading forestry, pulp, and paper companies for over 30 years. It became one of the most respected companies of its type in the world. I saw it develop in the best and worst of times. It provided the basis for prosperity for numerous employees, community members and shareholders. Virtually all of the employees were Brazilian. It benefitted from the fusion of Brazilian culture and best business and technical practices from all over the world.

    The last president of the company that I had worked with started in the mailroom and worked his way through a series of positions and ultimately was chosen to lead the company. Virtually all of the employees were Brazilian and its cash flows were reinvested in the operations. The original manufacturing location was regarded as the safest facility of its type in the world.

    The business did well in part because it rebalanced its domestic and international sales as economic conditions required. The company managed its way through decades of governmental changes and economic shocks including hyperinflation. The ethical practices, interpersonal skills, work ethics, and technical abilities of its employees were outstanding, in part because they benefited from combining their own initiative with best practices developed elsewhere in the world.

    The company developed its own expertise in forestry; and it benefited tremendously from technical, engineering, operational, environmental, human resources, and business management practices provided by the parent company in the United States. Most of its managers and leaders were sent to best in class management training programs in the United States. Team concepts, participative management and leading edge organizational development, compensation, benefits and human resource practices were adapted to local conditions. Governmental practices and regulations sometimes made implementing these practices difficult, and frequently made it difficult to source critical technology resources found outside of Brazil.

    Being a profitable producer has helped lift the standards of living of many Brazilians that were directly and indirectly associated with this company. It enabled workers to have outstanding wages, benefits, and challenging work opportunities. I hope that the ability to function in this way isn’t negatively impacted by aspects of “Fair Trade” and “solidarity” economics.

    I haven’t been involved with this company 2001. I hope that it, its employees and communities are continuing to prosper. Virtually none of the developments that took place within the company was seen through the prisms of globalism, neo-liberalism or virtually any other ideological framework. All of the developments were pragmatically dictated by how to make the best products and services in the most efficient, safest and most responsible manner. Its profitability allowed it to accomplish this, grow and prosper. Employees throughout the company were driven to achieve excellence and find innovative solutions to problems. I miss the time that I spent with my Brazilian associates. In my opinion, workers throughout the United States would benefit being able to become producers once more in the spirit of this Brazilian business.

  • Handicraft can be important is very specific areas of this vast country, but as my brother pointed out Brazilians’ consumption aspirations need constantly improving technology and managing techniques. And all of us need global links. I wish there were more news on Brazil in English as this would give a better sense to readers unfamiliar with Romance languages how daily life is in Brazil and how it has changed in the past decades; I know major Brazilian and American newspapers are thinking about this, but nothing substantive came out so far.
    The changes in our economy and society can be accessed by statistics, by recent studies done about the emerging middle class, but also in daily interactions with this vast group of people who suddenly have more, and aspire for much more, than their parents had in their youth. The Brazilian working class used to have a subservient manner when dealing with middle class folks which were invariably called “doctor”. Now this is gone, at least in the big cities: construction workers and cleaning ladies look into your eyes and explain what they will do, as professionals they found themselves to be. I don’t think this is the work of Lula, and I don’t think it is Fernando Henrique’s either.
    The country has changed. Students want to study abroad. Working class families pay private lessons for their kids. Everybody seems to have a goal in mind. When things go wrong, people demand “providências” from the authorities instead of accepting their fate as in the past. For good and for bad, the country is becoming more like the US. Like in every developed country, we are concerned about the environment, voting for the Green Party, recycling, and supporting green initiatives.
    I think the real Brazil will have to seriously face the environmental challenge its own development brought. We will also have to face democratic challenges coming from a government that intends to concentrate economic power in its large state companies and others controlled by political allies. (Although, I have to admit, Dilma is giving me the impression that she belongs to the group of women in her generation who came to public life with something to prove, while most politicians, including Lula, came to power as if they were doing us a big favor…)
    But I think the article touched on another issue, that of the imaginary Brazil of savagery and beauty, one whose existence we forgot when, in our daily lives in Brazil, we follow the news of floods in big cities or grade students’ term papers. When utopias fail in the real world, people have to project them into other realms. The democratic experience of the Island of Cuba, the liberating rule of Hamas in Gaza, and, why not?, alternative production in the fast-growing Brazil.

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