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.