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Free trade has long been a key driver of economic growth and has facilitated businesses engaged in international trade to generate profit. However, in the modern era where consumers increasingly prioritize sustainability and ethical production, fair trade has emerged as a vital instrument for positive change within the global trade system. The World Fair Trade Organization (WFTO) defines fair trade as “a way of doing business that puts people and planet first”. Currently, the global fair trade market is experiencing rapid growth.
Fair trade is not simply a social trend; it represents a new trade standard that serves as a crucial mechanism for addressing poverty and inequality, particularly in developing nations. Fairtrade International, the standard-setting and certification body, has established core fair trade standards, including fair pricing (encompassing production costs and profits), fair trade premiums (additional payments for community development), labor standards (adherence to international labor standards), and environmental sustainability (adoption of environmentally friendly practices).
The global fair trade market is demonstrating promising growth as consumers increasingly demand high-quality and socially responsible products. Euromonitor International projects that the market will expand to 15 billion euros by 2028, a 25% increase from 2022, with a compound annual growth rate (CAGR) of 4.1%. The European Union, United States, Canada, Australia, and Japan have been identified as markets with substantial demand for fair trade products, with consumers willing to pay premiums for quality and sustainability.
However, ASEAN currently has a limited number of fair trade producers due to a lack of knowledge and understanding. Fairtrade International’s 2021 data reveals only 83 fair trade organizations in ASEAN, constituting a mere 4.3% of the global total. The ASEAN Foundation notes that ASEAN small and medium-sized enterprises (SMEs) lack awareness of fair trade standards and certification processes, as well as support from both public and private sectors to access fair trade markets.
Despite this, ASEAN possesses significant potential for fair trade products due to its unique advantages in natural resources, cultural heritage, and indigenous knowledge. Fair trade certification can differentiate ASEAN products, enhance their value, and cultivate a positive brand image, while also opening doors for ASEAN SMEs to enter international markets with strong demand for fair trade goods.
To fully capitalize on fair trade opportunities for ASEAN businesses, particularly SMEs, the Thai government and other ASEAN nations can implement several measures: Provide knowledge especially for SMEs regarding certification processes and fair trade benefits. Offer financial and technical support to assist SMEs in meeting fair trade standards and accessing new markets. Develop supportive policies and measures, such as tax incentives, to encourage fair trade production and exports. Foster networks among fair trade producers within ASEAN to promote collaboration and knowledge sharing. Promote fair trade products through partnerships with retailers and consumers in high-potential markets.
Author:
Ms. Warunya Yossai
Senior Researcher
International Institute for Trade and Development (Public Organization)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section/World Beat
Volume: 37 Issue: 12696
Date: Wednesday, July 31, 2024
Page: 8 (bottom-left)
Column: “Asean Insight”
