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Fair Trade Glossary

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codes of conduct and ethical sourcing

A Code of Conduct is a statement about the ethical standards that a company claims to uphold,particularly regarding workers’ rights and environmental protection. These Codes are voluntary and are usually drawn up by the company itself. Supply chains are often very complex because of sub-contracting so verification is difficult. Campaigners are trying to establish an agreed international code which includes independent monitoring.


fair trade

An alternative to conventional world trade. It is a partnership between producers and consumers, based on reciprocal benefit and mutual respect. Fair Trade ensures producers in the South receive a fair price for the work they do, and gain better access to markets in the North. It aims to tackle the long-term problems of the South through sustainable development for excluded and disadvantaged producers.



The result of the process whereby barriers to international trade, eg taxes on foreign imports, have been progressively reduced. This has resulted in a more open global marketplace for commodities, manufactured goods, capital and services. As a result, the volume of world trade has increased considerably, along with the number of transnational corporations (TNCs), who now have easier access to world markets – to buy and sell – and can increase profit margins by moving their manufacturing operations to low-cost countries.



The phenomenon of socially and environmentally destructive corporations attempting to

preserve and expand their markets by posing as friends of the environment and leaders in the struggle to eradicate poverty. The advantages of an ethical image are well known, and PR companies openly advise businesses facing criticism to aggressively advertise their links with good causes, in order to counteract bad publicity.


north, also known as developed countries Shorthand for the industrialised countries of Europe, North America and Japan. First used by the 1980 ‘Brandt Report’, which described the under-development of the poor countries (most found south of a line drawn across the globe) by the rich nations of the ‘North’.


 south, also known as third world, developing or underdeveloped countries

Shorthand for the poorer countries of Africa, Asia, the Caribbean and Latin America. However, each collective term has its inadequacies – ‘South’ infers there is a geographical explanation for inequality, ‘Third World’ implies inferiority, ‘majority world’ is factually true, but not in widespread use, ‘developing’ assumes there is a natural path towards a western model of development, ‘underdeveloped’ suggests poverty is the result of a process. There are also differences between countries, so more specific terms are being used – emerging and transition economies, newly industrialising countries (NICs), least economically developed countries (LEDCs)…


transnational corporation (TNC), also known as multinational corporation (MNC)

Big businesses which have subsidiaries, investments or operations in more than one country. Annual turnover of some TNCs exceeds 60bn – their size and wealth gives them great power.


world bank (WB) & international monetary fund (IMF)

Set up in 1944, these specialised financial agencies of the United Nations are part of a system which aimed to stabilise the world economy. The IMF promotes international monetary cooperation and the growth of world trade, and stabilises foreign exchange rates. The WB provides loans to countries for development projects. Since the 1970s, both organisations have enforced the move towards a more open, liberalised global economy.


world trade organisation (WTO)

Set up in January 1995, the WTO took over from the General Agreement on Tariffs and Trade (GATT) as the forum where the universal rules governing a single, liberalised, global economy are written. Unlike the GATT, trade rules agreed in WTO negotiations, are legally binding and can be enforced by the threat of sanctions and compensation payments.



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