10 principles of the World Fair Trade Organization
The WFTO sets out 10 principles that fair trade organisations should adhere to in their day-to-day work and ensures compliance with these principles through monitoring.
Principle 1: Creating opportunities for economically disadvantaged producers
The fight against poverty through Fair Trade is a central goal of Fair Trade organisations. The organisation supports marginalised small producers, be they independent family businesses or associations or cooperatives. It helps them to move from an insecure income situation and poverty to economic independence and ownership. The organisation has an action plan for this purpose.
Principle 2: Transparency and accountability
The organisation demonstrates transparency in its management and trade relations. It is accountable to all stakeholders and respects the sensitivity and confidentiality of economic data received. It finds appropriate ways to involve its employees, members and producers in decision-making processes. It attaches particular importance to providing all its trading partners with relevant information. Communication channels are good and open at all levels of the trade chain.
Principle 3: Fair trade practices
The organisation's actions are aimed at the social, economic and ecological well-being of marginalised small producers and do not maximise profits at their expense. It fulfils its obligations in a responsible, professional and timely manner. The suppliers keep to the contracts and deliver on time in the desired quality and execution.
Fair trade buyers take into account the financial disadvantage of producers and suppliers of fair trade products and ensure that orders are paid on receipt of the documents or as agreed in mutual consultation. On request, an advance payment of at least 50 percent is made, interest-free in the case of crafts and at a reasonable interest rate in the case of food. The interest to be paid by the supplier may not exceed the cost of credit paid by the buyer to third parties. The calculation of interest is not mandatory.
When Fair Trade suppliers in the South receive an advance payment from a customer, they ensure that this payment reaches the producers or farmers who produce or grow these products.
Buyers consult with suppliers before cancelling or rejecting an order. If orders are cancelled for reasons beyond the producers' or suppliers' control, a reasonable fee must be guaranteed for the work already done. In the event of delivery problems, suppliers and producers consult with the buyers and provide compensation if the quantity and quality delivered does not match the quantity and quality invoiced.
The organisation maintains long-term relationships based on solidarity, trust and mutual respect, which contribute to the promotion and growth of Fair Trade. It is in close communication with its trading partners. The parties involved in a trading partnership endeavour to increase the volume of trade between them and the value and diversity of their product range in order to expand Fair Trade for the benefit of a higher income for producers. The organisation cooperates with other Fair Trade organisations in its country and avoids unfair competition. It does not use designs or samples from other organisations without their permission.
Fair trade promotes, protects and recognises the cultural identity and traditional skills of small producers, which are expressed in their craft designs, food products and related services.