Vous êtes sur la page 1sur 34

February 10.

2010
Brenda Wijnen Intern HES Amsterdam School of Business |February 2010

WR3A RESEARCH REPORT ON WR3A


FAIR TRADE STANDARDS
2

RESEARCH REPORT ON WR3A FAIR TRADE


STANDARDS

Author : Wijnen, B
City and Date : Middlebury, Vermont, United States;
February 2010
University : HES Amsterdam School of Business
Study Program: International Business and Languages
3

SUMMARY

The purpose of this report is to determine which Standards of the general Fair Trade
approach can be adapted by the WR3A approach, keeping in mind the particular
conditions of and needs in the e-waste export market. The board members of WR3A
have laid down Fair Trade Standards with which its members must comply in order
to enforce the best e-waste export practices. However, there does not exist an
exact document that gives a clear overview of all WR3A Fair Trade Standards. The
board members also want to know which of the WR3A Fair Trade Standards can be
improved upon or whether there are Standards to be added by looking at the pre-
existing Fair Trade system in the coffee industry.

The core question of the report is: What can be learned from the Standards in the
preexisting Fair Trade system -- in particular the coffee industry -- and translated
and implemented into the WR3A Fair Trade Standard system for the e-waste export
industry?

Literary, periodical, report and web research, and an interview are used to arrive at
the presented results.

The regular Fair Trade system and the WR3A Fair Trade system have many aspects
in common. However, there also are significant differences between the two systems.

The differences are that the main reasons for establishment initiatives are: that prices
that low that living Standards of the employees decline (FLO) vs. the shipment of
hazardous junk products (WR3A), the product flow from poor to rich countries (FLO)
vs. product flow from rich to poor countries (WR3A) and lower class disputes (FLO)
vs middle class disputes (WR3A).

The similarities are that both systems were set up in order to fight practices that harm
company employees and the environment in developing countries. International trade
is used as a tool for economic development in developing countries and for raising
awareness for change.

Subjects in the FLO Fairtrade Standards and WR3A Fair Trade Standards are very
similar. Many FLO Fairtrade Standards were already described in the WR3A Trade
Standards. There is no need for WR3A Standards on subjects such as Sustaining
Trade, Pre-finance and Pricing.
Also, in e-waste international trade, long-term relationships can be difficult to
maintain as supply and demand change rapidly and the products that are supplied or
demanded per buyer also change regularly. However, WR3A tries to find solutions
4

for changing supply and demand within the WR3A Fair Trade network. Also, price
and payment are not significant problems in the e-waste export industry.

Standards that do not exist in the WR3A Fair Trade Standards and that are valuable
to implement are added to the reviewed WR3A Fair Trade Standards which can be
found in the Recommendations. Also, pre-existing Standards are described more
precisely and were extended where necessary.

TABLE OF CONTENTS

Summary 3
Table of Contents 4
Introduction 5
1. What is Fair Trade according to WR3A? 6
1.1 Unfair practices in the e-waste export market 6
1.2 For who are the Standards meant?
7
1.3 Fair Trade According to WR3A 7
1.4 WR3A Fair Trade purposes
7
2. What is Fair Trade according to the Fair Trade Movement?
9
2.1 Fair Trade 9
2.2 History of Fair Trade 10
2.3 Unfair practices in global trade 10
2.4 For whom are the Standards meant for?
10
2.5 Fair Trade according to the Fair Trade Movement
10
2.6 Fair Trade Purposes
12
3. What are the Current WR3A Standards? 14
4.Which of the FLO Fairtrade Standards can be translated to the e-scrap export
industry? 17
4.1 Adaptable Standards of the Generic Fairtrade Standards
17
4.2 Adaptable Standards of the Generic Fairtrade Standards Small Producers
20
4.3 Adaptable Standards of the ETI Base Code
21
5. Conclusions
22
6. Recommendations 24
Sources
5

30
6

INTRODUCTION

The board members of WR3A have laid down Fair Trade Standards with which its
members must comply in order to enforce best e-waste export practices. However,
there does not exist an exact document that gives a clear overview of all WR3A Fair
Trade Standards. The board members also want to know which of the WR3A Fair
Trade Standards can be improved or whether are there Standards to be added, by
examining the preexisting Fair Trade system in the coffee industry.

The core question of this report is: What can be learned from the Standards in the
preexisting Fair Trade systems, in particular the coffee industry, and how can these
be translated and implemented into the WR3A Fair Trade Standard system for the e-
waste export industry?

The goal of the report is to present an overview of the improved WR3A Fair Trade
Standards which will be the Standards with which WR3A members will comply.

The first chapter describes what Fair Trade is according to WR3A. This is
followed by the determination of what Fair Trade involves according to the Fair
Trade Movement. The third chapter gives an overview of the current WR3A Fair
Trade Standards. Further, it determines which FLO Fairtrade Standards can be
translated to the e-waste industry. After the conclusion of the report, a complete
overview of the reviewed and improved WR3A Fair Trade Standards is given in the
Recommendations.

Some explanation of the use of certain words in this report is required. In this report
different ways of writing the words fair and trade are given: Fairtrade and Fair Trade.
This difference is made on purpose: the word Fairtrade is used to mean the Fair
Trade approaches of the Fairtrade Labeling Organization. Fairtrade is the word this
global organization uses to indicate its approaches. The words Fair Trade indicate
Fair Trade in general or are used without association with the Fairtrade Labeling
Organization.
7

1. What is Fair Trade according to WR3A?

The purpose of this report is to determine which Standards of the general Fair Trade
approach can be adapted by the WR3A approach, keeping in mind the particular
conditions of and needs in the e-waste export market. Therefore it is important to
determine what Fair Trade is according to WR3A. First, the unfair practices that make
Fair Trade Standards necessary are investigated. This is followed by an overview
of the audience for which these Standards are intended. The last part of the chapter
describes what Fair Trade is according to WR3A and its purposes.

1.1 Unfair practices in the e-waste export market

The reason that Fair Trade Standards are needed in the e-waste export market is
bad practices in this industry.

Firstly, African, Latin American and Asian repairmen and refurbishment factories
that seek business partners in the U.S. meet many recyclers that are willing to
sell them repairable and working equipment, if they also take a certain percentage
of irreparable units. In the second place, there is no transparency in the e-waste
recycling industry. Little data is kept on what happens to the electronics units once a
company in the chain has sold these devices to a subvendor.

Electronic equipment contains hazardous materials that should be kept out of the
environment and offered for recycling. However, in the US and other developing
countries, electronic equipment continues to be disposed of in the environment. In
the US, twenty states have introduced a ban on disposal of electronic equipment
and twelve states were considering legislation in 20091. This means that there
are still eighteen states where the disposal of electronic equipment is permitted.
However, there exists an electronic recycling infrastructure in every state.

On the other hand, none of the developing countries has a proper electronics
recycling infrastructure. Two things occur because of the lack of an infrastructure:
(1) in many responsible repair and refurbishment factories and charity organizations,
the irreparable electronics pile up because of general reluctance to dump them; (2)
irreparable electronics are dumped in the environment.

In brief, the main problems that can be distinguished in the e-waste export market
are: (1) so called “Toxic along for the Ride” being sent to overseas buyers who do
not want to have these junk electronics; (2) the lack of documentation on where

1 States Are Passing E-Waste Legislation, available online at: http://www.computertakeback.com/


legislation/state_legislation.html
8

electronic equipment goes in the chain and therefore a lack of responsibility


to prevent that; (3) the risk of dumping hazardous electronic waste into the
environment.

1.2 For whom are the Standards meant?

The WR3A Fair Trade Standards are meant for:


1. Seller: any company that wishes to trade only repairable and reusable equipment
with environmentally sustainable subvendors. This means that these companies do
not want to export “Toxics along for the Ride”.
2. Buyer: any company that wishes to buy obsolete electronics for repair
and reuse from parties who send only repairable and reusable commodities.

1.3 Fair Trade according to WR3A

Fair Trade is the transparent trade between good exporters of electronic equipment
and buyers abroad that want to adapt their businesses to high environmental
Standards. Transparent trade is realized with documentation from the moment of
stacking at the export company until the process and output at the buyer company.
Reuse is considered the economic engine of the e-waste Fair Trade market.
The goals of this Fair Trade are to develop affordable recycling, create blue-
collar jobs, create international trade complying with the Basel Convention, create
micro-lending, reduce mining and forestry and create international development2.

1.4 WR3A Fair Trade purposes

The Fair Trade purposes of WR3A include:

- To promote and encourage ethical recycling, reuse and repair Standards.


- To assist members in finding proper recycling opportunities in the USA and
other countries.
- To facilitate Fair Trade through cooperative marketing and enforceable civil
purchase and sales contracts between domestic and foreign asset recovery,
refurbishment and recycling organizations.
- To promote enforcement of national and international environmental law

2Sources: Ingenthron R., Fair Trade, Micro Lending and Digital Development, Good Point Idea
Blog, August 2008/ Ingenthron R., We shouldn’t have to make that choice, Good Point Idea
Blog, November 2009/ Ingenthron R., Basel Convention: The next chapter, Good Point Idea Blog,
December 2009
9

through civil law contracts, purchase orders, inspection, reconciliation and


verification programs.
- To conduct and promote research regarding improved processes, materials
and marketing for the reuse and recycling industry.
- To establish wider communications between companies engaged in
import and export and domestic recycling especially of used electronics.
- To conduct and promote such other logical activities that will enhance the
economic growth of the electronics recycling industry.
- To close the digital divide between the rich and developing countries trough
exporting reusable electronic equipment to developing countries.3

3 Source: World Reuse, Repair and Recycling Association Amended and Restated Articles of
Incorporation, April 2009
10

2. What is Fair Trade according to the Fair Trade Movement?

WR3A wants to base its previously described Fair Trade system on the Fair Trade
coffee system. The Fair Trade coffee industry is part of a wider system called the
Fair Trade Movement. Many different organizations within the Fair Trade Movement
have organized themselves in a global organization called Fairtrade Labeling
Organizations (FLO). Almost all Fair Trade organizations belong to this global
association. Therefore, the Fairtrade approach of FLO and its Standards are the
basis for the research of this report. A brief history of the movement is given and
is followed by an overview of the companies for which the Fairtrade Standards are
meant. The main subject of this project is described in the last part of the chapter:
an investigation of what Fair Trade is according to the Fair Trade Movement and its
purposes.

2.1 Trade

Fair Trade and the Fair Trade industry are in general associated with the trade of
products that are sold under a Fair Trade label in supermarkets and specialty shops.
This means in brief that the trade of products with this label is fair to all parties
involved in the business. However, other types of trade also use the term “Fair Trade”
with meanings other than the above. In this chapter, and in the whole report, “Fair
Trade” is referred to by the definition of the so-called “Fair Trade Movement”. The
organizations in the Fair Trade Movement are: Fairtrade Labeling Organizations
(FLO), International Federation of Alternative Trade (IFAT), Network of European
Worldshops (NEWS) and the European Fair Trade Association (EFTA). These are
also all umbrella organizations with members in different countries. All of them have
their roots in the hand craft and coffee industry.

2.2 History of Fair Trade

The Fair Trade Movement has existed almost 60 years. The following is
a brief overview of the development of Fair Trade in the past 60 years.

1950’s
Some U.S. church organizations began marketing local products from damaged
communities in Europe. In Europe itself, faith-based NGOs were established.
These organizations were progressive social movements with a mission for a better
world and the specific goal of fundamentally changing the terms of world trade.

1960’s –1970’s
11

Strikes and consumer boycotts of transnational brands. Campaigns to increase


awareness were launched by student groups and trade unions were established.

1980’s
Foundation of certification and labeling initiatives in the second part of the decade,
resulting in the development of Fairtrade Standards.

1997
The Fairtrade Labeling Organization (FLO) was founded to set international
Standards and achieve collaboration between different national labeling
organizations. The goal was to bring Fair Trade into the mainstream distribution
channels (supermarkets).

Today
There is a growing engagement of large-scale retailers and other companies bringing
Fair Trade to the mainstream public.

2.3 Unfair practices in global trade

The reason that Fair Trade organizations were established and Standards were
needed was the negative effects of globalization.

Many companies focus on offering the cheaper and more available products; as a
result, these companies seek for the lowest cost human and environmental inputs.
Low cost human input causes a decline in wages, incomes and Standards of living
for producers. Low cost environmental input causes the use of toxic weed killers, for
example in the coffee industry. This results in a decline in biodiversity.

Secondly, there is a growth of the “wealth gap” between the rich and poor as
transnational companies are usually companies from wealthy countries and their
cheap producers live in poorer countries.

2.4 For whom are the Standards meant for?

The Fairtrade Standards are meant for members of producer co-operatives, artisans,
bigger farms, trade companies and national producer networks.

2.5 Fair Trade according to the Fair Trade Movement

The definition that is most used for Fair Trade is the one of the Fair Trade Movement:
12

Fair Trade is a trading partnership, based on dialogue, transparency and


respect, that seeks greater equity in international trade. It contributes to
sustainable development by offering better trading conditions with, and
securing the rights of, marginalized producers and workers, especially in
the South. Fair Trade organizations (backed by consumers) are actively
engaged in supporting producers, raising awareness and campaigning
for change in the rules and practice of conventional international trade4.

Four dimensions can be taken from this definition:

Trade
Trade is used as a tool to produce development in developing countries or as a goal
on its own.5

Fairness
The products are traded using fair practices. These practices are the core of the
Fair Trade concept: fair price, social premium, pre-financing, provision of market
access and long-term relationship.6 They should result in an effective socio-economic
development for the producers in developing countries.

Education
Some Fair Trade organizations develop education campaigns for consumers. They
can have the aim to promote Fair Trade, to denunciate “unethical” trading practices
of multinationals7 or to raise awareness among consumers of the negative effects
on producers of international trade so that they exercise their purchasing power
positively.8

Regulation and advocacy


An important part of Fair Trade is the Standards. They function as a certification
and regulation system. In the Fair Trade Standards, the Fair Trade practices are
described and function to identify and label companies that conduct business

4 A charter of Fair Trade principles, World Fair Trade Organization and Fairtrade Labelling
Organizations International, January 2009 can be found online at: www.fairtrade.net
5 Gendron, C.,, Un nouveau mouvement socio-économique au coeur d'une autre

mondialisation:le commerce équitable, Chaire de Recherche en Développement des Collectivités


Université du Québecen Outaouais, Ottawa, 2004
6 Moore, G., The Fair Trade movement: parameters, issues and future research, Journal of Business

Ethics volume 53, 2004, pages 73-86


7 Huybrechts B., The Governance of Fair Trade Organizations in Belgium: A Focus on Stakeholders’

Representation on the Board, HEC Liege Working Paper, 2007


8 Raynolds L.T., Marray L., Wilkinson J., Fair Trade: The Challenges of Transforming Globalization,

London,
New York, 2007
13

according to Fair Trade practices.

Fair Trade rests on the three pillars of sustainability: social development, economic
development and environmental development.

Social development

Fair Trade Standards require companies to bring social rights and security to
their employees. The core elements of these rights are: training opportunities,
nondiscrimination of employees, no child labor, no forced labor, access to collective
bargaining processes and freedom of association of the workforce, condition of
employment exceeding legal minimum requirements, adequate occupational safety
and health conditions and sufficient facilities for the workforce to manage the
Fairtrade Premium9.

Economic development
The payment of a Fairtrade Minimum Price and/or a Fairtrade Premium to producers
is required. The first helps to cover the costs of sustainable products. The Fairtrade
Premium is money with which producers or employees can invest in improving the
health, education, environment and economy of the companies’ employees and in
the local community. Also, pre-financing must be a condition in the purchase order
if the producer asks for it. This pre-financing helps them to have access to capital.

Environmental development
Fair Trade requires environmentally sound business practices.

2.6 Fair Trade Purposes

The Fair Trade purposes of the Fair Trade Movement include:

- Market access for marginalized producers. Many producers are excluded


from mainstream and added-value markets, or can only access them via
lengthy and inefficient trading chains. Fair Trade helps producers realize
the social benefits of traditional forms of production to their communities.
By promoting these values, it enables buyers to trade with producers who
would otherwise be excluded from these markets. It also helps shorten trade
chains so that producers receive more from the final selling price of their
goods than is the norm in conventional trade via multiple intermediaries10.

9 Bargaining Beans India’s Small Coffee Growers reading to go global with certification- a report,
Prakuthi and Tropical Commodity Coalition can be found online at: www.teacoffeecacoa.org
1 A charter of Fair Trade principles, World Fair Trade Organization and Fairtrade Labelling

Organizations International, January 2009


14

- Sustainable and equitable trading relationships. The prices paid within a Fair
Trade relationship cover at least the production costs and costs for future
investment needs. The trading terms guarantee the producers and workers
a salary and/or price that cover the costs for a sustainable livelihood. Both
parties agree to a long-term trading partnership and information sharing and
planning11.
- Capacity building and empowerment. Fair Trade relationships assist producer
organizations to understand more about market conditions and trends and to
develop knowledge, skills and resources to exert more control and influence
over their lives12.
- Consumer awareness raising and advocacy. The Fair Trade relationships are
the connection between producer and consumer. Fair Trade organizations
inform consumers about the need for social justice and show opportunities
for change. They campaign to promote a wider reform of international trading
rules into a just and equitable global trading system13.
- Purchase orders are “social contracts” between buyer and seller in which the
buyer agrees to additional aspects such as paying fair prices, offering pre-
finance and support for capacity building. The seller agrees to use the financial
benefits to improve its social and economic conditions.
- Promotion of development opportunities for disadvantaged producers, in
particular women, indigenous people and to protect children from exploitation
in the production process14.
- To set an example of partnership in trade through dialogue, transparency and
respect.
- To protect human rights by promoting social justice, sound environmental
practices and economic security15.

1 A charter of Fair Trade principles, World Fair Trade Organization and Fairtrade Labelling
Organizations International, January 2009
1 Idem

1 Idem

1 Raynolds L.T., Marray L., Wilkinson J., Fair Trade: The Challenges of Transforming Globalization,

London, New York, 2007


1 Idem
15

3. What are the current WR3A Standards?

In previous chapters, the Fair Trade systems of both WR3A and the Fair Trade
Movement were discussed. This chapter will determine the current WR3A Standards
in order to have a basis for the investigation of fair trade Standards from the Fair
Trade Movement that can be translated into WR3A Standards for the e-waste export
market.

WR3A Standards

1. New members follow the certification procedure which includes completion of


a survey and answers to the following questions:
- Where does the bad CRT Glass go to?    
- Where do the printed circuit boards (PCBs) go to?
- How many staff do you employ per ton of material processed? 
- How many sea containers per year do you ship?16  
 
2. Members shall be open for inspection from the side of WR3A for the keeping
of the Standards17.

3. Overseas Buyers who join WR3A promise to buy only products they can really
repair or reuse.18

4. Generators who join the WR3A promise to hold their service providers to the
highest Standards of export for reuse and repair19.
 
5. The members abide by the actual Basel Convention, Annex IX, which explicitly
allows exports of "Electrical and electronic assemblies... destined for direct
re-use, and not for recycling or final disposal. Reuse can include repair,
refurbishment or upgrading, but not major reassembly. In some countries
these materials destined for direct re-use are not considered wastes."20

6. Any WR3A member who fails to meet the Standards of conduct set by the
organization will be voted out by the Executive Board, without appeal21.

7. Members must maintain documentation concerning the products shipped to

1 Can be found online at www.wr3a.org under Memberships


1 Article 2: Purposes, World Reuse, Repair and Recycling Association Amended and Restated Articles
of Incorporation, April 2009
1 Idem

1 Idem

2 Idem

2 Idem
16

downstream vendors . A downstream vendor must have safe management of


the end-of–life electronic equipment or its components in order to keep them
out of the environment.

8. A member documents that the CRTs are reused and maintains the
documentation for three years.22

9. A WR3A member shall send a truthful bill of lading. The declared description
of goods must be accurate and monitors should not be exported as “scrap
metal”. It is recommend that each and every monitor is indentified by year,
make, model, country of manufacture and tested condition, so that importers
have an opportunity to screen out what they cannot repair.23

10. Gold Test. The demand for gold in Asia drives a lot of the importation of non-
repairable electronic waste. While WR3A has not taken a position on scrap
metal yet, we recommend that members declare their processing records for
gold-bearing circuit boards.

11. Only companies which document waste stream management are allowed to
ship to refurbishing factories.24

12. A WR3A member uses civil law contracts and purchase orders to enforce Fair
Trade environmental Standards.

13. Members conclude civil law purchase orders that meet EPA Guidelines on
Export as described in the Responsible Recycling Practices.

14. Members from abroad have to pay top dollar for good CRTs.

15. Members from abroad have to offer better EH&S Standards.

16. Recyclers should only send what the customer wants:


If a U.S. company calls itself a recycler rather than an exporter, it should
demonstrate that it is able to take apart seven out of ten monitors and reduce
them to a form (copper scrap, gold scrap, etc.) needed overseas. If the
monitors are sent overseas for repair, the U.S. company should sort each
individual monitor by make/model, brand and year, and if possible note what
technical repair is needed. Anything else in the container is "toxics along for
the ride."

17. Exported scrap should be sold only to environmentally safe companies.


2 Can be found online at www.wr3a.org under Home
2 Can be found online at www.wr3a.org under Export Standards
2 Idem
17

18. All WR3A members will promise to achieve high reuse Standards, to ensure
that only correctly prepared, serviceable commodities - not wastes - are
exported.

19. WR3A members pay the importer if any bad units are received.

20. A company may make cleanup of an old site a condition of new quality product
sales, or may drop a buyer if the company finds find they are buying large
quantities from USA exporters who do not meet WR3A Standards.

21. WR3A is negotiating with well-intentioned importers to add ISO Standards,


recycling of incidental breakage, and better workplace conditions, in return for
dependable products and Fair Trade prices.

22. WR3A offers incentives to improve overseas facilities, to meet ISO14001, to


improve recordkeeping, and to create take-back programs for e-waste in their
own communities.
18

4. Which of the FLO Fairtrade Standards can be translated to


the e-waste export industry?

The previous chapter gave an overview of the current WR3A Standards in order
to form a basis for the investigation of the Fairtrade Standards. In this chapter, the
Standards that can be adapted from the Fairtrade Standards are described in order
to extend the current WR3A Standards.

4.1 Adaptable Standards of the Generic Fairtrade Standards25

Standard 1. Certification

Intent
All operators taking ownership of Fairtrade certified products and/or handling the
Fairtrade price and premium are inspected and certified.

1.1 All operators will be subject to inspection and certification to assess compliance
with this Standard.

Operators will be subject to an inspection process determined by the certifier to


assess their compliance with these Standards.

Subcontractors shall be considered as additional premises of the operator. They shall


be required to submit themselves to an inspection at the discretion of the certifier.
When an operator starts to work with a new subcontractor, the operator must confirm
with that subcontractor that inspection can take place if required by the certifier.

Inspections of subcontractors will be undertaken on the basis of an assessment of


the risk of non-compliance with trade Standards. Where the operator can provide
information, documentation, or plans to mitigate the risk associated with their
subcontractors, these will be useful in helping to categorize the risk of subcontractor
non-compliance.

1.3 All operators must designate one official contact person for Fairtrade-related
matters.

All operators must designate one key contact person (a Fairtrade Officer) within their
organization. The Fairtrade Officer will be the main contact person for certification
and inspection issues. She or he will be responsible for ensuring the operator’s
compliance with all certification requirements and for keeping the certifier updated

2 All text in this paragraph comes from Generic Fairtrade Standards, World Fair Trade Organization
and Fairtrade Labelling Organizations International, August 2009
19

with contact details and other relevant information.

Standard 2. Traceability

Intent
Traceability requirements are put in place to protect operators and consumers. The
objective is to ascertain that the authenticity of Fairtrade products can be verified so
that operators only sell Fairtrade products that are purchased as Fairtrade products.
Also,the final sellers to the customers seek to trace the product back to the producer
by verification through documentation and to ensure that the product is physically
separate and identifiable from non-Fairtrade products. The Standards emphasize
that the method of demonstration of physical traceability is at the discretion of the
operator.

For these trade Standards, traceability requirements are applied from the producer
onwards. In the case of Small Producers’ Organizations, Fairtrade product separation
requirements are not covered by these trade Standards but by the applicable Generic
Fairtrade Standards for Small Producers’ Organizations.

2.2 Where operators cannot demonstrate full compliance to physical traceability


requirements specified in Standard 2.1, a transition period applies. This period
may last no longer than two years from the date the Generic Trade Standard
comes into force. Requirements on traceability through documentation must still be
complied with. During the first year of application of this Standard, further research
will ascertain whether or to what degree the principle of physical traceability is
achievable for operators certified against the Cane Sugar, Cocoa, Fruit Juice and
Tea Standards. Until a decision is taken on the outcome of this research, operators
certified against the Cane Sugar, Cocoa, Fruit Juice and Tea Standards are exempt
from physical traceability requirements.

Standard 3. Contracts

Intent
Contracts between producers and buyers set the framework for Fairtrade trade
operations. It is important that the contractual obligations are determined by mutual
agreement, well documented, and clearly understood by the contracting parties.

3.1 Buyers must sign binding purchase contracts with producers. Unless otherwise
stated in the product Standards, contracts must as a minimum clearly indicate the:
• agreed volumes
• quality
• price
20

• terms of payment
• terms of delivery.

All contracts between producers and Fairtrade payers or conveyors must stipulate an
arbitration mechanism agreed upon by both parties.

Buyers must ensure that a written contract exists for products bought and sold under
this Standard.

The Standard makes it clear that, as a minimum, both parties must agree on
volumes, quality, price, terms of payment and delivery, and that these agreed terms
must be clearly stated in the contract.

The Fairtrade product-specific Standards may include additional requirements about


the contract content for particular products. Any such additional requirements from
the relevant product Standards must be included in the agreed contract.

Responsibility for drawing up the contract should be mutually agreed upon. Where
no agreement can be reached, the responsibility to draw up the contract rests with
the buyer who must also ensure that the contract reaches the seller in an agreed
language.

The Standard also requires that a mechanism for arbitration is written into contracts
between producers and Fairtrade payers or conveyors.

Standard 6. Pricing

Unless otherwise specified in the product Standards, Fairtrade payers


may use any available payment method as long as it is transparent, traceable
and mutually agreed upon between the Fairtrade payer and the producer.

This Standard allows for both parties to come to an agreement on the best
mechanism for payment and receipt of payment. Any financial instrument available to
the operators can be used (for example: letter of credit; bank transfer) as long as the
payment method is agreed upon between both parties.

All forms of payment must be transparent and traceable. The responsibility for
demonstrating payment to the certifier rests with the Fairtrade payer.
21

4.2 Adaptable Standards of the Generic Fairtrade Standards Small Producers26

Standard 2. Socioeconomic Development

2.1 Fairtrade Premium

Intent

The Fairtrade Premium is an amount paid to the producer organization in addition


to the payment for their products. The Fairtrade Premium is a tool for development,
supporting the organization to realize their development objectives as laid down
in their development plan. In the context of small producers’ organizations, it is to
be used for investment in the social, economic and environmentally-sustainable
development of the organization and its members and through them, their families,
other workers and the surrounding community. It is for the organization and its
members to analyse and evaluate the possible options for spending the Fairtrade
Premium. Choices should be made and priorities set depending on the specific
situation of the organization and the available amount of Fairtrade Premium.
Decisions on the use of the Fairtrade Premium are taken democratically by the
members following principles of transparency and participation. It is the joint
responsibility of the organization and its members to make wise and fair decisions.
The organization has the commitment and capacity to administer the Fairtrade
Premium in a way that is transparent for beneficiaries and for FLO. Procedures, roles
and responsibilities for handling the Fairtrade Premium are set out in more detail in a
separate Explanatory Document available from FLO, which must be adhered to.

In-depth explanation Fairtrade Premium27


The Fairtrade Premium is money paid in addition to the price agreed upon for the
product. It is an extra payment. It should not be included in discussions about the
price. The Premium will usually be between 5% and 30% of the FOB or ‘farm gate’

2All text in this paragraph comes from Generic Fairtrade Standards Small Producers,
World Fair Trade Organization and Fairtrade Labelling Organizations International, 2009

2 All text in this paragraph comes from Explanatory Document for the Generic Fairtrade Standard for
Small Farmers’ Organisations, World Fair Trade Organization and Fairtrade Labelling Organizations
International, March 2006
22

price. The Premium is fixed by FLO and published as part of the product specific
Standards. It is set when the product is first introduced and revised when necessary.

The Fairtrade Premium is money to support producers as they improve their working
conditions, their community and their environment. The Premium has been used to
fund projects such as schools, a bus stop and recreational facilities. It can also be
used for training or to invest in infrastructure at the cooperative level. The important
thing is that through the General Assembly, all farmers have a say in how the money
from the Premium is managed and what projects it is spent on.

4.3 Adaptable Standards of the ETI Base Code 28

Standard 4. Child labor shall not be used

4.1 There shall be no new recruitment of child labor.

4.2 Companies shall develop or participate in and contribute to policies and programs
which provide for the transition of any child found to be performing child labour
to enable her or him to attend and remain in quality education until no longer a
child; “child” and “child labour” being defined in the appendices.

4.3 Children and young persons under 18 shall not be employed at night or in
hazardous conditions.

4.4 These policies and procedures shall conform to the provisions of the relevant ILO
Standards.

Standard 5. Living wages are paid

5.1 Wages and benefits paid for a Standard working week meet, at a minimum,
national legal Standards or industry benchmark Standards, whichever is higher. In
any event wages should always be enough to meet basic needs and to provide some
discretionary income.

Standard 7. No discrimination

7.1 There is no discrimination in hiring, compensation, access to training, promotion,

2All text in this paragraph comes from ETI Base Code, Ethical Trading Initative, can be found online
at: www.ethicaltrade.org
23

termination or retirement based on race, caste, national origin, religion, age,


disability, gender, marital status, sexual orientation, union membership or political
affiliation.
24

5. Conclusions

The regular Fair Trade System and the WR3A Fair Trade System have many aspects
in common. However, significant differences also exist between the two systems.

Differences
The main reasons for establishing Fair Trade organizations are the unfair payment
to coffee and handcraft producers for their products and their poor working
conditions. The main reason for founding WR3A is environmental: the shipment of
junk electronics to repairmen in developing countries along with good equipment.
The problem is not the unfair payment or bad working conditions, but the lack of
a network of trust between the developed countries and repairmen in developing
countries. Therefore the core of the regular Fair Trade Standards is fair prices,
social premium, pre-financing and provision. However, the core of the WR3A Trade
Standards is best sustainable environmental practices.

The product flow for regular Fair Trade organizations is from developing countries
to developed countries. The sellers are producers in poor countries and their buyers
are in rich countries. In the e-waste export industry it is the opposite: the buyers
are in poor countries (repairmen) and the sellers are in rich countries (recyclers).

The producers in poor countries mainly belong to the poorer class, while repairmen
of WR3A belong mostly to the middle class. This means that, in general, the
repairmen are more independent and wealthier. Regular Fair Trade focuses on
building long-term relationships between buyer and seller. This is also possible,
and necessary, because the Fair Trade products that are offered per producer are
homogenous consumer commodities. In e-waste international trade, long-term
relationships can be difficult to maintain as supply and demand change rapidly
and the products that are supplied or demanded per buyer also change regularly.
However, WR3A tries to find solutions for changing supply and demand within the
WR3A Fair Trade network.

Similarities

Though there are differences between regular Fair Trade system and the WR3A Fair
Trade system, many similarities can be found between the two systems. The main
similarities that can be determined are the following.
- Both movements were established in order to fight practices that harm
employees of companies and the environment in developing countries.
- Both systems are engaged in supporting members.
- Raising awareness for changes in trade systems.
- International trade is used as a tool for economic development in developing
25

countries.
- Trade takes place between developed and developing countries.
- Trade is based on dialogue, transparency and respect
- Development of best practices Standards
- Certification on the basis of best practices Standards
- Members are assisted in understanding of market conditions and trends.
- Members are assisted in developing knowledge, skills and resources
- Fair Trade is promoted.
- Both systems aim at environmental, economic and social development.

Issues raised in the FLO Fairtrade Standards and WR3A Fair Trade Standards
are very similar. Many FLO Fairtrade Standards were already described in the
WR3A Trade Standards. There is no need for WR3A Standards on such issues as
Sustaining Trade, Pre-finance and Pricing.

Also, in e-waste international trade, long-term relationships can be difficult to


maintain as supply and demand change quickly and the products that are supplied or
demanded per buyer also change regularly. However, WR3A tries to find solutions
for changing supply and demand within the WR3A Fair Trade network. Also, price
and payment are not significant problems in the e-waste export industry .

Standards that were not included in the WR3A Fair Trade Standards and that are
valuable, should be added to the WR3A Fair Trade Standards, as mentioned in the
Recommendations below. These valuable Standards are described in chapter 4.
Also, preexisting Standards are described more precisely and were added to where
necessary.
26

6. Recommendations
Below follow the improved WR3A Fair Trade Standards.

Improved WR3A Fair Trade Standards

1. Compliance with the Standards


1.1 Certification process
All potential members will be subject to a Certification Process before being
confirmed as a WR3A member. If a company desires to become a Vetted Member, it
must fill out the
E-certification Tool at www.wr3a.org. WR3A will verify the answers of the completed
E-certification Tool and decide if a company complies with the WR3A membership
requirements.

1.2 Promises
- All WR3A members promise to achieve high reuse Standards, to ensure that
only correctly prepared, serviceable commodities are exported.
- Overseas Buyers who join WR3A promise to buy only products they can really
repair or reuse.
- Generators who join the WR3A promise to hold their service providers to the
highest Standards of export for reuse and repair.
- All members agree to the WR3A Fair Trade Standards.
- All members abide by the actual Basel Convention.
Annex IX B1110 of the Basel Convention explicitly allows the export of
electrical and electronic assemblies (including printed circuit boards, electronic
components and wires) destined for direct reuse and not for recycling or final
disposal. Reuse can include repair, refurbishment or upgrading, but not major
reassembly. In some countries these materials destined for direct re-use are
not considered waste.

1.3 Inspection
Members allow WR3A to inspect their compliance with the Standards at any time of
their membership.

1.4 Downstream vendors


Every member must seek downstream vendors that can comply as well as possible
to
27

the WR3A Standards. A minimum requirement for a subcontractor is the safe


management of the end-of-life of electronic equipment or its components in order to
keep them out of the environment.

Members enforce their subcontractors to improve their best practices and to raise
these practices to WR3A Standards.

Members shall keep information about their downstream vendors regarding the
environmental impact of their practices. The member shall provide this information
and documentation to WR3A if requested to do so. Members must be able to show
the information and documentation within one year after becoming a WR3A member
for their existing downstream vendors and within one year after starting business with
a new downstream vendor.

1.5 WR3A Key Contact Person


A member nominates a WR3A Key Contact Person that will be the main contact
person for all WR3A Standards matters including inspection, certification and
contact with WR3A. This person monitors the compliance of the member to the
Standards, the improvement of the Fair Trade practices and the level of compliance
of downstream vendors.

1.6 Violation
Any WR3A member who fails to meet the Standards of conduct set by the
organization will be voted out by the Executive Board, without appeal. WR3A may
terminate the membership of any member found to be buying large quantities from
USA exporters who do not meet WR3A Standards.

2. Documentation and recordkeeping


2.1 Documentation
The key to a transparent and fair export industry is record keeping. Documentation
about the sent product, its path from the seller to the end consumer and/or buyer
and the destination of its components once taken apart for recycling, will provide
traceability and transparency. Only companies that document waste stream
management are allowed to ship to refurbishing factories.

2.2 CRT documentation


CRT is considered the most hazardous and expensive component of electronic
devices to recycle. Therefore, it is important to keep track of the obsolete CRT tubes
in the waste stream.

2.2.1 Members shall keep documentation to show how many and which CRTs of a
28

load are repaired and reusable. The records must include:


- quantity of reusable CRTs
- model
- year
- destination of reusable CRTs (bare CRTs, monitors, televisions).
This documentation must be kept for three years.

2.2.2 Not every CRT is repairable. Therefore, companies exporting reusable CRTs
must be able to document where the bad CRTS are going and keep this document
for 10 years.
The seller must pay an incentive to the buyer for every non-repairable CRT.

2.2.3 Not every CRT is exportable. The company must show it has the capacity to
recycle the bad monitors. This means that it must show that sufficient employees or
capital investments are in place to account for processing a significant number of bad
CRTs. It must also provide information about the final destination of the bad CRTs.
The documentation on final destination of bad CRTs must include at least:
- description of good
- physical form of the good when sold
- quantity sold
- name of the buyer (company)
- country of buyer
- dates of transaction.
Documentation about the final destination of the bad CRTs must be kept for three
years.

2.3 Additional documentation requirements printed circuit boards


A member shall provide documentation about where its printed circuit boards are
sent. The documentation must include at least:
- description of good
- physical form of the good when sold
- quantity sold
- name of the buyer (company)
- country of buyer
- dates of transaction.
This documentation must be kept for three years.

2.4 Additional documentation requirements components and materials


Apart from electronic devices, components and materials derived from the
dismantling of electronic equipment are sold to down stream vendors. A member
shall keep records about where every separate category of component and material
is sent. These records must include at least:
- description of good
29

- physical form of the good when sold


- quantity sold
- name of the buyer (company)
- country of buyer
- dates of transaction.
This documentation must be kept for three years.

2.5 Transition period


For new members, a transition period of 12 months applies to comply with this
Standard.

3. Purchase Orders and Contracts

3.1 Written civil law purchase orders and contracts which meet EPA Guidelines
The trade of products is determined in written civil law purchase orders and contracts
which meet EPA guidelines. A new member is allowed to not meet the EPA
Guidelines in its current orders. However, after the contract ends, the member must
decide either to sign a new contract that meets EPA Guidelines or to not sign a new
contract with the specific party.

3.2 Minimum requirements


A purchase order or contract must describe at least the following points:
- agreed quantity
- agreed quality
- agreed price
- agreed terms of payment
- agreed mechanism for arbitration
- agreed incoterm.

4. Price
4.1 Good Price
Commercial members from abroad should pay a good price for good equipment.

4.2 Reimbursement bad units


A WR3A exporter is to pay the WR3A importer if any bad units are received. A
compensation fee of repairs is to be paid for the units that were repairable. A
recycling compensation fee is to be paid for the units that had to be recycled. The
importer must include this in the reconciliation report to the exporter to inform
the latter about the number of bad units received (as mentioned in Standard A4
30

Recordkeeping below)

4.3 Payment Transparency


All forms of payment must be transparent and traceable

5.0 Transport
5.1 Truthful Bill of Lading
While market information may be subject to confidentiality, the declared description
of goods must be accurate. Units must not be exported as "scrap metal".

5.2 Stacking
Every pallet or gaylord shall be stacked in a way that causes the least chance
of breakage of the products along the shipment to the destination facility.
WR3A can be contacted for examples of proper pallet and gaylord stacking.

5.3 Pallet Manifest


Every pallet or gaylord shall have a manifest that states the exact amount of units it
contains. Each unit must at least be described by model, brand, size, year, country of
origin, working condition and, if necessary, supplementary comments.

5.4 Shipment
Any type of shipment can be chosen. A picture must be taken of every tag that
secures the container and be kept in a database. This is a security measure in the
event that the tag is broken or changed by another party during shipment. If, in that
situation, ‘junk’ is added or the load is damaged, the exporter can show evidence that
this was not his fault.

A. Additional Overseas buyer Standards


A1 Certification
In return for good prices, an overseas refurbishment and repair facility shall become
ISO 14001, ISO 9000 and R2 certificated.

For new members, a transition period of 18 months applies to comply with this
Standard.

A2 Legal import permits


An overseas refurbishment and repair facility must have a legal import permit for
the goods it wants to import and must be able to show this to the seller. Goods shall
31

never be shipped before the buyer can show a legal import permit to the seller. In
case of noncompliance, all shipments to the refurbishment and repair facility shall be
stopped.

A3 Other permits
The refurbishment and repair facility shall have all other permits that are required
for the activities it executes. Under no conditions is it allowed to execute an activity
illegally.

A4 Recordkeeping
Members shall maintain reconciliation reports in order to inform their vendors how
many of the exported devices are reused, repaired and recycled.

For new members, a transition period of six months applies to comply to this
Standard.

A5 Proper recycling facility for non-repairable units


Not all units that arrive at the overseas refurbishment and repair facility can be
reused. The non-repairable units must be recycled in a sustainable way. Recycling
in a sustainable way means to recycle under safe and healthy working conditions,
without harming the environment and without disposal of any material into a landfill.

The facility must report to WR3A and the seller where and how the non-repairable
units are recycled.

A6 Active role in setting up sustainable electronics recycling system in city/region


A WR3A member shall actively assist or, if necessary, take the lead in developing
a sustainable electronics recycling infrastructure in its city/region. This means, for
example, that the company adopts, if necessary, a demanufacturing department in
its own company, to become a training centre in demanufacturing and organizes
electronics collecting events.

A7 Salary
The salary of every employee meets at least the minimum national legal Standards or
industry benchmarks. If no minimum national legal Standard exists, the salary must
at least be enough to meet basic needs.

A8 Discrimination
There is no discrimination in hiring, compensation, access to training, promotion,
termination or retirement based on race, caste, national origin, religion, age,
disability, gender, marital status, sexual orientation, union membership or political
affiliation.

A9 Contract
32

A written employment contract between the employer and the employee shall be
signed.
The employment contract includes at least a description of the employee’s
activities, contract start date, salary and term of payment, minimum working hours.

A10 No child labor


There shall be no new recruitment of child labor. Companies shall develop or
participate in and contribute to policies and programs which provide for the transition
of any child found to be performing child labor to enable her or him to attend and
remain in quality education until no longer a child. Children and young persons under
18 shall not be employed at night or in hazardous conditions.

B. Additional Seller Standards


B1 Documentation
A seller shall not only document the management of its export but also the
management of the rest of its waste stream.

B2 Export Documentation
Every electronic assembly that is exported shall be documented by brand, model,
year, country of origin and tested condition so that importers can screen out what
they do not want or cannot really repair. A reconciliation report shall be sent from the
buyer to inform the seller of how the electronics equipment is processed.

A record list shall be kept of every electronic unit exported including brand, model,
year, working condition and destination. Destination means country and company
where units are shipped to.

For new members, a transition period of six months applies to comply with this
Standard.

SOURCES

Books
Leutchford P., Fair Trade and a global commodity: coffee in Costa Rica, London
2008
Raynolds L.T., Marray L., Wilkinson J., Fair Trade: The Challenges of Transforming
Globalization, London, New York, 2007
33

Interviews
Peyser R. (Director of Social Advocacy & Coffee Community Outreach) and …..,
Interview about how Green Mountain Coffee Roasters implements Fairtrade and
which problems they face, Waterbury (VT),

Articles
Anon., Fair Trade an Alternative Economic Model, April 23 2007, CBS News Digital
Moore, G., The Fair Trade movement: parameters, issues and future research,
Journal of Business Ethics volume 53, 2004, pages 73-86

Weblogs
Ingenthron R., Fair Trade, Micro Lending and Digital Development, Good Points Idea
Blog, August 2008
Ingenthron R., We shouldn’t have to make that choice, Good Point Idea Blog,
November 2009
Ingenthron R., Basel Convention: The next chapter, Good Point Idea Blog,
December 2009

Websites
ELECTRONICS TAKE BACK COALITION
www.computertakeback.com
FAIR TRADE LABALING ORGANIZATIONS INTERNATIONAL (FLO)
www.fairtrade.net
FLO-CERT
www.flo-cert.net
TROPICAL COMMODITY COALITION
www.teacoffeecacao.org
WORLD REUSE REPAIR AND RECYCLING ASSOCIATION
www.wr3a.org

Reports
Gendron, C., Un nouveau mouvement socio-économique au coeur d'une autre
mondialisation:le commerce équitable, Chaire de Recherche en Développement des
Collectivités Université du Québecen Outaouais, Ottawa, 2004
Huybrechts, B., The Governance of Fair Trade Organizations in Belgium: A Focus on
Stakeholders’ Representation on the Board, HEC Liege Working Paper, 2007
Krats A., SOP Public Development of Fair Trade Standards, World Fair Trade
Organization and Fairtrade Labelling Organizations International, September 2006

Other Documents
34

A charter of Fair Trade principles, World Fair Trade Organization and Fairtrade
Labelling Organizations International, January 2009
Bargaining Beans India’s Small Coffee Growers reading to go global
with certification- a report, Prakuthi and Tropical Commodity Coalition
ETI Base Code, Ethical Trading Initative, can be found online at:
www.ethicaltrade.org
Explanatory Document for the Generic Fairtrade Standard for Small Farmers’
Organisations, World Fair Trade Organization and Fairtrade Labelling Organizations
International, March 2006
Generic Fairtrade Standards, World Fair Trade Organization and Fairtrade Labelling
Organizations International, August 2009
Generic Fairtrade Standards Small Producers, World Fair Trade Organization and
Fairtrade Labelling Organizations International, 2009
World Reuse, Repair and Recycling Association Amended and Restated Articles of
Incorporation, April 2009