Global trade and development

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1 Sean Hawkey Global trade and development connecting people and places Student resource PRIMARY SCHOOL

2 ACTIVITY How do you make choices when shopping? Imagine you are going to the shops. List three things you could buy that you need in order to live, and three things that you don t necessarily need but you want to buy. Need: 1. Want: There are lots of reasons why people choose to spend their money on one item instead of another, or on one brand instead of another. With a partner, discuss why you picked your three needs and three wants. Why did these items make your top three? Did you have specific brands in mind? Why do you like that brand? Was there something else you thought of to buy but it didn t make your list? What were your reasons for leaving it out of your list? Write down a few notes about what you discussed with your partner in the space below: 1

3 When people make decisions about what to buy sometimes they re influenced by: financial reasons, such as how much it costs and how much money they have available to spend the quality of the product and how long they think it will last, this can be linked to brand loyalty; their belief that a particular brand makes good products how popular or fashionable the item is if the item is environmentally-friendly, how making it or using it affects the environment, or if it was tested on animals or not ethical concerns about how the item was made, if the people who made it were treated fairly, that making or using the item won t harm anyone else personal reasons, for example religious beliefs, personal likes and dislikes, habit or allergies Usually it s a mix of these and other reasons. Listed below are some of these common reasons with a scale from 0-5 which stands for not important to extremely important. Think about what is important to you when choosing what to buy. Mark the number that shows how important (or not) that reason is to you when you decide to buy something. Remember: other people will have different opinions, and there are no right or wrong answers, it s just what you think. Not important Extremely important Financial reasons Quality Popularity Environmentally-friendly Ethical concerns Personal reasons

4 Words used in economics Learning about the buying and selling of things, and how those things are made, is part of the study of economics. There are some common words used in economics that are important to know: Physical things that we buy, like clothes, food or toys, are called goods. When we pay someone for their skills and knowledge, like going to a doctor or a hairdresser or hiring a plumber, we are paying for their services. People who buy goods to use for themselves, or to give to others (for example, parents who buy things for their children), are called consumers. A person or business that grows or makes a good for sale is called a producer. For example, a farmer growing cocoa beans is a producer. A person or business that makes more complex goods for sale, often using machinery and several different parts, is called a manufacturer. For example, a business that buys cocoa beans from a producer and then processes the beans, adding milk, sugar and other ingredients in order to make chocolate for sale is a manufacturer. Making goods for sale is an important part of a country s economy. The act of selling and buying goods is called trade. There is also trade in services. When goods are made and sold in the same country, for example when strawberries from farms in Queensland are sold in supermarkets in Victoria, this is called domestic trade. When goods are made in one country then transported and sold in a different country. For example when tea leaves from farms in Sri Lanka are sold in Australian shops, this is called international trade. In international trade, when a good is brought into a country from overseas for consumers to buy this is called an import. For example, Australia imports cars from Japan to sell to Australian consumers. In international trade, when a good is sent to another country for sale this is called an export. For example, Australia exports wheat to Indonesia. 3 Santiago Engelhardt

5 ACTIVITY Words used in economics Draw a line between each word and the example you think best matches that word. For example, a consumer can be described using the example a person who buys a shirt for themselves. Word Consumer Export Good Import Manufacturer Producer Service Example A sports ball for sale in a shop. A painter hired to paint a house. A farmer growing cotton. A quantity of iron ore sold by an Australian business to a business in China. A person who buys a shirt for themselves A spice bought by an Australian business from a business in India. A business that makes televisions. What is ethical consumerism? For some people, ethical and environmental considerations are extremely important to them when choosing what goods and which brands to buy. Fadi, for example, wants to buy goods that make a positive difference. Like Fadi, John also wants to make a difference, and he describes his thinking like this: when buying things, I wonder what lies behind the bright boxes and packets of products on the supermarket shelves. How were the workers treated? Did they get a fair wage for their work? Did they work in healthy conditions in an environmentally sustainable way? In other words: how will my action, in making what to me is a simple purchase of chocolate etc., affect the people who produced these things? 4

6 The approach to shopping that Fadi, John and others like them take is called ethical shopping or ethical consumerism. They learn about how products are made, and then choose to spend their money on goods and brands that don t cause harm. They avoid products that are unsustainable or cause harm to other people. For example, sometimes the people who make the goods we buy have been exploited they are treated unfairly and are taken advantage of while others benefit from their hard work. Usually these workers are the poorest people or the most discriminated against in their country, which can be the reason why they are vulnerable to being exploited. They might have been forced to work, expected to work in unsafe conditions, or they haven t been paid a fair wage for their work or a fair price for their crops. Sometimes companies take advantage of vulnerable workers and farmers because by paying them less they can increase their own profits (defined as the amount of money they make from the sale of a good, minus the amount it cost them to make that good). ACTIVITY What s fair? What it means to be ethical has to do with morals: the beliefs or principles that guide actions and behaviour. It s about making choices based on a set of values. When thinking about what s right and what s wrong, an idea that often comes up is the question of what s fair. 1. In your own words, define the word fair how would you explain what fair means to another person? What does it mean to be fair? 2. With a partner, discuss and give an example of a situation or scenario of something you think is fair, and an example of a situation or scenario you think is unfair. What is it about these situations/scenarios that makes them fair or unfair? Make a few notes about why you think that. Fair: Unfair: Example of being fair because: Example of being unfair because: 5

7 ACTIVITY Josh Griggs How does ethical consumerism contribute to global citizenship? Australian consumers buy and use products that have come from all over the world, and in particular from the Asia-Pacific region. Australia is connected to these places through trade. Using the Australia s connections through trade worksheet, identify Australia s main trading partners (the countries we import the most goods from, and the countries we export the most goods to) on the map provided. Australia is a major trading partner with countries in Asia and the Pacific. For example, in 2015 nearly 16 percent of all goods exported from Papua New Guinea went to Australia, and just over 25 percent of all goods imported into Papua New Guinea came from Australia. 1 Australian businesses and consumers create demand for, and benefit from, being able to buy and use goods that were produced in other countries, but do they have some responsibility for how those goods were made? Are they responsible for the impact that producing goods for Australian use can have on the people and environment in other countries? People who practice ethical consumerism see it as an act of global citizenship. What do you think? Do Australian consumers have some responsibility for the impact on local people and environments that occurs as a result of producing the goods they buy? What about Australian businesses that buy and use goods from overseas in the products they sell? What do you think is fair when it comes to making, trading and buying goods? Do you think ethical consumerism contributes to global citizenship? Make a few notes about your first thoughts. What s your opinion? Why do you think that? Are there any questions you have? When you ve learned a bit more about this topic, come back and make some notes about your final reflection. Do you still agree with your first thoughts or have you changed your mind? First thoughts Final reflection 1 DFAT, Country Fact Sheet: Papua New Guinea, available at: [accessed April 2017] 6

8 ACTIVITY How do people know if a good has been ethically produced? Use the words in the boxes to fill in the blank spaces in the section below: ask choice consumers fairly investigate research standards sustainable When making the to be an ethical consumer one of the challenges is knowing how goods were produced. Were workers treated? Were the methods of production safe and environmentally? When goods come from other countries it can be very difficult for an Australian consumer to know the answer to these questions. Think about a t-shirt, for example: who grew the raw cotton and what farming methods did they use? Who turned the raw cotton into thread? What about the workers who turned the thread into fabric, then cut and stitched the fabric into the final t-shirt? There are a few options for if they want to try to find out more about a t-shirt they are thinking of buying: They could do their own into how cotton is grown, and what some of the issues faced by farmers and workers in the manufacturing process might be. They could the company that made the t-shirt or the company that sold it to find out how it was produced. They could check out research from organisations that and provide information about whether a product was ethically made, for example the Shop Ethical consumer guide or the Baptist World Aid ethical fashion guide. They could see if the product has information, like a symbol, to show that it was made according to set ethical and/or environmental. 7 Fairtrade ANZ

9 CASE STUDY: Fairtrade There are ways that consumers can be sure goods have been produced in an ethical and environmentally sustainable way and that workers haven t been exploited. One way is if the producers and manufacturers of the goods agree to follow a set of standards (rules or expectations that can be checked or measured), and then someone else checks the production process to make sure the standards are being met. There are several different organisations that create and monitor ethical and/or environmental standards. One of these organisations is Fairtrade. What is Fairtrade? Fairtrade is an international non-profit organisation (unlike a for-profit business, they don t work to make money for themselves). Fairtrade works to help producers, farmers and workers from developing countries to benefit from international trade. It also works to help consumers understand how the choices they make when shopping can affect the communities where those goods were made. How does Fairtrade work? Form a producer organisation Fairtrade ANZ Individual producers (farmers or workers) from a developing country agree to join together in a co-operative and become a Fairtrade producer organisation. As a group, producers can demand better trade deals than they might be able to as individuals. The Fairtrade organisation helps new producer organisations to get started, making sure that everyone has an equal say in decision-making and no one is discriminated against. 8

10 How does Fairtrade work? Follow the Fairtrade Standards Kuldeep Singh Chauhan The farmers or workers in the producer organisation agree to work together and follow the Fairtrade Standards that were created by Fairtrade International. The Standards are a set of rules intended to make trade fair for producers and improve the environmental, economic and social sustainability of the whole community. Receive the Fairtrade Minimum Price Sean Hawkey The Fairtrade organisation sets the Minimum Price that businesses buying from a Fairtrade producer organisation must pay. The Fairtrade Minimum Price covers the cost of sustainable production. Also, instead of the price always going up and down (and sometimes down so low producers can t even cover their costs), having a Minimum Price means producers have a more stable income. A buyer can pay more than the Minimum Price, but they can t pay less. Spend the Fairtrade Premium Nathalie Bertrams In addition to paying the Minimum Price, businesses buying from Fairtrade producer organisations pay an extra amount of money into a communal fund for each cooperative. This money is called the Fairtrade Premium. The members of the producer organisation then decide together with everyone having an equal say how to spend this money, based on what will benefit their community the most. They might pay for something that helps their business to grow and earn more money in the future, they might do something to help protect the local environment, or they might fund a development project in their community, like building a school or health clinic. 9

11 What are the Fairtrade Standards? Siddarth Selvaraj Social development for example, the producer organisation must have democratic voting, can t discriminate against anyone, and is encouraged to invest in social development projects like education and health care. Suzanne Lee Economic development for example, the producer organisation needs to help the community prosper by doing things like investing in businesses and providing training. Sean Hawkey Sean Hawkey Environmental protection for example, crops need to be grown in environmentally sustainable ways, e.g. by looking after the land, limiting the use of chemicals, conserving water, and organic farming. No forced or child labour the producer organisation must not use child labour or force anyone to work for them. There is an independent organisation that checks to make sure producer organisations are following these Standards. Manufacturers and other businesses in the Fairtrade system also have Standards they follow and these are also checked by the independent organisation. 10

12 How do consumers know if something is Fairtrade? A chocolate bar might have been made with cocoa beans that were grown by the farmers of a Fairtrade producer organisation and meet all the Fairtrade Standards, but how would a consumer know? a special symbol is used, called the Fairtrade Mark. Fairtrade ANZ You might have seen this symbol before. A business that wants to use this symbol on their products must get permission from the Fairtrade organisation first. To get this permission, they have to show that they have paid the Fairtrade Minimum Price and Premium to a producer organisation that meets the Fairtrade Standards. Only then can they use the Fairtrade Mark. The idea is that consumers can be confident, when they see this symbol, that they are making an ethical purchase. ACTIVITY The Fairtrade system Watch the film clip What is Fairtrade? and answer the following questions: a) The impact of Fairtrade products improves what for families in developing countries? Circle the correct answer(s). environmental conditions living conditions social conditions economic conditions working conditions b) What is a central component of the Fairtrade system? c) Who decides how to use the Fairtrade Premium? d) Give three examples of different types of Fairtrade products mentioned in the film clip. 11

13 Does Fairtrade make a difference? Fadi said that as an ethical consumer he wanted to make a positive difference when shopping by buying goods that help the people who made them. The goal of Fairtrade is to help farmers and workers from developing countries and to reduce global poverty. According to the United Nations, Australia has a very high level of human development. This means that the living conditions, access to health care, and the education level of the average Australian are all very good, which is different to how it is for many people around the world. Many communities in other countries face a range of challenges due to poverty. They may not be able to access education or healthcare. Sometimes these services are available, but people can t afford them because they don t have enough money or can t use them because they face discrimination. It s hard for some communities to earn more money because they don t have reliable communications technology or suitable roads that would help them to transport and sell their goods. These are the types of problems Fairtrade producer organisations use their Fairtrade Premium to try and change. Here are some examples from Fairtrade producers in the Asia-Pacific region: Fairtrade ANZ Papua New Guinea Many farming communities are a long way from big towns and the roads are bad. This makes transporting their crops slow and expensive. The Highland Organic Agricultural Cooperative is spending some of its Premium to build and fix the local roads. This makes it easier to move their crops from farms to the villages, and then on to the towns so they can sell and export more coffee beans. Type of project: Pakistan The Tramondi Sports Company used their Premium on projects for health care, including free health checks, an ambulance for the community, and improving water quality. Transfair Germany Type of project: 12

14 Indonesia The KBQB producer organisation has spent money on new seedlings and a plant nursery as part of a climate change action project. Over 25,000 trees have already been planted, with another 40,000 to be planted. They have also organised a local environmental education project. Nathalie Bertrams Type of project: Indonesia Women in Indonesia can face discrimination when trying to get a job and earn money, and often do not have the same access as men when it comes to things like being able to go to school and get an education. All the members of the Gayo Women Coffee Cooperative are women. They pay for classes for other women to learn job skills like farming and money management, and for two kindergartens to look after young children while the women are working. Fairtrade ANZ Type of project: Fairtrade India Chemicals used in growing cotton can be very expensive and harmful to farmers and the environment. Organic farming uses only natural fertilizers and pesticides. The Vasudha Cooperative have training centres to show farmers how to change to organic farming. They and other organic cotton farming producer organisations also have projects to save water, and to use solar power in the villages. Type of project: 13

15 Sri Lanka Workers from the Stassen Bio Estate tea company used their Premium to buy a school bus. The nearest school was several kilometres away which made it very difficult for the younger children to get to school. It was a long walk on rough, unsafe roads, so many children missed out. The school bus means all the children in the community can now go to school and get an education. Ola Höiden Type of project: ACTIVITY Making a difference 1. With a partner, discuss the examples of projects different Fairtrade producer organisations in the Asia-Pacific region have started to help their communities. For each project decide what type of project you think it is. Is it: an environmental project aimed at protecting the natural environment or improving environmental sustainability? a social development project aimed at helping improve people s lives, for example their health, education and wellbeing? an economic development project aimed at helping people to learn work skills, get a job or improve their income (the amount of money they can earn)? Write your answers in the spaces provided at the end of each project example. 2. Go back to the activity How does ethical consumerism contribute to global citizenship? and fill in the Final Reflection section. 3. Imagine you are working for Fairtrade Australia and New Zealand. It s your job to tell other Australians what the Fairtrade Mark looks like, and explain what ethical consumerism is and how buying Fairtrade products can help people. Create a poster that encourages Australian consumers to buy Fairtrade goods. Francois Guenet 14

16 Fairtrade Australia and New Zealand Suite 312, 838 Collins Street Docklands Melbourne 3008 Australia T. +61 (03) E. Supported by the Australian Government and implemented by Fairtrade Australia and New Zealand Didier Gentilhomme 15

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