Monday, December 1, 2014

France: New Law on Social Economy lays down the outlines for fair trade

Article 94 of the new Law on Social and Solidarity Economy, which was adopted on 31 July 2014, elaborates the definition of fair trade, which was defined by the Law of 2 August 2005[1], and provides more specifications and extends the scope to trade with producers from the North and France in particular. The French fair trade actors who are united through the French Fair Trade Platform are pleased with this legislative step which is in line with their own attempts within the INPACT network (Initiatives for Citizen-led Local Agriculture) and the National Organic Agriculture Federation ,which after three years, led to the launch in June 2014 of the National "Local Fair Trade" Charter.

Article 94 goes as follows and includes several fundamental principles of fair trade:
II.-By means of trade relations with a buyer that meet the conditions listed below, fair trade aims to ensure economic and social progress of workers who suffer from economic disadvantages due to insecurity, poor remuneration or lack of qualifications, provided they are organised following democratic governance principles:
"1° A commitment between the contracting parties for a period that effectively limits the impact of economic uncertainty for the workers and lasts three years at least;
"2° The payment by the buyer of a profitable price to the workers, which is established on the basis of identified production costs and following equitable negotiation between the contracting parties;
"3° The payment by the buyer of an additional obligatory amount for common projects, which is added to the purchase price or becomes part of the price and which aims at capacity development and empowerment of the workers and their organisation.
"Each enterprise intervening in these value chains is able to produce traceability information about the products.
"Enterprises that openly adhere to fair trade participate to awareness-raising actions and to education activities on socially responsible and ecologically sustainable production and consumption."

These provisions do not hamper the application of Book IV of the Business Code.
"A decree of the State Council lays down criteria for economic disadvantage as referred to in the above first alinea, and the contractual modalities defined under 1° to 3°."
This new law provides a clear legal framework to actors who want to incorporate their value chains from either the South or the North in fair trade. It also allows for easier control of any claims pertaining to fair trade by State services, in particular by the Directorate-General for Competition, Consumption and the Fight against Fraud (DGCCRF).

[1] §2 of Article 60 of the French Law of 2005 defined fair trade as follows: " Within trading, craft manufacturing and service activities, fair trade organises exchanges of goods and services between developed countries and disadvantaged producers located in developing countries. Fair trade aims to establish long-term relationships which result in ensuring the social and economic progress of such producers. "

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