Fair trade in tourism

INTERNATIONAL JOURNAL OF TOURISM RESEARCH Int. J. Tourism Res. 2, 171±187 (2000) Fair Trade In Tourism Robert Cleverdon1* and Angela Kalisch2 1 Business School, University of North London, Stapleton House, 277±281 Holloway Road, London N7 8HN, UK 2 Policy Co-ordinator `Fair Trade in Tourism', Tourism Concern, London, UK ABSTRACT INTRODUCTION Tourism as an industry is increasing rapidly in developing countries. Due to historical inequality in global trading relationships on the basis of `core±periphery' dependency, globalisation and liberalised free trade, mainstream mass tourism reinforces the social and economic disadvantages of southern destinations. The `Fair Trade Movement' has sought to redress unequal trading by promoting fair trade in commodities with small producers in the South, enabling them to take control over the production and marketing process and challenging the power of transnational corporations. This paper examines the feasibility of fair trade in tourism. It explores the obstacles and opportunities that might lead to establishing a de®nition of fair trade in tourism, incorporating criteria that would be workable and practical for both partners in the South and North. Copyright # 2000 John Wiley & Sons, Ltd. Increase of tourism in developing countries Received 18 October 1997; Revised 16 July 1998; Accepted 10 September 1998 Keywords: unequal trading relations; social and economic inequality; fair trade in services; control; capital and land ownership; distribution of bene®ts. * Correspondence to: R. Cleverdon, University of North London, Stapleton House, 277±281 Holloway Road, London N7 8HN T ourism in developing countries is on the increase, with growth rates exceeding those of developed countries. Between 1980 and 1992, tourism receipts in developing countries increased from 3.0% to 12.5%, which makes an average of 8.4%. World Tourism Organization (WTO) in Burns and Holden, 1995). Although the developed countries still dominate the main world share of tourism receipts at 60%, arrivals and receipts are decreasing, particularly in Europe. Europe's share of international tourist arrivals has dropped from 65.56% in 1980 to 60.13% in 1993, North America's share of arrivals in the same period has dropped from 16.65% to 15.11%. The sharpest rise has been recorded in the Asia±Paci®c region, from 7.37% in 1980 to 13.58% in 1993 (WTO, 1995 in Tourism Concern, 1996). As short-haul destinations in the Mediterranean have begun the process of saturation, western Europeans are attracted by cheap long-haul package tours to destinations in tropical, exotic locations, frequently marketed by the industry in the North as paradise. Africa, Asia and the Paci®c have become fashionable, affordable and easily accessible to the average middle-income European citizen. The hedonistic sun, sea and sand mentality of those cheap short-haul charters with the emphasis on lowest price rather than quality threatens to in®ltrate the developing South. Recent reports indicate that beaches in Goa, Thailand (already under considerable environmental threat) and South Africa are beginning to be appropriated by fun-seeking all-night ravers, high on drugs such as hashish and ecstasy. Although environmental groups are trying to ®ght against this trend to retain some ecological balance and cultural integrity, raCopyright # 2000 John Wiley & Sons, Ltd. 172 vers and `clubbers' (the majority from Britain) state that `the world is our oyster'. There are a million beautiful beaches. It's a free world and it's our money to spend where we like' (Williamson, 1997). Tourism reinforces social and economic inequality Tourism has become the most important earner of foreign currency in most developing countries. For those who have no other competitive export commodity base it has become the only export, the mono-crop (Tourism Concern, 1996). The arguments condoning mass tourism in developing countries emphasise that any money spent by tourists there is bene®ting the economy and bringing some wealth to the people there. However, there is ample evidence that although some of the more fortunate sections of the society, ruling elites, landowners, government of®cials or private businesses might bene®t, the poor, landless, rural societies are getting poorer, not just materially but also in terms of their culture and resources. Eviction and displacement for construction of tourism resorts, rising land, food and fuel prices, and commoditisation of cultural assets are just some examples (de Kadt, 1979; Kent, 1983; O'Grady, 1990; Patterson, 1992; Monbiot, 1994; Equations, 1995). Far from bringing economic prosperity to the developing world, tourism has great potential to reinforce social inequality and economic dependency. Contemporary mainstream tourism has to be seen as a part of the existing trade system built on classic liberal economic theories of `comparative advantage', the `trickle down effect' and modernisation (Bauer, 1983; Rostow, 1991). Opposing theories of dependency and underdevelopment elaborate the historical relationships of the core to the peripheryÐthe industrialised metropoles to the agricultural economies of the developing countries (Hall, 1994). `Centres or metropoles exploit peripheries or satellites through the mechanism of unequal exchange' (Harrison, 1992 p. 9). This unequal exchange is fostered by the co-operation between wealthy and powerful elites in developing countries and the metropolitan centres and economic bene®ts being either repatriated to metropolitan Copyright # 2000 John Wiley & Sons, Ltd. R. Cleverdon and A. Kalisch centres or directed into channels controlled by the elites (Lea, 1988; Barrat-Brown, 1993. Peet (1991 p. 48) highlights the unfavourable terms of trade for developing countries as a result of `classical economic theory of trade' whereby products of the centre have higher costs attached, `while devaluing the exports of the periphery'. He concludes that `unequal exchange is `a hidden mechanism of surplus extraction and economic stagnation in the periphery'. Barratt-Brown (1993 p. 43) states that unequal trading relations `have become incorporated in the operations of the large transnational company' throughout the Third World, who `with their control over both buying and selling of the goods entering international trade, provide the ®nal explanation for the weakness of the millions of small Third World producers in the world market'. FAIR TRADE Within the current climate of free trade and globalisation, where transnationals from the `metropoles' dominate the tourism industry as any other industry in the developing countries, concepts of ethical trading and investment practices, human rights issues, social and environmental accountability of corporations are slowly appearing on the agenda of boardroom discussions. Consumer and media pressure, spurred by the initiatives of nongovernmental organisations (NGOs) such as the Global Supermarkets Campaign by Christian Aid (Bellos, 1997) and the possibility of competitive advantage, not to forget a basis of social consciousness on the part of some of the companies, represent the driving forces of a change in trading relationships with producers in the South. The concept The concept of fair trade as a mark of distinction for a particular trading process and product, and distinguished from free trade, is beginning to make inroads into the mainstream business world. In the UK, the Fair Trade Foundation (FTF) assists companies in implementing fair trade practices in the development of their products in order to grant them a licence for the use of the Fair Trade Int. J. Tourism Res. 2, 171±187 (2000) 173 Fair Trade in Tourism Mark. Products such as coffee, tea, chocolate, nuts and handicrafts have developed from a niche market in the early 1990s to a place on the supermarket shelf. Cafedirect, a fair trade coffee brand commands 3% of the market. It worked its way into supermarkets just 2 years after its inception in 1989, when Safeways in Scotland began to stock it as a result of consumer pressure. The British Supermarket Companies, Sainsbury's and the Co-op (CWS ÐCo-operative Wholesale Society) are in close negotiation with the FTF to develop ethical trading practices with their suppliers in the South (FTF, personal communication, 24 June 1997). Tesco, albeit after pressure from NGOs and the media, have set up an ethical trading monitoring group. B&Q, the do-it-yourself store, `have introduced independent monitoring of foreign labour conditions and from 1999 will only buy timber from sustainable sources approved by an independent certi®er' (Bellos, 1997). The Bodyshop, a multinational corporation set up in Britain in the 1970s, selling hair and skin care products, has long prided itself on being established along socially and environmentally responsible policy guidelines incorporating fair trade (The Bodyshop, 1996). Consumer Response Market research indicates that consumers are beginning to demand more responsibility and ethical standards in business. A Gallup poll in 1996 established that 74% and 92% of consumers believe that standards of honesty and of behaviour, respectively, are getting worse. Sixty-seven per cent of adults claim to consider a company's ethical stance when buying products and 57% of adults believe corporate ethics have declined over the past 5 years. An NOP survey, commissioned by Christian Aid in 1993 found that 68% claimed that they `would pay more for fair trade products' and 85% agreed that `workers in the Third World are exploited and do not get enough for their produce' (Ogilvy and Mather, 1996). Whether such statements made at a particular point in time would translate into action and result in a boom in fair trade products would have to be seen. Further research into attitudes and behaCopyright # 2000 John Wiley & Sons, Ltd. viour patterns of tourism consumers in relation to ethical issues needs to identify whether good intentions and ethical awareness would be translated into actual purchasing decisions. Price, performance and convenience are deemed to be the prime criteria for consumers' decisions. Existing research in psychological studies recognises a discrepancy between attitudes and behaviour amongst so-called green consumers (Balooni, 1997). This means that a consumer, concerned about poverty in the Third World might support fair trade in a questionnaire survey, but when it comes to booking a holiday, old habits and considerations of ®nance and convenience could well determine their purchasing decision. Nevertheless, the ®gures above reveal a general mistrust in business and corporate behaviour among consumers that needs to be built on by fair trade in tourism supporters. De®nition of Fair Trade The Fair Trade Movement is represented by organisations at European and international level: International Federation for Alternative Trade (IFTA)/and the European Fair Trade Association (EFTA). According to EFTA, the de®nition of fair trade is: (1) to support efforts of partners in the South who by means of co-operation, production and trade strive for a better standard of living and fairness in the distribution of income and in¯uence; (2) to take initiatives and participate in activities aimed at establishing fair production and trade structures in the South and on the global market (EFTA, 1996). The Max Havelaar Organisation, the Fair Trade Mark Organisation in countries such as The Netherlands, Switzerland and France and the Fair Trade Foundation in the UK, set up by a number of NGOs, including Christian Aid, Traidcraft Exchange and Oxfam conclude that: `Fair trade aims to ensure a fairer deal for Third World Producers in international trade ¼ by in¯uencing mainstream commercial practices and consumer attitudes, so that consumer demand in the UK for a greater availability of more equitably traded products Int. J. Tourism Res. 2, 171±187 (2000) 174 can be both stimulated and met. It is hoped that resources may be available to ¼ encourage discussion and action on fair trade issues among manufacturers, retailers and the public' (Tourism Concern, 1996). R. Cleverdon and A. Kalisch the operations would have to reveal to what extent this aspect affects the trading relationship. Factors of distinction from free trade Fair Trade criteria The Fair Trade Foundation in its Third World Supplies Charter lays down the criteria used for assessing suppliers and trading relationships. Apart from minimum standards that should be met relating to international labour standards on working conditions, health and safety, equality of treatment and forced labour, more precise criteria have been developed that might be adapted to different product groups. The following are based on the Cafedirect criteria. (1) Fair Price: should be ®xed by producers (service providers) in consultation with purchasing partners, allow a decent standard of living, `internalise' any social, cultural and environmental degradation and re¯ect a long-term trading relationship. (2) Premium: added to basic price to consumer, which providers can use to develop community infrastructure, such as schools, hospitals or training programmes to improve skills. (3) Advance payments: deposits or payments of 50% of the price in advance are a crucial component to enable local small-scale businesses with no access to capital to invest in their `product'. Present practices among tour operators of paying too late or not at all in the case of cancellations cause serious debts and degradation of the product. (4) Long-term relationship: contracts incorporating future commitment provide security and enhance credibility of partners in the South for obtaining credit from conventional lending institutions. It allows for a gradual improvement of product, skills, experience and business acumen for local people. (5) Direct trading relationship: fair trade partnerships cut out the `middle men' (`coyotes' in the coffee trade). In tourism an analysis of Copyright # 2000 John Wiley & Sons, Ltd. Although the term `fair' used in the free trade context is semantically similar to that used by the Fair Trade Movement it is essential to highlight the features that make it distinct from a free trade approach. (1) The main aim of fair trade is to ®ght against poverty in the Third World. The intention is to redress historical trade imbalances created by colonial practices and by the politics of dependency, which have produced a comparative disadvantage to developing countries in relation to the industrialised metropoles, rather than a `comparative advantage'. This disadvantage embodied by the low level of prices and demand of their primary export commodities and the high prices of imported manufactured goods from the metropoles has actually been caused by the free trade ideology. It is considered to be the root of the extreme levels of poverty in those countries. `Famines do not occur, they are organised by the grain trade' (Berthold Brecht, quoted in George, 1986). (2) It brings the consumer in touch with the producer (especially so in tourism). Normally, the consumer knows little about the people behind the production process. Most products are made by large impersonal multinationals, with the labour of hundreds of people in standardised conditions, people who usually have no say in the production process. The only information consumers have of those companies is through highly sophisticated advertising. Fair trade products attempt to provide the consumer with honest information about the producers and the details of the production process. It gives consumers a chance to be actively involved in ®ghting against poverty, not through charity or donations but by means of a just exchange of goods. (3) Fair trade targets small-scale producers. They Int. J. Tourism Res. 2, 171±187 (2000) Fair Trade in Tourism are people at the bottom of the economic scale of productivity who would otherwise be waiting in vain for the `trickle down effect'. They have few or no assets but enough skills to sell a product or their labour to earn a living. Fair trade offers them fair wages and working conditions, credit and loans at affordable interest rates, as well as advance payments and professional assistance with product and skills development. As such it not only brings the consumer and producer closer into contact but also creates a symbiotic relationship between the purchasing partner and producer. It creates a framework for collaboration and improvement rather than exploitation. Without fair trade these small-scale businesses would have little chance of gaining access to a world market, dominated by transnational corporations. (4) The components of the trading method are intended to strengthen the partner's position in a proactive way, to increase their bargaining position. This includes assistance from northern partners with product development, access to marketing techniques and control over image and representation. Fair trade in services/tourism Ð characteristics of difference to commodities So far, all the products that carry the Fair Trade Mark are primary commodities. Little or nothing is known about fair trade in services, let alone fair trade in the hospitality sector. Ethical investment policies have been developed in the banking and investment sector, such as the Co-operative and Triodos Banks, and Shared Interest which is organised along the lines of a building society, providing credit for producer groups in the South. Considering that the service sector has been outgrowing the manufacturing sector and that tourism, a `multi-sectoral service activity' (Jenkins, 1994) is claimed to be the largest industry and the leading job creator in the 21st century (WTTC, 1995, 1997) it may be high time to examine how fair trade could become an integral part of the tourism industry's partnerships with southern host destinations. The initial experience of fair trade in Copyright # 2000 John Wiley & Sons, Ltd. 175 commodities helps to determine to what extent it could be adapted in tourism. On a broad level, the fair trade criteria that have been developed for commodities are also relevant to tourism. However, the economic implications and the feasibility of issues such as the ®xing of price levels or long-term relationships in an economic climate where the success of the industry is determined by price wars and short-term, ¯exible investments in fashionable destinations, will require careful research. Fair trading organisations are non-pro®t making. With the exception of the Bodyshop, most of the trading organisations based in the North are non-pro®t making, mostly NGOs, many with a religious mission. They have been motivated by social and moral responsibility and are committed to the principle of using trade as a means of relieving poverty by increasing self-reliance in grassroots communities in the South. Cafedirect operates as a company and the trading arm of NGOs such as Traidcraft and Oxfam. Although Traidcraft and Oxfam, with a strong tradition in fair trade in commodities, have run holidays for their members to the projects they operate abroad none of them have as yet been active in the professional promotion of holidays to the broader public along fair trade criteria. Small and medium independent tour operators who practice some of the fair trade policies, such as direct trading relationships, equitable partnerships and community bene®ts, currently exist in the UK. The issue for them, however, in contrast to grant receiving NGOs is one of economic viability and survival rather than of altruism or a moral commitment to equality and poverty alleviation. They could, on the other hand, represent a starting point for a more intensive development process of an economically viable fair trade operation in tourism, which could eventually in¯uence mainstream tour operators. Tourism's `product' is intangible and invisible. Commodities such as tea and coffee are easily de®nable and tangible. Tourism, however, is a multisectoral service activity, incorporating many diverse service functions and overlapping with many different sectors, such as transport and agriculture. As a `product' it is Int. J. Tourism Res. 2, 171±187 (2000) 176 intangible. It is an invisible export trade item, the raw material of which is the living organism and dynamic of people (generally called `hosts'), cultures and natural resources (Tourism Concern, 1996). The product that is being traded on the world market therefore is different from any other product within the world trading system. In fact, the people who are part of this living organism might question whether they would want to be regarded as a product. Nevertheless, it is packaged as such for pro®t maximisation. Burns and Holden (1995) list a number of de®nitions that have evolved in the past 20 years in tourism studies. It is a seen as a `system' (Mill and Morrison, 1985), a `study of man away from his usual habitat, the industry and impacts' (Jafari, 1977) a `pan-humanistic process' (Nash and Smith, 1991) or an industry. Burns and Holden (1995) come to the conclusion that in view of its complexity it should be regarded as a `traded commodity, displaying some of the characteristics of the trade in commodities (prices set in metropoles, being subject to market manipulation, and the tenuous links between cost of production and selling price)'. As such it has been transformed from pilgrimage and education into a standardised global consumer mass product. Under normal circumstances a product for sale would be processed from raw materials. The raw materials and the processing knowhow constitute the asset and the capital of the producers, which gives them the competitive edge on the market. In tourism it could be argued that the capital itself is for sale, it is then processed by the purchasers, the tour operators, into a packaged commodity and sold to their customers, who consume the product on the producers' soil, the raw material of the product. Selling the capital makes little business sense (Schumacher, 1974; Goodland et al., 1992). Surrendering the components of the process that make it competitive to the purchaser is economically unviable for the producer and deprives them of any bargaining power. The capital is used up gradually, because the producers are not gaining enough from the sale to replenish it, if indeed it is replenishable. Some natural resources, such as ground water and topsoil, sometimes cannot be replaced (ECOMOST, 1994). Copyright # 2000 John Wiley & Sons, Ltd. R. Cleverdon and A. Kalisch The success of the tourism industry depends on low, ¯exible prices. Coffee has a world price, which can be used as a means of setting a fair price. Cafedirect have pledged to pitch their price at a certain percentage above the world price whatever it might be. In tourism no such ceiling exists. The implications of standardising prices on a global level would need serious attention. Indeed, the question might arise whether price is actually the most important issue in the discussion on fair trade in tourism or whether other issues, such as the distribution of bene®ts and democratic control at local level, are of greater relevance. The quality of the product is of utmost importance for its commercial viability, both in commodities as in tourism. Consumers will not buy a product purely for ethical reasons. It has to correspond with their taste, with `trends and fashions' (EFTA, 1995). The price difference to conventional products (or premium) needs to be carefully evaluated. If the price is too high it will not sell. Commercialisation of hospitality Ða new concept in developing countries. All the fair trade commodities, such as bananas, coffee, tea and handicrafts, have historically been export products by the countries involved. The tradition of agricultural and craft production in developing countries has thus created a wealth of experience and skills among local communities that assists them in managing and controlling their own production processes. Tourism is not a traditional industrial activity in most developing countries. The concept of hospitality as a free gift to a travelling guest or friend is centuries old in many cultures and a particular aspect of rural and remote societies. Commercialising such a gift in monetary forms, commercialising the relationship between host and guest is a new process to which most people who do not belong to local elites are initially unaccustomed (Zarkia, 1996). Analysing the sociocultural and psychological effects of this process is not the purpose of this paper. Suf®ce to say, however, that the difference between trading a traditional commodity such as sugar or tea and trading tourism is substantial. If fair trade targets grass-roots communities that have little experience of using tourism as an Int. J. Tourism Res. 2, 171±187 (2000) 177 Fair Trade in Tourism export trade item, this needs to be addressed. It involves a profound learning and development process not just on an economic level but also in terms of psychological adjustment. No history of collective organisation. Producer communities in the South are usually organised as collectives in the form of co-operatives, many of which have been in existence when fair trade purchasers from the North approached them. Oxfam deals with many groups who are linked to the development work they do. Some of the fair trade coffee producers also deal with conventional partners, in some cases transnationals. Approximately 25% of their business might be with fair trade partners (Cafedirect, personal communication, 30 September 1996). In structural terms, the collective organisation of tourism operations for small-scale tourism providers and producers is a new and unaccustomed concept. Tourism is normally based on competitive entrepreneurship. Collective co-ordination of and decision-making over the diversity of tourism activities in any location, the promotion and marketing process, product development and ®nancial planning would need to be approached differently from a co-operative selling coffee. Creating a professional high quality leisure and pleasure product which is acceptable to western taste and western expectations within the context of Third World underdevelopment is a dif®cult and sometimes impossible task. Satisfying the con¯icting needs of the western tourist for a certain level of familiarity, comfort and security combined with the need for the exotic, strange, mysterious and adventurous is a sophisticated skill. Any fair trade in tourism policy needs to address that, either in the context of how western expectations are shaped or how communities are going to respond to the demand. Whatever the de®nition of fair trade in tourism, the `product' or the tourist `experience' that is for sale has to be attractive to the consumer and commercially viable so that it can bring the desired bene®ts for all stakeholders involved. Social and cultural intrusion. Commodities are transported out of the producer community. Producers will not usually come into contact Copyright # 2000 John Wiley & Sons, Ltd. with the consumer or the culture where their product is sold. The fact that tourism is consumed in the place of origin puts it into a substantially different realm from any other commodity. Exporting coffee or tea might have environmental implications. The effects of certain planting methods and the `carrying capacity' of a plantation can be measured and addressed with some degree of scienti®c planning. However, the `demonstration effect' and the social implications of encountering the consumer face to face is not something that needs to be taken into account in coffee production. The effects of this encounter have been analysed in detail by sociologists and anthropologists (de Kadt, 1979; Smith, 1989; Cohen, 1993; Hitchcock et al., 1993; Crick, 1994; Boissevain, 1996; Selwyn, 1996). Although their analysis as to the changes that can be directly attributed to tourism and those which might be exacerbated by tourism varies, they all come to the conclusion that the presence of the tourist in a developing country is an important factor in changing cultures and social structures. A positive consequence of this encounter in fair trade terms could be the fact that the consumer is able to see the bene®ts of his/her particular contribution in buying a fair trade holiday, while also monitoring whether fair trade criteria are being implemented. De®nition of fair trade in tourism As yet a de®nition of fair trade in tourism does not exist. At present, research is being undertaken in a joint initiative by the University of North London, Volunteer Service Overseas (VSO) and Tourism Concern (TC), an NGO campaigning for just and responsible tourism, to achieve a de®nition of fair trade in tourism for the industry that re¯ects a North±South collaboration, is realistic and workable in practice. It is intended that it should not just be conceived as a theoretical statement merely to be used as a public relations exercise and a marketing ploy to provide a competitive edge. The term `fair' in the classic economic free trade and modernisation context, is used to ensure fairness in competition among businesses in the North. In the UK, the Fair Trading Of®ce has been charged with overseeing that Int. J. Tourism Res. 2, 171±187 (2000) 178 process. On a global scale, the General Agreement on Trade in Services (GATS) is intended as `a negotiated freedom of fair trade in services' in the context of `obstacle-free competition' for the countries involved. `Level playing ®elds' should thus be created to enable foreign companies `equal access' to natural resources and investment nationally and internationally (WTO, 1995). `Fair Trade' as examined in this paper is about providing a better deal for producers or, in the case of tourism, service providers in the South. This approach could be seen as emanating from theories of underdevelopment and dependency in the 1970s, which were based in the premise that the `existing economic structures had been strongly stacked against the economic interests of developing countries' (Cho, 1995). Thus, in formulating a de®nition for fair trade in tourism, the South needs to play a determinant role. Industry practices in the North need to be examined as to whether and how they might create or reinforce unequal trading patterns. Company policies and codes of conduct can be expected to refer to principles of responsibility and accountability not just to shareholders but also to the public and to trading partners in the southern destinations. Developing and implementing fair trade policies, however, has to be done in collaboration with stakeholders in the South to ensure a southern perspective in all aspects of the trading operation. At present, the concept of fair trade is largely infused by a northern perspective. Preliminary consultation with representatives from southern organisations involved in tourism has resulted in a more concise awareness as to the prerequisites for fair trade in tourism. It needs to address the root causes of inequality in tourism as perceived by grassroots communities in the South: i.e. access to capital, ownership of resources, distribution of bene®ts and control over representation of the destination in tourist-generating countries, and it needs to ensure transparency of tourism operations, including price and working conditions. Research into `fair trade tourism' needs to establish who bene®ts by how much and in what way. This needs to be examined against a background of historic structures of bene®t distribution and of the political and social dynamics in a Copyright # 2000 John Wiley & Sons, Ltd. R. Cleverdon and A. Kalisch particular location. (Richter 1993, p. 192) Access to capital. As outlined earlier, developing economies as a whole have been submitted on a global level to an `unequal exchange' through the concept of comparative advantage. Any bene®ts that do ¯ow into countries, in the form of foreign investment, aid or loans generally do not reach communities at grass-roots level that are involved in a daily struggle to overcome often extreme levels of poverty. They are too poor to qualify for credit or loan and are unable to make any investments enabling them to escape from the poverty trap. Barratt-Brown (1993, p. 43) considers the `real inequality' in trade to be based on the fact that the machinery and the new technology together with the capital available for investment to increase productivity, are in the hands of the capitalists in the developed First World economies. Third World industrialists must ®nd their capital and equipment mainly from outside their frontiers and pay for both at First World prices or borrow at First World interest rates. By making credit available at favourable interest rates or in return for goods or services, fair trade can break the `vicious circle of poverty'. Burns and Holden (1995, p. 92) create a `virtuous circle of economic development' as opposed to the `vicious circle of poverty'. In the virtuous circle the escape route from the poverty trap is marked by an injection of capital as a pump-priming initiative. The result is an increase in capital and higher productivity. The ideas inherent in fair trade of advance payments and microcredit or credit directly paid to producer organisations by ethical investment companies in the North, such as Shared Interest, could provide an answer to this issue. Ownership. Land ownership, land use and rising land prices as a result of tourism development are among the most contentious issues in tourism in the South. Land is the most precious and sought after resource by rich capitalists seeking to invest and by governments seeking to gain from the investment. In Int. J. Tourism Res. 2, 171±187 (2000) Fair Trade in Tourism this process of land acquisition the beaches occupied for centuries by ®sherfolk, the forests nurtured by tribals and the savannahs and deserts guarded by nomads who traditionally have had unquestioned land rights as part of their livelihood have been taken away without consultation or compensation. Such compensation as has been granted has often been inappropriate. Groups such as the Maasai in Kenya have been excluded from National Parks and fertile land to make room for tourism developments and conservation projects (Monbiot, 1994). Fair trade would need to ensure that people's livelihoods are enhanced rather than destroyed. `Land must ¼ serve all people rather than simply those who control it. Development must become the tool of those who need development mostÐthe homeless and the dispossessedÐrather than bene®ting only the developers' (Monbiot, 1997). Distribution of bene®ts. Hoogvelt (1982) argues that economic growth and development depend on who owns the `productive activities'. If they are owned by foreigners income will be remitted abroad rather than invested in the country of production. Even if they are owned by the state, it will depend on the political and social development policies of national and local governments whether the poorest section of society or the people involved (either actively or passively) in the tourism process will reap the bene®ts of the trading process. Research indicates that all too often it serves to `deepen social inequalities' and widen the gap between those with access to capital and those who are landless and on the threshold of subsistence (Hoogvelt, 1982; Richter, 1993). In tourism, distribution of bene®ts and the control over the distribution process is largely in the hands of northern business, in particular the transnationals. The way in which most package, charter and `all-inclusive' tours are organised, none of the money ever paid by the consumer in the North even touches the host destination. The tour operators have the power to determine where they send their customers and how they portray the destination in their brochures without being obliged to consult with any stakeholders in the destination (Jenkins, 1994). Copyright # 2000 John Wiley & Sons, Ltd. 179 Stakeholders. Fair trade targets small-scale producers, without the means to gain access to the world market. In order to ensure that bene®ts do reach the people who need them most these producers or providers need to be identi®ed. Owing to the complexity and diversity of tourism operations in the destinations, owned privately or publicly, locally or foreign, often incorporating a substantial informal sector such as ungraded family-run hotels, guest houses, paying guest accommodation or taxis and rickshaws, it is often hard to establish who to make business with. In many developing countries tourism has developed on the basis of private sector initiative, often in an unplanned, fragmented and uncoordinated manner by a government lacking the professional experience and understanding of modern tourism development (Pattullo, 1996). Even if tourism has begun to be incorporated into national economic development plans, lack of funding and experience has placed tourism development largely into the realm of private sector initiative and investment. If issues of distribution and ownership are to be addressed, an analysis of who is involved or affected and how any bene®ts are distributed in any given location needs to take place. The terms `local' or `community' are often used in the context of people who are living in a tourist resort. For the purpose of Fair Trade, they need to be clearly identi®ed as `interest groups' or `stakeholders' involved in or affected by tourism. Transparency of trading operations. One of the strongest criticisms levelled at transnational corporations is the fact that they have a great deal of power over the economic resources and the stability of a country, yet they are in no way accountable to either the government or the people (Korten, 1996; Vidal, 1997; Clarke, 1995). Most companies consider the responsibility to their shareholders, their dividends and pro®t levels, but not to the public or their trading partners. Fair trade in tourism could introduce a process of opening up trading operations to an independent monitoring and veri®cation process against a set of bench marks covering minimum labour standards, fair trade criteria Int. J. Tourism Res. 2, 171±187 (2000) 180 and the development of an ethical code of conduct (NEF/CIIR, 1997). The idea of environmental accounting has begun to capture the imagination of innovative and concerned businesses, added to this a system of social accounting would introduce a method of examining the validity of a peoplecentred approach by way of a stakeholder consultation (Traidcraft Exchange, 1996; The Bodyshop, 1996). Representation of southern tourist destinations in tourist-generating countries. In order to sell conventional mass tourism, or in many cases even specialised ecotourism to long-haul destinations in the South, the industry in the North uses images and descriptions of destinations that tend to mystify and romanticise by playing on the consumers' dreams and fantasies. This representation often provides a distorted and unrealistic impression of the country. In many cases, stereotypes, racism, sexism and colonial behaviour structures are reinforced (Dann, 1996; Hutt, 1996; Crick, 1996). It is usually developed for the purpose of pro®t-maximisation for the company to in¯uence customer choice without consultation of stakeholders in tourist resorts. Such marketing also substantially tends to in¯uence tourist attitudes to people and cultures in the destinations. Equality in the trading partnership would mean that stakeholders in the South, including `small-scale' stakeholders, have a voice and control over the way they are represented to potential visitors from the North. In this context, the issue of intellectual property rights would need to be more closely examined (Aotearoa Maori Tourism Federation, 1994). OBSTACLES TO THE IMPLEMENTATION OF FAIR TRADE IN TOURISM R. Cleverdon and A. Kalisch countries, the practical reality does not always bear this out. The negotiations of the Uruguay Round were permeated with criticisms from developing countries with respect to the advantageous position of the rich industrial nations, which they claimed would be maintained with the implementation of the GATS. According to these criticisms, the GATS was designed to make it easier for foreign companies, particularly transnationals, to gain access to developing countries, encouraged by favourable incentives, whereas developing economies could be denied similar advantages in developed countries because most transnationals are based in the North and restrictive trade and immigration policies, expensive setup costs and uncompetitive business practices would impede southern nations from gaining mutual advantages (Equations, 1995; Tourism Concern, 1996). The Multilateral Agreement on Investment (MAI), currently under negotiation, within the Organisation for Economic Cooperation and Development (OECD), will in effect give investors a free hand to create a business climate that will essentially obliterate any regulations that could hamper the capital accumulation of a company investing in any foreign country. The agreement gives legal authority to investors to repatriate pro®ts, acquire ownership over resources and capital assets in the host country, ban performance requirements in exchange for market access, such as investment in the local economy and responsible behaviour, and to lower wages, working conditions, environmental and consumer-safety standards. Governments of nation states will have little control over such trading practices. They will, in fact ®nd themselves having to repeal and modify their own national laws to ®t in with the requirements of this agreement (Monbiot, 1997; WWF, 1997. International trade agreements Competition within the tourism industry Discussion on fair trade in tourism must take into account the global economic context, which, it could be argued, is moving in the opposite direction. Although the GATS is hailed as introducing fairer trading practices between nations, which should give developing countries free market access to developed Competition in the UK tourism industry is ®erce. The three largest companies, dominating the mass market, Thomson, Airtours and First Choice command 80% of all package tours (Madeley, 1995). Vertical integration has enabled them to gain a stronghold over the cheapest possible prices, including increas- Copyright # 2000 John Wiley & Sons, Ltd. Int. J. Tourism Res. 2, 171±187 (2000) Fair Trade in Tourism ingly holidays to long-haul destinations, such as Goa, Kenya and Thailand. Their success relies on keeping the price low and keeping ahead of the price war game with their competitors. Small and medium-sized tour operators complain about the stranglehold these companies exert over them through, for example, ownership of the travel agents which demand high commissions for displaying their brochures and discriminate in favour of the owners in the sale of their holidays (Farrell et al., 1996). As fair trade requires raising the price in favour of the producers and implementing an environmental and social code of conduct, thus raising the quality of the product, it might seem dif®cult to convince mainstream tour operators of the commercial advantage of such an initiative. Critical voices from within the industry state that the conventional tour operator pays little attention to ethical principles and believes in shifting the responsibility and accountability for the company's trading practices on to host destinations and governments (Focus Group FTinT, 19971). This is borne out by research, which indicates that tour operators and other components of the industry are aware of the need for sustainable practices but would only be encouraged to implement them if they were costsaving devices (Forsyth, 1996). `Pro®t-maximisation remains paramount in the decisionmaking of tourism enterprises' (Cater, 1991), and Rees, in an argument supported by Mehmet (1995), states that `historic levels of pro®t are not compatible with sustainable development' (Rees, 1990, in Cater, 1991). The Niche Product Fair trade products currently comprise around 3% of the commodity market. Small and medium-sized tour operators comprise about 12% of the tourism market. Considering this small market position and the competitive 1 This was a meeting hosted by Tourism Concern, University of North London and Voluntary Service Overseas. Representatives from developing countries were brought together with European Travel Industry Representatives to ®nd common links and mutual interest in developing Fair Trade. `FTinT' means Fair Trade in Tourism. Copyright # 2000 John Wiley & Sons, Ltd. 181 pressures of those operators, the question arises whether the development of fair trade tourism as a niche product could be viable, both in commercial terms but also in terms of making an impact on the world trading system. Should the priority be for large-scale companies to adopt a code of conduct incorporating fair trade, and implementing it with the help of publicly approved independent monitoring procedures? Or would it be more ef®cient to develop exemplary fair trade holidays, which could be used to act as catalysts and be adopted by mainstream tour operators in the same way that supermarkets are beginning to stock fair trade products? Experience in primary commodities demonstrates that creating competitive and public pressure by the introduction of a fair trade product on the market does move mainstream companies to review their practices and implement change. It also creates a choice and an alternative for the consumer, who can actively evaluate the different trading processes through personal experience. However, if one argues that in mass tourism the product currently traded on the world market is inherently inequitable, it would follow that not only the trading relationship and the method would have to be changed, but the nature of the `product' itself and the way it is promoted by the industry. Less emphasis should be placed on the one hand on cheapness relying on low price and low wage economies in the South, and on the other on expensive, capital intensive investments inappropriate to the local ecosystem and culture but attractive to high-spending, high-quality tourists. More emphasis needs to be placed on quality and equality, with lower levels of western consumption patterns. This will require a more complex and thorough development and public education process. One of the determinant factors in the quality of the tourism product should be the economic well-being of the host community. Any fair trade tourism operation would currently have to survive in a free-market context. In order to be economically viable, it would have to be promoted as professionally as mainstream holidays but according to a different set of quality criteria. Mass tourism has made travel accessible to a wide section of Int. J. Tourism Res. 2, 171±187 (2000) 182 low and middle income people who would otherwise never have been able to afford to travel abroad. Ethics in tourism should not be con®ned to an expensive niche market for sophisticated `ego-tourists' (Wheeller, 1993; Munt, 1994). It has to permeate all operations not as an option but as a matter of principle. OPPORTUNITIES The climate is right Over the past 20 years, a commitment to environmental responsibility has become an integral part of many companies' policies. Environmental pressure groups have raised the level of public awareness and mobilised public opinion to exert an in¯uence on economic and political decision-makers. European and national government legislation has proved an important motivating force for businesses to make the necessary resources available to affect change. The media can exert an important in¯uence over a company's public image. Recent publicity of the environmental and human rights practices of large transnationals such as BP and Shell in developing countries have caused enough concern amongst corporate directors to consider policy changes not just to improve their environmental performance but also their human rights record (Beavis and Brown, 1996). The libel case in the UK against McDonalds has demonstrated that it is possible to challenge the power of transnationals and to compel them to make themselves more accountable to the public. These examples also show that in addition to environmental policy, social policy is beginning to become a considered entity in corporate decision-making. The political climate in the UK is beginning to change in such a way that ethics in business are becoming an integral part of discussions on trade. Sustainable tourism and the industry In tourism, the World Travel and Tourism Environmental Research Council (WTTERC) has published a comprehensive policy document on `Environment and Development' (1993), incorporating `consideration of the local community in development decisions' Copyright # 2000 John Wiley & Sons, Ltd. R. Cleverdon and A. Kalisch and the `development of forms of tourism appropriate to the local area' (p. 36). The successful implementation of such mission statements would depend on a detailed de®nition of those concepts. The World Tourism Organisation has recently published indicators designed to measure social impact and levels of satisfaction among both visitors and local people (Croall, 1996). British Airways (1994) and British Airways Holidays (1997) are addressing environmental issues through impact assessments and guidelines in their brochures to encourage their clients' environmental responsibility and a commitment to support the local economy. These are all initiatives that could be con®rmed by an independent monitoring process and built upon to include fair trade criteria. As with all policy statements, however, there is generally a tendency to pay lip-service and make token gestures, primarily for marketing and promotion purposes (Cater, 1991 p. 19; Forsyth 1996). In relation to fair trade in tourism, concern for the environmental sphere needs to be extended to include issues of human rights, distribution of economic bene®ts control and ownership, as outlined earlier in this paper. Terms such as `community participation' and `consultation' sound politically correct from a northern perspective, but overall little understanding and experience exists (even among the Fair Trade Movement) about the successful implementation of such concepts particularly in tourism. Knowledge of a community-centred approach in tourism, initiated by communities of tourism resorts in the South, particularly in undemocratic political structures, is scant. A super®cial approach can lead to confusion, token gestures and disappointment among those communities (Wahab and Pigram, 1997; Betz, 1998). Until such terms are backed up by an integrated action plan, genuine political and ®nancial commitment, necessary resources and practical evidence on the ground it will be dif®cult to give credence to any such statements on paper. Open Trading Amongst alternative trading circles there is now a movement emerging to encourage mainstream businesses to add social accountInt. J. Tourism Res. 2, 171±187 (2000) 183 Fair Trade in Tourism ing and auditing procedures to their existing ®nancial and environmental accounting processes. Any policy statements relating to social objectives would have to be measured against the company's actual track record, by means of independent monitoring and veri®cation procedures currently under discussion among NGOs (Traidcraft, 1996; NEF/ CIIR, 1997). Such a transparent and open trading process would have to determine measurable targets that would re¯ect equitable trading criteria. Organisations such as The Fair Trade Foundation (although resources are limited) and relevant consultancies would be assisting companies in the development process to achieve this, as is currently happening with supermarkets. The aim would not necessarily need to be a Fair Trade Mark as such but a more general seal of approval on the basis of achievable targets. The Fair Trade Foundation believe that the effect that such accreditation would have on business performance and the company's public image with the support of consumer pressure would be suf®cient encouragement for companies to become involved in this process (FTF, personal communication, 24 June 1997). Increasingly, a synergy between the business community and NGOs will have to take place recognising their interdependence in creating more responsible and publicly accountable trading patterns. In tourism, `measurable' targets for fair trade as yet do not exist. For this to happen, stakeholders in the South at public, private and local community level might have to create a collective consultation and planning process determining fair trade criteria in tourism acceptable to all stakeholders in a particular resort and then become actively involved in specifying the terms of the trading relationship with tourism organisers in the North. Targets would have to embrace a general global dimension, a minimum set of criteria followed by the whole of the industry as well as a set of location-speci®c criteria, taking into consideration that the organisation and structure of tourism varies considerably in different destinations. They could also allow for a speci®c alternative fair trade operation to be developed. Minimum fair trade policies would address Copyright # 2000 John Wiley & Sons, Ltd. a commitment to the following: (1) creating social, cultural and economic bene®ts for host destinations, in particular economically stressed communities, and minimising leakage; (2) being aware of and respecting national laws addressing environmental and sociocultural sustainability (the GATS needs to be reviewed with regard to making this possible, without contravening `free market access' rules); (3) developing strong structures of consultation both between northern tourism organisers and `host communities' and among key stakeholders in the `host community', including local people affected but not involved in tourism; (4) transparent and open trading operations, including social and environmental audits independently veri®ed; (5) ecological sustainability on the basis of scienti®c advice to governments and local people; (6) respect for human rights, including decent working conditions, equality between men and women, avoidance of forced labour, child labour and prostitution. The possibility for appropriate legislation and regulation of the tourism industry to underpin these objectives might need to be considered. Fair trade eliminates poverty One of the main goals of sustainable development discussed at the recent Earth Summit in New York is to relieve (if possible eradicate) poverty in the developing world. There is evidence that fair trade achieves this goal in some areas. Co-operatives in Nicaragua producing fair trade coffee for Cafedirect claim that although unemployment in their country is as high as 60%, their members have employment and have been able to pay off all their debts (Tourism Concern, 1996). The elements of advance payments, credit and long-term relationship have provided small-scale producer groups with the credibility to obtain loans from conventional lending institutions at favourable interest rates Int. J. Tourism Res. 2, 171±187 (2000) 184 in their locality. They have thus been able to raise their business viability (Cafedirect, personal communication, 1996). Whether similar successes can be achieved by fair trade in tourism has to be seen. Community-based tourism Evidence suggests that there are many smallscale initiatives around the world where people in villages or small communities are trying to join the tourism business and make a modest living with scarce resources, sometimes not only out of economic need but also to counter discrimination and abuse of their cultures. The Maori in New Zealand set up the Aotearoa Maori Tourism Federation in 1988 to `support the aspirations and needs' of Maori involved in tourism as operators, as investors and as employees' and to research and promote a `Maori Tourism Product' that re¯ects Maori culture authentically, interpreted by Maori who have a direct relationship with that culture (Aotearoa Maori Tourism Federation, 1997). In Venezuela the number of micro-enterprises in tourism is growing. An important sector of grass-roots tourism are the so-called posadas, guest houses `run by a family or as a small business and providing rooms and food' (Pattullo, 1996). The Inuit in the Canadian Arctic have taken control over the management of their visitor industry after their land rights were restored by the Canadian Government (Smith, 1996). The major challenge of such enterprises is the competition and the threat posed by largescale tourism resorts in their vicinity, who with their rich resources and their sophisticated marketing techniques often not only take away the business but also copy any new ideas that might be developed by those small entrepreneurs (Ascher, 1985; Afrikan Heritage, personal communication 1996). The challenge for the tourism industry and policy makers is to ®nd a way in which large mass tourism and small-scale grass-roots tourism projects can coexist, feeding into each other and assisting each other in a positive way as part of an integrated local economic development policy, in the knowledge that the market needs not Copyright # 2000 John Wiley & Sons, Ltd. R. Cleverdon and A. Kalisch just one but a diversity of tourism provision that is of a high quality and can re¯ect changing consumer demand. CONCLUSION Poon (1993) and Urry (1995) both argue that the age of mass tourism is coming to an end. Poon (1993) believes that modern tourists are by now experienced travellers, well educated, world wise and informed and ready for a change from the traditional sun, sand and sea mentality. She thinks that there will be a need for more natural, more authentic and `downto-earth' vacations (p. 120). Urry (1995) points out that `there seems to be a move away from the organised tourism characteristic of the modern period to a much more differentiated and fragmented pattern of mobility which one could almost describe as the end of tourism per se'. These views seem to be echoed by the industry, who have to either resort to ever cheaper prices to attract customers or become much more `sophisticated in the way the market is segmented' Poon (1993). If this analysis is right then these are signs of a social transformation that augurs well for the proponents of fair trade in tourism as a more sophisticated and more `authentic' tourism experience. As yet the process of determining what exactly fair trade in tourism means in practice and whether it can be implemented successfully has only recently started. Initially, it will be a question of challenging the priorities of the existing trade system and making the case for a different kind of tourism experience in countries where the poverty levels of the population are high and ecosystems are fragile. This might also mean challenging the western view that as long as one has money to spend, one has the right to use the world as a playground and an amusement centre. Although the Earth Summit in June 1997 has brought few concrete commitments, the fair trade concept offers a concrete and practical opportunity for business operations in the North and South to make sustainability in tourism a reality and a way of life. It is recognised that control, ownership and land use are not likely to be relinquished with ease by power wielding forces in North or South. Historically, the concept of fair trade as Int. J. Tourism Res. 2, 171±187 (2000) Fair Trade in Tourism providing a better deal for producers in the South has emerged from development theories directly opposed to the existing dominant economic theory. However, the economic dynamics of the world are changing rapidly. Globalisation and technological advances are increasing the ability of the South to match the North. These modern tools need to be used in a positive way to enhance communication and information procedures that could create `level playing ®elds' for grass-roots communities in remote societies. It is those communities that will have to take the lead in determining how fair trade in tourism could provide them with a better chance in life. `¼ it is grassroots activism and not lobbying that provides the muscle' (Athanasiou, 1997). One could argue that it is a combination of both and that responsible sources in the North have to collaborate with responsible sources in the South to effect change. 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