Fair Jewellery Action

Press release from CAFOD.
August 16th, 2010

Authorities in Honduras last week filed criminal charges against senior officials of Entremares – a wholly-owned subsidiary of mining giant Goldcorp – based on evidence from aid agency CAFOD of severe water contamination.

The data gathered at the San Martin gold mine in the Siria Valley area of Honduras revealed dangerously high acidity and metal concentrations in water flowing into a local stream. The information uncovered by CAFOD was part of an official water monitoring report at the mine but was not disclosed or acted upon by the Honduran Government’s department for mineral resources or Goldcorp.

CAFOD Policy Analyst Sonya Maldar said: “We welcome the news that action has finally been taken against Goldcorp on the basis of CAFOD’s evidence and local community concerns. Given that Entremares is applying for new mining permits in Honduras, it is essential to get to the bottom of events at San Martin and ensure that the people of Honduras don’t pay the price of pollution in the long term.”

Charges have been filed against two executives from Entremares for contaminating water and damage to the environment. The accusations against Christian Pineda and Renan Santamaria are that their actions contravened Article 181 of the Honduran criminal code, and if convicted, they could face imprisonment of up to six years.

Gustavo Adolfo Torres Garay, a former senior official within DEFOMIN (the Honduran Department for the Administration of Mineral Resources) has been charged with breach of official duties for failing to act on evidence of pollution. This is in contravention of Article 349 of the Honduran criminal code with a punishment of up to three years and disqualification from office.

Goldcorp is one of the world’s largest gold mining companies and has consistently denied that the San Martin mine has caused environmental damage. On top of the undisclosed water monitoring report, Newcastle University experts also gathered visual evidence of acid mine drainage close to the mine site.

The Newcastle study was carried out in 2009 in response to a request for technical support from the Honduran authorities.

During a visit to Honduras in November 2008, Paul Younger, Professor of Hydrogeochemical Engineering at Newcastle University and a renowned expert on mine water management, noted signs of acidic mine drainage close to the mine site.

Professor Paul Younger said: “Goldcorp’s denial of pollution at San Martin has done the company no favours. If Goldcorp had been open about the problems, they could have avoided this action by the Honduran Environmental Prosecutor. The effects of acid mine drainage can continue for long after a mine has closed so the company must publicly commit to long term monitoring and maintenance at the site to prevent a recurrence of such pollution in the future.”

During a subsequent visit, Dr Adam Jarvis and Dr Jaime Amezaga, also of Newcastle University, saw unequivocal evidence that highly acidic and metal-rich water had discharged from one part of the mine (the Tajo Palo Alto) to a local stream, on at least one occasion. This evidence was in the form of an analytical report of water samples collected by DEFOMIN (the Honduran Department for the Administration of Mineral Resources), the government body responsible for promoting mining in Honduras, granting concessions and monitoring environmental impact.

Drs Jarvis and Amezaga’s report of their visit, which was released by CAFOD in December 2009, reveals acidity of the water at two sites reached levels of a pH between 2.5 and 3, which is typically very damaging to stream biology. (Distilled water has a pH of 7, vinegar 3 and lemon juice 2). As well as high levels of cadmium, copper and iron.

This is consistent with a complaint presented by a local community group, the Siria Valley Environmental Committee, to Honduras’ Environmental Prosecutor about discolouration of the water flowing from streams originating from within the mine’s perimeter on 24 September 2008. Community members reported that the water was a “reddish colour (…) and emanated a strong smell of sulphur”. This indicates that contaminated water from the mine’s perimeter had entered streams used by people in the Siria Valley for domestic and agricultural purposes.

Pedro Landa of the Honduran Centre for Community Promotion and Development said: “The case against Entremares (Goldcorp) finally acknowledges the damage caused by this company which has had such a profound effect on the local population and the whole country. It is disappointing that an international company like Goldcorp refuses to take responsibility for its actions. We will stay vigilant so that the authorities apply the full weight of the law and do not allow Entremares to abandon the mine without taking responsibility for the damage it has caused to the local community and environment.”

San Martin was the largest open cast mine in Central America before it ceased production in 2008. Since then, Canadian mining company Goldcorp has been carrying out the final stages of mine closure, which it is expected to complete by the end of 2010. The mine has caused controversy from the start, with local people claiming they were not fully consulted about the project.

Notes to editors:

• In 2007, the Honduran Secretariat of Natural Resources and Environment (SERNA) fined Goldcorp one million lempiras, equivalent in value to about £26,000 (at the time) for pollution and damage to the environment. The company has consistently disputed these tests and has appealed against the fine.

• In 2007, the Latin America Water Tribunal ruled on a complaint filed by members of the Siria Valley communities, finding Goldcorp accountable for damage to the environment and unreasonable use of water in the Siria Valley.

• Acid mine drainage is a process whereby sulphides in the rock are exposed to oxygen and water and react to produce sulphuric acid. It can have devastating impacts on the environment, contaminating groundwater with toxic heavy metals and killing plants and animals for years after the mine has closed. Professor Younger’s observations included unequivocal signs of discoloration of streams indicating that metal-rich, and likely acidic, waters have discharged from the mine perimeter.

• Communities in the Siria Valley have also complained of health problems, including respiratory, skin and gastro-intestinal diseases, which they believe are a result of drinking water polluted by the mine. A study carried out by the Honduran Department for the Environment in 2008, found high levels of heavy metals, such as arsenic, lead and mercury in blood samples taken from villagers living close to the mine. The study has yet to be published by the government. Goldcorp denies that the health problems are a result of their operations.

• CAFOD has attempted to raise concerns about pollution at the San Martin mine with Goldcorp on numerous occasions via letter and in person for several years. The Newcastle University report was presented to Goldcorp’s senior management in 2009 but the company has still refused to admit that the site had ever caused water contamination. Without open disclosure of how serious the water contamination was, it is difficult for independent specialists to be sure that the remedial measures now proposed by the mine will be sufficient to protect the communities from long term environmental hazards.

• For further information and copies of the reports submitted by CAFOD as evidence, please contact Pascale Palmer ppalmer@cafod.org.uk +44 7785 950 585

———————–

Tags: Announcements, Ethics, Gold, Green Issues, Mining, Rad Transparency, Responsible Mining, Transparency, Trends by Marc Choyt
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Introduction:

This is an ongoing documentation of a series of dialogs between members of our Manufacturing Group, charged with the task of developing exceptional standards for jewelry manufacturing. Follow this link, http://www.fairjewelry.org/madison-dialogue-manufacturing-committee for full review of past discussions.

In Part II, we continue our discussion regarding how to implement standards for transparency. Part I (previously published) ended with my proposal to drop the Transparency Standard all together. Patrick Schein begins this by offering an idea which would be considered radical: applying transparency not only to producers but also, the merchants that use the Fairmade label.

Even after a few weeks of discussion, the issue of a transparency standard has yet to be decided.
~ Marc Choyt, Publisher

Patrick Schein Wrote:

On the transparency issue, you know my recommendations but there is something that could be interesting to implement for the fairmade standards on the economic transparency.

The consumer, and the manufacture/producer even more, should know the split of the value of the product. In this view, we could ask the companies using the Fairmade label to disclose the value (in % of the consumer price) that goes to the Fairmade manufacturers and how many FAIRMADE workers have been impacted. This economic transparency would,

I believe, be useful for both the consumer and the artisan and a marketing argument for the jewelry companies. I think that Martin’s remarks should be assessed with that “economic transparency” because as a consumer, I will not buy a product in silver if only let’s say 5% of the final value has been paid to the artisan who made it.

What do you think of the concept? If OK (hope martin be fan of the proposal) , we could deepen it further.

Flavia Aarden-Kilger wrote:

I don’t see that kind of economic transparency working. At least not conventional jewellery companies. Even in the handicraft fair trade world we don’t like to show mark ups. No one likes to show others what their margin is. Some will think it’s too much, others might think it’s not enough.

FLO, Transfair, Fair Trade Foundation, Max Havelaar and WTO all audit their members, they make sure that producers and workers are getting a fair price. Would something this not work for jewellery?

Stephen Metcalf wrote:

I agree with Flavia that this wouldn’t work.

Rigorous certification that the primary producers are receiving a fair price seems like the only way. The certification system—the whole product chain, including primary producers–has to negotiate what is “fair” in fair trade.

Martin Rizzi wrote:

I agree with Ms. Flavia that the commercial people will not like the idea of revealing their profit margins. In the conventional fair trade industry no jewelry maker receives as much as five percent of the price the public pays, convinced one is “helping” the producer.

I must correct a mis-perception that WFTO, or any of the other fair trade licensing agencies that were mentioned, audit their members. There is no performance of an authentic or rigorous audit as these licensing agencies are, in effect, an arm of the commercial dealers.

Did you notice where Greg said that the FLO is owned by the Producers, who are defined as “holding companies, plantations, and factories”? Understandably, these holding companies and plantations are not owned by the producers, even when the holding company is styled for legal fiscal and/or labor reasons as, a cooperative. The fair trade licensing agencies are hardly independent. They are financed by the commercial interests who are the real ownership of the Holding Companies, Plantations, and Factories styled as Producers.

It is a myth or an assumption that the WFTO audits its members to see that they are complying with the principles of fair trade in respect of paying artisans a decent price and treating artisans with dignity or providing any health or pension benefits whatsoever WFTO is mainly concerned with collecting membership dues from everyone who will pay and no mercy is shown to artisan groups in the Third World who have gotten the idea that if they pay FTO for a membership this will lead to getting some orders from overseas buyers.

I do still agree with Ms Flavia that expressing transparency in the form of a declaration of the component of the price of the price that has gone to the artisan (this value should not include expenses for materials and overhead etc. only the money that the silversmith or artisan gets) is too much, since the public will NOT understand why this is only 2 or 3 percent of the price.

I really do appreciate Patrick’s making this suggestion though since it shows good intentions.

Martin Rizzi wrote:

There is the old legend about the king presiding naked in a parade when a foolish little kid exclaims: “he doesn’t have any clothes on!”

1. the tiny percentage of the retail sales volume received by the artisan as distinguished from FLO’s Small Holder Plantation Producer is the last thing commercial dealers are ever going to want to publicize

2. there is a general belief among people in North America and Europe that the fair trade organizations and fair trade companies are on the job when it comes to enforcing high minded standards in dealing with producers

(When, in fact, the fair trade agencies systematically work against the artisans by excluding them and relegating them to having to sell to the licensed dealers.)

There is NO meaningful regulation of fair trade practices, however the idea that there is, has been subtly pushed by Ten Thousand Villages, in connection with FTF and WFTO.

3. This comes back to the question of Transparency; can one afford to say the truth? or, is the truth a hungry horse that is supposed to pull a cart for a manger full of oats?

I am a supporter of Marc’s Circle Manifesto approach and to distinguish one selves’ from the forms of tree trade practice that are familiar now. Best wishes from Mexico

Greg Valerio wrote:

One point of correction.

The regional producer networks in South America, Africa and Asia sit on the board of FLO, not the commercial companies. It would be wrong to suggest that plantation owners, holding companies & factories sit on the FLO Board as they do not.

As to WFTO, I cannot comment as I do not know that much about them.

Stephen Metcalf wrote:

Dear Martin,

It might be that looking at wages as a percentage of retail prices in high cost of living countries confuses the analysis:

It may help to look at manufacturing wages in general, contextualizing the wages paid to jewelry artisans.

A quick (and non-rigorous!) internet search shows that in the US automobile sector, workers receive direct wages of only around 2-3% of the retail cost of a new car (with total benefits, this % increases to 5-8%). According to Wikipedia, “ $70/hr sounds like a ton of money, but starting wage for laborers is only about $14/hr….barely enough to pay the bills in the US. The top earners make $29/hr. Health care and pensions cost equivalent of about $15/hr, vacation time, overtime, sick leave are the equivalent of roughly $10 per hour.”

A few years ago, I operated a colored glass foundry that employed 15 people, manufacturing primary materials for the “stained” glass trade. I recall that our wages represented a similarly low percentage of the final retail price, after the product flowed through the distribution chain.

I think we need to think about what is achievable. Is it possible to double the wage of the artisans (ie 4% instead of 2%)? As with ARM, relatively small percentage changes at the primary level make a big difference in real wages, without changing things much for the retail trade.

I don’t see why it would not be possible to implement wage standards that can be checked and certified.

Martin Rizzi wrote:

Buenos Dias Greg

Are you saying that the “regional producer network” organization representatives who are on the board of directors of the Fair Trade Labeling organization are artisans and small farmers themselves?

Martin Rizzi wrote:

Steve et al, thank you for your observations they are apt and useful in the context of this dialog. Yes the world has gone to a low wage economy, as even the autoworker doesn’t get a good wage

Please notice I have never made this argument that the producer should get a higher percentage To be able to support one’s family, it is necessary for the jewelry maker to have work all year. Otherwise this person is forced to consider migration to the United States as a necessary evil (Almost 300 persons from Tecalpulco, mostly artisans and miners, live illegally in the USA)

What I am saying, is that percentage of retail price, is not a meaningful gauge of artisan welfare. I agree with the comment that one will one confuse potential customers with such a percentage. Still it is good that present company is aware of this issue for the reason I am now going to explain.

To the ordinary .925 silver jewelry industry of Taxco, let us compare an equivalent fair trade transaction. As the mark-up of the jewelry is not so much, the artisan gets a multiple of the percentage fair trade pays. What does it mean then when the artisan receives a much greater percentage when the buyer is not fair trade?

Greg Valerio wrote:

I am happy to go with Marc’s recommendation if it is the will of the group.

I do however wish to note that not having it listed as a standard allows traders and other operators more wriggle room as a principle cannot be measured, whereas a standard can.

To my mind transparency does not mean disclosure of profit margins etc, it means a clearly defined criteria against which a trader, operator etc is measured for compliance during audit.

Social compliance criteria of this mature has not been attempted before within the jewellery sector (outside of what RJC are attempting).

It is needed bit as Martin rightly points out it must benefit the artisanal manufacturers and be workable. As we discovered with ARM and gold, the process, systems, rules and regulations can become very bureaucratic, very quickly, which needs to be balanced against a system that is measurable, transparent and provides consumer confidence.

Vivien Johnston Wrote:

I am for including it as a standard, in line with Greg’s comments about achieving a balance between the bureaucracy and not being about profit margins. To my mind, transparency is the fundamental issue which the jewellery industry lacks and the one which allows creative interpretations to be made, often not in favor of the producer ; thus artisans and miners and those who should benefit from fair principles still lose out. As Greg puts it – wriggle room.

Without transparency, which is measurable and quantifiable, I feel the whole process may be undermined. If it can be achieved it should protect the artisan, not hinder them.

Therefore I propose we retain the 8th standard but revise it to perhaps put less emphasis on the financial aspect, simply about equitable trade to protect each link of the supply chain and workers.

*Transparency*
*Principle:*
High standards of financial, social, manufacturing, delivery transparency and accountability principles will be observed.

*Standards: *
*Minimum Requirements:*

*8.1: *Companies will be transparent in regard to finances and delivery to their workers and trading partners.

Focus more on standards for; Transparent management practices and equitable, accountable trading relationships

Martin Rizzi wrote:

Greg, I find it doubtful that these are “stakeholders” are really producers.

FLO (purposely?) causes confusion by defining Producers as Holding Companies and Plantations, whereas To my mind, a Producer is a person who creates, fabricates, or otherwise makes a product. Just because somebody is heading up an organization that represents or manages actual producers, does not convince me that this person is a producer himself or herself , or that this person has the interests of the producers at heart. I think in most cases these so-called producer representatives are cut-outs and/or fundamentally beholden to the commercial buyers and, often, they may be involved in buying and selling themselves, and be systematically complicit in an arrangement designed to keep producer prices, and, especially, producer expectations, down.

Marc Choyt wrote:

First, in terms of the bureaucracy, wiggle room, creative interpretation, this is something that we are hypersensitive to.

We still have two distinct approaches here. We could, as Vivien suggested previously (below), keep this principle. Or, we could put the standards that she suggested in other parts of the document– specifically, Human and Worker Rights, and make transparency a foundational part of the document. My sense is that so far, up until now, there is a still leaning toward not putting transparency in as a numbered standard.

In light of Vivien’s proposal, I would like to hear from others. Do we keep 8th or drop it?

Martin Rizzi wrote:

Anna Karenina by Tolstoy, Leo
It seemed to her that such principles could only be a hindrance in farm management.

Tags: Best Practices, Ethical Jewelry, Ethics, Fair Trade, Fair Trade Jewelry, M. D. Manufacturing, Madison Dialogue, Manufacturing, Rad Transparency, Responsible Mining, Transparency, Trends by Marc Choyt
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Introduction

This is an ongoing documentation of a series of dialogs between members of our Manufacturing Group, charged with the task of developing exceptional standards for jewelry manufacturing. Follow this link, http://www.fairjewelry.org/madison-dialogue-manufacturing-committee for full review of past discussions. The entire principles and standards document can be found here.

How to deal with the issue of transparency generated much discussion in itself and catalyzed consideration of a wide range of issues. Even now, weeks after starting, we are still not settled. At the end of this section, I propose that the Transparency Standard is dropped from our document.

The group is taking a break this August and will pick up this issue in September. This is the first of at least three posts on Transparency.
~Marc Choyt, Publisher

Below are the dialogs on the Transparency Standard.

Marc Choyt wrote:

Transparency is foundational to any ethical venture in the jewelry sector. Please consider what is below carefully and put forth your ideas. What I drafted below last fall now seems minimal and may need some flushing out.

Below is the 8th principle: Transparency.

Transparency

Principle:

High standards of financial, social, manufacturing, delivery transparency and accountability principles will be observed.

Standards:
Minimum Requirements:

8.1: Companies will be transparent in regard to finances and delivery to their workers and trading partners.

Patrick Schein Wrote:

I do not like this standard as transparency is more a main pillar of this kind of initiative and should stay at that level.

I would propose to state in the foreword that Transparency is one of the bases of this initiative and to shift the communication of the financial statements to the workers in the labor relation section.

Regarding the transparency to the trading partner, this is usual business and any requirement from a partner should be dealt directly with the manufacturer.

Martin Rizzi Wrote:

Congratulations

I am impressed by the seriousness you are affording to this process with your question of whether Transparency is to be a numbered point in a constitutional statement of what should ethical fair made jewelry; or, whether Transparency ought to be a fundamental principle of fairmade.

In the familiar fair trade model, Transparency is a numbered principle (to my mind, this is the old model we are all about replacing here.)

In the familiar old fair trade model, Transparency is waved like an icon, but what is happening on the ground? Transparency would be, to show for one’s Mexican suppliers, invoicing over the past 10 years or maybe only the past year if it is too much work.

Let us see the export invoice, the import invoice, and all the relevant corresponding documentation. Would not this be Transparency? Could one ever see these papers, or not?

And how about a registry of which producers actually made the pieces? These folks surely should be enrolled with the Mexican tax authority; even in the case they are not, there should be remission notes. It should be possible to interview and talk informally with them as these are the artisans responsible for making the products.

Well now, the present company: is this asking too much to ask of licensing agencies, and fair trade wholesalers?

If it is too much, then, Transparency would be a trap this worthy new initiative should be sure to not step in.

Greg Valerio Wrote:

Just a quick note here, Fair Jewellery Action has transparency and traceability as it core principles, so in every way we take it very seriously, including financial, who you work with, where you work. I have sat around to many board meeting in my time, listening to individuals talk about transparency but when they are asked to deliver , they never do.

Will FJA get it right? No, it will make mistakes, but it won’t cover them up either, so I think we can say transparency is top of the agenda alongside moving towards physical traceability in the supply chain so the middle can’t wriggle out of changing as well.

Marc Choyt wrote:

This is a very important discussion and different approaches have been put forth.

Patrick suggests that we put transparency not in the standards section, shifting the communication of financial statements into the labor relations section. In this case, if I understand Patrick correctly, transparency would an item which we discussed earlier as our “Foundational Issues,” along with size of factory and content of material which we discussed earlier.

Martin writes about “transparency waved around like an icon.” The concern I have based upon numerous side discussions with Martin is that the icon often does not have any real teeth in certain “fair trade” scenarios. For numerous reasons, including the prevalence of distributorships, corporations posing as cooperatives in Mexico, and massive mark ups of product from producer to consumer benefiting the fair trade merchant, producers, the artisans, are not in fact benefiting from fair trade. Fair trade is used as an exploitative marketing tool and many artisans would rather do straight business.

There are many different fair trade organizations and the fair trade claim is loosely bandied around in the market place, often with little backing the claim up. Even so called fair trade jewelry being marketed right now by fair trade organizations has no standards, which is why we are doing this project.

The question comes, how do we best not fall into the traps that undermine the integrity of this process to truly create a situation that benefits producers? Everyone must benefit on this circle for it to work: producers, retailers, consumers.

Should we ask for transparency which would assure integrity in the process, such as the import invoice and relevant documentation, a registry of which producer made the piece and allowing interview and talks with the producer, as Martin suggests? If distributorship is involved, that should be disclosed as well. Are there other things that should be added as standards? Or should we go more top level as Patrick suggests?

I believe that we all support the notion that transparency, in Greg’s words, should be something that we actually deliver. I believe my web based proposal would also be supportive to this end. It would allow us to discuss what is actually happening in each fair made jewelry manufacturer instead of just providing a label.
Greg Valerio wrote:

ARM began not just with miners but also retailers (CRED Jewellery) and other concerned NGO’s (Amichoco). FLO have been clear they are wanting to follow but will not move on social compliance in the manufacturing jewellery stage at this point until the fairtrade fairmined gold is fully launched, which I believe to be a very sensible approach.

Marc (Reflective Images) is a manufacturer and to that end is the person other manufacturers can gather around, other of us have experience working with artisanal manufacturers in Mexico, Nepal, Ethiopia are the ones I can think of. i am sure there are others out there.

I believe the foundations are in place…

Marc Choyt wrote:

When considering the issue of whether to put transparency in the principle/standard section or as an overarching foundation, it is clear to me that every principle and standard we’ve discussed and settled upon right now must already based upon transparency. If there is no transparency, then this whole process falls apart.

For example, we could write at the end of every principle that we’ve created so far these lines: “The basis of this principle is transparency in context to the standards below.”

There is no other principle and standard that we have agreed upon that is so general and foundational. The value of our agreed upon principles and standards lie in their specificity to particulars in support of a fair made situation. So, what are we trying to accomplish with this “transparency” principle that we have not already done?

The true contribution, if there is on, in the work that we have done is on the standard level. Other fair trade organizations already are selling fair trade jewelry. They have lofty principles and show beautiful photos of smiling artisans on their websites inducing people to buy the products. They all claim transparency. But… alas, they have no standards.

Martins’ concern, if I understand it correctly, is that layers of standards hinder the artisan. The artisan’s work with its hand made integrity is enough in itself and anything on top of that represents an added burden. They artisan should not bare the burden.

The reason for my wanting to do this project is to support that artisanal integrity, not burden it. The best support is market support and also technical support that will enable a safer studio. I deeply appreciate how ARM assists small scale gold miners to safely do their work. I would like to be able to do this as well with artisanal groups we partner with.

I know that safer compounds and equipment costs money and sometimes efficiency. This can be too high a price for some artisans. Perhaps when the artisan gets more business they will be able to switch to greater safety practices. So our efforts will create an upward spiral that is life giving and beneficial for all. The web based system I propose will allow people to understand the issues and the trade offs. It also allows for larger fair made factories where ventilation would be a requirement to be fair made. I believe that the fair made label can be widely applied and I believe that it is very much needed today.

But, getting back to our point at hand, what is the standard for transparency? I do not know, other than the specific standards that are the real value of our document and collective efforts.

So, I propose that we follow Patrick’s earlier suggestion that we drop this 8th principle. Transparency is the foundation of this whole process, not a specific line item. It should be mentioned as the third item in our preconditions, along with size of the factory and content of material.

If this view that we drop Transparency as a principle and standard is valid, please make public your support. If I am not seeing clearly, then I ask those who have an argument that Transparency should remain as an 8th principle to put forth their views for consideration. What are the standards? To me at this point in my thinking, making Transparency the 8th principle and making a specific standard for it actually undermines its power in the document.

Tags: Best Practices, Ethical Jewelry, Ethics, Fair Trade, Fair Trade Jewelry, M. D. Manufacturing, Madison Dialogue, Manufacturing, Rad Transparency, Responsible Mining, Transparency, Trends by Marc Choyt
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Jewelers of America Opposes The Amendment.

The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act contained a provision that requires third party validation, tracing back to source, gold and diamonds coming from ten African countries. The law demands transparency. Much of the impetus for this legislation came from the current situation in the Democratic Republic of Congo.

The DRC is rich in natural resources, and is a classic example of the resource curse. One study estimates that 5.4 million people have died in the Congo from conflict. Perhaps as much as 45,000 people continue die every month in the DRC.

The legislation has impact for other industries outside of the jewelry sector. The DRC has many rare metals that are critical to our electronics industry. Obtaining them from the DRC is considerably cheaper than other mines in developed nations. According to an article entitled, The Genocide Behind Your Smart Phone, Apple and HP may be inadvertently getting the rare metals to make their products from the Congolese militia.

The passage of the bill not only brings attention to these atrocities, but also provides the beginning of a real solution. It’s likely that every NGO working for the betterment of Africa is also in support. Earthworks, which has been particularly active in hard rock mining issues in the jewelry sector, issued a statement in its support.

Opposition From Jewelers of America

Right before the final vote in the US Senate, Jewelers of America (JA) issued an urgent appeal asking their network of about 10,000 jewelers to contact their senators urging them to block the bill. In their talking points, I was surprised that JA issued their appeal so late. Apparently, at least in terms of their interest, they were asleep at the wheel.

JA made the distinction that while they support the overall objective of this bill to eliminate conflict minerals, government legislation was not the right way to do it.

Robert Hadley, COO of JA, issued a statement published in JCK online that the bill, “would put an incredible burden on jewelry businesses if enacted, essentially requiring suppliers to determine the source of ALL their gold inventory…the idea of certifying a particular region of any of those countries as completely conflict free—as defined in the legislation—would appear to be difficult to do.”

Indeed, gold that is sold on the open market often comes from multiple sources. Diamonds are also a commodity that is consolidated, graded and polished across borders. Traceability and transparency are indeed difficult.

Yet, from the perspective of Fair Jewellery Action, there is no question that traceability and transparency are the cornerstones of any ethical platform.

Jewelers of America Opposes the Legislation

To those who are not familiar with the business/politics of sourcing issues, it might seem that the legislation would be supported by JA. Jewelers of America is a key member of the Responsible Jewellery Council, whose stated mission is “Reinforcing confidence in the diamond and gold supply chain.”

Harley also points in the JCK article that, “Legislators are asking business to solve a political problem, and while we fully support efforts to stop the trade in conflict minerals, we don’t agree that this legislation is the right approach.”

Natural business interests are opposed to any efforts to block their objective of making as much money as possible in developing countries. Mining products are grouped together. Just as a hamburger at McDonald’s can be made up of 100 cows, the gold on a ring can be from 100 mines. Traceability and transparency would expose the impact of these products on some particularly “resource cursed” African producer communities.

If the impact on these communities was ethical, the trade would welcome the legislation. We could proudly point out that the jewelry business is truly good from mine to market. But JA’s stance implies that the impact on these communities is negative.

The legislation is designed to support corporations operating in these conflict areas to act in a manner that does not kill people in producer communities. Harley’s argument is that the political and the business interests are independent and not linked. Last I looked, politics and business were in the same, king size bed. If there was no market for these conflict minerals, then the wars would not be funded by money that goes into the jewelry produced in the US and EU.

Secondly, there is plenty of traceable and recycled metal available to supply all the jewelry needed in the US and EU. Cutting out conflict metals will not raise the costs in the production of jewelry. The new legislation will not hurt the independent jeweler who wants to source ethically, as there is already plenty of product available.

In an interview published on this site, Micheal Rea, CEO of the RJC, stated that the RJC standards will not prevent dirty gold from entering the supply chain. I do not doubt that RJC wants to create real standards that anchor their stated intention. The legislation supports the stated intention of RJC to be transparent and traceable in their mineral extraction. RJC members can still use dirty gold mined by child labor in Peru, but at least they will not be able to use conflict gold from Africa legally.

A Major Step Forward

According to NGOs, the jewelry sector is responsible for the death of three million Africans through the purchase of diamonds funding wars in the nineties. If this legislation had been in place in the nineties, much of this carnage may not have happened. We do not know how much conflict gold from the Congo has ended up in our supply chain. For me, one ounce of conflict gold and one blood diamond entering the US market is too much.

In context to recent history, JA’s position is out of step with the public and is morally bankrupt and irresponsible. It says, money and business first, and ethics (so long as they support money and business) second. It undermines the stated position of the Responsible Jewellery Council. It also weakens the entire jewelry sector, because our business is based upon our public reputations. The most important trade group in the jewelry sector should understand that in context to ethical stances, action must be in alignment with speech.

JA’s position is also out of step with our times. Consumers today, particularly the upcoming generation of buyers, are becoming more and more sensitized to environmental and human rights issues. The fact that conflict gold is currently in our supply chain makes our entire industry more vulnerable. It is utterly unacceptable and immoral that any conflict gold should be used in the making of jewelry.

Those in the ethical sourcing community, including we at Fair Jewellery Action, consider transparency and traceability as foundational to any ethical sourcing platform. We consider the passage of this bill as a major step forward.

Tags: Announcements, Best Practices, Editorial, Ethics, Fair Trade, Fair Trade Jewelry, Manufacturing, Rad Transparency, Transparency, Trends by Marc Choyt
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In England, ethical issues in the jewelry world are in the forefront, and years ahead of US in terms of trade and public support. See a press release below.
~ Marc Choyt, Publisher

The National Association of Goldsmiths (NAG) will form an ethics working committee following the announcement by the Fairtrade Labelling Organisation (FLO) and the Association of Responsible Mining (ARM) to introduce Fair Mined and Fair Trade standards for gold and precious metals.

The NAG has announced the move which will see Greg Valerio, founder of CRED Jewellery and co-founder of The Alliance for Responsible Mining and Vivien Johnston of Fifi Bijoux Luxury Ethical Jewellery, work in conjunction with the NAG’s Board to create a valuable resource for NAG members.

Enabling Relationships

Presently, creating a transparent supply chain which upholds positive ethics at every level is a complex process and one which remains inaccessible for the majority of jewellers.

Fairly traded, as well as socially and environmentally responsible resources already exist. However, the miners often lack the methods to connect with western jewellers.

Throughout the jewellery industry, a great will has been noted to work with these mining communities and to build their production capacities through enabling relationships.

“The partnership between small mining communities and UK small businesses seems a natural one, however both require some support and structure to maximise the benefits to each’ said Johnston.

Micheal Hoare, CEO of the NAG says “We are delighted to announce the formation of an ethics working committee. We hope that it will be a valuable resource for members looking to become part of an ethical supply chain”.

Johnston and Valerio have been working independently for several years to promote Fair Trade standards in Jewellery.
Johnston has been working on auditable standards and traceability formed under the British Ethical Jewellery Association (BEJA) 2007. Whilst in 2009, Valerio ‘a fair trade jeweller and activist’ was appointed by the Fairtrade Labelling Organisation (FLO) and is currently working with Fairtrade Foundation in the run up to the launch of certified gold in the UK, in Feb 2011.

Valerio commented that ‘Some of the biggest reputational risks the jewellery trade faces today are directly linked to our supply chains. The NAG supply chain ethics working group has been established to research, review and resource jewellers in the UK with practical ways they can positively tackle the human rights and environmental issues linked to our industry.”

Retailers to Benefit

It is hoped that retailers will benefit from the NAG coalition which aims to support businesses in the transition to a traceable and ethical supply chain .

This significant shift towards positive ethics is set to shape the future of the UK jewellery industry.

For further information please contact Faye Hadlow, Information Manager at the NAG, at 020 7613 4445 Option 4 or faye@jewellers-online.org

Tags: Announcements, Best Practices, CSR, Ethical Jewelry, Ethics, Fair Trade, Fair Trade Gems, Fair Trade Jewelry, Gold, Rad Transparency, Responsible Mining, Transparency, Trends by Marc Choyt
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Christine Dein of Ethical Metalmiths and I have been corresponding lately about a number of issues. She co-directs Ethical Metalsmiths and has been traveling around the world with her Radical Jewelry Makeover.

The question of sustainability in context to small scale mining was addressed to both Greg Valerio and myself. As Greg is away at the moment, I answered. Below is Christina’s question, and my response.
~ Marc Choyt, Publisher, Fair Jewellery Action.

I have appreciated reading what you are both working on. It has raised a question in my mind that maybe you have already answered.

What are the long-term plans for artisanal / small-scale mining projects? As industrial mine sites have to close every 20+ years or so because the supply is gone, I can imagine that artisanal sites will face a similar situation.

Then again, the artisanal / small-scale sites might provide supply/income for a longer period of time because they are being mined at a much slower rate. What is the plan for a community that becomes dependent on mining revenue, grows into its new economic situation and then faces a diminished or consumed supply?

How will preparation for this scenario be handled? Is the idea that communities might evolve out of a mining based economy into another one; that they will need to create new economies to survive on? I am just curious and wonder how the project will address this.

———————————

First, artisan small scale mining (ASM) done with hand tools can provide economic benefit that will last for last a long time. Sapphires have been mined in Sri Lanka by artisan miners since before the time of the Buddha. Deposits of other gemstones as well as rubies in Burma have also generated revenues for the local economy for hundreds of years. A more recent example of large gem deposits that have not yet been tapped is in Greenland. William Rohtert, who has documented high value ruby deposits, told me that small scale ruby mining in Greenland could supply the Inuit with a viable economy for hundreds of years as well.

Large scale mining, in contrast, is focused on extracting minerals as quickly and efficiently as possible. Their reason to exist is not to help in local jobs and economy—that is a by product. Publicly traded companies are mandated by law to maximize profit for the company, employees and shareholders. Consequently, huge amounts of value are exported from the community to justify the venture, leaving very little behind.

What takes Oro Verde two years to accomplish might take large scale mining two weeks. What might take a LSM mine twenty years to clear out might well provide a small ASM community for a hundred years or more. Even if an ASM community lasts twenty years, during that time, money will filter into the local economy to a much greater degree. More value will remain within the local economy.

With LSM, in contrast, after that twenty years, the community will be left with practically nothing. Their highest paid workers are generally ex-pats imported to that country. The likelihood of a strong local economic foundation is much greater in ASM than LSM.

Yet, I would not consider any mining scenario truly sustainable, even though LSM companies, such as Rio Tinto, have created entire publicity campaigns around their “sustainability.” First, mining is monumentally damaging to eco-systems. Boom and busts have been common in the mining industry throughout time. But from these resources entire, long lasting economic foundations have been created. A massive amount of infrastructure was generated in California and even beyond as a result of it’s gold rush. .

The cutting edge question is, how can these ASM opportunities be nurtured in such a way to create strong infrastructure and capacity that will outlast the mineral resource? This gets into grass roots development and creating capacity in the poor ASM communities. It involves dealing with massive and institutional corruption in developing countries. There is no easy way, but there is great potential. ASM provides the vast majority of material in the entire jewelry supply chain—some say up to 90% of all gemstones.

Hopefully, fair trade institutions will not be afraid of getting their hands dirty with small groups. The Diamond Development Initiative and the Alliance for Responsible Mining have created pathways that provide examples of what might be possible. Our efforts as jewelers to connect those ASM communities directly to retail our retail customer also helps.

Part of the mission of Fair Jewellery Action is to support these types of initiatives so that we can increase the beneficial impact of these positive developments, and support the grass roots local economies of vibrant ASM communities.

Tags: CSR, Editorial, Environment, Ethical Jewelry, Ethics, Fair Trade Jewelry, Green Wash, Interviews, Manufacturing, Rad Transparency, Responsible Mining, Social Initiatives, Transparency, Trends by Marc Choyt
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Ethical Metalsmiths is taking Radical Jewellery Makeover further than it ever has before!

“We are really looking forward to hosting a Radical Jewellery Makeover at Queensland College of Art,” says Elizabeth Shaw, of Convenor Jewellery and Small Objects. “Ethical Metalsmiths had designed a project that we are excited to share with our students and the community. RJM compliments our teachings about social and environmental responsibility in jewellery.”

Radical Jewellery Makeover will take place in Brisbane, Australia, from July 23 – July 30, 2010. Queensland College of Art Griffith University students and participating local jewelers will transform donations into exciting new jewellery during a workshop with RJM Project Directors, Susie Ganch and Christina Miller.

There will be an opening reception for Radical Jewellery Makeover on Friday July 30, 2010 from 6-8pm. All completed work will be available for sale from July 30 – August 28, 2010 at Artisan Gallery, located at 381 Brunswick Street, Fortitude Valley. Proceeds will benefit collaborative student research scholarships dedicated to responsible studio practices at Queensland College of Art Griffith University and United States based Ethical Metalsmiths.

Ethical Metalsmiths will be participating in two other notable events while in Australia:
Green Jewellery & Objects Symposium #2 Saturday 24 July 2010: The Green Jewellery & Objects Symposium #2 will address the processes, concerns and consequences of making Jewellery and Objects with a heightened environmental awareness. How are green concerns affecting practice? The symposium is being held at Queensland College of Art, Brisbane, Australia

Jewellery Practice as a Site for Enquiry will be held at Kaleide Theatre, RMIT University on Friday 6 August 2010, 9am to 4pm and afterwards at the RMIT School of Art Gallery. Jewellery Practice as a Site for Enquiry is an opportunity to examine, “What are the social, political, conceptual, theoretical, historical paradigms that determine and or influence the way contemporary jewellery is practiced today?”

MORE INFORMATION IS AVAILABLE AT: Radical Jewelry Makeover Blog

Tags: Announcements, Ethical Jewelry, Rad Transparency, Transparency by Marc Choyt
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In a press release on CSR Wire, STR Responsible Sourcing announced a partnership with the Responsible Jewellery Council. They will be auditing RJC’s supply chain. STR Responsible Sourcing categorized their initiative with the RJC in the press release as “fair trade.”

The STR Responsible Sourcing initiative with the RJC is similar to fair trade only by the virtue of it being a third party certification system. The Fair Labeling Organization (FLO) also has a third party certification. But the similarities between RJC’s and fair trade end there. The RJC is not fair trade. STR Responsible Sourcing’s categorization of their initiative as fair trade in their release on the CSR wire is inaccurate and misleading.

~ Marc Choyt, Publisher, Fair Jewelry Action

Tags: Announcements, CSR, Editorial, Ethics, Fair Trade, Fair Trade Jewelry, Manufacturing, Rad Transparency, Spin, Transparency, Trends by Marc Choyt
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Introduction:

This is an ongoing documentation of a series of dialogs between members of our Manufacturing Group, charged with the task of developing exceptional standards for jewelry manufacturing. Follow this link, http://www.fairjewelry.org/madison-dialogue-manufacturing-committee for full review of past discussions, including the entire principles and standards document that we are reviewing.

On several occasions, our dialogs have launched into unexpected areas that may be tangential to our particular principle and standard, but are critical to fair trade issues. What we have below is a serious discussion about the validity of fair trade in context to its funding and its economic structures as challenged by Martin Rizzi. Rizzi assists in a revolutionary fair trade producer centered project in Mexico which I wrote about previously in this blog: http://www.fairjewelry.org/archives/2649

In these dialogs, Rizzi discusses how fair trade organizations manipulate the system in Mexico by labeling their business ventures as “cooperatives.” He questions the validity of fair trade as true advocates of producers, writing:

“I know that if I give in to the general consensus in the fair trade world today, we will be neutralized…. When I have used the term “producer” I am referring to an artisan or a small farmer. When the Fair Trade employs the term “producer”, it means a factory or a plantation.”

Patrick Schein, a board member of the Association of Responsible Mining collaborating with FLO answers some of Rizzi’s concerns. Greg Valerio, who is also bringing fair trade gold into market, and I respond to Rizzi’s as well. Read the entire fascinating dialog below.

~ Marc Choyt, Publisher, Fair Jewellery Action

Martin Rizzi wrote:

I have reviewed various sections of the linked document and recommend that others do as well always keeping into mind that The Fair Trade Foundation is funded by the commercial re-sellers.

So, where does the money to pay the salaries of The Fair Trade Foundation officials and staff come from, if not from the marginal profit derived from the buy-sell arrangement with producer organizations in the 3W?

WHY not afford the producers access to a little of that marginal profit to finance the production of a similar report in their own frame of reference and addressing this same question:: “How Do Producers Benefit from Fair Trade”?

Patrick Schein wrote:

On how the producers benefit from Fairtrade, please see:
www.fairtrade.net/impact_studies.html you can also download the word document named “Retail pricing of Fairtrade products: Questions and Answers” on the upper part of the following page where you will find helpful other docs: http://www.fairtrade.org.uk/resources/reports_and_briefing_papers.aspx

Fair trade is a business model not charity (TRADE NOT AID). It links directly the small producer organization with the consumer. A premium is paid DIRECTLY to the producer (development premium). Also the producer benefits of a shorter and more transparent supply chain allowing him to get a better price for its commodity. Finally, there is a minimum price paid when the commodity international price is weak.

Following this link you will be able to evaluate all Fairtrade premiums and minimum prices: www.fairtrade.net/list.html?&no_cache=1

Regarding the running cost, if we follow the FTF example you are mentioning, in the UK in the last 10 years FT sales went from 33 million £ to 800 m £ (X25).

To get there, you need staff, campaigning, management etc. and this is financed by the Labeling fees and the donations. Labeling fees are paid by the brands and not the producers. They serve to finance the system promote the products and assure an third party labeling system. At FLO level, labeling fees represent 50% of the income and the other half are the grants received ( see: www.fairtrade.net/annual_reports.html )

Finally, FLO, FTF and the national initiatives of the FLO family are non-profit organizations.

To conclude, yes fairtrade impacts the producers and premium is transferred to them thanks to the model. The model is financed thanks to grants and labeling fees paid by the consumer brands. Those brands in exchange get better consumer visibility that allows them to partly absorb the labeling costs and premiums. It also contribute to their CSR politics. It is a triple win solution. The producer, the consumers and the brands.

I personally believe that this is the best model for impacting the producers in the South and do not know one which has a better impact using the existing market tools.

I can understand your points but besides making a revolution, I believe that the best way to go is to use the existing market tools as Fairtrade & Fairmined gold decided to do.

Martin Rizzi wrote:

Is not the producer the craftsperson, the small farmer, the artesenal miner the reason-of-existence of fair trade itself? I support the establishment of a new ethical fair trade label if it does not mis-use the producers.

I hope I have not messed anything up. My purpose has always been creative and constructive; however, I know that if I give in to the general consensus in the fair trade world today, we will be neutralized.

This has been a very interesting process and the question is, how to achieve justice? Isn’t that the question? Is there anything that is being considered in this dialog, that has not been discussed in Plato’s Republic?

Doesn’t economic justice of the commercial variety have to concern the craftspeople, the small farmers, and the artesenal miners who actually produce the material content of the entire ethical and fair trade jewelry industries? …and the source of all its profits?

The big brother of Fair Trade is FLO with revenues in excess of 10 million US dollars per year – all they have to spend all this money on are the salaries of European administrators and office workers, and of course to issue fat contracts to buddies. According to the FLO website, the producers pay the costs of certification and this involves paying for a professional to fly in from Europe, spending up to several months in the research before returning to Europe in a jet plane to write up a report, that the FLO administration will finally decide on.

It’s rather obvious isn’t it? This expensive process is not designed in consideration of the farmers and artisans.

So where are the small people who are after all the primary suppliers to the growing Fair Trade distributors and whose creations and artesenal production and distinct ethnic culture are so all-important and valuable?

FLO Definitions

3.1.1. Producer

A Producer is a small holder group, plantation, or factory that is engaged in the production of the primary product.

Who controls the small holder group? who owns the plantation? who operates the factory? Surely they are not those persons whose friendly and hopeful dark faces the buying public associates with Fair Trade? whose interests Fair Trade systematically claims to champion.

These farmers and craftspeople work for those plantations and factories, and these are folks fair traders fail to acknowledge exist, preferring to arrange things with the plantation manager.

p.s. Numbers of Americans have expressed concern in response to the extensive media coverage of a supposed “narco war” in Taxco and generally in Mexico. First, is was the notorious “narcofosa”; the abandoned mine respirator shaft where dead bodies had been deposited over the years. This is at the 16th Century Rancho Hacienda Cuadra, about an hour’s walk from here. A week or two later, there was a shootout where the soldiers killed a band of armed men refusing to give themselves up. This little mini-documentary filmed, within a few hours of the shoot-out. It shows how it is really.

http://handcrafted-ethnic-jewelry.com/videos-of-guerrero/massacre-of-the-assassins-taxco-guerrero-2010

Marc Choyt wrote:

I share Martin’s concerns and have visited him and his project in Mexico. For those of you who are not familiar with Martin’s projects, he has enabled through hard work and conviction, a truly producer centered artisan model. You can read about it here: http://www.fairjewelry.org/archives/2649 and see a website which provides a direct producer to retailer and consumer outlet. http://handcrafted-ethnic-jewelry.com/

In considering these issues from a macro point of view, I see no easy solution in bridging first world demand with artisanal craft in the developing world. Often we see that fair trade does not benefit those who need it most, for numerous reasons, many of which we have discussed in these dialogues. This concern cuts across issues related to fair trade and the jewelry sector. For example, the Fair Trade Diamond study funded by Tiffany and conducted by TransfairUSA concluded that small scale artisanal communities which are most desperately in need of fair trade support were not potential candidates for fair trade diamonds.

In the mainstream jewelry sector right now, the emphasis with the RJC is on chain of custody which does not at all address the larger economic concerns we have. Greg Valerio and I wrote a critique of this approach. http://www.fairjewelry.org/archives/3862

The issues are enormously complex, which is why no other working group from the Madison Dialog established so idealistically in Oct. 2007 has come even close to what we have nearly done: create a standard and principle document.

I know we can do better than the mainstream approaches. I also believe that our consensus model might be useful in other tasks ahead. We are not oriented toward the corporate, but toward the producer. We know that what we do will have to be tested in the field, but that is who we truly want to benefit.

I have mentioned this before, and I would like to reiterate once again my proposed solution to address Martin’s concern. We can create a web based platform that links off a simple logo stamp that says “fair made.” This logo would link to a study about a particular workshop. This study would list our standards, and state what is accomplished and what is not. Different workshops are going to have different strengths and weaknesses. But this would allow us to have a wide variety of ethical, fair made products under broad criteria of standards. This would allow both a small shop to get exposure, as well as a fair made factory which employs many artisans. In both cases, the platform we outline would support best practices.

Our platform would provide market support for all these workshops which authentically want to be part of our fair made or fair trade manufacturing initiative. How this would be funded, I’m just not sure at this point. There is plenty of money and good will in the world. We will see this through to its successful fruition.

Greg Valerio Wrote:

I feel that I have to correct some of Martins inaccuracies.

FLO is owned by the producer networks in the south and the labeling initiatives where product is sold.

Salaries and other expenses are defined by the board who are made up of producer networks and labeling initiatives.

Salaries in the small scale mining sector and corporate business are a lot bigger in many cases than those at FLO.

As to ownership, it is misleading to suggest one form of business model is operational within the FLO network. Within the fairtrade system there are many forms of business model, of which the dominant one is cooperative ownership by the producers.

With thanks

Martin Rizzi wrote:

With all respect, amigo, maybe this confusion is caused by the use of the ambiguous term “Producer”

FLO Definitions

3.1.1. Producer

A Producer is a small holder group, plantation, or factory
that is engaged in the production of the primary product.

When I have used the term “producer” I am referring to an artisan or a small farmer;
when the Fair Trade employ the term “producer”, it means a factory or a plantation.

Another source of confusion is the use of the term “cooperative”. The very familiar Fair Trade narrative suggests that “cooperative” refers to a collaborative social production community, one where everybody puts in their share, and then the profits are shared among everybody. This idealized system is not common in Europe and the united states where most people naturally are working in the familiar old capitalist model.

It’s true Mexicans are quite communalistic, but Mexican communalism is an ancient social tradition having nothing to do with contemporary commercial legal fiscal formulas for the mitigation of taxes and labor rights.

In Mexico (and i believe in the other Iberoamerican countries) a “cooperative” is merely a legal-fiscal figure; a cooperative (SC de RL) is similar, nearly identical, in its essence to an ordinary “corporation” (SA de CV)

Just because a business is legally structured as a cooperative does NOT in itself signify that the workers control the cash flow. Hardly. Perhaps the single most attractive feature of the SC de RL over the SA de CV is this fact: it allows cash flow to be controlled by the capitalists, while attributing ownership to the workers.

The ordinary way in which accountants in practice handle SA de CV corporations, also SC de RL cooperatives, is to zero-out profit over the course of the fiscal period. Often Anglo American people are not familiar with the way in which the kind of fiscal invoicing employed in Mexico (etc) works in practice.

The high rate of taxation applying to legal-fiscal entities (the SA de CV and the SC de RL) is avoided by spending the money out of the operation before the final day of the reporting period.. The nominal ownership of cooperatives by the workers only signifies that the workers get a minimalized amount as determined by the accountant and whoever is handling the money. In other words, that individual who is in contact with the international buyers and is, in effect, their representative.

Cooperatives are used to shield real ownership by suggesting that the enterprise is really owned by the workers. However, in a commercial operation, the buyer is god, or, at least, the buyer generally thinks of himself as a god and the people ordinarily treat the buyer as a god, since the common workers depend on the prospect of orders.

FLO’s Definition: “A Producer is a small holder group, plantation, or factory that is engaged in the production of the primary product.”

If the Producer (using the FLO definition) is styled as a cooperative, that only begs the question of who controls the cash flow. In reality the cash is king and the international buyers are astute enough to know their interests, and so are the people in the South. The workers know their job in the plantation depends on humble discretion. The buying agent puts on the robes of a cooperative president, and the international buyers are in effective control.

The idea that workers on these fair trade plantations are in the position to negotiate anything, is quite dubious. The small farmers and artisans get what is offered to them by the buying agent, as that is how the system works.

Again, nominal ownership of a cooperative is not important. All that matters really is who controls the cash flow. I don’t doubt the claim made that FLO is owned by the Producers (the holder groups, plantations and factories). These legal fiscal entities styled as “cooperatives”, or whatever, are set up and controlled by the foreign buyers. to provide a legal structure for tax-free commercial operations in the 3W country, also to shield themselves from legal responsibility for various benefits due to workers under the Constitution, when acknowledged as employees.

That FLO is owned by the “holder groups”, plantations and factories established in 3rdW agricultural communities is a claim that should be questioned, if these legal fiscal entities are purported to represent artisans and farmers.

With thanks to all for your forbearance and interest in this topic

from Tecalpulco Mexico

Martin

Tags: Ethical Jewelry, Fair Trade Jewelry, M. D. Manufacturing, Madison Dialogue, Manufacturing, Rad Transparency, Transparency, Trends by Marc Choyt
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Introduction:

This is an ongoing documentation of a series of dialogs between members of our Manufacturing Group, charged with the task of developing exceptional standards for jewelry manufacturing. Follow this link, http://www.fairjewelry.org/madison-dialogue-manufacturing-committee for full review of past discussions, including the entire principles and standards document.

The question of legality generated some discussion. In Part I, below, most of the concern was about language. In part II, to follow, some critical issues regarding the challenges of fair trade were more broadly discussed. ~Marc Choyt, Publisher

Below is a documentation of the dialogue for the 7th Principle, Legality.

Marc Choyt wrote:

Below, please find the 7th principle, Legality. Please comment if you feel it is in any way lacking. To me it seems quite straight forward.

Principle:

Companies and individuals will adhere to existing applicable laws and support the establishment of legal frameworks in sectors where they do not currently exist. They will comply with international conventions and national laws with regard to anti-money laundering, bribery and corruption.

Standards:

Minimum Requirements:
7.1: Companies agree to work within legal frameworks and comply with international conventions and national laws.
7.2: The fair made manufacturing company must pay all taxes, fees and royalties as applicable by law.

Melinda Nugent wrote:

Looks fine to me.

Patrick Schein wrote:

Coming back in the discussion after some traveling, I would like to make the following proposition on this 7th principle.
*7.1: *Companies agree to work within legal frameworks and comply with international conventions and national laws..

I think you cannot oblige a company to respect an international convention because conventions are made for states and not companies. Some states do not sign international treaties and this cannot be a reason to exclude its companies. For example, the US did not sign, unless recently, the Convention on the Rights of Persons with Disabilities (CRPD) which is in force and signed by 140 countries. Does than mean that all US companies can not be “fairmade” certified.

I agree that there are some international treaties or conventions that are very important for the initiative and thus should be mentioned separately. This is the case of the ILO convention that is mentioned in our social standards. I do not have the expertise on the legality issues to mention if there is a specific treaty we should enforce.

*7.2: * The fair made manufacturing company must pay all taxes, fees, royalties as applicable by law

There is no state royalty as in mining in manufacturing.

‘Companies and individuals will adhere to existing applicable laws and support the establishment of legal frameworks in sectors where they do not currently exist. They will comply with international conventions and national laws with regard to anti-money laundering, bribery and corruption.’

Same than for 7.1. A company can only comply to national laws. It is a country who adheres to international treaties and thereafter must adapt its national law to that treaty. Also, in money laundering, of what I know, there is no international treaties but only national ones which differs from one country to another. If you compare the US, Swiss, Dubai, I am sure you will find differences in their standards and all of those countries are quite active in jewelry. I would even propose to eliminate the whole phrase (red option) as whether it is money laundering or something else, we do require that the actors stick to their national laws.

Marc Choyt wrote:

Thank you for your suggestions, which I fully support. Does anyone else have additional comments?

Flavia Aarden-Kilger wrote:

I know very little about national laws and international conventions. I feel therefore that I should not comment on this particular principle and leave this section to the experts.

Hopefully there are more people within the group that have comments as it is their field and/or expertise.

Marc Choyt wrote:

Unless there are further suggestions, Patrick’s suggested revisions stand as our new principle and standard for Legality. Below is how it would read.
If there are no further suggestions, we will move on the 8th principle next week.

Principle:

Companies and individuals will adhere to existing applicable laws and support the establishment of legal frameworks in sectors where they do not currently exist. They will comply with national laws with regard to anti-money laundering, bribery and corruption.

Standards:

7.1: Companies agree to work within legal frameworks and comply with national laws.

7.2: The fair made manufacturing company must pay all taxes and fees, as applicable by law

Greg Valerio wrote:

I am happy with this, although company law in most countries will cover this anyway.

Stephen Metcalf wrote:

Would there be a marketing advantage if this FT designation would provide assurances that the manufacturing is free from money laundering, etc, in addition to the usual FT environmental and equity assurances?

Perhaps, but in practice, it would be very hard to convincingly demonstrate no corruption. Likewise, how can it be convincingly shown that Companies and individuals have adhered to existing applicable laws?

Patrick Schein wrote:

Stephen, thanks for your message.

1- Money Laundering: Yes it is an advantage but at the same level than respecting other laws like the social and environmental ones. By not specifying a law we do encompass all of them. If we specify one of them, we should specify all of them.

Also, fair trade includes 3 pillars which are: social, environment and economic. Money Laundering is included in the Economic pillar.

2- Demonstration to the consumer. Standards are designed to be verified. Once the standards are set, the certification agency draw what we call “compliance criterias”. Compliance Criteria are established to translate standard requirements and certification policies into verifiable control points that are evaluated in the certification process to determine compliance with the Standard. see:
http://www.flo-cert.net/flo-cert/main.php?id=60

The way to reassure the consumer is that a certifier audits the manufacturer according to the standards and their criteria and grant, or not grant the certification.

Hopes this helps.

Marc Choyt wrote:

Though I think Steve’s point is good, and had similar thoughts myself, I learn towards Patrick’s view. We can’t list all the laws. If there is an opportunity for additional documentation and commentary, however, would could mention the items specified as examples, but I think they are too specific for the actual standard which needs to cover everything.

So, I propose that the principle will read, as Patrick suggested:

Companies and individuals will adhere to existing applicable laws and support the establishment of legal frameworks where they do not currently exist.

Does anyone have additional ideas for comments? If not, we can move on to the next principle, perhaps later this week.

Tags: Ethical Jewelry, Fair Trade, Fair Trade Jewelry, M. D. Manufacturing, Madison Dialogue, Manufacturing, Rad Transparency, Transparency, Trends by Marc Choyt
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