Short to establish code of conduct for ethical trading

The Government hopes to use consumer pressure to persuade businesses of the merits of ethical trade with the Third World.

Clare Short, Secretary of State for International Development, will today announce government support for an initiative to develop a code of business conduct for trading with the world's poorest countries.

Some of the country's biggest retailers, including Sainsbury's, Safeway, C&A, Littlewoods and the Co-operative Wholesale Society, have already started to introduce "ethical trading" codes. Under the Government's new initiative, they will help develop a benchmark set of voluntary rules covering the pay and conditions under which the goods retailers import from developing countries are made.

Ms Short hopes that consumer pressure on ethical trade will build up in a parallel to the green consumer movement. In her speech at the Institute of Directors today she will say: "The ethical movements are growing instruments of change and development. Consumers are increasingly using their power."

The Government's new initiative follows a decision by retail group Burton last week to cease importing clothes from suppliers in Burma. Its announcement came after The Independent and the BBC's Newsnight exposed working conditions there

Ms Short will announce that the Government is to take a more active role in encouraging ethical trade. It will provide seed money for other businesses and charities such as Oxfam and Christian Aid to develop a code of conduct.

A spokesman for Safeway said: "We will work with government departments and other organisations to try and get an agreed approach. Fair trading standards will only work if they are industry-wide."

A spokesman for Christian Aid said: "It is time for ethical business to come out of the ghetto and into the mainstream. It is no longer good enough to have just a few ethically-traded products."

In her speech, Ms Short will say: "My hope is that we can increasingly work together toward a shared sense of purpose in eliminating poverty from the globe." She will stress the importance of a partnership between the Government, businesses and consumer and pressure groups.

The role of business is crucial, Ms Short will say, because private trade and investment dwarf official aid flows in scale. Trade flows between the UK and less developed countries amounted to nearly a hundred times the size of the official aid programme, and UK investment in less developed countries amounts to more than that from France, Germany and Italy combined.

The Government's stress on voluntary measures to press for better pay and conditions in poor countries will be less controversial than separate moves to write minimum labour standards into international trade agreements.

Although the unions and many aid organisations favour blocking imports made in what they consider to be exploitative conditions, many developing country governments see this as plain trade protectionism.

The moral pound - a history of consumer boycotts

Chile: Human-rights abuses by General Pinochet's right-wing government in Santiago sparked off a boycott of Chilean wine.Though Pinochet was finally voted out in 1988, he is still in charge of the country's armed forces.

South Africa: Throughout the Eighties, the British middle-classes spurned wine and fruit while Margaret Thatcher, the then Prime Minister, was still calling the ANC terrorists. After Nelson Mandela's release from prison, South African wine sales shot up.

Romania: In January, Amnesty International called on consumers not to buy Romanian wine as the country still has the most draconian anti-gay laws in Europe. Gays still face long jail terms even seven years after the fall of Ceaucescu

France: After the outrage at France's nuclear-tests on Muroroa Atoll in the Pacific Ocean 18 months ago, which led to an environmentalist-led boycott of French wines, President Chirac promised that he would henceforth comply with the nuclear test ban treaty.