The UK’s International Development Strategy raises questions about trade for development plans, says Fairtrade

Opinion piece written by Tim Aldred, Head of Policy at the Fairtrade Foundation

Ever since the Foreign Secretary, Liz Truss, announced the new International Development Strategy (IDS) a few weeks ago, amongst a number of important issues, many have pointed to its focus on trade and economic development. What does Fairtrade make of it?

First of all, Fairtrade’s 1.9m farmers and workers earn their income through trade. Smallholder farmers do not run their farms as charities but as small businesses – but businesses where, if they don’t break even, it means they struggle to put food on the table. If UK Government policy can make Fairtrade a reality for more people, we welcome it. For example, you might well find Fairtrade calling for certain trade deals. When the UK left the European Union, we welcomed the ‘rollover’ deals which avoided new UK tariffs being placed on our farmers’ produce.

But being able to trade something is not the same as being able to earn a decent living from trade. Shockingly, cocoa farmers in West Africa supplying the UK might earn as little as 75 pence per day. And, for too many plantation workers, wages and human rights at work are far from fair, as they work backbreaking hours for poverty wages.

This is not just a bad deal for farmers, it’s bad news for UK shoppers. We’ve become all too aware that global crises can hit the price and availability of groceries at home. Recent research shows that all Fairtrade crops are severely threatened by extreme weather, such as drought and flooding, because of the climate crisis. Paying fair prices is about addressing poverty, but it is also about our own food security. Farmers are seeing the weather change in front of their eyes, and need to be able to take action right now.

So we’re not interested in any old trade. We’re interested in fair trade – trade which builds up incomes for farmers, offers a real route out of poverty, and helps us all prepare for the future. And, while the IDS says a lot about encouraging trade with lower- and middle-income countries, it says much less about how the Government will make sure that trade leads to decent jobs, living incomes and sustainable development. A reference to building “sustainable and resilient global supply chains that benefit all” is welcome – but it would be great to understand what this will look like by way of policy (and of course, funding and action).

What is very clear is that much of UK Aid will be going to what are often called “macro-economic” interventions. There’s investment in high level infrastructure, and especially in the provision of investment finance through British International Investment (BII). BII is, in effect, a UK Government owned bank. It makes investment decisions based on its direction from Government. Again, when you look closely, it isn’t yet clear how the Government will make sure that the poorest people in the trading system will see the benefit of BII finance.

In any discussion of trade and development there’s one thing which must be crystal clear – and that’s the need to avoid “tied aid”. Tied aid is a notorious practice where aid finance is “given” in return for purchasing goods or services from the UK: it’s been rightly prohibited for decades. In an International Development Committee hearing on the IDS, the Foreign Secretary was asked directly whether a return to tied aid was envisaged – and gave a similarly direct reply that it remains firmly ruled out. Good to have that on the record, but the fact that the IDC needed clarification shows that the strategy does not make this sufficiently clear.

The IDS leaves us with lots of questions about the Government’s trade for development strategy. At Fairtrade we’re keen to back plans that help the people growing the food and other products we consume to get a fairer deal. Smart use of UK aid can help turn exploitative supply chains into ones which reduce poverty and help the transition to a low carbon, sustainable future – Fairtrade has run programmes like this before with the FCDO, with great success.

But the IDS doesn’t explain well enough how the high level economic measures it proposes will deliver these kinds of outcomes. It isn’t clear enough that the test of economic development initiatives will be the benefit received by the poorest people. Neither do we know whether or how poorer farmers and workers supplying the UK will be able to access UK trade for development finance. The IDS looks well-designed to deliver trade. But we’re unconvinced that it is well-designed to deliver development.