Amber/red rating for UK Government’s ‘aid for trade’ approach: Fairtrade Foundation response

The Fairtrade Foundation has expressed concern at the results of a review by the Independent Commission for Aid Impact (ICAI), which has measured the effectiveness of the UK’s ‘aid for trade’ approach in low-income countries.

Published on 6 June, ICAI’s review assesses how well the UK’s aid for trade interventions (funded through overseas development assistance) has supported low-income countries to expand their trade, and contribute to economic growth and poverty reduction, since 2015.

Giving the UK Government an Amber/Red rating overall, ICAI concludes that: ‘The UK is not doing enough to ensure that its aid for trade interventions benefit the poor, and the increased focus on short-term UK interests poses risks to the quality of programming that are not being sufficiently managed.’

Responding, Michael Gidney, CEO of the Fairtrade Foundation said: “Since the Government approved cuts to the UK’s aid budget, it has become more vital than ever that our overseas aid is spent well and is directed at those who most need it. This amber/red rating from ICAI is therefore extremely worrying, although not a complete surprise.

“Aid for trade has, so far, placed too much focus on macro-economic theory while ignoring the human reality of doing business. The international trade system is already heavily stacked in favour of the richest and most powerful. That’s why, in order to drive real impact, aid for trade needs to focus on the people behind the products, rather than dehumanising them by focusing narrowly on commodities not communities.”

Mr Gidney continued: “Fairtrade has stood shoulder-to-shoulder with farmers and agricultural workers in low-income countries through the Covid-19 pandemic, and now through the climate emergency and global cost of living crisis. As a result, we know that the right kind of support for low-income nations is the sort which helps communities build resilience to shocks and enables the benefits of trade to spread more widely.

“We fully support ICAI’s call for the UK’s aid for trade interventions to focus relentlessly on ensuring that small businesses, smallholder farmers and workers reap some of the value of a higher volume of international trade. It can be done – Fairtrade farmers and workers themselves have benefited from this kind of aid in the past. It is time for the Government to refocus and help some of the most marginalised communities to thrive. Not only is it the right thing to do, but it will also help to ensure a more sustainable and resilient flow of goods and food exports into the UK.”

The ICAI report notes that “the recent aid budget reductions have threatened the effectiveness of UK aid for trade”. However, the report highlights areas of strengths to the Government’s approach. These, it says, include “delivering significant reductions in the time to trade across borders and contributing to increases in trade, although who benefits is less clear”.