Recommendation 19

HM Government · verbatim extract Accepted

The FCDO has worked closely with the Department for International Trade (DIT) to ensure that UK trade policy benefits developing countries, particularly those facing food insecurity and/or climate threats. FCDO will continue this work with the Department for Business and Trade (DBT) following its creation on 7 February 2023. A joint FCDO/DBT Trade and Development unit is responsible for ensuring development and global prosperity are reflected in UK trade and investment policy, and for shaping the UK’s future trade arrangements with developing countries. Through this unit, the FCDO plays a lead role in the development and implementation of market access arrangements for developing countries such as Economic Partnership Agreements (EPA) and the Developing Countries Trading Scheme (DCTS). These development-focused trading arrangements are designed to support developing countries to export to the UK, to diversify their economies and to grow and prosper. EPAs and the DCTS benefit developing countries that are impacted by food insecurity and climate threats. 33 African, Caribbean and Pacific countries have signed an EPA with the UK whilst 65 countries, including 46 Least Developed Countries, are eligible to trade under the DCTS. The FCDO has worked closely with the Department for International Trade to reflect development interests in our wider Free Trade Agreements (FTAs). As a result of this work, the FTAs with Australia and New Zealand have included dedicated development chapters which recognise the importance of trade as a tool for economic growth and poverty reduction. For example, the chapter in the Australia FTA provides that the UK and Australia may monitor the impacts of the agreement on developing countries. The FCDO has also worked closely with the Department for International Trade to ensure that the multilateral trading system works for all. Our mission to the World Trade Organisation continues to champion development, including by seeking the introduction of measures to include those most exposed to food insecurity and climate threats, into the global trading system. Recommendation 17: We recommend: 1) The FCDO must ensure that its focus on trade and investment, and the rising costs associated with Ukraine and Afghanistan, do not lead to further decreases in funding for poverty reduction programmes, such as health, nutrition, Water, Sanitation and Hygiene (WASH), education, social protection and graduation programmes. 2) The focus must be on the entrenched poor, alongside those who have more recently slipped into extreme poverty as a result of the pandemic and global economic crisis. We need a restoration of the 0.7% of GNI target for development spending in order to effectively support the poorest people. 3) The FCDO should use the multidimensional poverty index (MPI) to assess need and to direct funding accordingly. The International Development Strategy describes the role of trade in “help[ing] countries to grow their economies, raise incomes, create jobs and lift themselves out of poverty”. Alongside trade, the Strategy is clear about the UK’s continued support for other areas of work, including humanitarian, girls’ education and health, as part of our broader approach to poverty reduction and development. The Government is committed to spending 0.7% of GNI on ODA as soon as the fiscal situation allows. This commitment was re-emphasised at the Autumn Statement 2022. We are strengthening the governance of cross-government ODA, including a cross-government Ministerial body for ODA oversight co-chaired by the Minister for Development and the Chief Secretary to the Treasury. The FCDO uses a range of modelling and information sources to inform ODA funding decisions, including indicators on humanitarian need, the ability for a country to make effective use of aid and self-finance its own poverty reduction and reductions in the number of person poverty years (the number of poor people multiplied by the number of years they are expected to remain poor), in line with the IDS commitment to “channel the majority of our ODA towards low-income countries.