PRELIMINARY FINDINGS AND INTRODUCTION TO THE CASE STUDY OF ETHIOPIA Stakeholder Outreach Workshop Addis Ababa, Ethiopia Tuesday March 7, 2017 and executed by DEVELOPMENT Solutions. Any views expressed are those of the consultant and do not represent an official view of the Mid-term Evaluation European of the EU Union GSP
Content Case study approach Trade between Ethiopia and the EU Impact of the EU s EBA The economy in Ethiopia Social rights in Ethiopia The environment in Ethiopia Human rights in Ethiopia Conclusions and next steps
Case study approach Quantitative and qualitative assessment of main indicators on: Economic impact in particular on economic development Social impact in particular on poverty reduction and distribution of gains Environmental impact Human rights impact Unintended consequences of the EBA Stakeholder input and contributions National workshop in Ethiopia Interviews and meetings Stakeholder questionnaire
Analytical questions What is the economic, social and environmental impact of EBA? What is the impact of EBA on economic development? What is the impact of EBA on poverty reduction? What is the impact of EBA on the distribution of gains? Are there any unintended consequences of EBA?
Millions of EUR Ethiopia-EU trade Trade preferences under the Lomé Conventions (Lomé I to Lomé IV) since 1975 and EBA beneficiary since 2001 Sixth largest beneficiary of the EU s EBA 1.5% of all EBA exports to the EU EU is the main export destination for Ethiopian exports 24.2% of total exports in 2015 1,200 40% Main export products: Flowers Coffee Apparel Mushroom spawn Edible vegetables Leather Parts of electronic motors 1,000 35% 30% 800 25% 600 20% 400 15% 10% 200 5% 0 0% 2011 2012 2013 2014 2015 Ethiopia's total exports to EU Share in Ethiopia's total exports Source: ITC TradeMap
Ethiopia-EU trade Increase in EBA exports to the EU in terms of value and as percentage of total exports to the EU 2015 36% 64% 2014 43% 57% 2013 41% 59% 2012 33% 67% 2011 29% 71% 2010 30% 70% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% EBA exports Non-EBA exports Source: EuroStat
Millions of EUR Ethiopia-EU trade Relatively low export diversification focus on agricultural products Agricultural products represent more than 87% of Ethiopian exports to EU Top 10 exports account for 92.5% of all exports to EU 500 450 400 350 300 250 200 150 100 50 0 2011 2012 2013 2014 2015 Flowers Coffee Mushroom spawn Edible vegetables Source: ITC TradeMap
Millions of EUR Ethiopia-EU trade Non-agricultural products apparel, leather, parts of electronic motors 60 Apparel exports to the EU more than doubled since 2011 Steep increase in the exports of parts of electronic motors to the EU in 2015 Exports of leather to the EU halved in value 50 40 Apparel 30 Leather 20 Parts of electronic motors 10 0 2011 2012 2013 2014 2015 Source: ITC TradeMap
100.00% EBA utilisation rate 90.00% 80.00% 70.00% 60.00% Change in Rules of Origin 50.00% 40.00% Revised GSP scheme 30.00% 20.00% 10.00% 0.00% 2010 2011 2012 2013 2014 2015 Mushroom spawn Flowers Edible vegetables Apparel Leather Coffee Parts of electronic motors General utilisation rate Source: EuroStat
Competition with other beneficiaries Competition from Standard GSP beneficiaries Kenya and Vietnam Duty reduction on coffee and flower exports EU-Vietnam Free Trade Agreement will allow duty-free exports of certain coffee products Competition from EBA beneficiaries Uganda and Zambia Duty-free access for coffee and flower exports Change in market share in flower exports to the EU 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% 2012 2013 2014 2015 Change in market share in coffee exports to the EU 60% 50% 40% 30% 20% 10% 0% -10% 2012 2013 2014 2015-20% -30% -40% Kenya Ethiopia Vietnam Ethiopia Kenya Uganda Source: ITC TradeMap
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GDP in million USD ($) GDP growth in % Economy in Ethiopia Rapid economic growth over the past decade Average GDP growth at 10.6% per year Projected economic growth at 7% per year until 2025 Growth and Transformation Plan (GTP) II for 2015/16-2019/20 Become a lower middle-income country by 2025 Real GDP growth at 11% per year 70,000 14 60,000 12 50,000 10 40,000 8 30,000 6 20,000 4 10,000 2 0 0 GDP Source: World Bank GDP growth
Economy in Ethiopia Agriculture main contributor to GDP growth 41% value added in 2015 80% of the labour force employed in agriculture Growth and Transformation Plan (GTP) II Rapid industrialisation and structural transformation Top priority given to the manufacturing sector 13% 16% 2005 2015 42% Value added as % of GDP 43% Industry 45% 41% Agriculture Services Source: World Bank
Social rights in Ethiopia Improved access and quality of education Increasing enrolment in primary education: from 40.1% in 2000 to 85.8% in 2014 Enrolment in secondary education remains low: 12.5% of adult population with secondary education Main challenges: poor attainment of basic skills, high student to teacher ratio, poverty, early marriage, disability, lack of transport and accommodation near schools Improved preventive, promotive and curative health services Focus on improving access and quality for rural communities Decreasing availability of generic medicine in public and private sector Decreasing prices of generic medicine in public and private sector compared to international reference prices Main challenges: poverty, remote access, low literacy, unreliable medicine supply system and uneven distribution of health professionals
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 In thousands Labour rights in Ethiopia Labour is one of the main production factors in Ethiopia The labour force has expanded rapidly from 29 million in 2000 to 47 million in 2014 Government efforts to tackle child labour resulted in a significant reduction 27% of children between 7 and 14 years old remain employed Main challenges: non-compulsory secondary education, poverty, limited access to education Low trade union membership Discrimination against unionised workers 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Source: World Bank
Environment in Ethiopia Deforestation is the main environmental challenge Annual deforestation of 1.1% As a result of scarcity of fuel and arable land Affects biodiversity and leads to soil erosion High vulnerability and low readiness regarding climate change High awareness of climate change and the urgency to tackle the challenges ahead Increasing CO 2 emissions as a result of rapid population and economic growth CO 2 emissions per capita increased by 75% between 2002 and 2013 Total CO 2 emissions increased by 135% between 2002 and 2013
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Environmental impact of agriculture Intensive agriculture and overgrazing has resulted in land degradation Coffee production has both positive and negative environmental effects Plantation coffee makes use of chemical fertilisers and leads to deforestation and soil erosion Forest grown coffee prevents topsoil erosion, eliminates the use of chemical fertilisers and stimulates biodiversity Horticulture and floriculture has a negative impact on water, soil and air quality as a result of pesticides and fertilisers Better management of waste materials and waste water would limit the sector s impact 30 25 20 15 10 5 0 Fertiliser consumption (kg per hectare of arable land) Source: World Bank
Human rights in Ethiopia EU can withdraw trade preferences in case of serious and systematic violation of the principles laid down in the core UN and ILO conventions Since October 2016 a state of emergency in the country Reported restrictions on the freedom of assembly and the freedom of expression Reported cases of land grabbing and forced evictions in Oromia and Addis Ababa Reported cases of restrictions on freedom of association Especially concerning civil society organisations working on human rights, governance, conflict resolution and rights of women, children and people with disabilities Foreign funding to these organisations is restricted to 10%
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