Report of the Stakeholder Outreach Workshop on the Mid-Term Evaluation of the EU s Generalised Scheme of Preferences (GSP) in Addis Ababa, Ethiopia

Transcription

1 Report of the Stakeholder Outreach Workshop on the Mid-Term Evaluation of the EU s Generalised Scheme of Preferences (GSP) in Addis Ababa, Ethiopia Capital Hotel and Spa, Addis Ababa, Ethiopia 7 March 2017, 08:30-17:30 Objectives of the workshop The Project Team organised a one-day Stakeholder Outreach Workshop on the EU s Generalised Scheme of Preferences (GSP) in Addis Ababa, Ethiopia on 7 March The workshop gathered 64 stakeholders from the national government, business organisations, academia, think tanks, international organisations and civil society organisations in Ethiopia. The objective of the workshop was to disseminate information about the EU s GSP, particularly the Everything but Arms arrangement (EBA); to discuss the preliminary findings on the economic, social, environmental and human rights impact of the EBA on Ethiopia; and to gather stakeholder views on the impact and the application of the EBA in Ethiopia. In the afternoon, two breakout sessions on the Social and Human Rights Impact of the EBA and the Environmental Impact of the EBA were organised to facilitate in-depth discussion with and between stakeholders. Main points of discussion Opening session 09:00-09:30 Opening remarks - H.E. Dr. Bekele Bulado, Minister of Trade of Ethiopia - H.E. Ms. Chantal Hebberecht, Ambassador, Delegation of the European Union to Ethiopia - Mr. Nikolaos Zaimis, Advisor, Directorate-General for Trade of the European Commission 09:30-09:45 The EU s GSP and Everything but Arms (EBA): Explaining the GSP Regulation - Ms. Shui-Beam Lam, Policy Officer, Directorate-General for Trade of the European Commission Opening remarks H.E. Dr. Bekele Bulado, Minister of Trade of Ethiopia The EU is an important development, economic and political partner for Ethiopia. Since the first Lomé Convention in 1975, the scope and coverage of the cooperation between the two countries have expanded. Ethiopia now receives duty-free and quota-free access for all products, except arms and ammunition, to the EU market under the EBA. The scheme has had a positive impact on economic growth and job creation in Ethiopia. The EU is both the main destination for Ethiopian products as well as the main source of merchandise imports. However, the EU s importance as trade partner has been declining because destinations such as China, the Middle-East, North-America and other African countries are becoming increasingly important for Ethiopian exports. The obstacles for full utilisation of the EBA are Technical Barriers to Trade (TBTs), Rules of Origin (RoO) and other supply-side constraints. Furthermore, there are concerns over decreasing tariff margins due to multilateral and bilateral agreements. This will have significant implications for the effectiveness of the arrangement in the future.

2 Opening remarks H.E. Ms. Chantal Hebberecht, Ambassador and Head of the Delegation of the European Union to Ethiopia Trade has been at the heart of the EU s international relations with the rest of the world. Since 1971, it has helped countries to develop and create additional revenue. The 2014 reform of the GSP can be considered in this context, because it further aims to reduce the competitive pressures for Least Developed Countries (LDCs) and support poverty reduction, sustainable development and good governance. With respect to Ethiopia, the utilisation rate and trade flows covered by the EBA have continuously increased. The scheme can be considered a vehicle for enhancing Ethiopia s integration into the global economy and thereby contributes to Ethiopia s objective to become a middle-income country by 2025 as stipulated in the Second Growth and Transformation Plan (GTP II). In addition to the EBA, the EU supports Ethiopia s development through various programmes, including on transformation and trade enhancement and to boost trade, trade facilitation and the Government s ability to support trade. In this respect, the Government of Ethiopia is a crucial partner for the EU. Furthermore, the EU Business Forum plays an important role in encouraging a constructive dialogue with the Government to improve the business environment. Opening remarks Mr. Nikolaos Zaimis, Advisor, Directorate-General for Trade of the European Commission The EBA should be considered as part of the wider scheme of unilateral trade preferences, the GSP. The scheme is constructed around the idea that trade should have a positive impact on growth and development in the countries benefitting from it. As a result, it has become a priority for trade preferences to support sustainable development. When Ethiopia graduates from the LDC category and becomes a middle-income country, it would no longer be eligible for preferences under the EBA. Other options for trade preferences would then become available, such as the GSP+, which offers duty suspension for a selected number of tariff lines. This arrangement would additionally require compliance with international conventions on human rights, labour rights, environmental protection and good governance as well as cooperation in the monitoring process. The EU s GSP and Everything but Arms (EBA): Explaining the GSP Regulation Ms. Shui-Beam Lam, Policy Officer, Directorate-General for Trade of the European Commission The objectives of the EU s GSP are two-fold: to contribute to poverty eradication and to promote sustainable development and good governance. The scheme has been in place since 1971 and has been reformed various times. The 2014 reform aimed to better focus on countries most in need and reduced the number of beneficiaries to decrease competition. Additionally, it improved the procedural transparency and ease-of-use to create stability and predictability for economic operators. The current GSP offers three arrangements: Standard GSP, which offers tariff reductions for approximately 66 per cent of the tariff lines; GSP+ for vulnerable and developing countries, which offers complete duty suspension for approximately 66 per cent of the tariff lines. The arrangement is conditional to the ratification and implementation of international conventions on

3 human rights, labour rights, environment and good governance and cooperation on monitoring. EBA for LDCs, which offers duty-free and quota-free access to the EU market for all products, except arms and ammunition. Morning session I 09:45-10:00 The GSP Mid-Term Evaluation: Objectives and Methodology - Dr. Willem van der Geest, Team Leader, GSP Mid-Term Evaluation 10:00-10:30 The EBA: Ethiopia s Perspective - Mr. Yishak Tekaligne Taye, Director, Bilateral and Regional Trade Relation and Negotiation, Ministry of Trade of Ethiopia 10:30-10:45 Discussion and feedback The GSP Mid-Term Evaluation: Objectives and Methodology Dr. Willem van der Geest, Team Leader, GSP Mid-Term Evaluation The Mid-Term Evaluation of the EU s GSP will support the European Commission Report to the European Parliament and the Council of 21 November The Project Team will conduct quantitative and qualitative analysis on the functioning of the GSP Regulation and the scheme s economic, social, human rights and environmental impact. In-depth focus will be placed on six case studies on the EBA (Bangladesh and Ethiopia), GSP+ (Pakistan and Bolivia) and key sectors (textile and machinery). Key questions that the study seeks to address include: To what extent are the objectives of the GSP on track to be achieved? What has been the impact of the GSP on developing countries? What unintended consequences can be observed? To what extent is the current GSP efficient? To what extent is the current GSP coherent with other EU policies? To what extent is the current GSP relevant to the development needs which it is intended to address? The data and economic analysis will be based on previous studies, using updated trade and tariff data. It will capture the preference utilisation rates, export diversification and real income indicators, among others. The social, human rights and environmental analysis will cover indicators such as good governance, poverty reduction, women equity and climate change, among others. The Project Team will additionally rely on extensive stakeholder consultation via workshops, interviews/meetings, Online Public Consultation, Civil Society Dialogues, social media and website interaction. The EBA: Ethiopia s Perspective Mr. Yishak Tekaligne Taye, Director Bilateral and Regional Trade Relation and Negotiation, Ministry of Trade of Ethiopia Ethiopia has pursued an export-led strategy since 1992, supported by various strategies, national development plans and reforms. Over the past decade, its export of goods has increased six-fold. While exports remain dominated by primary agricultural commodities (86.3 per cent), there has been a shift from traditional mono-crops to high-value agricultural products and manufactured products, including leather and textile. This is reinforced by GTP II which aims for Ethiopia to become a lower-middle income country by 2025 and focuses on the manufacturing sector and high-value agricultural export products. GTP II further sets a target to annually expand exports by 36 per cent. Ethiopia benefits from EBA since 2001 and mainly exports agricultural products - primarily coffee and flowers (78 per cent) - to the EU. In this respect, Ethiopia has yet to realise the full potential of the preferential market access beyond agricultural products. Between 2001 and 2011, exports to the EU increased consistently, but since 2012 this

4 trend has declined. While the EU remains the main destination for Ethiopian exports, the country increasingly exports to other partners due to new market opportunities and trade preferences under similar systems, such as the US African Growth and Opportunity Act (AGOA). Supply side obstacles (limited production capacity, low diversification, low industrial development), logistical barriers, weak linkages in the value-chain, weak global competitiveness and a low level of technology transfer and market linkage create obstacles to Ethiopia s full realisation of the EBA s potential. From the EBA s perspective, challenges are presented by stringent RoO, costs of compliance, high standards and sanitary and phytosanitary (SPS) requirements. Additionally, preference margins are decreasing, Ethiopia faces increased competition from Latin America and Asia and the prices for agricultural products are highly volatile. To fully realise the scheme s potential, Ethiopia needs to address supply-side constraints, improve production and productivity in the agricultural sector and become a manufacturing hub in the region. There is an overall need to enhance institutional and human capacity, strengthen public-private partnerships, promote exports, improve the investment climate and create competitive trade-related infrastructure. The EU would need to address preference erosion and RoO. Another concern for Ethiopia is Brexit and the implications for preferential market access to the United Kingdom, one of its main trading partners. Discussion and feedback The discussion touched upon target setting in EU-Africa relations. While on one hand it was considered to potentially improve the effectiveness of the scheme; on the other hand it was deemed more suitable in the context of bilateral relations as the uptake and conditionality is particularly difficult in an unilateral scheme. It was furthermore argued that RoO are necessary and include provisions on added value. To increase the simplicity of RoO, they have been revised in The general message was that there is still room for improvement in this respect. Lastly, the discussion mentioned the potential impact of Brexit on the scheme and the beneficiary countries. Because the United Kingdom is still considering its options, it is too early to comment on the potential effect. However, the United Kingdom is considering a similar approach to the GSP in its future relations with developing countries. Morning session II 11:00-11:30 EBA: Preliminary Findings and Introduction to the Case Study of Ethiopia - Dr. Willem van der Geest, Team Leader, GSP Mid-Term Evaluation 11:30-12:15 Discussion and feedback - Dr. Mulu Gebreeyesus, Senior Researcher, Ethiopian Development Research Institute (EDRI) 12:15-12:45 The Development Impact of EBA on Ethiopia - Mr. James Wakiaga, Senior Economist, United Nations Development Programme (UNDP) 12:45-13:00 Discussion and feedback EBA: Preliminary Findings and Introduction to the Case Study of Ethiopia Dr. Willem van der Geest, Team Leader, GSP Mid-Term Evaluation The approach to the Ethiopia case study is two-fold. Firstly, the Project Team will undertake a quantitative and qualitative assessment of main indicators on the economic, social, human rights and environmental impact. Secondly, the Project Team will

5 incorporate stakeholder input and contributions from workshops, interviews, meetings and the Online Public Consultation. Ethiopia is the sixth largest beneficiary of the EU s EBA and is increasingly exporting under the arrangement. The utilisation rate is more than 90 per cent for the main export products, except coffee, which fluctuates around 75 per cent. There is a relatively low export diversification, as the vast majority of the exports are agricultural products, i.e. flowers, coffee and edible vegetables. However, recent years have seen an increase in the export of non-agricultural products such as apparel and parts of electronic motors. Ethiopia has experienced rapid economic growth over the past decade at 10.6 per cent per year. This can mainly be attributed to the agricultural sector, which provided 41 per cent of the added value. However, a trend towards a stronger manufacturing sector can be observed in line with GTP II. Social progress can be observed in the access and quality of education and preventive, promotive and curative health services. Additionally, the labour force has increased rapidly between 2000 and However, some issues remain concerning child labour and discrimination against unionised workers. Environmental challenges for Ethiopia concern deforestation as a result of fuel and arable land scarcity and increasing CO2 emissions. In particular, intensive agriculture and overgrazing can be linked to land degradation. Coffee plantations have a significant impact on deforestation and water and soil pollution as a result of chemical fertilisers. Lastly, the horticulture and floriculture have a negative impact on water, soil and air quality as a result of pesticides, fertilisers and insufficient waste management. Regarding human rights, there have been reported restrictions of freedom of assembly and the freedom of expression, for example civil society organisations are restricted in their access to foreign funding. Additionally, there have been reported cases of land grabbing and forced evictions as a result of expanding cities and plantations. Discussion and feedback Dr. Mulu Gebreeyesus, Senior Researcher, Ethiopian Development Research Institute The EBA has not supported export diversification and Ethiopian exports remain mainly focused on agricultural products. This is the result of strict RoO, high EU standards, increased competition from other regions and preference erosion as a result of an increasing number of bilateral and multilateral trade agreements. Three major issues hinder export growth and diversification in Ethiopia. First of all, Ethiopia applies high import tariffs, which generate higher prices at the domestic market. This creates an incentive to sell at the domestic market and a disincentive to export. Import substitution in specific sectors, i.e. protecting an industry by an export ban or additional tariffs, and export promotion in the same sectors can therefore not be achieved simultaneously. This is particularly a problem for the textile and leather industry, which are considered export-oriented sectors, but which mainly sell at the domestic market. Secondly, exports are hampered by non-tariff trade barriers. This includes high transport costs and slow shipping and border clearance, which creates a disincentive for doing business in Ethiopia. Thirdly, the overvaluation of the domestic currency has led to a declining purchasing power. As a result, overall exports have declined. By addressing the incoherence between import substitution and export promotion policies and by tackling non-tariff trade barriers, the competitiveness of the country can be improved. Additionally, an adequate exchange rate policy could boost exports from Ethiopia.

6 The intervention was followed by a discussion with the participants. The discussions further elaborated on the Ethiopian tariff structures and import substitution policies. While on one hand it was agreed that these restrict the economic performance of the country, on the other hand this statement was contested. Firstly, tariffs on unfinished products are lower than on finished goods. Secondly, there are other incentives to promote export, i.e. duty-free import privileges for investors engaged in export-oriented industries. Young industries need to be protected by these policies to be able to develop. The import substitution and export promotion policies should be revisited to create sector-based policies. For example, tariffs affect competitiveness, technology transfer and knowledge transfer, and are therefore particularly beneficial for highly technological and manufacturing-intensive products. The same policy instrument is often applied for different sectors, while the needs of the sectors are different. The discussion highlighted the importance of AGOA for Ethiopia. AGOA entered into force in 2000, after which exports from various African countries significantly increased. However, when Multi-Fiber Arrangement (MFA) quotas on US imports of textiles were removed, exports decreased again. The removal of quotas had led to increased competition from developing countries in Southeast Asia and Africa. Due to the possibility of third country accumulation, AGOA is the preferred system in the textile industry. However, most African countries are not in a better position to export to the EU than Southeast Asian countries such as Bangladesh. Lastly, it was mentioned that the capacity to export is more important than actual market access conditions. For big markets such as the EU is it important that producers can provide a steady and bulk supply of goods. The Development Impact of EBA on Ethiopia Mr. James Wakiaga, Senior Economist, United Nations Development Programme Ethiopia has experienced a rapid growth in the volume and value of exports over the past decade, which supported the country s high economic growth. Since 2009/2010, exports have been declining in value and as a share of the Gross Domestic Product (GDP). Prices for primary and low-quality products have dropped extensively in the past years, which has affected exports. However, there is a trend towards increased export diversification and the share of industrial products increased to 30 per cent in This development is supported by the Government s efforts to promote export-led economic development, including high value-added production, agro-allied industrialisation and a strong manufacturing sector. International trade supports the implementation of the United Nations (UN) 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda, whose goals include to increase aid for trade support to developing countries and trade-related technical assistance to LDCs as well as to double the LDCs share of global exports by Increased exports and a high economic growth have had a positive impact on Ethiopia. All except 2 UN Millennium Development Goals (MDG) have been achieved by The EBA has had a positive impact on Ethiopia by increasing trade flows between the EU and Ethiopia. As such, it has supported a decrease in the poverty rate by 15.3 percentage points in the past decade. Furthermore, in over a decade the life expectancy at birth increased by 12.2 years and years of schooling increased by 4.2 years. Additionally, it has led to an increase in the Human Development Index. Risks to these positive developments are presented by severe droughts, the youth bulge and lacking citizenry engagement.

7 To fully benefit from the EBA s potential and positive impact on the country s sustainable development, it is essential to improve the competitiveness of Ethiopian exports and avoid commodity dependence to increase its value addition. Furthermore, bottlenecks such as supply side constraints, trade logistics, trade facilitation and ease of doing business need to be addressed. Lastly, it will be critical to mitigate risks to Ethiopia s transformation agenda. Discussion and feedback The discussion expanded on themes and issues identified during the preceding presentations and drew inputs from diverse stakeholders representing academia, civil society, public administration and business. The discussion touched upon inclusive growth. The score of Ethiopia on the Gini coefficient has increased over the years. When economies grow, inequality becomes an important topic and governments will put in place redistributive policies and tools. However, certain segments of the Ethiopian population have yet to fully benefit from the rapid growth. The discussion further touched upon trade as a tool to promote human rights. While the primary responsibility for human rights lays with the state, businesses can promote human rights through corporate social responsibility. Policy should encourage this approach. Regarding the Mid-Term Evaluation, it was highlighted that it is essential to keep the balance between the economic, social and environmental aspects of the EBA and to build on the information provided by stakeholders during the workshop. Breakout Session I: The Social and Human Rights Impact of EBA 14:30-15:00 The Social and Human Rights Impact of EBA on Ethiopia - Mr. Tadele Derseh, Executive Director, Vision Ethiopian Congress for Democracy (VECOD) 15:00-16:00 Discussion and feedback The Social and Human Rights Impact of EBA on Ethiopia Mr. Tadele Derseh, Executive Director, Vision Ethiopian Congress for Democracy Civil society has an important role to play by fostering the human rights culture, invigorating the state commitment to human rights values, promoting new social values, mobilising people on issues of public interest, generating new public policy ideas and acting as a catalyst for social change. With regards to improving public accountability and fighting corruption, civil society can act as a watchdog, raise public awareness, propose alternatives and ensure civil participation in policy making. These roles were mandated by the UN Covenant on Civil and Political Rights and the UN Covenant on Economic, Social and Cultural Rights. One of the main challenges faced by Ethiopian civil society organisations (CSOs) relates to the limits imposed on foreign funding. The Civil Society Law CSP No. 621/2009 limits international funding for CSOs undertaking human rights activities to a maximum of 10 per cent of their administrative funding. Propositions have been made to amend the law to increase this percentage to e.g. 30 or 50 per cent and to make a clear separation between administrative costs and programme costs. Presently, most of the programme costs are included as administrative costs, which severely hampers the scope for the operations of CSOs. It is especially challenging for organisations to raise 90 per cent of their funding locally due to the lack of donation culture. The law furthermore prohibits

8 human rights activities by foreign NGOs, including on equality, children s rights, disabled persons rights and conflict resolution. For CSOs to be able to perform their role in society, it is therefore important that the Civil Society Law is reviewed and amended. Additionally, the Government should engage all policy actors, including civil society organisations, in an on-going dialogue and involve them in the policy-making process for any public policy. There should be more opportunities for partnership and collaboration between the Government and CSOs. Lastly, the Government should promote the donation culture by positively presenting civil society through their official communication channels. Discussion and feedback The discussion expanded on the social and human rights impact and drew inputs from diverse stakeholders from the Ethiopian government, the Office of the High Commissioner for Human Rights, the Addis Ababa University Centre for Human Rights and a trade union federation. A focal point of the discussion centered on the issue of land grabbing. Non-Governmental Organisations (NGOs) have reported several instances of land grabbing, specifically affecting the original inhabitants of communal land. The instances of land grabbing include situations where no prior consultation was conducted or where no adequate compensation was paid to the inhabitants. Cases of land alienation are sometimes linked to foreign direct investment (FDI) entering the country, but is often not sector-specific. To address this issue, it is important for business organisations to contribute to the promotion of human rights through a corporate social responsibility agenda. Breakout Session II: The Environmental Impact of EBA 14:30-15:00 The Environmental Impact of EBA on Ethiopia - Dr. Wubalem Tadesse Wondifraw, Director General, Ethiopian Environment and Forest Research Institute (EEFRI) 15:00-16:00 Discussion and feedback The Environmental Impact of EBA on Ethiopia Dr. Wubalem Tadesse Wondifraw, Director General, Ethiopian Environment and Forest Research Institute Ethiopia has experienced rapid population growth and a concurrent intensification of economic activity that has created increasing pressure on domestic environmental resources. The extent to which these trends have coincided with environmental degradation is most pronounced in Ethiopia s forested areas. Ethiopia is endowed with diverse ecosystems consisting of wide varieties of flora, fauna and microbial resources. However, deforestation is cited as a major challenge to the environmental sustainability of Ethiopia s development. The rate of deforestation is calculated to be in excess of 100,000 hectares per year. Net losses in forested surface area were recorded in 3 out of 4 of Ethiopia s primary biome classifications, with most severe losses in the northwestern, western and south-western parts of the country (Tigray, Gondor, Benishangul Gumuz, Gambella, Bench Maji, Gamo Gofa and Sidamo). While the overall forested surface area is reduced, biodiversity is also decreasing as many cultivators increasingly plant non-native species such as Eucalyptus, which is fast growing. Native species - such as Frankincense, which has been a mainstay in domestic production for more than 2,000 years - are now endangered. Despite this, the Ethiopian economy remains heavily reliant on imported industrial wood products; as domestic production has decreased, Ethiopia s import bill for industrial wood products rose to EUR million in 2015.

9 Additional environmental challenges include rapid siltation of lakes and dams, soil degradation and erosion (linked to deforestation) and high rates of urban pollution. These challenges are compounded by relative lack of greening initiatives and coordinated policy planning. The Government of Ethiopia is observed however to be increasingly active at both the federal and regional levels in addressing environmental sustainability through strategies including establishment of the Ministry of Environment, Forest and Climate Change (2013) and creation of a national network of research capabilities under the Environment and Forest Research Institute (2014). In view of the challenges, it is concluded that there is nonetheless good potential to expand the uptake of best practices in Ethiopia, including in coordination with international donors and partners. Discussion and feedback The discussion expanded on themes and issues identified during the preceding presentation and drew inputs from diverse stakeholders representing academia, civil society, public administration and business. The discussion centered on the challenges of directly linking trade under the EBA to environmental outcomes in Ethiopia. Several sectoral stakeholders contributed to the discussion, including representatives of the beekeeping, coffee and horticulture industries. These sectors in particular noted good practices already undertaken to mitigate environmental degradation. For example, coffee cultivation in Ethiopia is reported to make widespread use of drip irrigation - which reduces water resource intensity - while also banning many types of hard chemicals and pesticides in accordance with international conventions. A representative of the beekeeping industry further noted the important role of bees in pollination and biodiversity. Despite the extent to which the environmental impact of many economic activities in Ethiopia has been reduced, several participants observed that the country nonetheless faces significant sustainable development challenges. Specific challenges identified include net loss of forestry resources and a lower regeneration rate than the EU, topsoil erosion at a rate of more than 1-2 million tonnes per year and the relative difficulty of implementing environmental policies at the ministerial level, noting that the creation of the Ministry of Environment, Forest and Climate Change is recent. These observations arrived at overarching questions of whether population growth can be uncoupled from environmental pressure, what path to economic development Ethiopia should pursue and what the impact of its trade with the EU under the EBA is. Several participants identified that cohesive planning and sustainable environmental strategies can successfully mitigate these pressures, as has been observed in several recently developed high population economies. Afternoon session II 16:15-16:45 Ensuring Stakeholder Input into the GSP Evaluation: Concerns, Progress and Opportunities Panel discussion with speakers from CSOs and Industry - Mr. Tewodros Zewdie, Executive Director, Ethiopian Horticulture Producer Exporters Association (EHPHEA) - Dr. Joy Kategekwa, Head of the Regional Office for Africa, United Nations Conference on Trade and Development (UNCTAD) - Mr. Kassahun Follo, President, Confederation of Ethiopian Trade Unions (CETU) 16:45-17:15 Discussion and feedback 17:15-17:30 Closing remarks - Mr. Nikolaos Zaimis, Advisor, Directorate-General for Trade of the European Commission

10 Panel discussion with speakers from CSOs and Industry Ms. Joy Kategekwa Head of the Regional Office for Africa, United nations Conference on Trade and Development The EBA is still as relevant today as it was in 1971, in particular as for the first time LDCs are economically deteriorating. In recent years, LDCs have on average only grown by 2 or 3 per cent. It is therefore essential to maintain momentum and to support these countries growth and development. An exception to this trend has been Ethiopia, which experienced double digit growth over the past decade. The GSP faces a number of challenges. First of all, product coverage should not create a disincentive for beneficiaries to work towards graduating from the LDC category out of fear of losing their preferences. Secondly, preference erosion should be addressed by providing additional support on RoO, SPS and TBT. Lastly, if a low utilisation rate is not caused by the scheme itself, it is essential to address structural supply side obstacles. It therefore may be necessary to provide complimentary assistance on skills development and capacity building. Mr. Tewodros Zewdie Executive Director, Ethiopian Horticulture Producer Exporters Association The Ethiopian horticulture sector has expanded rapidly over the past decade from USD 28 million to USD 300 million due to the country s competitive advantage in terms of climate and proximity to large markets. However, the sector s full potential has not been yet exploited. The expansion of the sector and its exports to the EU has had a positive effect on various dimensions. Over 185,000 people are employed in the horticulture sector, including a large share of women and young people. This has had a positive impact on the economic and social situation of women. Additionally, the sector has benefitted the shipping industry, in particular air freight which operates regular flights to markets in the EU and Asia. Lastly, the sector promotes knowledge transfer. Overall, the EBA has had a positive impact on investments, job creation and labour rights and standards through the horticulture sector. Mr. Kassahun Follo President, Confederation of Ethiopian Trade Unions Ethiopia has ratified all eight core ILO Conventions, including on the freedom of association and collective bargaining. The provisions in these Conventions have become an integral part of constitutional law through Article 42. However, in practice labour rights are not always applied by companies, in particular the freedom of association and the right to collective bargaining. There is discrimination against unionised workers, especially in the textile sector where workers are fired for being part of a trade union. Additionally, there are major issues regarding health and safety and minimum wages. As a result, labour conditions remain stagnant while investment and economic growth increase rapidly. There is a need for greater social dialogue on labour right, including a tripartite forum at the national level. Discussion and feedback The discussion expanded on themes and issues raised by the panel. In particular, the discussion focused on labour rights and environmental protection. One of the issues raised concerned the need for dialogue between trade unions and business associations to resolve the lack in understanding and improve compliance with the right to freedom of association. Business associations also have an interest in labour

11 right and standards for workers the EHPEA for example is working on a voluntary minimum wage per clusters. The discussion further touched upon measures to address the low productivity in Ethiopia. While this could partly be done by introducing minimum wages to raise the income, training on the part of the employer and the government is also an important element in improving labour productivity. For example, labour productivity is higher in Kenya than in Ethiopia due to more training. Furthermore, the need for a better environmental impact assessment of the horticulture sector was raised. Currently it is not obligatory for horticulture producers to allow researchers to assess their compliance with environmental standards and requirements. The government does have the right to conduct inspections and should enforce this right. Another issue that was raised concerned transparency of the declaration of export in the horticulture sector. It was argued that the National Bank should have access to the accounts of exporters to ensure that under-invoicing and illicit outflows are tackled. Closing remarks Mr. Nikolaos Zaimis, Advisor, Directorate-General for Trade of the European Commission The EBA and AGOA are often compared in the context of preferential market access. However, whereas AGOA only applies to African countries, the EBA extends across the globe. The EBA links to international standards and values and reinforces international norms, conventions and agreements on sustainable development. The discussions identified several obstacles that keep Ethiopia from fully benefitting from the EBA. These are mainly supply-side constraints, such as its landlocked position and an inadequate trade infrastructure. By improving the investment climate, logistics and addressing the declining exchange rate, Ethiopia could maximise the benefits of the scheme. An important element in this respect is that Ethiopia is negotiating its accession to the World Trade Organization (WTO). While this is not expected to have a major impact on market access, as Ethiopia already enjoys good market access, it is expected to have a positive impact on the political environment and the investment climate. The discussions further addressed the main challenges faced by the scheme itself, including preference erosion as a result of multilateral trade liberalisation and bilateral and unilateral tariff reductions granted by the EU. While it is not possible to further reduce the tariffs under the EBA, there is room for better coordination between the European Commission and the beneficiary countries. It could be necessary to establish better cooperation with development programmes to channel resources for aid for trade to further support the beneficiaries development. Another point for consideration is a country s graduation from LDC status. This has an impact on the benefits received from the scheme and the products covered by it. Given the gap between EBA and GSP+, some participants wondered whether an intermediate step could be included. Evaluation of the workshop The workshop was well-received by the participants and featured a good mix of government, industry and civil society stakeholders who were very enthusiastic about sharing their views on the EBA in Ethiopia. This resulted in fruitful dialogue and useful feedback, which was comprehensively recorded by the Project Team. As a point of improvement, the participants listed the sessions on the social and human rights and environmental impact of the EBA. The discussions on the direct impact of the scheme in this regard remained relatively limited.