Ethiopia s Perspective on EBA

Transcription

1 Ethiopia s Perspective on EBA Yishak Tekaligne Director, Bilateral and Regional Trade Relation & Negotiation Ministry of Trade Presentation to the Mid-Term Evaluation of the EU s GSP, 7 th March 2017

2 POINT ON THE MENU 1. Ethiopia s Development Strategies and Export Performance 2. Ethiopia and EU s GSP/EBA 3. Main Challenges in the export sector and utilizing the EU s GSP/EBA 4. Possible Measures to Address the Challenges

3 I. ETHIOPIA S DEVELOPMENT STRATEGIES AND EXPORT PERFORMANCE Since 1992, Ethiopia has vigorously pursued export-led strategy in its free market economic policy. To this end, different strategies and national development plans which supports the export sector have been developed:- Policy and Strategy Agricultural Development Led Industrialization Industrial Development Policy National Development Plans Sustainable Development and Poverty Reduction Programme- SDPRP /2002/ /05/ Plan for Accelerated and Sustainable Development to End Poverty- PASDEP /2005/ /10/ First Growth and Transformation Plan-GTP I (2009/ /15) Second Growth and Transformation Plan-GTP II (2015/ /20)

4 CONTD. Different Reform Programs including tax reform implemented. Continuous revision of the legal frameworks has been undertaken to improve the investment climate of the country Different incentive mechanisms have also been designed to promote export.

5 EXPORT PERFORMANCE The overall performance of merchandize exports has shown a remarkable growth rate. Over the last ten years, it increased by six folds Export Average Growth Rates during the different plan periods:- SDPRP------Annual Average growth rate of 26% PASDEP------Annual Average Growth Rate of 22% GTP I Modest Increase from 2 billion USD in 2009/10 to 3.1 billion USD in 2014/15. Fell short of the planned target (6.5 billion USD) The bulk of Ethiopia s merchandize exports are primary agricultural commodities.

6 HS Code Export Value in 2016 (USD) Share in % Agricultural products 2,256,274, Textile and Textile Products 77,022, Footwear and its Parts 37,117, Other Non-Agricultural Products 245,279, ,615,694,

7 EXPORT PERFORMANCE In terms of product lines, there has been a significant departure from the traditional, mono-crop dominated export sector, towards exporting manufacturing products and other HVP. In 1990/91, coffee has contributed more than 55% of the country s total export earning, while by the end of GTP I, its share declined to even less than 25%. The shares of other goods such as, cut flower, leather and leather products, textile products and other emerging agricultural products like sesame seeds have been increasing substantially.

8 Share in HS Description % Coffee, Whether or not rosted or decaffenated Edible Vegitables and certain roots Oil Seeds and oleaginous fruits..(sesamum seeds) Live trees, plants,roots and cut flowers 8.26 Precious or semi-precious stones, metals, metals clad 4.49 Meat and edible meat offal 3.58 Live Animals 3.47 Textile abd Textile Articles 2.94 Raw hids and skins and Leathers; articles of Leathers 2.87 Footwear and the like; parts of such articls 1.42 Tea, Mate and Spices 1.22 Electronic equipments 0.78 Salt, Sulphur, earths and stone; lime and cement 0.52 Preparations of Cereals, flour, starch or milk 0.46 Natural gums and Vegitable saps and extracts 0.34 Edible Fruits 0.30 Ores, slag and ash 0.26 Sugars and Sugar confectionary 0.22 Cereals 0.20

9 CONTD. Regarding export destination, the market destinations of Ethiopia s exports have also shown tremendous increment and has now reached to 140 countries. However, more than 93% of Ethiopia s exports is absorbed by 30 countries.. Germany, Netherlands, Belgium, Italy, France, Sweden are on the list from the European Union. U.K also is on the list.

10 EXPORT SECTOR IN GTP II The main basis of GTP II is the country s vision to become a lower middle-income country by It is considered to be an important vehicle for Ethiopia s renaissance. The two basic rationales for the targeted increase in merchandise export growth are: (i) Emphasis will be given to agricultural production and productivity growth in high value exportable products; (ii) Most of the manufactured value addition commodities are to be destined for export.

11 CONTD. Export Target in GTP II Annual average Growth rate % Foreign Exchange earnings million USD Agriculture billion USD Industry billion USD Mining billion USD

12 CONTD. The main focus areas of export:- Agriculture textile and garments; leather and leather products, meat, meat products and honey, food and beverage, sugar, pharmaceuticals, metals and engineering products, electric and electronic products, chemical and construction materials

13 II. ETHIOPIA AND EU S GSP/EBA Non-reciprocal preferential access has been granted by the EU to most developing countries via the General System of Preferences (GSP) since The GSP is a specific instrument focusing on a single dimension only tariff preferences for trade in goods. It does not have the ambition or the possibility to tackle other problems faced by developing countries. As the needs of developing countries vary widely, the GSP currently takes a differentiated approach.

14 CONTD. The GSP includes the GSP General Arrangement, the GSP+ (i.e., a special incentive scheme for sustainable development and good governance designed for vulnerable countries) and the Everything But Arms (EBA) scheme - Objectives:- helps developing countries (DC) by making it easier for them to export their products to the European Union. Through the additional export revenue which is generated, the GSP fosters growth in their income and supports economic growth and job creation

15 EBA The Everything But Arms arrangement was already an open-ended tool and this has not changed. Least Developed Countries continue to benefit from duty-free, quota-free access to the EU market for all products except for arms and ammunition. EU has reviewed the GSP including EBA in 2014 to strengthen the effectiveness of the EBA arrangement. Reduce the GSP to fewer beneficiary countries Removal mechanism to remove from the list.

16 CONTD. Removals from the beneficiary lists due to the income criterion happen only if countries are listed as high or upper-middle income 3 years in a row, i.e. their level of economic development is sustained

17 ETHIOPIA S EXPORT PERFORMANCE UNDER EBA Since 2001, Ethiopia has been using the EBA arrangement to export to EU. A mixed result registered From : increased consistently. From : declining trend However, Ethiopia s export to EU is still at a better position than 2001 and the periods before that.

18 1,000,000,000 Ethiopia's Export to EU Value in USD 900,000, ,000, ,000, ,000, ,000,000 Ethiopia's Export to EU Value in USD 400,000, ,000, ,000, ,000,000 -

19 CONTD. Of the total export to EU, the line share is taken by agricultural products. Of the agricultural products, exports were concentrated on two products only: coffee and flower which accounted for more than 78% of Ethiopian exports to the EU in Therefore, Ethiopia has yet to realize the full potential of the preferential market access beyond agricultural products.

20 No. Sectors Export Value to EU by 2016 in USD Share in % 1Agricultural Products 551,240, Textile and Textile Products 42,809, Footwear and its Part 926, Other Non-Agricultural Products 14,118, ,094,

21 CONTD. Comparing to other regions The share of Ethiopia s export to EU has a shown a declining trend. The share was: % in % in % in % in 2016 The main reasons: the increase of export to other main trading partners; emerging new export destinations due to high demand; the existence of other GSP schemes offered by main trading

22 45.00 EU's share in Ethiopian overall Export (in %) EU's share in Ethiopian overall Export (in %)

23 CONTD. Despite the declining trend, comparing to other regions, EU by far remains the main destination to Ethiopian exports. EU absorbs on average approximately 24.5% of Ethiopia s exports.

24 Ethiopa's Export Destination by Region Average Export Share in % ( ) Africa USA EU(28) Middle East China ROW

25 3. CHALLENGES IN THE EXPORT SECTOR Considering the potential having as country and the opportunity offered by the EBA Scheme, Ethiopia has not been effectively utilizing the EU market Main Challenges As a country, supply side factors is a crucial challenge Limited productive capacity Limited diversification of the economy Low level of structural change and industrial development

26 CONTD. Efficiency problem in logistics support & facilitation services: / transport, customs, port service, credit, quality certification/ Weak vertical & horizontal linkages within the valuechain (Producers, Traders, Manufacturers, Service Providers & Consumers) Weak global competitiveness of Private sector Low level of technology transfer & market linkage

27 CONTD. From the EBA Scheme perspective Stringent rules of origin and cost of complying with the Rules of Origin (which specify the conditions which must be met for a product to be considered as originating in the beneficiary country and thus to be eligible for preferential access). High standard and SPS requirement External to EBA Diminishing of preferences (i.e. preference erosion) due to both the multilateral system and other regional or bilateral Free Trade Agreements that the EU has signed. Competition from Latin America and Asian countries that generates market share loses for LDCs despite their tariff advantages

28 POSSIBLE MEASURES Addressing supply-side constraints is a key factor to promote the export sector and there by to effectively utilize the EU s EBA market access opportunity and other GSP s. In the country s development plan (GTP II), different strategy directions are designed in the agricultural and industrial sector to make Ethiopia the Manufacturing hub in the eastern region

29 CONTD. Agricultural Sector: Improving production & productivity through: Strengthening research and extension linkage; Improving modern technology utilization capacity; Introducing modern technology to reduce post harvest loses & to improve quality; Mitigating rain fall shocks by implementing different water harvesting technologies; Enhancing diversification and commercialization; Strengthening agricultural marketing system through developng market infrastructure

30 CONTD. Manufacturing sector; Ensuring adequate supply of industrial inputs Improving logistics support & facilitation services: / transport, customs, port service / Strengthening linkages between the industry and higher educations to enhance research and development; strengthening vertical & horizontal linkages within the value-chain(producers, Traders, Manufacturers, Service Providers & Consumers)

31 CONTD. Cross Cutting Issues:- Enhancing institutional and human capacity; Strengthening Public Private Partnership; Different promotion techniques to enhancing optimum utilization of existing market opportunities; Improving the investment climate to attract foreign investment; Creating competitive Trade Related Infrastructures, (Market Information System, transport, customs, port service, credit, quality certification);

32 CONTD. From the EU side Improving the rules of origin (is there any room?) Addressing the Preference erosion U.K---BREXIT

33 Thank you!