Local Capacity Development for Ethiopia's Economic Sustainability

Posted by: Webmaster on February 13, 2009 8:05:17 AM More open markets means that Ethiopia will be required to reduce (or in the case of an EPA, eliminate) tariffs on most products being imported into the country. On the one hand, this can translate into reduced prices on goods for consumers. On the other hand, it would expose Ethiopian industry and agriculture to highly competitive products, as well as reducing government revenue from tariffs.

Both the WTO agreements and a potential EPA with Europe would allow for some 'sensitive' products to be protected - i.e tariffs on those products would not have to be lowered so much. The forum, held in Addis Ababa to raise stakeholder awareness on Ethiopian sensitive products, provide detailed information for informed decisions and examine how to foster mutual understanding of Ethiopian sensitive/strategic products between government and non state actors was attended by participants from the Ministry of Trade and industry as well as economic development consultants and local community based organisations.

 

The Ethiopian Government has identified 1,640 local products as sensitive. The criteria for classification includes: the rate of tariff levied on imports, contribution of import tax to government revenue, the nexus between import products and policies and strategies of Ethiopia, contribution towards the attainment of the Millennium Development Goals, impact on infant industries and employees, overall impact on agricultural and food security, effects on environment, contribution to technological/knowledge transfer, contribution to the Gross Domestic product, current importation trends and potential in future. Ensuring the sensitive products are transparently chosen on the basis of just criteria is an important role of civil society.

 

Currently, products coming into Ethiopia from Europe are subject to import taxes in accordance with Ethiopian laws. If Ethiopia signs an EPA with Europe at least 80 per cent of European goods coming into Ethiopia will be exempted from taxation. Thus, domestic producers of those products will have little choice but to directly compete with European producers, despite the fact that European industries and export agriculture are significantly subsidised by the State. Many studies have shown that African industries will be hard pressed to compete in such a situation. Similarly, agricultural producers will risk losing their local and regional markets.

 

Another impact of an EPA will be a decrease of government revenue from import taxes. Ethiopia collects USD 99.3 million from direct import tax on European products per year, and predicts it will lose USD 50.6 million under an EPA. Overall, Ethiopia stands to lose up to 11.5 percent of the total revenue that is collected from all import products.

 

Ethiopia has been negotiating with the European Commission since 2002 for an EPA. Ethiopia is part of a regional negotiating block of 16 countries, referred to as the 'East and Southern Africa' countries. it includes most of the COMESA countries and some SADC countries. At the end of 2007, some of these countries initialed interim EPAs with Europe, but Ethiopia refused, with the civil society supporting the government's refusal to accept an EPA that risks retarding development rather than supporting it.

 

Ethiopia Statistics

With a human development index of 2.4 out of 10, Ethiopia is ranked at position 169 out of 177 in 2007-2008. The economy is heavily dependent on agriculture which employs more than 85 per cent of its work force and contributes not less than 45 per cent of the GDP. Furthermore, over 60 per cent of Ethiopia's foreign exchange reserves come from exporting coffee. In addition, 26 million people have been reported to be living under food deficits every year.

 

Involvement and Support

ACORD Ethiopa programmes seek to strengthen community-based organisations and raise their awareness on macro-economic policies such as food security policy. ACORD has taken a lead role in coordinating civil society advocacy on EPAs. Other focus areas are agricultural extension, animal health and water provision, as well as strategic strengthening of the capacity of the local community networks and civil society organisations to advocate for the rights to livelihood protection.

 

ACORD in Ethiopa has been coordinating meetings to improve knowledge and capacities working closely with the Ministry of Trade and Industry and other civil society and community based organisations in Ethiopia, aimed at breaking new frontiers and adding its voice to national debates addressing poverty, social justice and development. 

 

To comment on this article and related issues, please write to: info@acordinternational.org