ETHIOPIA INPUT FOR 2008 PRESIDENT'S ANNUAL AGOA REPORT

UNCLAS ADDIS ABABA 000615 SIPDIS SIPDIS DEPARTMENT FOR AF/EPS (DAVIDSON AND POTASH),EB/TPP LURIE AND DRL/AE GILBRIDE E.O. 12958: N/A TAGS: ETRD AGOA ECON ET SUBJECT: ETHIOPIA INPUT FOR 2008 PRESIDENT'S ANNUAL AGOA REPORT Ref: State 20082 ¶1. Post submits the following input for the 2008 President's Annual AGOA report: ¶2. Status: AGOA-eligible, including for textile and apparel benefits. ¶3. AGOA Trade and Investment: Ethiopia's 2006 exports under AGOA and its GSP provisions were valued at $7.2 million, representing 9 percent of total Ethiopian exports to the United States. AGOA/GSP exports included apparel and a variety of agricultural products. ¶4. Market Economy/Economic Reform/Elimination of Trade Barriers: Since the early 1990's, Ethiopia has pursued development of a mixed economy, encouraging greater private sector activity. However, the state remains heavily involved in most economic sectors, and parastatal and party-affiliated companies continue to dominate trade and industry. Several areas, including banking, insurance, telecommunications, broadcasting, shipping and forwarding, and large-volume passenger air transport, remain closed to foreign investors. Ethiopia formally applied for WTO membership in January 2003 and submitted its Memorandum of 5. Foreign Trade Regime to WTO - one of the first formal steps in the accession process - in December 2006. In 2005, Ethiopia and the U.S. signed an Open Skies air transportation agreement. In recent years, Ethiopia has simplified its tariff system and reduced tariff rates. Business disputes involving a foreign investor or the state may be submitted to an Ethiopian court or to international arbitration within the framework of any bilateral or multilateral agreement to which the government and the investor's state of origin are contracting parties. Ethiopia is not a member of the International Center for the Settlement of Investment Disputes. ¶6. Political Pluralism/Rule of Law/Anti-Corruption: Ethiopia continues to progress towards a more democratic political system. The elections in May, 2005 were the most openly contested in Ethiopia's history and gave birth to the country's first truly multiparty Parliament. Despite some irregularities, the results of the election were generally credible. Within parliament, concessions were made in committee leadership profiles and provisions for questioning executive branch officials in an effort to accommodate the substantial opposition presence. The opposition parties in parliament have responded by being vocal representatives of alternative viewpoints. Outside of parliament, parties' unwillingness to compromise over regulations and composition of democratic institutions caused an initially promising process of inter-party dialogue break down in mid-2007. Harassment of opposition leaders and supporters at a local level in rural areas continued to persist throughout 2007 hampering opposition parties' ability to prepare for April 2008 local elections. While the first half of 2007 was marked by the trial of prominent journalists and opposition leaders, the Ethiopian government's pardon of most of these individuals in July 2007 represented a magnanimous gesture and an opening for further positive political engagement in the second half of the year. While the law provides for an independent judiciary, the judiciary remained weak and overburdened. Some NGOs perceived the judiciary to be subject to significant political intervention. Corruption continues to be a problem. ¶7. Poverty Reduction: Ethiopia's GDP per capita is about $130, making it one of the poorest countries in the world. Poverty alleviation and food security remain priorities for the government. The 2007/08 government budget allocations reflect poverty reduction priorities. The government has decreased military spending from 13 percent of GDP in 1999/2000, during the border war with Eritrea, to 8.46 percent of GDP in 2007/08, and is redirecting the savings to poverty reduction and capacity building efforts. In coordination with donors, the Ethiopian government is implementing its 2006-2010 Plan for Accelerated and Sustainable Development to End Poverty in Ethiopia (PASDEP). In addition to continuing poverty reduction strategies in areas such as human development, rural development, capacity building, and food security, the new PASDEP will increase efforts in commercialization of agriculture, promote greater private sector participation in the economy, and scale-up efforts to achieve the Millennium Development Goals. ¶8. Labor/Child Labor/Human Rights: Although the law prohibits anti-union discrimination, unions reported that employers frequently fired union activists. The law provides for strikes but there are restrictions and exclusions. A new labor law that went into effect in February 2004 and was amended in June 2006 is generally considered pro-employer by labor unions. Ethiopia has ratified all eight core ILO Conventions. The law prohibits forced or compulsory labor, but there were reports of these practices, including the trafficking of women for involuntary domestic labor and sexual exploitation. There were laws against child labor; however, the government did not effectively implement these laws in practice, and child labor remained a serious problem, both in urban and rural areas. The Ministry of Labor and Social Affairs is responsible for enforcing child labor laws, but it did not provide adequate resources and oversight. There are reports of forced or bonded labor of children who have been trafficked to work as domestic servants. The government is implementing a National Plan of Action for Children, participating in two USDOL-funded child labor and education projects, working to combat human trafficking, and partnering with UNICEF on child protection and education activities. Human rights problems include restrictions on freedom of the press; arrest, detention, and harassment of journalists for publishing articles critical of the government; restrictions on freedom of assembly; and limitations on freedom of association. While civilian authorities generally maintained effective control of the security forces, there were instances in which elements within those forces acted independently of government authority and in which they reportedly engaged in unlawful killings; arbitrary arrest and detention, especially of suspected opposition members or sympathizers; and mistreatment of detainees and opposition supporters. Poor prison conditions are also a problem. YAMAMOTO