Cablegate: Ethiopia Input for 2008 President's Annual Agoa Report


DE RUEHDS #0615/01 0641414
R 041414Z MAR 08





E.O. 12958: N/A

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

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.


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