Study on the Impact of the Trade Related Issues in the Economic Partnership Agreement on Ethiopia

Terms of Reference (TOR)

Study on the Impact of the Trade Related Issues in the Economic Partnership Agreement on Ethiopia

Background

Ethiopia is currently engaged in various trade negotiations aimed at creating new, secure relationships for its further integration within the international community at the regional, bi-regional and multilateral levels. At the regional level Ethiopia is a member of the Inter-Governmental Authority for Development (IGAD); the Sana’a Forum for Cooperation and the Common Market for Eastern and Southern Africa (COMESA).  At the bi-regional level Ethiopia is currently negotiating an Economic Partnership Agreement (EPA) with the European Union (EU) as part of the Eastern and Southern Africa (ESA) bloc.  Finally, at the multilateral level Ethiopia is currently negotiating its accession to the World Trade Organization (WTO). While the extent of engagement in the various negotiations varies, increasingly all such negotiations require taking obligations and commitments beyond trade in goods, to include services and a number of trade-related areas. 

Some of these trade-related areas like Government Procurement, Investment, Competition Policy and Trade and the Environment are rather contentious and relatively unexplored even at the multilateral level.  Yet, in the context of the EPA negotiations with the EU, all of these issues have been included in the scope of the talks, necessitating negotiating positions from Ethiopia.

In this context the current study will seek to investigate and to the extent feasible, quantify, the impact of the above-mentioned trade-related issues currently   being negotiated in the EPA on Ethiopia, giving particular attention to the likely challenges they will present for their implementation. 

With regards to Investment, Ethiopia already has a number of Bilateral Investment Treaties (BITs) with several of its strategic partners.  Commitments in some of these BITs are very deep while others less so.  Should Ethiopia agree to negotiating a chapter on Investment in the EPA it needs to decide on a minimal standard that would be acceptable to the country.

Competition Policy in Ethiopia is being developed and administered primarily by the Trade Practice Commission.  However, the regime on competition policy is not yet comprehensive and Ethiopia would need an assessment of the regime to determine implications for further commitments if they are to be entertained in a chapter of the EPA.  The issue of State Trading Enterprises (STEs) is a sensitive matter to Ethiopia and clear guidance will be needed on how this issue should be addressed in the context of any commitment that might be undertaken in the EPA.  An amendment to the Trade Practice Proclamation is currently being discussed among stakeholders and the output of this study could guide the final text adopted for such amendment.

Government Procurement is another area in which Ethiopia needs further guidance in order to decide on the extent to which any new commitments may be undertaken in the context of an EPA.  The current Government Procurement regime is centralized and this has the advantage of cost reduction and relative efficiency.  However, as an LDC the Government Procurement process can be used to stimulate certain aspects of production in the economy and hence there needs to be flexibility on the extent to which such an area can be liberalized in the context of the EPA. ESA’s position on Government Procurement is to have provisions on cooperation and transparency only. The study should assist in appraising this position and guiding Ethiopia in considering alternative positions, accordingly.

Finally, the subject of Trade and the Environment is also under negotiation in the EPA.  Ethiopia would like to boost international trade with its Key Partners, including the EU.  However, such increase in trade should not be achieved at the expense of the environment.  In other words, Ethiopia would like to develop environmentally sustainable trade practices.  There already exists an Environmental Protection Authority that has introduced some policies in this area.  However, significantly more research needs to be done to guide the future policies to be adopted by the Environmental Protection Authority of Ethiopia in the context of any obligations that may be assumed by Ethiopia in the EPA.

The resource for this study is contributed by the European Union (EU) in the context of the portion of the trade capacity building project that is being managed by UNDP in partnership with the Ministry of Trade and Industry (MOTI).  

Objectives of the Study

The overall objectives of the Study are:

i.                    Provide a detailed understanding and analysis of the existing policy, laws, and practice and institutions with regards to Investment, Competition Policy, Government Procurement and Trade and the Environment in Ethiopia. 

ii.                  Analyze the provisions of the chapters on Investment, Competition Policy, Government Procurement and Trade and the Environment in other EPAs and specifically identify the gaps to be addressed by Ethiopia if it is to undertake similar commitments in the ESA EPA.

iii.                Describe, discuss and to the extent feasible quantify, the impact of implementation of additional obligations in Competition Policy, Government Procurement, Investment and Trade and the Environment on the Ethiopian economy using the provisions in existing draft legal EPA texts as the likely standard.

iv.                Suggest the broad parameters of a negotiation strategy for Ethiopia in relation to the EPA negotiations pertaining to Investment, Competition Policy, Government Procurement and Trade and the Environment, in line with the country development vision and LDC status.

v.                  Provide a detailed roadmap, showing all major activities and timeframes over which commitments need to be undertaken in implementing provisions in the EPA on Investment, Competition Policy, Government Procurement and Trade and the Environment.

 Scope of work

In pursuance of the objectives of this study and the anticipated outputs, the consultant will be guided by the specific tasks set out hereunder. 

1. Undertake a thorough review of all laws in force in Ethiopia, governing the areas of Investment; Competition Policy; Government Procurement and Trade and the Environment
2. Perform an in-depth assessment of the practice currently in place, i.e. the interpretation of laws in force in Ethiopia, governing the areas of Investment; Competition Policy, Government Procurement and Trade and the Environment.
3. Provide a thorough analysis of the draft legal texts currently under negotiation for governing Investment; Competition Policy; Government Procurement and Trade and the Environment in the ESA EPA.
4. Undertake a comparative analysis of the draft legal text of the ESA EPA with the text of the CARIFORUM EPA and draft EPA legal texts in other regional configurations like SADC and EAC, with respect to Investment, Competition Policy, Government Procurement and Trade and the Environment.
5. Assess the institutional capacity in place in Ethiopia for implementing the provisional obligations with respect to the draft EPA text and provide recommendations to address any capacity gaps that may exist.
6. Undertake a detailed assessment of existing BITs giving indication of the extent of market access to the most preferred investors by sector and their implications for undertaking similar commitments in the EPA.
7. Appraise the existing Government Procurement Regime in Ethiopia in the context of government’s overall development objectives, and taking into account the country’s LDC status, make specific recommendations on further commitments that may be contemplated in this area. 
8. Appraise policies and laws governing Competition Policy in Ethiopia, especially in the context of the existence of several STEs, the continuation of many being desirable in pursuance of Ethiopia’s development vision.
9. Develop a detailed analysis of existing policies and laws governing Trade and the Environment identifying any weaknesses and providing in detail additional measures that may need to be introduced in order to safeguard Ethiopia’s ambitions of creating a sustainable environment for the growth of international trade.
10. Discuss the attendant challenges Ethiopia will face in implementing obligations in the above mentioned trade-related areas and specify a detailed roadmap and plan of action that needs to be pursued in order to achieve these.

Expected Output

Upon completion of the study the final report produced by the consultant is expected to provide the following outputs:

1. A clear and lucid understanding of the legislative and regulatory environment for Investment, Competition Policy, Government Procurement and Trade and the Environment in Ethiopia.
2. A thorough understanding of the draft legal texts currently under negotiation in the ESA EPA governing the subjects of: Competition Policy, Investment, Government Procurement and Trade and the Environment; and the implications for Ethiopia in the context of even greater ambition levels as shown in the CARIFORUM EPA and other draft legal texts of regional EPAs.
3. Challenges that Ethiopia will face in specific areas driven by both its extent of liberalization in certain sectors with respect to Investment in some BITs and commitments envisioned in the EPA.
4. Detailed recommendations on the process to be followed by Ethiopia in realizing compliance with any new obligations to be taken in each of the identified trade-related areas.  Recommendations must include institutional arrangements, human resources, finance and other factors that may impact compliance.
5. Alternative draft legal texts for each of the identified subject areas, setting out the optimal choice for Ethiopia in each case, taking into account: the extent of progress in existing legal texts still under negotiation; Ethiopia’s development vision; and its LDC status. 

Reporting Arrangements

1.   The consultants will submit an inception report, a mid-term report and a final draft report for comments to both the Ministry of Trade and Industry (MoTI) and the UNDP in Addis Ababa, Ethiopia;

2.   The Foreign Trade Relations Department of MoTI in partnership with UNDP will coordinate the study and keep abreast of the mission’s activities during the consultants stay.  The study team will work closely with the Foreign Trade Relations Department and submit all draft reports to this Department, and UNDP;  

3.   Once the final draft of the report is produced, the document will be shared with relevant stakeholders for comments. The study will be validated at a national workshop in order to obtain feedback on the study;

4. Only after incorporating of and/or provision of appropriate responses to all the comments at the validation workshop shall the consultants produce and submit a final report to MoTI and UNDP.

Qualifications and Experience of the Consultant

It is required that the consultancy firm presents experts having the following minimum qualifications:

-          Post graduate level degree in economics, trade law, development studies and related fields;

-          Demonstrated knowledge of Economic Partnership Agreements with EC;

-          Familiarity with the Eastern and Southern Africa region, preferably as an advisor, consultant, or negotiator to a member state, or the secretariat of a regional negotiating entity;

-          Demonstrated knowledge of the specific trade-related issues identified: Investment; Competition Policy; Government Procurement; and Trade and the Environment;

-          Sound understanding of the multilateral trading system, the treatment/discussion of the identified issues in negotiations and the implication of various commitment levels for Ethiopia in the EPA for further accession to the WTO;

-          Good interpersonal skills, ability to work well in international, multi-disciplinary teams, a flexible approach and the ability to multi-task and meet tight deadlines;

-          Demonstrated knowledge of report writing, proficiency in English language and computer-literacy (MS Office);

-          Demonstrated familiarity with the social and economic conditions of Ethiopia;

-          Proven ability to write in a clear and concise manner, to communicate orally; and to meet strict deadlines.

Duration of the study (including final draft): Up to three months.

Evaluation Criteria

Technical proposals will be rated as per the following matrix. A firm will have to score a minimum of 70% to be considered for the next step. Financial evaluation will be conducted for the qualified and responsive technical proposals (i.e 70% and above). Financial Proposal and Technical proposal will constitute 40% and 60% respectively. The responsive and qualified firm with the highest combined rate will be issued a contract.

Submission of Technical & Financial proposals

The technical proposal should have as annexes: (i) CVs of the Consultants expected to undertake the work; (ii) A list of related consultancies/ contracts carried out satisfactorily, supported by credentials; (iii) A confirmation of the capacity to deliver the completed work by the set timeframe; ( iv)  Detailed list of capacity in terms of human and material resources of the organization is needed; (v) Proposed methodology of the study, and (vi) Copies of professional and trade licenses of the consultancy firm.

The financial proposal - cross-referenced to the sealed technical bid should be a financial bid, giving the overall cost but with as much breakdown of costs as possible to allow analysis of reasonableness of the offer.

Qualified and interested Firms should submit their Technical and Financial proposals in separate sealed Envelopes to the following address no later than 15 March 2010:

UNDP Ethiopia

Procurement Specialist

ECA Compound Old Bld.

Vacancy No: RFP/007/2010

Fax: 251 11 5514599 / 5515147

P. O. Box 5580, Addis Ababa

Ethiopia