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Study on the Implication of Joining the New Initiative of COMESA-EAC-SADC Tripartite FTA in Ethiopia

Funded by UN System - UN System
Location Ethiopia
Status
Deadline
Proposal due on 16 Nov 2009

As Ethiopia engages more deeply with the global economy, policy makers face the challenge of devising trade policies that take into account the stunning diversity of the Ethiopian economy and people. While taking advantage of opportunities offered by increased economic integration, Ethiopia must manage the challenges that a more open economy will pose for the majority of Ethiopian farmers and workers. The country’s current commitments on trade policy through institutions such as the World Trade Organization (WTO) are still on the accession stage and as such, broad policy discretion over tariffs and other trade measures is left in the hands of national policy makers. As Ethiopia pursues a new multilateral trade agreement and numerous bilateral and regional trade pacts, it is moving into uncharted territory, where the decisions it makes will constrain its existing policy space and have a significant impact on the evolution of the economy.

Study on the implication of joining the new initiative of COMESA-EAC-SADC Tripartite FTA

Agency     UNDP
Status     Published
Type of notice     Request for Proposal
Close date     16-11-2009
Country     Ethiopia
Reference     UNDP Ethiopia RFP/037/2009
Contact     Mekdelawit Hailu mekdelawit.hailu@undp.org Assefa Gebrehiwot assefa.gebrehiwot@undp.org

Description     

Terms of Reference (ToR)

RFP/037/2009

Study on the implication of joining the new initiative of COMESA-EAC-SADC Tripartite FTA

1.      Background

As Ethiopia engages more deeply with the global economy, policy makers face the challenge of devising trade policies that take into account the stunning diversity of the Ethiopian economy and people. While taking advantage of opportunities offered by increased economic integration, Ethiopia must manage the challenges that a more open economy will pose for the majority of Ethiopian farmers and workers. The country’s current commitments on trade policy through institutions such as the World Trade Organization (WTO) are still on the accession stage and as such, broad policy discretion over tariffs and other trade measures is left in the hands of national policy makers. As Ethiopia pursues a new multilateral trade agreement and numerous bilateral and regional trade pacts, it is moving into uncharted territory, where the decisions it makes will constrain its existing policy space and have a significant impact on the evolution of the economy.

Ethiopia has a number of bilateral trade arrangements (for instance with Sudan, Iran, Algeria, South Korea among others); it is also a member of the Common Market for Eastern and Southern Africa (COMESA) trade bloc, although it has not yet acceded to the region’s free trade area (FTA) and customs union (CU) arrangements. The country is also a member of Inter-Governmental Authority for Development (IGAD). At continental level, the country has signed and ratified the Abuja Treaty that aims to establish an Africa Economic Community (AEC) by 2037 among the continent’s 53 countries. At inter-regional level, although the country’s current trade with the EU is governed by the latter bloc’s Everything But Arms (EBA) preferential trade arrangement, Ethiopia, together with other countries in the Eastern and Southern Africa (ESA) configuration, is currently negotiating an Economic Partnership Agreement (EPA) with the EU. Lastly, at multilateral level, the country is currently in the process of acceding to the World Trade Organization (WTO).

In an effort to fast tracking the attainment of the African Economic Community as outlined by the Treaty of Abuja, a Tripartite Summit at the level of heads of state and government consisting of COMESA, the East African Community (EAC) and the Southern Africa Development Community (SADC) announced their intention of creating an FTA comprising the three regional economic communities (RECs)[1] . This Summit was held on 22 October 2008 in the Ugandan capital of Kampala. The member countries of these three communities agreed to develop, within six months, a roadmap towards the establishment of this FTA. Given that this envisioned COMESA-EAC-SADC Tripartite FTA has been considered to focus on trade in goods, it is not only tariff phase-down and alignments among member states that will be required, but work on non-tariff measures, rules of origin, standards, customs management and trade facilitation will also be required. With stark differences among these three RECs (and member states) on many of these issues, this promises to be a challenging task.

It is therefore imperative at this juncture for Ethiopia to conduct an analysis of the likely impacts of joining this potential FTA. Thus, it is against this background that a qualified consultant(s) is being solicited to do an impact assessment of the benefits and costs, both economic and legal that the country is likely to incur should it decide to join this FTA. The study should also analyze the extent to which the Economic Partnership Agreements that the three RECs have individually been negotiating with the European Community is likely impact upon the successful formation of the envisioned COMESA-EAC-SADC FTA. The investigations will also help Ethiopian policy makers to have informed decisions regarding whether to join or not to join this new FTA.

2.      Objectives of the study

The main objectives of the impact assessment are:

1.      An overall assessment on the establishment of COMESA-EAC-SADC Tripartite FTA
2.      Analysis of policy issues that will arise in merging the three RECs into a single REC and the legal and institutional framework required for its implementation.
3.      Assess the implications of the on-ongoing EPA negotiations between countries in the COMESA-EAC-SADC regions with the EU in the successful formation of the Tripartite FTA.
4.      Provision of a thorough and detailed explanation of the potential economic, social, institutional and legal implications of Ethiopia’s joining the COMESA -EAC-SADC Tripartite FTA
5.      Outlining plausible options for Ethiopia in proceeding with joining regional Free Trade Area(s).

In outlining the options for Ethiopia, the starting point for the Consultants ought to be the ongoing efforts to establish IGAD Free Trade Area.

3.      Scope of Work

The impact assessment study will:

1.        Study the competitiveness of major industries in Ethiopia in relation to those in EAC, SADC and COMESA member states
2.       Evaluate the structural, institutional, legal and policy problems that might have made the Ethiopian industries, including the agro processing industries, uncompetitive,
3.       Assess the foreign trade pattern of the country for at least the recent five years and Ethiopia’s trade relations with the EAC, SADC and COMESA member states,
4.      On the basis of the assessment in 2 forecast future volumes and value of Ethiopian imports and exports from and to EAC, SADC and COMESA member states,
5.       Review the current and  project the future trade balance of Ethiopia with EAC, SADC and COMESA member states (with and without FTA),
6.       Study the impact of Tripartite Free Trade Area on possible gain/loss through (Trade creation, Trade diversion and Trade expansion) on government revenue and balance of payments, particularly investigate possible market opportunities for government selected priority sectors,
7.       Review the effect Tripartite of  Free Trade Area if Ethiopia reduces its tariff by 60%, 70%, 80%, 90%  and 100% , and draw possible scenarios of the implementation year to reduce the effect,
8.       Assess the tax structure of  major trading partners in COMESA, EAC  and  SADC region in relation to Ethiopia,
9.      Explore the economic impacts of Ethiopia’s membership to the COMESA-EAC-SADC Tripartite FTA. Special attention should be given to analysis of possible trade creation and trade diversion, impacts on government revenue, industrial competitiveness and sectoral employment, among other issues.
10.  Identify sensitive products and possible measures to protect these products from increased competition
11.  Investigate the legal and institutional effects of Ethiopia’s membership to the COMESA-EAC-SADC Tripartite FTA. Emphasis shall be given to relevant policy formulation, legislation and the readiness of appropriate institutions to implement the envisioned Tripartite FTA arrangement.
12.  Discuss the challenges ( policy, legislation, institution,  government revenue,  etc.) and opportunities (access to new markets, job creation, poverty alleviation, etc.) that Ethiopia will encounter by joining  the COMESA-EAC-SADC Tripartite FTA


4.         Expected Output
The finalized assessment report should include (at minimum) the following outputs:

1.   An overall assessment of the implications of a merger of the three RECs into a single REC on the economies of members of the three RECs, with special emphasis on Ethiopia
2.      An overview of the institutional and legal framework required for the establishment of  the COMESA -EAC-SADC Tripartite FTA
3.      Analysis the Economic Partnership Agreements that the three RECs have individually been negotiating with the European Community and their impact on the optimality of the COMESA-EAC-SADC  Tripartite FTA
4.      Challenges and potential benefits of Ethiopia’s membership to the COMESA -EAC-SADC Tripartite FTA
5.      A discussion of policy issues for Ethiopia arising from joining the COMESA-EAC-SADC Tripartite FTA ; and
6.      Provide menu of plausible options for  Ethiopia in considering joining  regional Free Trade Area(s) including sequencing and timeframe for entry


5          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 country representative in Addis Ababa, Ethiopia. The inception report will provide details of the methodological approach to be used by the consultants to undertake the study.
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; and
2.      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 feedbacks on the study;
3.      Only after incorporating and/or responding to all the comments at the validation       workshop shall the consultants produce and submit a final report to MoTI and UNDP.

6.         Qualifications/Experiences of the Consultants

The consultants must have the following minimum qualifications:
·         Post graduate level degree, in economics, trade law and/or development studies;
·         Knowledge of the challenges and opportunities of regional integration in developing countries;
·         Familiarity with the Eastern and Southern Africa region.
·         Experience in assessment studies and excellent knowledge of regional integration process in Africa, Economic Partnership Agreements between the EC and ACP regions, and the WTO system.
·         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 the country;
·         Proven ability to write in a clear and concise manner and to communicate orally; and
·         Proven ability to meet strict deadlines.

7.      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). The responsive and qualified firm with the lowest financial proposal will be issued a contract.

1. Expertise of Firm / Organization submitting Proposal (relevance of experience, reputation of firm, general organization)- 30% 30 points

2.Proposed Work Plan and Approach (understanding of TOR, scope of task, clear presentation, -50% 50 points

3. Personnel (General qualification, specialized trainings, professional experience, knowledge of region) - 20% 20 ponits

Submission of Technical & Financial proposals

Qualified and interested Firms should submit their Technical and Financial proposals in separate sealed Envelopes to the following address no later than 16 November 2009:

UNDP Ethiopia
Procurement Specialist
ECA Compound Old Buld.
Vacancy No: RFP/037/2009
Fax: 251 11 5514599 / 5515147
P. O. Box 5580, Addis Ababa
Ethiopia


[1] If all individual countries from the three RECs subscribe to this envisioned FTA, the COMESA-EAC-SADC FTA will comprise 26 countries.

 

 

The above is a complete copy of the original procurement notice.

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Study on the Implication of Joining the New Initiative of COMESA-EAC-SADC Tripartite FTA in Ethiopia

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