What is the EBA?

The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements.

At a glance: EBA beneficiaries' preferential imports to the EU

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123,38 M

Population

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Federal Parliamentary Republic

Government

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5.30%

GDP Growth

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20.70%

Inflation

money

$ 126,78 B

GDP

Facts about the Ethiopian economy

Export Products

Ethiopia's most important export products are coffee and spices, sesame seeds, flowers, apparel, and clothing, as well as vegetables and hides and skins. The large dependency on the export of agricultural products leaves the country vulnerable to fluctuations on international commodity markets.

Trading Partners

China is Ethiopia’s most important trading partner, with the EU ranking second. Sudan is the most important export market, about one third of Ethiopian products go to the Sudanese market. With a share of 14.3%, the EU ranks second.

Fast economic growth

Ethiopia experienced substantial economic growth, in fact the fastest among countries in Sub-Saharan Africa, however starting from a very low level. Economic growth in Ethiopia is mainly driven by growth in the construction and services sectors.

Trade with EU

Total trade with Ethiopia summed up to € 2,242 million in 2022. With a share of 12.1%, the EU is Ethiopia's second most important trading partner.

Preference Utilisation

Ethiopia has an extremely high preference utilisation rate of 92% (2022)

Strategic Location

Ethiopia is strategically well located on the Horn of Africa. Though landlocked, the country uses the nearby port of Djibouti for over 90% of its foreign trade ensuring a good connection to Europe, but also Middle Eastern countries.

Ethiopia and the EU (2022)

Imports from Ethiopia by product section

Imports from Ethiopia over time (in € m)

ETHIOPIA AND THE EU’s GSP

Economic Impact

Ethiopia can look back on a decade of substantial social and economic development. Nonetheless, Ethiopia’s continuously high economic dependency on the export of agricultural commodities, coffee in particular, makes the country susceptible to exogenous shocks, both climate related and macroeconomic. While incidents of droughts and floods have an adverse impact on the harvest, fluctuations in international commodity markets lead to high variations in revenues and a negative impact on the terms of trade.

37%

Less than 40% of EU imports from Ethiopia is eligible for preferential market access under the EBA arrangement.

91.90%

Ethiopia has an extremely high preference utilisation rate of currently 97.4%.

Preference utilisation and export diversification

Ethiopia's imports to the EU (in million Euro)

Preference Utilisation vs. total eligible imports (in million Euro)

Ethiopia’s preference utilisation rate has been comparatively volatile – constantly increasing between 2011 and 2014, peaking at 98.6%. With an increase in eligible imports in 2014, the preference utilisation decreased to 76.8 in 2015 and reached its historical low in 2016 at 61.2%. With again decreasing eligible imports, the share of used preferences increased again in 2017 and 2018. Between 2020 and 2022 Ethiopia made good use of preferential rate, picking 97% in 2020, and standing at 92% in 2022. However, only 37% of imports were eligibile for EBA.

The largest product sections under EBA

Ethiopia has high preference utilisation rates for its most popular export products under the EBA scheme like live trees and plants, coffee, tea and spices as well as textile articles. Even though a large share of one of Ethiopia’s most famous products- coffee- is being imported to the EU under MFN rates. Preferences are underutilised in the area of articles of stone, plaster, etc (S13), where less than 40% of the imports make use of EBA preferences.

SUSTAINABLE DEVELOPMENT

Ethiopia has ratified all 7 core conventions on human rights as well as all 8 fundamental ILO conventions on labour rights. Although Ethiopia, as an EBA beneficiary, is not obligated to ratify any of the international conventions, the country has ratified all 27 conventions covered under GSP+.

Core international conventions on human rights and labour standards

Ratified

Convention on the Prevention and Punishment of the Crime of Genocide (1948)
International Convention on the Elimination of All Forms of Racial Discrimination (1969)
International Covenant on Civil and Political Rights (1976)
International Covenant on Economic Social and Cultural Rights (1976)
Convention on the Elimination of All Forms of Discrimination Against Women (1981)
Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
Convention on the Rights of the Child (1990)
Convention concerning Forced or Compulsory Labour, No 29 (1930)
Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
Convention concerning the Abolition of Forced Labour, No 105 (1957)
Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Additional Conventions

Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
Convention on Biological Diversity (1992)
The United Nations Framework Convention on Climate Change (1992)
Cartagena Protocol on Biosafety (2000)
Stockholm Convention on persistent Organic Pollutants (2001)
Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
United Nations Single Convention on Narcotic Drugs (1961)
United Nations Convention on Psychotropic Substances (1971)
United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
United Nations Convention against Corruption (2004)

EU-Ethiopia Bilateral Development Assistance

DG INTPA

Access all info about EU-Ethiopia relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/ethiopia_en

Opportunities in Ethiopia

Based on population size, Ethiopia is the second largest country on the African continent with a comparatively young population. This implies a large domestic potential both regarding domestic consumption and labour force availability.
Ethiopia has set up a strategy to establish industrial parks of export-oriented industries particularly focussed on textiles, agro-processing, mining and oil & gas.
There is untapped potential for renewable energies, which already account for about 90% of Ethiopia's energy production. Ethiopia aims at exploiting these resources, hydroelectric power in particular, by further expanding the current capacities.
Ethiopia is endowed with diverse agricultural resources and the climatic conditions to take advantage of them. Although agricultural products already make up an important share of the country’s economy, about half of the arable land is not being used for cultivation yet. Furthermore, Ethiopia possesses mineral resources such as gold and different types of gemstones, but also industrial minerals which can be further exploited.
Following the strong economic growth in the past ten years, the IMF projects continuously strong annual GDP growth rates of around 7% for the next five years.