Latest Post

Ethiopia's WTO Accession - Protracted but a Must Do Task

Despite tough and tiresome, Ethiopia has to win WTO negotiation keeping its interests at the center. 

With almost a decade and five years elapsed, Ethiopia has been through complex negotiations and discussions to secure its position at the World Trade Organization, but scholars advise the need to expedite the process. 

Being home to 100 plus million consumers and fast growing economy, Ethiopia's membership of the international organization, according to the experts, is of reciprocal purposes while it gives boost for the world trade, the country on the other hand would ease unilateral and arbitrary trade barriers. But for these to happen, the accession process should see the day's light sooner than later. 

Ethiopia submitted official request to join WTO 2003 and a working party drawn from various organizations has been working on the process for the last 15 years. But in spite of some headway, the main negotiations are far from over particularly in finding conciliatory gesture between opining up service sectors and protecting local companies. 

Despite the complex nature of the negotiations, the process should have been over by now. There are certain policy issues that are putting the negotiations on hold. Some of these issues require strong policy decisions and smart negotiations. In fact, the country has gone through various process and procedures so far. However, the hardest part of the negotiation, which is also very continuous, has been the issue relating to liberalizing the service sectors, comments Abebe Abebayehu Deputy Investment Commissioner. 

The country is required to open up its economy including the service and financial sectors that are only allowed for local companies currently. And sometimes this could run counter to the country's interests, he says adding: "These are the sectors that the country considers should be protected from the dominant foreign counterparts. However, for Ethiopia to join the organization it should find a gray line between opening up the sectors and protecting the local companies and then make the deal." 

The key question is, therefore, how long will it take to somehow liberalize the service sector and in what way international companies can involve in the national economy? This should be dealt with critically. It takes policy decision as to what sort of dealings and preconditions must the country put in place and allow foreign investment in the country. That is why this has been one of the longest negotiations in the history of WTO accession. 

Ethiopia, in terms of economy, geopolitical importance and others, is the largest economy in the east Africa worth the accession. 

As the power house of the region, the world cannot afford to exclude this expansive economy. Equally important, for Ethiopia to ensure its place and increase export presence in global market, it has to enter to the trading coalition which the deputy commissioner stresses. 

Ethiopia's trade volume with other countries is growing and joining the organization will further ease possible export hurdles, he added. "The membership process should further be fast tracking to expand its exports and ensure trade competitiveness." 

Currently, the country has access to global markets via bilateral agreements but it rests on unilateral will. Through WTO membership, the country can make sure that its trade activities are not hindered with dynamic politics and changing global trade rules and positions. Besides as the country's export reach various destinations and able to penetrate into foreign markets, reciprocally, the demands of other countries to invest in Ethiopia will increase as well. Hence, the membership would pave the way for this to happen, Abebe indicates. 

Eyesuswork Zafu, developmental economist [also Hibret Bank Board chairperson], believes that joining the organization is not only about expanding and adding new markets, it is also about securing and maintaining existing position in the global trade. It needs smart and dab-handed negotiators with wealth of experiences and skills. And the private sector must take part on the ongoing negotiations, he underscores. 

With regard to the deals relating to privatizing the service and financial sectors, Eyesuswork says the private sector should learn to compete with international companies. And the only way to do that is to make sure that doors are open for international investments. It is through competition that local companies appear strong. There may come a time where the country will have to lose more for not becoming WTO membership. The gains outweigh the risks, thus the country needs to see ways and means to face the latter, he comments. 

Discussions and negotiations with the WTO have seen progress on various aspects but lots of works remain in opening up Ethiopia's service sector. This requires thorough negotiations and agreements. Membership is a process. It is normal is that all countries went through long sometimes tiresome negotiations, comments another Economist, Zemdeneh Negatu. 

Ethiopia can negotiate as it wants to protect certain sectors. Opening up the economy and liberalizing sectors should come through time. At the beginning, china did not open-up everything. That is also what other countries did. In fact, there are provisions within the WTO membership process that allows the least developed countries to be able to protect some sectors for certain period of time. And the organization does allow this, what it takes is to put the agenda on the table and other aspects will follow, Zemedeneh argues. 

"I'm of the same opinion with the government that the private sectors are protected until it is efficient and competent," he notes. 

The private sector needs to emerge strong on the face of global markets making sure that they supply quality and standard products as good as international ones, he says, adding the fact that the private sector is beginning to compete. 

Ironically, the fact that the process is taking long is good for the private sector. Had the country opened up the economy some 15 years ago, the private sector could not have been in a position to compete with the international companies, he states. 

It would be beneficial for Ethiopia to join the trade international organ sooner than later as the country aims to become export-led value-added economy, Zemedeneh makes clear. "It has to be part of the world trading economy form the value added economy." 

By joining the Organization, the country will seize new market opportunities under global rules, he suggests, explaining that the country would be protected from arbitrarily and unilateral trade bans. 
Despite the complex nature of the negotiations, all the experts agree that the gains that Ethiopia embrace by joining the WTO outweighs the risks the country would carry, hence the accession process should not be put in the back burner. 

Culled from Ethiopian Herald