Ethiopia is currently involved in a number of international trade negotiations which will have a far-reaching impact on the Ethiopian economy. Negotiations take place both at the multilateral level (Ethiopia’s accession to the World Trade Organisation) and inter-regionally (Economic Partnership Agreement with the European Union). Regionally, studies are under way on the establishment of economic integration among members of the Inter-Governmental Authority for Development and the Sana’a Forum for Co-operation. Finally, a decision will have to be taken regarding Ethiopia’s potential joining the Common Market of Eastern and Southern Africa’s (COMESA) Free Trade Area – which might be superseded by a Tripartite FTA combining the 26 members of COMESA, the Southern African Development Community (SADC) and the East African Community (EAC).
The European Union is one of the most active users of antidumping and antisubsidy measures (trade defense instruments or TDIs) worldwide. Traditionally, TDIs have been characterized as the international trade analogue of internal market competition policies, addressing predatory and other price-distorting and anti-competitive business practices of firms and market-distorting measures of foreign governments (whether for “strategic policy” or mercantilist objectives). The economic literature, however, is quite overwhelmingly negative towards the way TDIs have been used and indeed calls into question whether there is any defensible policy rationale for their existence. This judgment is based on analyses of why, how and with what effect TDIs have been used.
The surprise devaluation of the Ethiopian birr on August 31, 2010 was apparently undertaken to boost export performance and bring about structural change in the economy. This was a bold and important move because it indicates recognition by the Ethiopian government that its policy setting had been a factor in inhibiting Ethiopia’s external performance and industrial development.
Developing country members of the WTO benefit from special and differential treatment, a flexible application of WTO principles and rules according to their developmental needs and capacities. However, there has been widespread criticism that special and differential treatment is not granted to acceding countries – almost all of which today belong to the group of developing countries. If anything, it is argued, these countries receive an “inverse” special and differential treatment as a result of which they are compelled to offer further reaching liberalisation commitments than WTO members themselves.
This study seeks to identify and estimate the relative importance of supply- versus demand-side constraints on Ethiopia’s exports. Ethiopia has tried radically different trade strategies in the past, including a strategy of import replacement/protection for infant industries during the Imperial period, a heavily state-managed trading system during the military government era, and a market-oriented liberalized approach supported by the international financial institutions in the most recent period. It is presently engaged in various trade initiatives, including accession to the World Trade Organization, negotiations with the European Union on an Economic Partnership Agreement and with African regional partners towards a Tripartite Free Trade Area (TFTA).
The establishment of a Tripartite Free Trade Area (TFTA) which would combine the members of three existing regional economic communities, i.e. the Common Market of Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC), was decided at the 2008 Tripartite Summit. The purpose of the TFTA will be to harmonise trade arrangements among SADC, COMESA and EAC, improve the movement of persons within the region, facilitate the joint implementation of infrastructure projects and enhance co-operation of members.