EPA Review Annex Documents - DFID

1. Overview of existing resources for trade negotiations
1.1. Trade negotiation Structure of Ethiopia
The Ministry of Trade and Industry (MoTI) was re-organised by the Proclamation No. 471/2005
of the Federal Gazette as a Federal Ministry in 2005. This legal instrument gave MoTI a number
of additional powers, duties and responsibilities among which entering into contracts and
international trade negotiation and agreement. In addition to the Common Powers and
Duties given for all Federal Ministries stated under Article 10 Proclamation 471/2005 (which
gives power to enter into contracts and international agreement), exclusive powers given for
MoTI are also stated under Article 15 of the Proclamation.
Article 15, among others, empowered MoTI to carry out duties and responsibilities of trade and
industrial development negotiations and agreement as follows;
• Strengthen the country’s foreign trade relations and negotiate and implement trade, port
and transit agreements.
• Create conductive conditions for the promotion, acceleration and development of the
country’s industry and export trade and investment.
• Provide support to industries considered to be of strategic importance.
Based on the given mandate, duties and responsibilities to handle international trade relation
and negotiations and agreements, MoTI has been engaged in bilateral, regional and multilateral
trade negotiations since 1992 (since the present government took power). Since then, 14
bilateral trade agreements (general trade agreements) were negotiated, concluded, ratified and
implemented. These bilateral trade arrangements are; seven with African countries - Algeria,
Equatorial Guinea, Kenya, Libya, Nigeria, Sudan, and Tunisia; five with Asian & Middle East
countries - India, Iran, Malaysia, South Korea and Yemen and the remaining two with Russia
from Europe and Cuba from Latin America.
At regional level Ethiopia played the leading role as a founding member of the COMESA (the
then Preferential Trade Area - PTA). COMESA launched its Free Trade Area (FTA) in 2000 and
Customs Union in June 2009. Although Ethiopia is the founding member of COMESA, to date it
has not joined either the FTA or the Customs Union. It could be argued that their reasoning for
not joining is because the empirical facts and conclusions of an impact assessment study
findings justifies for not joining the FTA. The country negotiated the Economic Partnership
Agreement (EPA) with the ultimate goal of entering into an agreement of establishing an FTA,
and following on from that also expected to join the COMESA-FTA and Customs Union. It was
in order to evaluate the real impact of such FTAs on the overall economy, the competitiveness
of domestic industries and employment in particular, the government commissioned three
different studies by three different consulting firms at different times and two studies on the
impact of the EPA Agreement. However, the findings of the studies on the impact of joining the
COMESA-FTA did not encourage Ethiopia to join such a FTA. 99
99 The following conclusion is taken from one of the study reports “…Based on the international
competitiveness computed, only those manufacturing activities with Industrial Competitiveness Index
/ICI/, less than or equal to one will survive the pressure of the free trade arrangement on equal footing.
Manufacturing activities that could cope with the - pressure of competition in Ethiopia are... manufacture
of sugar and sugar confectionery, publishing and printing services, manufacture of parts and accessories
for motor vehicles and their engine, manufacture of tobacco products, manufacture of basic iron and
steel, manufacture of wood and cork, except furniture, manufacture of other fabricated metal products
94