Ethiopia and EPA Negotiation 2008 - FES Ethiopia

Lifting the export tax will considerably undermine the production capacity of
Ethiopian tanneries. All the tanneries are currently working under their full
capacity because of the critical shortage of raw hides and skins. Lifting the
export tax while there is this evident shortage of supply will lead to closure of
more than half of the tanneries. Similarly, eliminating the export tax would arrest
the transition to export of value added products.
5.4 Scope of Liberalisation
Free Trade Agreements by definition restrict states’ freedom to manoeuvre –
that is their intention. Countries choose between the advantages of constraints
to other countries’ policy freedom and the disadvantages of constraints on their
own when they negotiate any trade deal. Arguably, the single largest loss of
policy space that takes place when each country joins an FTA or the WTO is the
loss of freedom to impose custom duties or vary them, as the case may be.
However, this doesn’t mean there are no flexibilities. For instance, in the current
Doha negotiations LDCs are exempted from having to make any market access
concessions. Under the Interim EPAs, countries are required to allow a minimum
of 80% of EU imports to enter duty free with a period of 25 years. For the ESA
countries, the transitional period is only 15 years. In the EAC Interim EPA-which
includes four LDCs, 82% of the region’s import from EU will be liberalised. 62% will
be liberalised within 2 years, and 80% within 15 years and only the final 2% within
25 years. There is no justification or even claim that these concessions are
designed to be consistent with the countries development needs. The EC’s one
–size- fits –all approach of requiring liberalisation of a minimum of 80% of import
from EU within a transition period of 25 years doesn’t even make a distinction
between LDCs and developing countries. The market access commitments in
the interim EPAs are out of proportion to what is being requested of LDCs in the
Doha Round although admittedly the Doha Round is not a free trade
negotiation.
Obviously, as the scope of the liberalisation widens the revenue loss from tariff
collection increases. This is significant given the stage of development of most
of these counties. This will be an added burden given the weakness and
administrative difficulty in collecting o internal taxes and will affect the
government’s expenditure for other objectives such as health and education.
5.5 Prohibition of the Use of Quantitative Restrictions
Article 17 of the ESA Interim Agreement provides that “except as specified in the
Annexes, all prohibitions or restrictions in trade on the importation, exportation or
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