Ethiopia and EPA Negotiation 2008 - FES Ethiopia

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for export to a country other than the country of importation; (f) minimum customs values; or (g) arbitrary or fictitious values. Article 20 (1) allows developing countries to delay the full implementation of CVA for a maximum period 5 years after acceding to WTO. Article 20 (2) allows a further 3 years delay to implement the computed method of valuation under article 6. Paragraph 2 allows developing countries which are using officially established minimum values to continue using these values on a limited and transitional basis by way of reservation. Despite the SD&T that is available under the Customs Valuation in terms of longer timeframe for the implementation of the agreement and easing of the rules of the Customs Valuation Agreement (for example, the request to reverse the order of fourth and fifth method; right to value imported goods on unit price of goods sold at home after undergoing processing), both the ESA and EAC text seems to require the automatic application of the Customs Valuation Agreement. This can be very problematic for Ethiopia as the country has a long way to go towards CVA implementation. Implementing the CVA agreement might help in bringing about a fair, uniform, and neutral system for the valuation of goods for customs purposes. However, it also requires accompanying reforms in customs regulations, procedures, better compliance, trade facilitation, modernized customs authority and enhanced human resource capacity both in the government and private sector. This requires hard work and will not certainly come about immediately after the signing of the Interim EPA. There is also a big concern that if the CVA is automatically implemented, there will be lowered protection levels for domestic producers and reduction in customs revenues due to under invoicing. It is important, however, to note that under-invoicing is not a major problem with regard to imports coming from the European Union. Most of the imports coming from UAE and China are significantly and fraudulently under-invoiced to reduce the amount of duties that will be imposed on the goods by the Ethiopian Customs Authority. These reflect the weak domestic tax administration of UAE and China that allow exporter to declare a low value for exported goods. To address the problem of fraudulent under-invoicing the National Bank of Ethiopia, in the recently revised bill presented to the Parliament, proposed that any manipulated import and export documents presented to the government for tax purposes would lead to severe punishment of up to 25 years rigorous imprisonment. The revised law further states that apart from confiscating the 22 | P a g e
goods involved in the fraud and imprisonment of the suspect, the person involved in the tax evasion would pay up to three fold of the amount he/she had tried to evade. 32 Although the incidence of under-invoicing is not high with regard to imports coming from the EU, implementing the Customs Valuation Agreement automatically will be problematic as Ethiopia cannot be expected to have two different valuation regimes for imports coming from the EU and third countries. 5.7 Definition of Customs Duty Article 7 of the ESA Interim Agreement and Article 6 of the EAC Interim Agreement provides that “for the purposes of elimination of customs duties on imports, a customs duty shall include any duty or charge of any kind imposed on or in connection with the importation of goods, including any form of surtax or surcharge in connection with such importation.” This implies that the definition of customs duty that is subject to tariff reduction and elimination include not only normal customs duty but also other duties and charges. Last year, the Ethiopian government has introduced 10% surtax on all goods imported into Ethiopia except fertilizers, petroleum and lubricants, motor vehicles for freight and passengers and special purpose motor vehicles, aircraft spacecraft and investment goods. The Interim Agreements will lead to not only the reduction of normal customs duties but also the elimination of other duties and charges. This will considerably undermine the flexibility the government can potentially have in quickly raising funds in extraordinary circumstances. A related concern for Ethiopia is the standstill provision under Article 14 of the ESA EPA that requires the parties not to increase their applied customs duties on products imported from the other party. This provision has a far-reaching consequence on Ethiopia’s future bound tariff rate offer in WTO accession negotiation context. It is expected that Ethiopia would, in its accession negotiation, bind its tariff rate at a far higher rate than the current applied tariff rate to retain some policy flexibilities to increase tariff in case of surge in import. The standstill provision will significantly undermine the possibility of binding tariff at a higher rate. 32 See Capital, a Business Weekly, 8 June 2008. 23 | P a g e
Page 1 and 2: 2008 Ethiopia and EPA Negotiation R
Page 3 and 4: References ........................
Page 5 and 6: Unilateral preference programs not
Page 7 and 8: Cotonou Agreement. The Cotonou Agre
Page 9 and 10: egional trade arrangements envisage
Page 11 and 12: 4. Content of the Interim EPAs As o
Page 13 and 14: country inputs in such key areas as
Page 15 and 16: African LDCs signed the Interim EPA
Page 17 and 18: the policy space of developing coun
Page 19 and 20: have the audacity to claim otherwis
Page 21: sale for export between the parties
Page 25 and 26: instruments remain to be negotiated
Page 27 and 28: 6.1 Initialling/ acceding to Develo
Page 29 and 30: The EBA regime provides duty free a
Page 31 and 32: etween the EU and Ethiopia as these
Page 33 and 34: cost. It should also be noted that
Page 35 and 36: different documentation requirement
Page 37 and 38: negotiation on the Full EPA with EC
Page 39 and 40: The final outcome of the EAC-EC EPA
Page 41 and 42: and eastern African countries. Harm
Page 43 and 44: 7. Conclusion: Key Issues Ahead The
Page 45 and 46: importance of technical cooperation
Page 47 and 48: the framework rules on procurement
Page 49 and 50: addressed since most of the CARIFOR
Page 51 and 52: References 1. Agritrade, EPA Negoti
Page 53 and 54: 19. Roberta Piermartini, The Role o
Page 55 and 56: Scope of Application Article 6 Clas
Page 57 and 58: Relations between this Agreement an

Ethiopia and EPA Negotiation 2008 - FES Ethiopia

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