Free Trade Agreement Ethiopia

By September 21, 2021 No Comments

The 12th Extraordinary Meeting of the African Union on the AfCFTA was convened to bring the new agreement into its operational phase, which was held in Niamey on 7 July 2019. [40] [41] At this summit, Benin and Nigeria signed the agreement, so Eritrea is the only African state not to be part of this agreement. In the meantime, Eritrea has applied to accede to the agreement. Gabon and Equatorial Guinea also deposited their ratifications at the summit. At the time of launch, there were 27 states that had ratified the agreement. [45] [47] [48] [49] According to the United Nations Economic Commission for Africa (ECA), if ratified by all 55 African countries, the AfCFTA is considered the largest free trade area in the world, with more than 1.2 billion people with a combined GDP of $2.5 trillion. Since then, Sierra Leone, Namibia, Lesotho, Burundi and South Africa signed the AfCFTA at the 31st African Union Summit in Nouakchott. [50] As of July 2019, 54 states have signed the agreement. [51] The Ministry of Foreign Affairs confirmed that Ethiopia was one of the 44 countries that signed the agreement. The AfCFTA needs to be ratified by some countries in order to boost intra-African trade, which accounts for about 10% of total trade across the continent, by creating a free trade area. Ethiopia is relatively open to international trade, with a rate of 31.2% of foreign trade (World Bank, 2018). It is a member of IGAD and COMESA (but has not joined the free trade area) and has been a member of the WTO since March 2003.

As part of this process, the government is restructuring tariffs. In order to rationalise investment opportunities, it introduced lower tariffs on raw materials and semi-finished products. Ethiopia has also recently signed the African Continental Free Trade Agreement and established special economic zones that offer investors tax incentives and tariff exemptions. The country mainly exports coffee, pulses, gold, meat and production products. The main imported products are oil, vehicles, medicines, fertilizers, palm oil and airplanes. Ethiopia`s main trading partners are China, the United States, Somalia, Kuwait, Switzerland and Saudi Arabia. The peace agreements signed with Eritrea are expected to allow the resumption of economic relations between the two countries and the water-sharing agreement concluded with Egypt and Sudan on the Nile dam will ease tensions between these neighboring countries and promote economic relations. Inaugurated in January 2018, the Djibouti-Addis Ababa railway line is expected to increase Ethiopia`s exports of industrial goods. Historically, the trade balance has widened further due to the country`s investment-oriented economy, which strongly encourages imports. The trade balance depends in part on the weather phenomenon, which sometimes forces Ethiopia, a major agricultural producer, to import cereals during droughts. In 2018, total exports of goods and services amounted to $2.83 billion, while total imports of goods and services amounted to $15.5 billion, resulting in a trade deficit of $11.02 billion (World Trade Organization).

Ethiopia deported US$6.69 billion in services imports, while services exports generated US$4.49 billion $US. Ethiopia and 43 other African countries today signed the African Continental Free Trade Area (AfCFTA) agreement in Kigali, Rwanda. .