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Viewing cable 07ADDISABABA91, ETHIOPIA: WTO ACCESSION MOVES FORWARD WITH MFTR

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Reference ID Created Released Classification Origin
07ADDISABABA91 2007-01-12 10:44 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Addis Ababa
VZCZCXRO6548
OO RUEHROV
DE RUEHDS #0091/01 0121044
ZNR UUUUU ZZH
O 121044Z JAN 07
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4036
INFO RUEHGV/USMISSION GENEVA IMMEDIATE 3942
RUCNIAD/IGAD COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS SECTION 01 OF 03 ADDIS ABABA 000091 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
US MISSION GENEVA FOR DUSTR ALLGEIER 
 
E.O. 12958: N/A 
TAGS: ETRD EINV EAID ET
SUBJECT: ETHIOPIA:  WTO ACCESSION MOVES FORWARD WITH MFTR 
SUBMISSION 
 
 
1. (SBU) Summary: The GOE's December 22 submission of the 
Memorandum of Foreign Trade Regime (MFTR) to the WTO 
Secretariat ends a two-year delay in Ethiopia's WTO accession 
 
SIPDIS 
process.  News accounts of the political debate prior to the 
memorandum's approval by the Council of Ministers suggest 
that Trade Minister Girma has become a champion of WTO 
accession and trade liberalization generally, but faces 
continued ideological opposition from others within the 
ruling party.  Comment:  Ethiopia's accession process 
presents an opportunity for the USG to engage the GOE on a 
broad agenda of economic reform within the structured forum 
that the WTO engenders.  This same opportunity for dialogue 
on reform constitutes the greatest incentive for local 
private sector leaders, many of whom are otherwise ambivalent 
about further opening Ethiopia's economy.  USAID technical 
assistance in the research and drafting significantly 
improved and expedited Ethiopia's MFTR; continued assistance 
from donors, including USAID, will be helpful in overcoming 
obstacles to Working Party discussions expected to begin by 
mid- to late-2007.  End Comment. 
 
MFTR SPARKS DEBATE, CREATES A WTO CHAMPION 
------------------------------------------ 
 
3.  (SBU) The issue of Ethiopia's membership in the WTO has 
sparked two years of debate among ruling party leaders, and 
occasionally other stakeholders, on the merits of further 
opening Ethiopia's economy to foreign investment and lowering 
customs and duty tariffs.  A technical committee of 15 
officials drawn from various GOE ministries first delivered a 
draft of the MFTR in October 2004 to the Council of 
Ministers.  The Council kept the draft under review in the 
ensuing months but offered little information to the public 
concerning its status.  USG officials periodically raised the 
issue with GOE interlocutors and received vague replies. 
 
4. (SBU) In mid-2006, local economic newspapers and contacts 
within the Ministry of Trade and Industry (MOTI) suggested 
that MOTI Minister Girma Birru was strongly advocating 
approval of the MFTR within senior GOE circles.  In November 
2006, a newspaper account recounted an vigorous debate within 
the Council of Ministers concerning the submission of the 
MFTR in which Prime Minister Meles himself asked whether WTO 
accession would force Ethiopia to open up its financial 
sector to foreign investment.  Minister Girma Birru 
reportedly responded that the sector could not remain closed 
forever.  The Council reportedly concluded that the GOE 
should seek the maximum transition period under WTO rules 
before allowing foreign financial institutions to operate in 
Ethiopia.  The Council similarly concluded that the GOE 
should try to retain the right to maintain high Customs 
duties for as long as possible.  The Council of Ministers 
reportedly gave its approval to submit the MFTR to the WTO 
Secretariat November 10, 2006, though several more weeks were 
 
SIPDIS 
required to scrub the final draft.  The document was finally 
sent to Geneva Dec. 22. 
 
ROAD MAP TO WTO ACCESSION 
------------------------ 
 
5.  (U) Current estimates by the World Bank (WB) envision 
Ethiopian accession by 2009.  However, the pace of the 
accession process depends on both internal and external 
factors that are difficult to project: 
 
-- Translation of the MFTR by the WTO Secretariat in Geneva 
into the three working languages of the WTO (English, French 
and Spanish) may take between 30-90 days. 
 
-- Working on Questions and Answers:  WTO members 
participating in the Working Party meetings will generate 
hundreds of questions.  Subsequent to the first round of 
Working Party questions, ACC documents must be prepared, 
providing details on the agricultural and service sectors, 
sanitary and phyto-sanitary standards (SPS), technical 
barriers to trade (TBT), and intellectual property rights 
(TRIPS) policies.  The WB Road map study allocates 
approximately six months for this process. 
 
-- Legislative Action Plan:  USAID, in cooperation with the 
Ministry of Justice, expects to prepare a legislative action 
plan, outlining the legislative work program underway, as 
well as target dates for completion, in early 2007.  New 
legislation on both trademarks and Customs has been drafted 
and is currently under review by the relevant ministries. 
Updates of the plan will occur as Ethiopia becomes aware of 
 
ADDIS ABAB 00000091  002 OF 003 
 
 
laws and regulations necessary to reach compliance. 
 
-- Convening of the Working Party Meeting in Geneva:  A 
presentation by GOE officials to WTO members will likely 
generate concerns about Ethiopia's trade regime that will 
have to be addressed in follow-up meetings.  The WB Road map 
assumes the first Working Party meeting occur in mid-2007. 
 
-- Stakeholder Consultation:  Dialogue among the relevant 
stakeholders, including Parliament, regional officials, the 
business community and civil society, is important to assess 
the possible impact of WTO accession.  In May 2006, USAID 
presented information on WTO laws and practices to the Trade 
and Industry Committee Members of the Parliament.  Beginning 
in September 2006, USAID implemented WTO awareness workshops 
in Ethiopia's major regional hubs, targeting academia, the 
public sector and particularly the private sector. 
Additional regional workshops, as well as industry-specific 
workshops with key individuals from major exporting sectors, 
are planned for 2007. 
 
-- Capacity-Building:  Over the coming year, USAID must 
strengthen the analytical and negotiating capacity of members 
of the national technical committee for WTO accession, while 
urging the GOE not to introduce laws inconsistent with the 
WTO after the MFTR is submitted.  A study tour for selected 
Ethiopian officials to a current or formerly acceding 
developing country will address concerns that may arise 
during the accession process. 
 
-- Initial Offer and Bilateral Negotiations:  Concurrent with 
the multilateral Working Party process, the GOE, through its 
designated chief negotiator, will be preparing an offer to 
enhance market access for foreign goods and services by 
reducing tariffs and other barriers, and committing to allow 
foreign service providers to operate in new sectors.  The 
GOE's initial offer could be prepared during 2007, and 
bilateral negotiations could begin by the of the year, 
continuing through 2008. 
 
-- Conclusion and Accession:  Following the successful 
completion of bilateral and multilateral negotiations on 
commitments, as well as on how Ethiopia harmonizes its trade 
regime with WTO obligations, the terms of the agreement must 
be approved by WTO's General Council and then ratified by the 
GOE. 
 
USAID'S WTO ACCESSION PROJECT 
----------------------------- 
 
5.  Begun in 2005, the USAID Doha WTO Accession Project 
focuses on assisting Ethiopia with the critical legal and 
regulatory aspects of WTO accession by promoting Ethiopia's 
compliance with WTO rules; outreach to build public- and 
private-sector support for accession; and building the 
Ethiopian government's capacity to effectively analyze trade 
policy measures.  The Doha Project's priority continues to be 
assisting the GOE in WTO-related internal reform: identifying 
laws and regulations that must be brought into compliance, 
and identifying potential questions/issues that the working 
party group may raise.  To date, the Doha Project has 
submitted policy memos to the Ministry of Trade and Industry 
(MOTI) regarding Ethiopia's import licensing regime, export 
ban of hides and skins, import ban of used clothing, 
intellectual property rights protection and customs law, and 
is finalizing work on foreign exchange and trading rights. 
These memos have already prompted new draft legislation on 
both customs and intellectual property rights.  Work began in 
December on Ethiopia's import bans on ethyl and denatured 
alcohol, on opiate and narcotic drugs, and on organic 
fertilizer and soil. 
 
6.  The Doha Project frequently engages members of the 
technical committee, advisory committees and other interested 
stakeholders at the grassroots level.  It has so far trained 
approximately 375 key civil servants, Parliamentarians, 
members of the private sector and civil society.  Members of 
the Doha Team have addressed law school classes at both the 
federal and regional levels.  In partnership with the WTO 
Affairs Department at MOTI and the Ethiopian Chamber of 
Commerce, the Doha Project is currently sponsoring WTO 
awareness workshops in Ethiopia's major regional hubs.  In 
September, 70 members of academia, the public sector and the 
private sector participated in the project's first regional 
workshop in Bahir Dar.  A November workshop reached a similar 
group in Awassa; additional workshops are planned next year 
 
ADDIS ABAB 00000091  003 OF 003 
 
 
in Mekele and Nazret. 
 
7.  The Doha project has provided the WTO technical working 
groups and the WTO Affairs Department in MOTI with materials 
regarding WTO rules, analytical indices, explanatory notes, 
articles and WTO cases.  Coordination will extend to the 
lawyers in the ministries from which technical committee 
members were selected.  Per the WB Road map study, a WTO 
Reference Center is under construction with research tools, 
computers and books.  As regulations and directives of a 
number of Ethiopian ministries and agencies have not been 
published, a MOTI website is being designed to help MOTI 
comply with WTO transparency requirements. 
 
COMMENT: WTO OFFERS FRAMEWORK FOR ECONOMIC REFORM DISCUSSION 
--------------------------------------------- --------------- 
 
8. (SBU) Ethiopia's accession process presents an opportunity 
for the USG to engage the GOE on a broad agenda of economic 
reform within the structured forum that the WTO engenders. 
This same opportunity for dialogue on reform constitutes the 
greatest incentive for local private sector leaders, many of 
whom are otherwise ambivalent about further opening 
Ethiopia's economy.  USAID technical assistance in the 
research and drafting significantly improved and expedited 
Ethiopia's MFTR; continued assistance from donors, including 
USAID, will be helpful in overcoming obstacles to Working 
Party discussions expected to begin by mid- to late-2007. 
YAMAMOTO