The Implication of African Continental Free Trade Area Agreement on Ethiopia’s Foreign Trade Regulation
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Date
2020-09
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A.A.U
Abstract
On 21 March 2018 in Kigali, Rwanda, at the 10 th Extra-ordinary and ever historic summit of the AU,
representatives of African state members with strong political devotion and commitment, have
adopted the African Continental Free Trade Area Agreement (AFCFTA) to boost intra-African Trade
and bring radical economic development among member states through creating a liberalized single
continental market facilitated by the movement of natural persons and capital mainly for the free flow
of trade in Goods and trade in Services by dismantling tariff and non-tariff barriers of trade.
Ethiopia, a country within Africa, has become a member and ratified actively the AFCFTA agreement
in order to tackle poverty and transform its citizens from poverty shelf story to the betterments of
tomorrow. Accordingly, in this Paper, I argue Ethiopia as LDC, as a member to COMMESA, was
awarded a market access opportunity, but that was insignificant to attain competitiveness of the
export sector. She also tried to balance its foreign deficit by providing incentives for the export sector
but not that much meaningful. So that, the foreign trade regulation regime has to be reformed to
benefit from AFCFTA Agreement. As a result, the AFCFTA agreement will have an implication on
Ethiopia’s foreign trade regulation; first, it enables Ethiopia to reform its policy and strategy, legal
and institutional frameworks in a way to host trade liberalization and avoidance of tariff and non-
tariff barriers of trade. Second, it would have an implication to assess and restructure regulatory
tools of foreign trade regulation regime. First, I argue that liberalization of tariff, quantitative
restriction and export duties as per AFCFTA Agreement positively implies to have more trade flow to
drive economic growth, but it will pose a problem of government revenue loss and impact on the competitiveness of the domestic industry. Second, harmonization of technical measures as per the
AFCFTA enables the country to have a competitive export sector through quality assurance and
enhance food safety and security even though it requires its technical costs. Third, legislating trade
remedy laws and domestic arrangements as per AFCFTA is pertinent, since it protects the domestic
industry from unfair and unintended trade practice. Fourth, sticking to AFCFTA’s rules of origin
enables the country to intercept the regional supply chain and promote value addition. Fifth, having a
simplified customs regulation enables to have an effective and efficient customs regime though it
requires investing infrastructure and automated technologies. Finally, liberalization of the service
sector including the financial sector and the foreign exchange regime is valuable to facilitate business
transaction, attract FDI and to generate economic growth, but it requires capacity building of the domestic industry in order to protect it from floating by foreign companies.
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Keywords
Foreign trade regulation, Tariff, Non-Tariff Barriers, Free Trade Agreement, Technical measure, Contingent Trade remedies, Trade facilitation, quantitative restriction, Export duties, Foreign Exchange, and Customs Regulation.