The Implication of African Continental Free Trade Area Agreement on Ethiopia’s Foreign Trade Regulation

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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.



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.