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RR RUEHWEB

DE RUEHDS #3293/01 3481239
ZNR UUUUU ZZH
R 141239Z DEC 06
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 3723
INFO RUEHNR/AMEMBASSY NAIROBI 2730
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ADDIS ABABA 003293 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV PGOV ET
SUBJECT: ETHIOPIA:  WTO ACCESSION LEAPS FORWARD WITH MFTR 
SUBMISSION 
 
¶1. Summary.  Ethiopia reached a significant milestone in its 
bid to join the World Trade Organization (WTO) when the GOE 
submitted the Memorandum of Foreign Trade Regime (MFTR) to 
the WTO Secretariat on (date).  From application to 
membership, WTO Accession comprises three major phases:  fact 
finding; sectoral and bilateral negotiations; and submission 
of working party report and protocol of accession.  With 
submission of the MFTR, Ethiopia now embarks on the beginning 
of the phase two sectoral and bilateral negotiations, the 
most active and important phases in the accession process. 
With the formal submission of the MFTR and the emergence of a 
strong WTO champion, political insider Trade Minister Girma 
Birru, the Ethiopian government has demonstrated political 
commitment to the WTO Accession negotiations.  There remains, 
however, a significant need for on-going coordination to 
ensure Ethiopia's ownership of its accession process.  End 
Summary. 
 
¶2. Comment.  For Ethiopia, the MFTR milestone confirms the 
GOE's political commitment to join the WTO, signals a reform 
process anchored to international standards and demonstrates 
intent to improve Ethiopia's overall business environment. 
Moreover, after submission of the MFTR, Ethiopia will be 
expected to comply with the "standstill provision" which 
requires Ethiopia to refrain from issuing new laws that 
violates the WTO Agreements.  Submission of the MFTR triggers 
the accession process in earnest and it is in these next 
phases that the real work of accession begins.  Based on the 
experience of former acceding countries, the most significant 
challenge stems from the disparity between a nation's 
internal legal and regulatory capacity and the requirement 
for WTO integration.  As such, assistance from donors, 
including USAID, is imperative to avoid pitfalls that could 
slow down the Working Party discussion at the early stage of 
the negotiations.  Ethiopia's accession also presents the 
opportunity for the USG to constructively engage the GOE 
within the structured forum that the WTO engenders.  End 
Comment. 
 
MFTR SPARKS DEBATE, CREATES A WTO CHAMPION 
------------------------------------------ 
 
¶3. The issue of Ethiopia's membership to the WTO has been the 
focus of much economic and political debate between the 
government and relevant stakeholders.  A technical committee 
of 15 officials drawn from various GOE ministries delivered a 
draft of the MFTR in October 2004 to the government body 
responsible for approving the document, the Council of 
Ministers.  Since 2004, approval of the MFTR stalled while 
government officials debated the merits of WTO accession. 
According to government officials and media sources, the 
opening of Ethiopia's financial sector to foreign investment 
and the lowering of customs and duty tariffs were the main 
sources of contention during government debates.  During a 
November 10 Council of Ministers meeting, WTO champion 
Minister of Trade and Industry Girma Birru bluntly responded 
to Prime Minister Meles' concerns about being "forced" to 
open up the financial section by saying that it was better 
for Ethiopia to "open up and try to become a member rather 
than closing the door and trying to argue."  At this same 
November 10 meeting, the Council of Ministers approved the 
MFTR and its submission to the WTO Secretariat in Geneva. 
 
ROADMAP TO WTO ACCESSION 
------------------------ 
 
¶4.  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.  Without respect to 
time, the GOE's path the WTO accession includes the following 
activities. 
 
¶5.  Translation of the MFTR:  Following submission of the 
officially sanctioned MFTR, the WTO Secretariat in Geneva 
will translate the document into the three working languages 
of the WTO (English, French and Spanish).  The timeframe 
necessary to complete translation may take between 30-90 days. 
 
¶6.  Working on Questions and Answers:  After translation, the 
MFTR will be circulated to WTO members.  Those countries that 
will be participating in the Working Party meetings may 
require time to review and comment on the Ethiopian 
documentation.  However, the Ministry of Trade and Industry 
(MoTI) may begin receiving questions as early as 30 days 
after submission of the official MFTR.  In total, Ethiopia 
can expect to receive hundreds of questions from Working 
Party members.  The question and answer phase will also 
include preparation of various documents - namely the ACC 
documents - that play key roles in the accession process. 
The ACC documents are technical notes that provide detailed 
 
information on the agricultural and services sectors, 
sanitary and phyto-sanitary standards (SPS), technical 
barriers to trade (TBT), and intellectual property rights 
(TRIPS) policies.  Drafts of these documents will be prepared 
in tandem and subsequent to the first round of Working Party 
questions.  The World Bank (WB) Roadmap study allocates 
approximately six months for this process. 
 
¶7.  Convening of the Working Party Meeting:  After responding 
to the initial round of questions, the first Working Party 
meeting will convene.  An official delegation composed of key 
members of the GOE's trade team, and led by a "chief 
negotiator," will travel to Geneva to meet formally with 
members of the Working Party.  This meeting may be held over 
one or more days and will involve a presentation by the GOE 
officials as well as queries and comments by the WTO members. 
 At the conclusion of the Working Party meeting, the Chair 
will report on the next steps to be taken, namely a list of 
additional information that the GOE will be expected to 
generate in anticipation advance of a follow-up meeting. 
Working Party members can be expected to present the GOE with 
lists of questions on Ethiopia's trade regime.  The WB 
Roadmap assumes the first Working Party meeting will take 
place sometime in mid-2007. 
 
¶8.  Legislative Action Plan:  Ethiopia will be required to 
submit a legislative action plan, outlining the legislative 
work program underway, as well as target dates for 
completion.  This document should be submitted prior to the 
first Working Party meeting.  A draft version of the action 
plan has been prepared by USAID in cooperation with the 
Ministry of Justice and will be submitted in early 2007. 
Draft legislation for both trademarks and customs laws have 
been tendered and are currently under review by the relevant 
ministries.  Updates of the legislative action plan will 
occur as Ethiopia becomes aware of laws and regulations 
necessary to reach compliance. 
 
¶9.  Stakeholder Consultation:  Dialogue between the relevant 
stakeholders, including Parliament, regional officials, the 
business community and civil society, is important in order 
to gain a full view of the possible impacts 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 developed and 
implemented a series of WTO awareness workshops in Ethiopia's 
major regional hubs.  Participants include members of 
academia, the public sector and the private sector with 
particular emphasis on the private sector.  Additional 
regional workshops, as well as industry specific workshops 
with key individuals from major exporting sectors, are 
planned for 2007. 
 
¶10.  Capacity Building:  Significant work is required to 
strengthen the capacity of members of the national technical 
committee for WTO accession.  During the coming months, USAID 
will assist the technical committee by working directly with 
national negotiating teams, assisting in the preparation of 
documentation required by the WTO Secretariat, preparing 
analytical papers and briefings, organizing brainstorming 
meetings and disseminating trade policy information.  At the 
same time, USAID will coordinate with relevant technical 
committee members to ensure that the GOE does not introduce 
laws inconsistent with the WTO after the MFTR is submitted. 
Over the coming year, efforts are focused on improving the 
negotiation capacity of national officials.  A study tour for 
selected Ethiopian officials to a current or formerly 
acceding developing country is planned so that these 
officials will have practical explanation for concerns that 
may arise during accession process. 
 
¶11.  Initial Offer and Bilateral Negotiations:  Concurrent 
with the multilateral Working Party process, the GOE, through 
its designated chief negotiator, will be developing offers on 
market access for both goods and services.  Trading partners 
may be expected to request reductions into Ethiopian tariffs 
for their products and also to request that Ethiopia make 
certain market access commitments to allowing operation of 
foreign service providers to operate in the country.  The 
initial offer could be prepared during 2007, and bilateral 
negotiations could begin by the of the year, continuing 
through 2008. 
 
¶12.  Conclusion and Accession:  Following the successful 
completion of bilateral and multilateral negotiations on 
commitments, as well as the manner and timing with which 
Ethiopia is to harmonize its trade regime with WTO 
obligations, the terms of the agreement will be approved by 
WTO's General Council and ratified by the GOE. 
 
BACKGROUND ON USAID'S WTO ACCESSION PROJECT 
 
------------------------------------------- 
 
¶13.  The objective of the USAID Doha WTO Accession Project is 
to provide a framework for technical assistance that will 
enable the GOE to accede into the WTO in an organized manner. 
 The Project focuses on assisting Ethiopia with the legal and 
regulatory aspects of WTO accession, as resolution of these 
issues are central to Ethiopia's accession to the WTO.  The 
overarching goals of the project are:  development of 
Ethiopia's policy and legal framework so that it complies 
fully with WTO rules; outreach to build the necessary 
political, public and private sector support for accession; 
and building of institutional capacity within the Ethiopian 
government in order to effectively analyze trade policy 
measures. 
 
Legal and Regulatory Support 
 
¶14.  The Doha Project's top priority continues to be 
assisting the GOE in making concrete gains in WTO-related 
internal reform.  Identifying laws and regulations that must 
be brought into compliance with WTO rules is very important 
as submission of the memorandum will trigger full-scale work 
in answering working party members' questions.  In 
preparation for this development, the project team is 
identifying in advance some areas of potential 
questions/issues anticipated to come from the working party 
group. 
 
¶15.  To date the Doha Project team has completed and 
submitted policy memos to the 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.  This work has resulted in draft 
legislation on both customs and intellectual property rights. 
 Currently, the Doha team is finalizing work in the areas of 
foreign exchange and trading rights.  In December, work will 
begin on Ethiopia's import ban on ethyl and denatured 
alcohol, the import ban on opiate and narcotic drugs, and the 
import bans on organic fertilizer and soil. 
 
Outreach 
 
¶16.  The Doha Project frequently engages members of the 
technical committee, advisory committees and other interested 
stakeholders.  To date, the project has participated in the 
training of approximately 375 key civil servants, 
Parliamentarians, members of the private sector and civil 
society in semi-formal training programs.  Members of the 
Doha Team have addressed law school classes and forums 
organized by stakeholders at both the federal and regional 
levels.  We have also participated in programs organized in 
and outside of Addis Ababa in preparation for the Economic 
Partnership negotiations.  These stakeholder consultations 
have afforded the project a rare opportunity to consult with 
grass-roots level associations and individuals. 
 
¶17.  In partnership with the WTO Affairs Department at MoTI 
and the Ethiopian Chamber of Commerce, the Doha Project is 
currently sponsoring a series of WTO awareness workshops in 
Ethiopia's major regional hubs.  Participants include members 
of academia, the public sector and the private sector with 
particular emphasis on the private sector.  In September, a 
mixed group of 70 participants attended the project's first 
regional workshop in Bahir Dar.  Another workshop in November 
reached a similar group in Awassa; additional workshops are 
planned next year in Mekele and Nazret. 
 
¶18.  The accession process, though guided and accomplished by 
the GOE, can be further driven by participation of the 
private sector and civil society.  For this reason, 
significant additional outreach programming is essential to 
expediting Ethiopia's accession. 
 
Institutional Capacity Building 
 
¶19.  The Doha team has been coordinating with members of the 
WTO technical working groups and has provided materials 
regarding WTO rules, analytical indices, explanatory notes, 
articles and WTO cases.  The same has been done for the WTO 
Affairs Department in MoTI.  Coordination will extend to the 
lawyers in the ministries from which technical committee 
members were selected.  Per a WB Roadmap study, a WTO 
Reference Center is under construction with research tools, 
computers and books.  Earlier analysis by the project team 
revealed that the regulations and directives of a number of 
Ethiopian ministries and agencies have not been published. 
As such, a MoTI website is being designed to help MoTI comply 
with WTO transparency requirements. 
WILGUS