VZCZCXYZ0000
RR RUEHWEB

DE RUEHDS #2531/01 2591412
ZNR UUUUU ZZH
R 151412Z SEP 08
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 2010
INFO RUCNIAD/IGAD COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ADDIS ABABA 002531 
 
STATE FOR AF/E 
COMMERCE FOR BERKUL 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL ET
 
SUBJECT: COMMERCE VISIT PUNCTUATED BY MIXED FEELINGS ABOUT DOING 
BUSINESS IN ETHIOPIA 
 
SUMMARY: 
 
¶1. (U) U.S. Department of Commerce Deputy Assistant Secretary (DAS) 
Holly Vineyard's August 17-20 visit to Ethiopia highlighted an 
economy offering significant opportunities as well as great 
challenges. While the Ethiopian economy has shown significant growth 
in recent years, business and development community interlocutors 
questioned whether such growth can be continued in the absence of 
broader structural reforms. Ethiopian Government (GoE) officials 
made clear that Ethiopia 'is not ready to liberalize' its 
telecommunications or financial services sector, but did note 
potential openings for expanded protection and the reinforcement of 
intellectual property rights (IPR). The visit highlighted the 
importance of continued bilateral engagement to support Ethiopia's 
accession to the World Trade Organization (WTO) and to secure 
greater opportunities for U.S. businesses to invest in, and trade 
with, Ethiopia. 
 
BUSINESS COMMUNITY: ETHIOPIA IN NEED OF A 'MAKE-OVER' 
 
¶2. (SBU) In a lively and wide-ranging meeting, DAS Vineyard and 
Senior Economic Specialist Becky Erkul engaged founders of the 
American Chamber of Commerce (ACCE) and a cross section of business 
leaders in discussions on the climate, status, perceptions and 
challenges of doing business in Ethiopia. In framing the groups 
concerns, the Addis Ababa's Chamber of Commerce President 
highlighted Ethiopia's challenges with WTO accession, IPR 
protection, foreign exchange reserves, banking, financing, 
inflation, land acquisition and expropriations. Ernst and Young's 
Ethiopia Managing Partner asserted the need for Ethiopia to undergo 
a 'business image makeover' and suggested that the USG promote 
private equity investment in Ethiopia to signal that the country is 
indeed 'open for investment.' The AmCit Manager also noted growing 
concerns that USG support of Ethiopian business development is 
predicated upon 'too many rules.' He cited local businesses having 
difficulty accessing financial support via ExIm funding, causing the 
United States to fall behind China in the international movement to 
invest in Ethiopia. 
 
¶3. (SBU) Members of the U.S. Mission-supported Women's Entrepreneurs 
Group (WEG) asserted that their constricted access to working 
capital stems in part from gender biases in the business community. 
These biases serve to inhibit women's ability to secure and sustain 
financial capital. While WEG members are heartened by the World 
Bank's capacity building and training efforts, they remain hopeful 
that ACCE can leverage U.S. contacts to help women-led businesses 
access traditionally male-dominated industries. Throughout the 
course of the meeting, the DAS asserted that better branding, a 
gender-bias free climate, more liberal banking policies, and 
heightened awareness of IPR and expropriation issues would serve to 
enhance Ethiopia's capacity to do business within the international 
community. 
 
COMMERCIAL POLICY OPENINGS FOR CHANGE ARE DIFFICULT TO IDENTIFY: 
 
¶4. (SBU) DAS Vineyard met with Ethiopian Intellectual Property 
Office (EIPO) Acting Director General (ADG) Alemu Abebe, who early 
in their discussion admitted to Ethiopia's clear need for education 
on IPR issues. Abebe asserted his office's willingness to work with 
the USG on IPR issues as DAS Vineyard highlighted USPTO training 
opportunities for EIPO staff. With a staff of 53 (and hopes of a 40% 
personnel increase in coming years), Abebe's EIPO team is currently 
operating under capacity. DAS Vineyard highlighted Marriott's 
concerns over the infringing "Mariot" and Abebe agreed to follow up 
on the issue. DAS Vineyard queried the EIPO on the GoE's protection 
of foreign copyrights and patents, as well as its decision to 
implement a trademark (TM) versus certification mark (CM) for its 
coffee brands. Characterizing his office's position on TM versus CM 
as being 'open for debate,' the EIPO has studied, and is most 
comfortable with, models that employ the TM option in other 
developing countries. Abebe agreed to follow up the DAS's request 
for additional details on GoE plans to introduce domestic enabling 
legislation to bring the country into compliance with the TRIPS 
agreement as it pursues WTO accession. The ADG noted that the EIPO, 
the Ministry of Tourism, and the Ethiopian Embassy in Washington, DC 
are co-organizing a tour for influential Ethiopian Diaspora business 
people and other foreigners to visit coffee, leather and textile 
sites in Ethiopia. This trip may present opportunities for 
cross-coordination with ACCE's fall 2008 media launch in Addis 
Ababa. 
 
¶5. (SBU) The DAS spoke at length with the Minister of Trade Girma 
Birru regarding Ethiopia's WTO Accession, IPR protections, 
import/export barriers, and the investment climate. The DAS 
complimented MoTI's signal of interest in opening its markets to the 
international community by working to become a member of the World 
Trade Organization. Birru agreed that while Ethiopia's forward 
 
movement with accession planning has proven difficult, the country 
has made positive steps with respect to increasing awareness of IPR 
protection and enforcement. The DAS highlighted U.S. companies that 
have approached the USG, such as Marriott's concerns about trademark 
infringement, and Caterpillar's concerns about burdensome 
import/export requirements, and limited supplier credit. Birru 
indicated that the GoE is examining the possibility of relaxing 
supplier credit regulations to enable companies to increase their 
trade volumes. He also acknowledged that while these shared 
challenges may have impeded U.S. businesses and investments in the 
past, his Ministry is committed to taking corrective action on cases 
cited by American firms. In like-fashion to Minister Birru, Ministry 
of Foreign Affairs' Acting Director General for Economic Cooperation 
and Business Affairs, Girma Temesgen, offered his office's 
assistance in the investigation of AmCit land and investment 
expropriation cases, foreign exchange and supplier credit disputes. 
While Temesgen promised to investigate and facilitate such cases, he 
also made explicit that Ethiopia 'is not ready to liberalize' its 
financial services sector. 
 
¶6. (SBU) Recognizing that ACCE is only the fourth American Chamber 
in Sub-Saharan Africa, the Minister heralded this milestone and 
apologized for delays in the registration process. The Minister 
expressed deep appreciation of Ethiopia's AGOA increases, and 
USAID's agribusiness expansion program. Birru remains interested in 
increased USG assistance to attract FDI to Ethiopia and appreciated 
the DAS's keen interest and support. The DAS welcomed further 
collaboration between the Commerce Department and MoTI on ACCE and 
IPR enforcement, with particular emphasis on assisting American 
companies to receive full protection for their brands. 
 
ETC, AN EXERCISE IN AVOIDANCE: 
 
¶7. (SBU) While national telecommunications operator Ethiopian 
Telecommunications Corporation (ETC) CEO Mr. Amare Amsalu graciously 
received the DAS on short notice, he avoided questions regarding WTO 
expansion in Ethiopia, citing WTO issues as 'outside his area of 
expertise.' Praising the Chinese for their 'economies of scale,' 
Amsalu suggested that American and multi-national ICT firms (such as 
Oracle) model themselves after their Chinese counterparts. According 
to Amsalu, Chinese bidders are better accustomed to Ethiopian price 
sensitivities, and ways of doing business. Amsalu cited the length 
of time traditionally needed for U.S. ICT firms to vet deals with 
ETC (six months or more) as 'prohibitive to doing business with 
American firms.' When asked about the status of the media law, 
freedom of information act, and internet censorship, Amsalu waxed 
profoundly about how the internet 'relaxes borders,' 'maximizes 
globalization,' and 'promotes the freedom of information.'  When 
PolEconOff pushed further on the issue of internet censorship, 
Amsalu asserted that ETC has no role in 'blocking information.' 
Amsalu punted the DAS's questions on the media law and freedom of 
information act to the Ministry of Communications and Transport, a 
meeting that Post, after considerable effort, was unable to secure. 
 
 
SITE VISTS AND SUCCESS STORIES: 
 
¶8. (SBU) While in-country, DAS Vineyard visited several companies 
benefitting from AGOA and USAID capacity building efforts: Taytu 
Leathers PLC, Jobera Flower Farm, NovaStar Garment Factory and Muya 
Ethiopia PLC. The DAS was encouraged by niche sales strategies 
exhibited by all the companies and in several cases breakthroughs 
within high-end U.S. retail markets by Taytu Leathers PLC and Muya 
Ethiopia PLC. (Note: Taytu retails finished leather goods to Barneys 
New York). In total these companies employ and train more than 2,000 
workers, most of whom were unemployed before the businesses opened. 
These companies are currently exporting many of their products to 
the United States, Canada, Western Europe and Israel. Managers and 
owners of the four sites visited were particularly appreciative of 
USAID's overall approach to market driven diplomacy, linkages to 
clients, and U.S. trade fair opportunities. 
 
COMMENT: 
 
¶9. (SBU) Commerce DAS Vineyard's visit highlighted persistent 
challenges and some opportunities. Given the GoE's human capital, 
financial, and technological limitations, sectoral monopolies will 
continue to stunt severely Ethiopia's prolonged economic growth and 
could delay its accession to the WTO. Efforts to convince the GoE to 
open itself for private investment should continue such that 
additional technological, financial and managerial know-how can flow 
into the country. The GoE's openness to expand international IPR 
protections presents an opportunity for positive USG engagement with 
the GoE to protect U.S. commercial interests and support Ethiopia's 
WTO accession efforts. The DAS's visit also re-emphasized Ethiopia's 
need for further engagement on WTO accession requirements while well 
highlighting the current risks and benefits to U.S. firms doing 
 
business in Ethiopia. 
 
YAMAMOTO