Trade Data Analysis

Ethiopia: Intra-Africa trade and tariff profile

Ethiopia: Intra-Africa trade and tariff profile

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This trade update provides a country analysis of Ethiopia’s trade relations with Africa, including tariff analysis. All data is sourced from the United Nations (UN) International Trade Centre (ITC) TradeMap and Market Access Map (MacMap) databases. We use the most recent data available from these databases and we are cognizant of the challenges to access of reliable and quality data. Therefore, this analysis at best provides an indicative picture of Ethiopia’s Africa trade profile.

Trade policy and trade agreements

In 2010, the Government of Ethiopia launched an agriculture-led industrialisation strategy, labelled the Growth and Transformation Plan (GTP) a five-year economic strategy that has seen the country reach two digit-growth rates in the past few years. Currently Ethiopia is implementing the second GTPII (2015/16 – 2019/20), which builds on the first GTP and is considered to be an important milestone towards realizing Ethiopia’s vision of becoming a lower middle-income country by 2025. At the centre of GTPII is the need to develop and modernise the agriculture sector, promote industrial development focusing on light manufacturing, and shift towards an export-oriented economy.

Ethiopia is not a member of the World Trade Organisation (WTO). However, Ethiopia is a signatory of the Common Market for Eastern and Southern Africa (COMESA); the Intergovernmental Authority on Development (IGAD) and the Tripartite Free Trade Area (TFTA) which comprises the regional economic communities of COMESA; the East African Community (EAC) and the Southern Africa Development Community (SADC). Important to note that while Ethiopia is a member of COMESA and IGAD, it is not part of the COMESA FTA, and currently IGAD does not have a trade agenda, while the TFTA is still under negotiation, Ethiopia is not engaged in any negotiations.

AfCFTA negotiations

At the continental level, Ethiopia has signed the African Continental Free Trade Area (AfCFTA) which aims to establish an FTA among the continent’s 54 countries. Given that Ethiopia is not actively engaged in tariff liberalisation in the RECs it is party to, the country will have to negotiate with virtually all of the other African countries that have signed to the AfCFTA.

Ethiopia’s trade with Africa

Over the review period 2013-2017, Ethiopia has witnessed an increase in imports from Africa which exports have virtually remained constant. In 2017, Ethiopia had a trade deficit with Africa of over US$ 310 million. Imports were valued at almost US$ 800 million and exports at around US$500 million. Important to note that imports account for a mere 5% of Ethiopia’s global imports and exports a significantly higher 17% share of global exports.

A review of Ethiopia’s trade with Africa reveals the following:

  • Goods traded (imports and exports) are very concentrated and limited to a few products

  • Africa exports mostly vegetable products, which account for almost 90% of total exports with HS0709 – Other vegetables (Khat) accounting for 50% share of total intra-Africa exports; Other vegetable products of interest include HS0713 – Dry legumes (6%); HS0701 – Potatoes (5%); HS0702 – Tomatoes (2%); and HS0901 – Coffee (1%)

  • Imports on the other hand are mostly value-added manufactured or processed goods with main imports including chemical products (44%) and mineral products (fuels) (22%); and food and beverages (8%). These product groups account for about 74% of total intra-Africa imports

  • Top products include HS3105 – chemical fertilisers (36%); HS2701 – coal fuel (10%); and HS2710 – Petroleum Oils

  • In terms of trading partners, Ethiopia’s top 10 import sources account for 99% of Ethiopia’s intra-Africa imports; while top 10 export destinations account 98% Ethiopia’s intra-Africa exports

Amongst the top import sources include, Morocco; South Africa and Egypt, while top export destinations include Somalia; Djibouti; and Kenya.

Ethiopia’s intra-Africa import tariffs

Ethiopia does not participate in any preferential arrangements on the continent despite being part of COMESA and IGAD, but the country accords preferential access to major suppliers of goods from Africa.

A tariff analysis reveals the following:

  • Despite Ethiopia, participating in any preferential arrangements, most goods originating from Africa enter at preferential rates for most countries, especially goods from top suppliers; only about 15% of total intra-Africa imports enter at MFN rates

  • Top imported products attract low tariffs under 10%

  • Duty free products account for only US$12 million equivalent to under 2% of total intra-Africa imports in 2017.

Downloads

Ethiopia: Intra-Africa trade and tariff profile | July 2018
Infographic: Ethiopia – Intra-Africa trade and tariff profile | July 2018

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