As talks progress, Ethiopians debate whether joining the WTO is a good idea

 

After eight years of stalemate, Ethiopia resumed its World Trade Organisation (WTO) accession process in January.

Ethiopia’s transition to liberalism is fairly recent, having started in the 1990s, and the country’s launch of this process in 2003 is fully in line with this trend.

While the previous government was willing to negotiate on trade in goods, it was very reluctant to open up the services sector to privatisation and foreign investment. This stalled the negotiations. The current administration is more enthusiastic about implementing a more liberal economic policy.

Ethiopia was the fastest-growing economy in 2017 according to the World Bank, yet its debt is rising sharply, from more than 47% of GDP in 2014 to 61% in 2018. “We have borrowed significantly for infrastructure projects that have really not achieved the expected results,” Ethiopia’s finance minister Eyob Tekalign told parliament in 2019.

The development model implemented by former prime minister Meles Zenawi was supposed to pay for the debt through export revenue. It is a difficult plan to implement in a continuing period of political turmoil. It was in this context that Prime Minister Abiy Ahmed came to power in 2018.

Reforms needed

Under constant pressure from the World Bank and the IMF, the Abiy administration has adopted a radical reform to move to a market economy. Included in the new policy is the privatisation of key sectors such as telecoms with Ethio Telecom, air transport with Ethiopian Airlines, banking and logistics. These reforms have enabled it to resume negotiations with the WTO.

READ MORE Ethiopia prepares for partial privatisation of Ethio Telecom

By adhering to a regime of binding rules and thus guaranteeing reform, Ethiopia wishes to encourage foreign investment. At the local level, the government says that WTO membership will provide the private sector with better market access.


Source: The Africa Report

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