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The Compatibility of Trade Policy with Domestic Policy Interventions in Ethiopia

The Compatibility of Trade Policy with Domestic Policy Interventions in Ethiopia Amdissa Teshome Consultant Elements of trade policy Liberalisation Investment Policy/FDI Policy on Cross Border Trade Financial Sector Policy Rural Development Policy Food Security Strategy/Safety Net PRSP

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The Compatibility of Trade Policy with Domestic Policy Interventions in Ethiopia

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  1. The Compatibility of Trade Policy with Domestic Policy Interventions in Ethiopia Amdissa Teshome Consultant +251 (0) 91 117 7069

  2. Elements of trade policy • Liberalisation • Investment Policy/FDI • Policy on Cross Border Trade • Financial Sector Policy • Rural Development Policy • Food Security Strategy/Safety Net • PRSP +251 (0) 91 117 7069

  3. Liberalisation • Government withdrawal from production and marketing/trade. • Removal of fertilizer subsidies • Allow the market to determine prices (except petrol/sugar) • Devaluation of the Birr (towards “Flexible” exchange rate) +251 (0) 91 117 7069

  4. Investment policy • Priority areas for investment • Horticulture • Floriculture • Agro-processing • Livestock • Textile and garment • Leather and leather products • Where are the staple foods? • Are investors responding? Yes, but critical of exclusion from certain sectors. +251 (0) 91 117 7069

  5. Cross border trade • Cross border trade labeled “illegal” • Government crack down has seriously affected the livelihood of those depending on it. +251 (0) 91 117 7069

  6. Financial sector • Private banks and public banks work side-by-side • The sector not opened to international competition • Opening up this sector seen as critical to increase FDI +251 (0) 91 117 7069

  7. Institutional support to trade and domestic policy • Ethiopian Quality and Standards Authority • Ministry of Agriculture • Investment Agency • Privatisation Agency • Customs Authority • Ethiopian Livestock Marketing Agency • Ethiopian Grade Trade Enterprise +251 (0) 91 117 7069

  8. Compatibility • Too much emphasis on enforcing regulations. • Removing fertilizer subsidy incompatible with ensuring food security. • Investment in floriculture, construction and other sectors taking prime land away from the staple food production. • Ban on cross border trade incompatible with ensuring food security. • Giving unfair advantage to party affiliated trading institutions incompatible with free market economy. +251 (0) 91 117 7069

  9. Ethiopia: an ancient trading nation …. but +251 (0) 91 117 7069

  10. Heritage Foundation’s “Index of Economic Freedom” (average 50%) +251 (0) 91 117 7069

  11. Ethiopia & WTO • Applied in 2003 • Memorandum on trade regimes submitted in 2007 • It could take up to 10 years for approval and accession • No public debate on pros and cons of joining the WTO • Informally we feel that we must get our house in order before joining. +251 (0) 91 117 7069

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