July 15 (Bloomberg) -- Ethiopia will submit an offer to the World Trade Organization on access to services such as banking and telecommunications before the next meeting of a decade-long accession process in September, a Trade Ministry official said.
Last year, Ethiopia submitted suggested tariffs on goods to the 159 member countries of the Geneva-based body for negotiation, Geremew Ayalew, head of the trade relation and negotiation directorate at the Trade Ministry, said in an interview in the capital, Addis Ababa. The Horn of Africa nation is now working on offers for 160 service industries, some of which are controlled by the state.
“That is the challenging part,” Geremew said by phone on July 11. “We have to decide which ones are open and which ones are not open.”
Ethiopia’s gross domestic product has grown an average of 9.1 percent over the past 10 years, ranking it as Africa’s second-fastest growing economy, after Angola, and sixth globally, according to World Bank data. The country plans to complete accession to the WTO by mid-2015, as set out in a five-year growth plan unveiled in 2010, Geremew said.
Government-owned enterprises monopolize telecommunications, power distribution and commercial aviation, while state banks dominate a financial industry that bars foreign companies. At the same, foreign and domestic private investment in manufacturing and agriculture is encouraged.
A decision on whether to liberalize service industries will be based on government policy and through negotiations with WTO member nations, Geremew said. The state has previously said that the opening of vital industries won’t occur until the government is effectively able to regulate them and domestic businesses can compete with foreign companies.
The government must be prepared to cede more control of state-run enterprises and support the expansion of private industry to prepare for entry to the WTO, said Mulu Solomon, president of the Ethiopian Chamber of Commerce and Sectoral Associations. “Whether we like it or not, to access the WTO, liberalization is one of the requirements,” she said today.
Ethiopia is at “mid-point” in its bid to join the global trade body, Chiedu Osakwe, director of the WTO’s accessions division, said in a phone interview from Geneva.
“We have certainly not turned the corner to drive it toward an end-game status,” he said. “There is considerable work to be done to change gears and begin to turn this accession machine around.”
Ethiopia has yet to answer questions on its foreign trade regime submitted by WTO members in March 2012, he said. The process that concludes with Ethiopia making specific commitments on trade-related laws “goes on for years,” Osakwe said.
The government expects to accede to the WTO as a Least Developed Country, while retaining control of industries considered strategic, Getachew Reda, spokesman for Prime Minister Hailemariam Desalegn, said in an interview on July 12.
“There will be some wiggle room for LDC countries to retain policy autonomy in a number of areas, which of course will include the sectors we’ve so far not liberalized,” Getachew said. “There definitely will be a compromise, but the compromise will not affect our control over the strategic sectors.”
The WTO said last year the world’s poorest countries won’t be forced into making commitments on market access to services sectors that “do not correspond to their individual development, financial and trade needs.”
There will have to be “degrees of opening” equivalent with changes made by other recently acceded poor nations such as Cambodia and Cape Verde, Osakwe said.
After initial resistance, Cambodia’s government decided to “fully open” its telecommunications market during negotiations with the WTO, according to a book written by Sok Siphana, Cambodia’s chief negotiator, published on the Asian Development Bank Institute’s website. It “saw the merit of foreign participation” on the price and quality of services and overall economic development, Sok said.
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