Ethiopia’s bumpy journey to the WTO
Keith Rockwell is Director of the Information and External Relation Division of the World Trade Organization (WTO) based in Genève. Two weeks ago Friedrich-Ebert-Stiftung (FES ) in collaboration with WTO has organized a seminar on “Challenges for the Multilateral Trading System ‐ Perspectives from East Africa” which took place in Nairobi. The seminar explores the challenges of WTO, growing trade war among members of WTO and emerging trade regionalisim. Yohannes Anberbir of The Reporter has attended this seminar where he got a chance to sit for a brief interview with Rockwell where the later took time to discuss the belated WTO accession process of Ethiopia. Excerpts:
The Reporter: The Ethiopia government has been negotiating for more than a decade to join the global trading platform. However, the accession process took very long and is yet to be completed. Tell us the accession process and where Ethiopia is as of now?
Keith Rockwell: Ethiopian’s accession process has begun in the year 2003 but it was not smooth, not only because of the nature of the accession itself but rather because of the decisions of country’s leadership. So, the accession process has broke down in 2012 and there was no communication for the past six years until the Ethiopian officials have resumed communication and restart the accession process recently. So, during the six year break there was no communication, meetings or negotiations.
Give me a brief explanation about how the accession process works?
The way the process works is this: it has a multilateral element and a bilateral element in it. The multilateral element is mostly about WTO rules; it is mostly about the structure of the system. It is about the WTO itself. So, the negotiation at this level deals with issues of the basic principles such as subsidies, anti-dumping, safeguards, agricultural policies and things like that. Then the bilateral element will follow. The bilateral element is mostly about issues of market access. The pace of the negotiation in general and the bilateral stage in particular is driven by the capital of the country joining the platform. I don’t want to speak for Ethiopia but to put it fairly, there were concerns about cutting tariffs and subsequent loss of tariff revenue for the government. On the other hand, there were concerns about opening up the services sector such as telecom, financial services, logistics and the like. The Ethiopian government has already submitted the goods offer but member countries demanded Ethiopia to improve the goods offer. That means member countries are not satisfied with the heavy tariffs that Ethiopia wanted to retain, so they demanded a cut in the tariffs to which Ethiopia is still expected to respond. There has not been the services offer so far. So we can say that the pace has been modest, but it is interesting now Ethiopians have come and said ‘let’s try and get this going again’. I don’t know why Ethiopia is changing its decision now.
What was WTO’s response to Ethiopia's latest communication?
For each and every accession process, there is a working committee from the WTO that we officially call the Working Party. Therefore, countries in the process of acceding should communicate to their respective working parties. Unfortunately, chairman of the working party for Ethiopia has retired and has left very recently. So, there was no official reply to Ethiopia's request so far. We are now in the process of finding a new chair; and the hope is that we can get the working party in place and have another meeting of the working party before too long. But I can't say when.
It has been 15 years since Ethiopia has started the accession process but no tangible results so far. Is that the usual pace? What is the right approach if the country needs to speed things up?
It is up to the acceding country to decide which pace it wants to pursue because it is a negotiation. Acceding countries submit their schedule of goods; it is about ten thousand or whatever tariff lines, and it indicates the average tariff rate. But, what happens is this: On the schedules member countries looks specifically at the products that interest them. You can imagine how negotiating with 164 member countries of the WTO can be complicated. In fact, it is usually easier than this because the US and the Europeans and recently the Chinese are usually the ones that say ‘these are the products of interest to us’ and make sure that they have market access opportunities after the negotiating country has acceded to platform. So manufacturing and services will be big things for the US and the Europeans. You have other countries too. For example, New Zealand will always be very interested in butter, lame and wool because it is the biggest exporter of these products in the world. So, they will come in to the negotiation and ask Ethiopia about its proposed tariffs for those products. If the response is something that New Zealand don't like then the discussion wouldn't continue. But, normally it is the big players that are the driving forces in determining the pace. However, actually it is really the acceding country that determines the pace. Sometimes there has been an effort to put too much pressure on the developing countries, but because of guidelines established a few years ago LDCs are supposed to have more flexibility in this process.
So you mean that there is a room for Ethiopia to accede without opening up the financial sector and the services?
Well it is up to the negotiators. The members will negotiate this. For instance, Ethiopian could say we are an LDC and we can't open up these sectors because we have these infant industries that need to be shielded. There are degrees of openness, you can open it in some ways but you can't open it too much. Countries acceding now as opposed to countries which become members from the very beginning have to go through more rigorous process than those automatically become members because they were in GAAT. During GAAT days, you are expected only to send a letter mentioning your interest to be a member of GAAT and you become a member. However, it didn't have the same level of legal enforcement that the WTO has now.
Taking in to account your experience in the WTO what is your advice to Ethiopia to speed up the accession process?
Trade policy is a very political process and a very difficult balancing act. If you look at market opening, if you look at tariffs for example every government needs to strike the balance between their producers and consumers. May be the high tariffs are very useful for producers. But, let’s say we are taking about food, high tariff on wheat import will be good for the wheat growers but that might mean the price of bread will go up and in developing countries there are poor consumers to think about. So, if you are raising the cost of bread and limiting competition from import this can be tricky. On the other hand, you don’t want your wheat farmers driven out of business because of the import coming from elsewhere that may be subsidized. So, it is a very difficult balancing act governments have to entertain, and it is particularly difficult if you have many poor consumers. It is for the Ethiopian government to play cleverly and it is for them to decide. Ethiopia is also an LDC that needs flexibility and policy space and the government has to understand this tricky political process.