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Ethiopia has taken a major step in implementing the African Continental Free Trade Agreement (AfCFTA) by publishing a long-awaited regulation on tariff concessions. However, the decision to exclude certain high-value goods and services from the regulation has raised questions about how the country intends to balance national interests with continental trade integration.
The regulation, which spans 419 pages, was approved by the Council of Ministers last month and appeared this week in the Negarit Gazette. It comes nearly six years after Ethiopia ratified the AfCFTA treaty and four years since the agreement officially became operational in January 2021.
The AfCFTA framework covers close to 6,000 goods and services. Under the agreement:
• Category A: 90% of goods and services receive immediate zero-tariff access once the deal is operational.
• Category B: 7% of products will have tariffs phased out over a 10-year transition period.
• Category C: 3% of goods and services are exempt from tariff reductions, allowing countries to protect industries vital to their economies.
Ethiopia’s newly published regulation lists only the items falling under Category A, while leaving out categories B and C. This omission means the country has yet to disclose which products it considers sensitive or strategic.
The regulation grants tariff-free access to a broad range of goods, including agricultural products, alcohol, cotton, fertilizer, cement, post-tanning leather, and other commodities.
But strikingly, some of Ethiopia’s most competitive exports and services are missing from Category A. Coffee, a major foreign exchange earner, was left out, although substitutes such as roasted chicory and coffee extracts are included. Likewise, banking and telecom services, as well as sesame and khat, were excluded.
By withholding these items, Ethiopia appears to be prioritizing the protection of its most lucrative sectors, keeping them within the Category C exemption or potentially Category B for gradual tariff reductions.
According to the regulation, the Ministry of Finance has been tasked with classifying goods under categories B and C. The ministry also holds the authority to suspend tariff concessions if another AfCFTA member state violates the terms of the agreement.
The Ethiopian Customs Commission will play a central role in execution. Its responsibilities include:
• Developing implementation systems in collaboration with other government agencies,
• Issuing certificates of origin for Ethiopian goods,
• Verifying certificates of imported goods to ensure compliance with AfCFTA rules.
Ethiopia’s approach reflects the delicate balancing act facing many African economies under AfCFTA. On one hand, full participation in the continental free trade market promises greater market access, industrial growth, and stronger regional ties. On the other, governments are reluctant to expose their most competitive sectors to external competition without safeguards.
By holding back strategic exports like coffee and financial services, Ethiopia appears to be safeguarding domestic revenue streams while testing the waters of the continental trade pact. However, trade experts caution that limited liberalization could delay Ethiopia’s ability to fully benefit from Africa’s largest economic integration effort.
With implementation still in its early stages, the next steps will involve clarifying which goods fall under Categories B and C, and how Ethiopia will manage the gradual reduction or exemption, of tariffs on those items. The government’s decisions in the coming months are expected to shape not only Ethiopia’s trade profile but also its role within the broader African free trade landscape.
Source: The Reporter Ethiopia