ETHIOPIA: TRADE MINISTER CONFIDENT OF SUBMISSION

UNCLAS SECTION 01 OF 02 ADDIS ABABA 001954 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR AF/E DEPARTMENT PASS TO USTR DEPARTMENT PASS TO USAID E.O. 12958: N/A TAGS: ETRD ECON EAGR ET SUBJECT: ETHIOPIA: TRADE MINISTER CONFIDENT OF SUBMISSION OF THE FOREIGN TRADE REGIME MEMORANDUM BY THE END OF THE SUMMER REF: ADDIS ABABA 1138 SENSITIVE BUT UNCLASSIFIED-- PROTECT ACCORDINGLY ¶1. (SBU) SUMMARY. Trade and Industry Minister Girma Birru assured the Charge on July 13 that the Government of Ethiopia (GOE) is fully committed to WTO accession and plans to submit the Memorandum on the Foreign Trade Regime (MFTR) no later than the end of August. Minister Girma stressed that there were no political objections to WTO accession from Prime Minister Meles or members of the Cabinet. Thus, no USG intervention was needed on this front. Minister Girma showed a strong understanding of the accession process and stated that the benefits to Ethiopia from WTO accession included increased support for trade capacity building and enhanced investor confidence. While Minister Girma stressed that there were no objections to WTO accession at the political level, he noted that some elements in the private sector remained resistant to change and skeptical of the benefits of joining the WTO. Minister Girma described his recent visit to Washington for the AGOA Forum as very positive and agreed that Ethiopia could be taking greater advantage of AGOA. He complemented USAID on its livestock initiative and requested a similar program for the coffee sector. END SUMMARY. ¶2. (U) Charge called on Trade and Industry Minister Girma Birru on July 13 to obtain a read-out on his recent visit to Washington and inquire about the status of the Memorandum on the Foreign Trade Regime. She was accompanied by Econoff (notetaker) and USAID WTO Accession Project Chief of Party. GOE COMMITTED TO WTO ACCESSION AT THE HIGHEST LEVEL -------------- -------------- ¶3. (SBU) Minister Girma stated that the GOE was fully committed at the highest level to WTO accession. Any past concerns about joining WTO had been resolved. The MFTR, which was submitted to the Council of Ministers for approval in early 2005 (reftel),is currently circulating among various Council departments. Girma stated that he had personally brought the MFTR to the attention of the Prime Minister and was working directly with the Prime Minister's Office on moving the MFTR forward. The goal is to have the MFTR approved by the Council and submitted to Geneva no later than the end of August. He noted that no USG intervention was necessary to move the process forward, since the GOE was fully committed to WTO accession. Girma appeared confident that the MFTR would be submitted by the end of the summer. (NOTE: In a recent interview in "Fortune," a leading Addis Ababa-based weekly economic newspaper, Prime Minister Meles stated that the Cabinet would be reviewing the MFTR by the end of the summer. This is one of the few occasions that the Prime Minister has spoken publicly about WTO accession. The Prime Minister has also signaled his commitment to WTO accession in talks with the Charge. END NOTE.) ¶4. (SBU) Speaking on the costs and benefits of WTO accession, Girma highlighted capacity building support, particularly in the areas of sanitary/phyto-sanitary standards (SPS),and increased investor confidence as the principal benefits. Given the preferential access that Ethiopia currently enjoys to both the US and EU markets, Girma was skeptical of any trade-related benefits from WTO membership. Rather, he stated that Ethiopia wanted to be "part of the club" and had nothing to gain by not joining. Our message that WTO accession can support Ethiopian exports by providing protection for exporters did not seem to resonate as much as the prospect of greater trade capacity assistance. Girma expressed appreciation for USG technical assistance on WTO accession, and stated that in the future, the GOE would be looking for broader support from donors. (NOTE: While the USG is the only donor currently reviewing existing laws and regulations, there is strong donor cooperation on WTO accession. END NOTE.) According to Girma, it is some elements of the private sector, particularly the Chambers of Commerce, that remain resistant to WTO accession. AGOA FORUM BENEFICIAL, BUT ETHIOPIA COULD DO MORE -------------- -------------- ¶5. (U) Girma spoke positively about the recent AGOA Forum in Washington, though he expressed disappointment that more US businesses were not present at the various events. ADDIS ABAB 00001954 002 OF 002 Recognizing that Ethiopia was not taking full advantage of AGOA, he told the Charge that Ethiopia needed to support a broader range of products. To this end, he has directed his staff to study and identify products or sectors that have potential under AGOA. Cut-flower exports to the US market, for example, were constrained by cargo limitations. Increased air cargo exports from the US could serve to elevate this problem. Girma cited foreign exchange constraints due to higher oil imports as a significant challenge for businesses. Increasing power generation and attracting foreign direct investment were also named by Girma as key determinants for sustainable growth. He expressed his appreciation and satisfaction, and that of the Deputy Prime Minister, for USAID's livestock initiative, and requested that this type of program be replicated for the coffee sector. ¶6. (SBU) COMMENT. Minister Girma's assurances about the GOE's commitment to WTO accession at the highest level, combined with his confidence about the submission of the MFTR, were highly encouraging. Although Girma has made similar commitments about the submission of the MFTR in the past, the fact that the Prime Minister appears to be fully supportive of the process is a major step forward and gives Post confidence that the MFTR will in fact be submitted. Post is aware of private sector concerns about the impact of the WTO accession on local business, and will continue to work with the private sector, including the Chambers, to both educate them about the process and help create a more competitive commercial environment. Post has also begun to actively engage the Parliament: USAID's WTO Accession Project recently conducted a WTO training workshop with ruling party and opposition MPs in May. We will also continue to dialogue with high-level GOE officials to ensure that that they fully understand the trade benefits, including to exporters, of WTO accession. END COMMENT. HUDDLESTON