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
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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