The Potential Market Benefits and Challenges of accession of World Trade Organization Ethiopia – the case of Leather Industry in Ethiopia

Abstract

Ethiopia is one of the eight least developed countries (LDCs) that are currently in the process of accession to the WTO. Despite pursuing WTO membership for the past eighteen years, the country is joining the global trade body in near future. Progress in the accession process is held back by a series of issues including Ethiopia‘s reluctance to open some sectors, which are deemed to be of vital importance for the country‘s economic development, and the protracted nature of WTO accession negotiations. The adoption of the 2012 WTO Accession Guidelines for LDCs has raised hopes that it will give an easy ride to acceding LDCs like Ethiopia. The objective of this paper is to examine the benefits and challenges for the Ethiopian Leather Industry in joining to World Trade Organization. To identify the benefits and the major perceived challenges for the Ethiopian leather industry in joining World Trade Organization, then to analyze Ethiopia‘s WTO accession process, including its institutional capacity and how the various domestic political aims, structures and constraints affect the accession process. WTO accession involves a complex and lengthy process, especially for LDCs that aim to implement industrial policies in terms of supplying credit, foreign exchange allocation, import tariffs, export subsidy, etc. Such industrial policies require autonomous policy space, which sometimes run counter to WTO principle and agreements. Ethiopia is a case in point. Ethiopia has been reviewed the foreign trade regime of Ethiopia on the basis of an updated version, which was issued in December 2019 ahead of the Working Party meeting. Ethiopia plays a major role in the Horn of Africa region, which has the highest concentration of WTO accession activities. ―Therefore, the resumption of the accession of Ethiopia is expected to give positive impetus to other African accessions, as well as regional integration efforts in the African continent, such as the African Continental Free Trade Area. The combination of its desire to practice industrial policy and thus its need to have a policy space and the availability of favorable access to international markets suggests that joining the WTO that, the Government of Ethiopia headed by 2019 Nobel Peace Prize winner Prime Minister Abiy Ahmed is committed to using the WTO accession process as an anchor for its Homegrown Economic Reform Plan and has set the goal of achieving WTO membership by end-2021. In this thesis an attempt is made to analyze the implication of WTO for the Leather Industry sector and draw possible lessons and best practices for Ethiopia. As was indicated in the literature review trade liberalization was achieved through a long and complicated process of negotiations. Hence, this study paper is designed to facilitate this situation to reap the benefits through WTO accession and to show the tangible benefits of joining the World Trade Organization in leather products Export and leather Industrial Sectors.