International trade is an important component of international relations. It is one of the tangible issue areas in interstate relationships. Multilateral and bilateral negotiations and agreements are central to international trade regimes. It is also important to mention the role of commercial laws and policies operating at the domestic level, regulating import and export activities besides bilateral or multi-lateral agreements having implications for the applicability international trade regimes. In this respect China is a member of World Trade Organization. A little more than a decade after being a member of the international body, it appears that it has come to terms with the rules of WTO. On the other hand Ethiopia is not a member of the WTO while it has shown an interest to join. This means that Ethio-China Trade is essentially based on bilateral trade agreements, and the fact that Ethiopia is not member would raise a number of issues.
It is important to note that the growing trade relations between the two countries take place within the larger framework of Chinese development assistance to Ethiopia. Trade between China and Ethiopia is largely based on mechanisms such as the Joint Ethiopian-China commission (JECC), Sino-Ethiopian Agreement for Mutual Promotion and Protocol of Investment-1988, Sino-Ethiopia Agreement for trade, economic and technical cooperation-1996 and Forum for China Africa Cooperation (FOCAC) Sino-Africa at continental level, since recent times.
Against the background of pervasiveness of bilateral agreements Ethiopia’s aspiration to become a member of WTO is part of this new dynamics. However, what has been questioned is its institutional capacity in the form of adjusting domestic laws and enacting, appropriate economic reforms in order to become an active member of the world organization. In this regard it was lately reported in a local news paper Addis Fortune, that after a period of reluctance, the government of Ethiopia submitted its application for membership in 2003. Since then the Government has been submitting documents dealing with Ethiopian trade regulations including a “memorandum on foreign trade regime” (Addis Fortune, December 8, 2013).
It is mentioned that in February 2012, Ethiopia submitted an offer on goods with a list of all tariff rates concerning imported goods. The understanding is that on the basis of the offers, WTO member states engage in negotiations with Ethiopian authorities bilaterally and as a whole. The information indicates that “trade negotiators from Canada, the European Union and the United States who have carried out readings of the offers and returned with questionnaires that totaled into the hundreds” (Ibid).
However, it is being repeatedly mentioned that Ethiopia’s reluctance to open the telecom and the financial sector due to political reasons has repercussions on its aspiration to join the WTO as a multilateral trade forum. While opening up of telecom sector would invite voices of political dissent against the existing political system that is in place, opening the financial sector would risk the fragile economy to outside world. Interestingly enough Chinese Telecom companies have already gained huge concessions from the Ethiopian government as part of a range of bilateral agreements. This means that the representatives of countries which want to negotiate with Ethiopia at the WTO level on international trade rules work to persuade Ethiopia to reform domestic laws in order to make them compatible with the WTO rules of transparency and predictability.
As noted earlier, in the realm of China-Ethiopia trade relations, it is bilateral agreements that are at work. However, China’s position on Ethiopia’s attempt to join the WTO is not clear. In this regard, while WTO regime could also be unforgiving for China too, the situation of China is markedly different from that of Ethiopia. China has managed to join the WTO, and its perception towards the WTO is first one of challenges, then the understanding that becoming a member has finally paid off (Alden 2007). This is important in Ethio-China trade relations because, the WTO as an international trade organization has been working on the strengthening of the rules, and therefore one of the key concerns is transparency of trade practices of countries. In this regard, one of the texts agreed by member countries of the WTO recently relating to the principle of trade facilitation or transparency each to provide including online “a description of its importation, exportation and transit procedures, including appeal procedures that inform governments, traders and other interested parties of the practical steps needed to import and export, and for transit; the forms and documents required for importation into, exportation from, or transit through the territory of that member and contact information on enquiry points”13.
This makes transparency an issue in China-Ethiopia trade relations, arguably one of the most important in China-Ethiopia trade relations. Sooner or later, Ethiopia’s joining the WTO would compel both countries to be making their bilateral trade dealings transparent and make the information pertaining to their trade relations available.
Related to the above is the requirement on the part of Ethiopia, in its attempt towards joining the WTO, in rewriting all national laws to comply with WTO rules and translating them all into one of the international working languages for the sake of transparency, as well as making it available to be viewed by anyone interested. In this respect while China has undergone this stage, this is going to be one of the major challenges for Ethiopia having implications for China- Ethiopia trade relations. In working towards this, it has been indicated that Ethiopia’s Council of Ministers is currently reviewing the country’s customs laws and is soon to refer it to Parliament for approval. Sources indicate that there have been several amendments designed to comply the country with WTO rules, according to fortune papers interview with government officials (Addis Fortune December 8, 2013).
Therefore given Ethiopia’s non-accession status, international trade regimes have implications for China-Ethiopia trade. China being one of the dominant trading partner of the WTO and Ethiopia an aspiring least developing countries (LDC) it largely depends on bilateral agreements, sometimes enjoys quota- and duty free access to a number of major export markets including the USA (under the African Growth and Opportunities Act, AGOA), and the EU (under the Everything But Arms initiative, EBA), and with China. In the short term such preferential trade relations may be working, but in the long term this is subject to change. Ethiopia is believed to be enjoying access to markets which appears favorable than operating under WTO rules. It has been argued that the preferences which Ethiopia enjoys, with China, AGOA, EBA and others schemes can be withdrawn at will. However there is an argument that withdrawal from such schemes could damage the reputation of the withdrawing country. Therefore, becoming a member of WTO by countries such as Ethiopia could provide scope for the predictability of trade strategies of the country and also have strong implications for its transparency in its trade with China. The assumption here is the fact that if Ethiopia is admitted as a member of WTO like China it would lead to the expectation that the trade behaviors of countries will be more predictable and transparent. This is also important because the international trade regimes besides representing the interest of industrialized countries could also advance the interests of developing countries at a multilateral level, beyond the bilateral schemes. In the words of Bienen, (2010: 25) “if Ethiopia remained outside of the WTO it would be barred from entering into these negotiations and representing its own interests – while at the same time being affected by the negotiation outcomes”.
Moreover, the issue of transparency is important not just for the WTO and the adherence to its rules by member countries but also for the private sectors and trading communities of both countries. It is expected that WTO would bring benefits for the Ethiopian private sector. It is argued that WTO accession or subscription to more transparent trade regimes beyond preferential treatment will change the rules of doing business in Ethiopia by strengthening the forces of the market. The argument is that competition will gradually increase, creating opportunities for the private sectors. According to the World Bank’s Doing Business indicators, Ethiopia is believed to be not doing well as the role of private sector in international trade is limited (Ibid). More importantly the challenges of transparency and the availability of information do affect not only member states of multilateral and bilateral trade agreements, but also the domestic actors who in fact are the engine of international trade.