WTO membership could boost Ethiopia's economy, even as the trade group faces crisis

By Duncan Miriri

NAIROBI, April 2 (Reuters) - Ethiopia's more than 20-year quest to join the World Trade Organization is set to come to fruition this year – part of the nation's plans to boost its economy through global integration - just as the WTO itself faces unprecedented uncertainty.

The likely accession comes following deep economic reforms in the East African coffee and gold-exporting nation. While analysts said the backdrop of global turmoil and protectionism is daunting, membership could rejuvenate Ethiopia's economy.

"It's strategic clarity in an era where no single framework delivers comprehensive development support," said Endalkachew Sime, a former state minister of planning and development.

Endalkachew said the proposed WTO membership is part of a three-pronged approach, which also includes better integration with the continent via the pan-African trade bloc (AfCFTA), and BRICS membership, which should provide more affordable development financing and less onerous conditions.

Neither Ethiopia's Trade Minister Kasahun Gofe, nor his ministry, responded to requests for comment.

UNPRECEDENTED UNCERTAINTY

The WTO itself is facing major challenges in its 30-year history as global trade referee, and last month U.S. trade chief Jamieson Greer vowed to seek alternatives to the organization.

But for Ethiopia, WTO membership could be key to its clawback from an economic crisis - marked by foreign-currency shortages and double‑digit inflation – that culminated in a 2023 sovereign debt default.

Membership, according to Pamela Coke-Hamilton, executive director at International Trade Centre (ITC), would anchor the country in the rules-based global trading system.

"The first to benefit would be small businesses, which form the backbone of the Ethiopian economy, as they would gain access to new markets and have opportunities to integrate into global value chains," she said.

Ethiopia has been implementing reforms in the past two years required by an International Monetary Fund bailout, including liberalising its currency, lifting foreign exchange controls, and opening up areas like banking.

WTO membership would require binding policies that could lock in those reforms and others to key sectors such as telecoms and financial services, trade experts said.

Hannah Ryder of Africa-focused consultancy, Development Reimagined, said its status as a "least developed country" would also cement Ethiopia's access to arrangements for key trade partners including the European Union, India and Brazil.

The country's textiles and apparel manufacturers could also access more markets under the WTO's most favoured nation rules, Endalkachew said, which could lure investments from Asian manufacturers seeking to diversify their supply chains.

Those new markets are particularly valuable given Washington’s 2022 exclusion of Ethiopia from its preferential trade program with Africa, known as AGOA.

But those in the industry warn WTO membership is not a panacea, particularly since it would force Ethiopia to lower some protective tariffs for the industry, exposing firms to competition from Bangladesh and Vietnam.

The country must also improve structural competitiveness, including lower energy costs, logistics efficiency and better access to finance, according to Pankaj Bedi, owner of Kenya's biggest garments-exporting firm, Aryan Ltd.