Trading in Uncertainty, Ethiopia Eyes WTO Accession Despite Its Paralysis

Trading in Uncertainty, Ethiopia Eyes WTO Accession Despite Its Paralysis

Nov 1 , 2025. By Daniel Fikadu ( Daniel Fikadu (LL.B, LL.M, MBA) Head Attorney at Law, Daniel Fikadu Law Office, and Partner at Legaltec Ethiopia Software. He can be reached at (Danielfikadulawoffice@yahoo.com) )

As Ethiopia works toward WTO accession, it is also moving to implement the African Continental Free Trade Area. The dual strategy mirrors an emerging consensus among trade officials that regional agreements may offer a fallback if global rules remain in limbo. For many, the message is clear. Rules still matter, even when the enforcers are missing.

Ethiopia’s negotiators have circled March 2026 as the deadline for WTO accession, a time laden with political symbolism and economic risk. The move, more than symbolic, is intended to embed the federal government’s Home-Grown Economic Reform Agenda within the legally binding commitments of multilateral trade rules, shielding it from potential future political reversals.

But the global trade regime Ethiopia seeks to join is itself in disrepair.

Ethiopia’s bet rests on the idea that WTO accession will serve as a legal anchor for reforms in sectors as sensitive as finance, investment, and foreign exchange markets, and open the door to “most-favoured-nation” (MFN) treatment. The status guarantees non-discriminatory market access from all WTO members, a potentially vital lever for export diversification. Coffee may already enjoy tariff-free access under China’s duty-free scheme for LDCs, but Ethiopia plans to go further, boosting sectors beyond commodities and unlocking markets that have traditionally been closed to its exports.

For trade policymakers, certainty trumps even tariff cuts. Predictability is the currency investors trade in. But that principle is being tested at a global level.

The WTO's Appellate Body, the apex court of trade dispute settlement, remains effectively defunct. Member states can now appeal to the void, rendering adverse rulings unenforceable. For Ethiopia, this means undertaking tough reforms without guaranteed protection under the very rules it agrees to. It is a trade-off between structural reform and judicial reciprocity, one that suggests belief in norms over enforcement.

The Ministry of Trade & Regional Integration (MTRI) has modelled the effects of WTO accession. While agriculture might benefit, the competitive shock to light manufacturing, particularly from Asian imports, could overwhelm fledgling local industries. Historically protected by high tariffs and subsidies, the nascent domestic manufacturers could struggle under WTO rules, which sharply curtail such policy tools.

Negotiators are leaning on Ethiopia’s Least Developed Country (LDC) status to carve out grace periods and flexibilities. But those windows will close, and the question is whether domestic industries will be ready when they do.

At the same time, Ethiopia is also implementing the African Continental Free Trade Area (AfCFTA). This regional pact is viewed by federal officials as a legal “backstop”, a way to preserve enforceable trade rules closer to home should the global system continue to unravel.

Accession is driving deep domestic legal reforms. One of the most visible is a directive (1082/2025) issued by the Ethiopian Investment Board. This measure opens formerly protected activities in export, import, wholesale, and retail trade to foreign investors, under clear, and stringent, conditions. On the export side, qualified foreign firms can now ship key commodities such as coffee, khat, livestock, oilseeds, and forest products. Applicants should undergo rigorous due diligence to ensure financial integrity and be free of illicit ties, an attempt to keep strategic commodities in "credible hands."

On the import and wholesale front, virtually all sectors are now liberalised except for fertiliser and petroleum. Foreign investors may also participate in domestic supply chains, a step intended to increase efficiency and reduce price volatility.

Most symbolically, the retail sector, long off-limits to foreign capital, is being opened. With a minimum capital requirement of 2.5 million dollars, foreign retailers, particularly global single-brand names, are now welcome. Policymakers hope these players will raise market standards and offer consumers better prices and quality. The directive sets up a multi-agency enforcement framework, involving the Ethiopian Investment Commission, the Trade Ministry, the National Bank of Ethiopia (NBE), and the Customs Commission. The hope is to see transparency, coordinated regulation, and accountability.

However, questions linger about whether such openness will yield inclusive development. Small domestic traders fear being muscled out by large capital-intensive rivals. Labour unions warn of job losses from import-driven competition. Conversely, economists argue that efficiency gains and lower prices will expand consumer welfare and create new jobs along the value chain.

All of this unfolds against a turbulent macroeconomic backdrop. Ethiopia faces high external debt, acute forex shortages, and the aftershocks of civil conflicts. Capital controls and a managed exchange rate continue to frustrate investors. Profit repatriation remains slow. Informal forex markets thrive.

Still, WTO accession signals a commitment to reform. Transparency, dispute settlement, and rule-based trade are seen as antidotes to regulatory opacity and policy reversals. Even with the WTO’s institutional paralysis, membership sends a message. Ethiopia wants to play by the rules. Its march toward WTO accession is less about instant benefits and more about locking in reform through international law, even if the global enforcers are absent.

The economic reforms carry both promise and peril. They have a potential for increased investment and export growth, countered by the risk of dislocation in vulnerable sectors. If Parliament ratifies the package by late 2025, accession may be formally approved at the WTO’s 13th Ministerial Conference in 2026. By then, Ethiopia will have bet heavily, not only on trade, but on the hope that rules, even when unenforced, matter.

PUBLISHED ON Nov 01,2025 [ VOL 26 , NO 1331]