The Ethiopian Ministry of Trade and Regional Integration announced that the Chinese government has allowed some Ethiopian products to enter the Chinese market duty-free and quota-free.
The government of China, on November 9, 2022, announced its grant of zero tax treatment to 98 percent of taxable items originating in 10 least-developed countries, especially in Africa.
Afghanistan from Asia and nine African countries, including Ethiopia, Tanzania, Uganda, and Zambia, are beneficiaries of the Chinese government's zero-tax policy.
The Customs Tariff Commission of the State Council of China stated on November 9 that "the policy covers 8, 786 products," and that "the treatment enables the least developed countries (LDCs) to boost their economic development and potential to export to China."
Out of 6422 Ethiopian products, only 1,644 items are eligible for the Chinese policy of zero tariff treatment.
These items include machinery, mechanical appliances, electrical machines, and optical and photographic equipment.
Experts said that as most of the products enlisted in the zero tariff treatment are not produced in Ethiopia, the benefits are minimal.
Edris Seid (Ph.D.) is an economist, he told Addis Zeybe that most of these eligible products are machinery-related items for which Ethiopia doesn’t have any comparative advantage and doesn't produce them.
The most recent data on Ethiopia's total export share of listed items under the Chinese scheme show that the eligible items for the Chinese government's zero tariff policy account for less than 1% of Ethiopia's export.
In the short run, the policy doesn’t bring any positive contribution to Ethiopia's economic growth or its export role, as Ethiopian producers of the eligible items are incapable of competing with Chinese producers, according to Edris.
Similar to the zero-tariff policy granted by the Chinese government, Ethiopia was designated as Unites States’ AGOA beneficiary on October 2, 2000, allowing its products to enter the United States duty-free.
With the objective of promoting economic growth through good governance and a free market, AGOA is supposed to allow sub-Saharan countries to enter their products duty-free on the markets of the United States of America.
“Unlike the Chinese government's waiver of tariffs on items originating in LDCs, AGOA helps these least-developed countries, including Ethiopia, export items that have a comparative advantage,” said Edris Seid.
It is recalled that Biden's administration announced on January 1, 2022, Mali, Guinea, and Ethiopia’s suspension from AGOA due to the alleged claims of grave human rights violations.
The Ministry of Trade and Regional Integration noted that the market opportunity was provided by the Chinese government and that there will be no obligation imposed on Ethiopia.
Edris further commented that in order to realize the initiative, the government should incentivize and implement economic strategies that encourage producers of eligible items enabling them to export their products to China.