ETHIOPIA AND SUDAN PREFERENTIAL FREE TRADE AGREEMENT (PTA)

Ethiopia and Sudan signed Preferential Trade Agreement (PTA) and entered into force in February 6, 2003. The provision of the preferential treatment is applicable to all industrial and agricultural products originating from both countries.

The objectives of agreement

1. Promote the expansion of trade and the economic development of the two countries,

2. Foster the advancement of economic activity in the two countries,

3. Increase productivity and financial stability of the two countries hence, it Improves the

living and employment conditions of the people of the two countries and

4. Provide fair conditions of competition for trade between the two countries.

Tariff Rate

The zero tariff rates are applied to all industrial and agricultural products originated from both countries.

Rules of Origin Protocol

The two nations reach an agreement that, the COMESA Rule of Origin Protocol will be the origin rule governing the trade in to Ethio-Sudan preferential trade agreement. Therefore, goods traded between the two nations must fulfill COMESA Rules of Origin Protocol which contains the following three governing rules:

• Origin criteria
• Direct consignment
• Documentary evidence

Rules of Origin / Origin Criteria

1. The goods should be wholly produced or obtained in Ethiopia/Sudan. These are minerals extracted from the ground, vegetable products and harvested, live animals born and raised, products obtained by hunting or fishing, products obtained from sea or river….in Ethiopia or Sudan.
2. The goods should be produced in Ethiopia/Sudan and the C.I.F value of any foreign materials should not exceed 60% of the total cost of all materials used in their production:

Import material content =             CIF value of imported materials

                                    Cost of local materials + CIF value of imported materials

The goods should be produced in Ethiopia/Sudan and attain a value added of at least  35% of the ex-factory cost of the goods:

Value added=                      Ex- factory cost–CIF value of imported material                       

                                                   CIF value of imported materials

3. The goods should be produced in Ethiopia/Sudan and should be classifiable under a tariff heading other than the tariff heading of the non-originating materials used in their production.

4. The goods designated as “goods of particular importance” to the economic development of Ethiopia/Sudan should not contain less than 25%   value added.

Note

1. Goods manufactured with inputs from other countries are considered eligible for the preferential tariff treatment if they have undergone sufficiently working or processing,

2. Change in Tariff Heading and Value Added rule are the general rules but there is specific rule for each products. These rules are Products

Specific Rule (PSR). PSR is available if you inquire at the Addis Ababa Chamber of Commerce & Sectoral Association business support  department,

3.  Rules of origin refer to a change in tariff heading in terms of this protocol apply to non-originating materials only and such change in classification  is at the level of the Harmonizes Commodity Description and Coding System by reason of production.

4. Otherwise, minimal operations or processes defined in rule 5 of the COMESA Rules of Origin protocol, if the process fulfill CTH rule with minimal operation products couldn’t be eligible for zero tariff preference.

Processes not conferring origin under minimal production process are

1. Packaging, bottling, placing in flasks, bags, cases and boxes, fixing on cards or boards and all other simple packaging operations,

2. Simple mixing of ingredients and simple assembly of the components and parts imported from outside the two countries,

3. Operation to ensure the preservation of merchandise in good condition during transportation and storage such as ventilation, spreading out, drying,   changes of packing and breaking up of or assembly of consignments,

4. Marking, labeling, or affixing other like distinguishing signs on products or their packages,

5. Simple operations consisting of removal of dust, shifting or screening, sorting, classifying and matching, including the making up of sets of goods, washing, painting and cutting up and

6. Slaughter of animals

Direct Consignment Rule

The goods should be transported directly from Ethiopia to Sudan.

Documentary Evidence

Certificate of origin is issue by Ethiopian/Sudan chamber of commerce confirming that goods satisfied COMESA Rules of Origin.