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A new study by the Agriculture Transformation Agency (ATA) is recommending that a legal authority be assigned to oversee cereal export restrictions.
On different occasions the country has imposed bans on cereal exports to increase supply on the domestic market, increase food security, and ensure affordable prices for consumers.
Some of the bans have been imposed for a long period. For instance teff exports have been banned since 2008. Maize and sorghum exports were banned off and on over the last few years.
In Ethiopia teff and corn are the major grains that have been prevented from being exported. Wheat and sorghum have also faced bans as well; these four are Ethiopia’s most important cereal crops.
The study points out that there isn’t a written procedure for imposing or lifting export bans and that it isn’t clear if the bans affect only the four major crops or every cereal.
It goes on to say that the exact scope of commodities covered by Ethiopian cereal export bans are almost impossible to determine.
“There is no formal procedure in place to assess the need to impose and lift export bans, leaving producers particularly vulnerable,” it added.
Applying export bans on an ad-hoc basis without an established mechanism for determining the need to impose and lift them results in a highly unpredictable production and trading system, which adversely impacts production and marketing because producers are uncertain when such export bans will be introduced and lifted, the study says.
Article 43(1) of the Commercial Registration and Business Licensing Proclamation 980 of 2016 says that the Ministry of Trade (MoT) is the agency responsible for regulating imports and exports and that it can ban goods or services from being exported from or imported to Ethiopia.
The study says that even though this is the formal agency responsible for determining and implementing trade bans, the actual decision making process is reportedly quite different. “The actual export ban decision was made at the Prime Minister’s Office under the auspices of the National Export Coordination Committee (NECC) chaired by the Prime Minister. This committee oversaw all export activities in the country.”
It added that article 43 of Proclamation 980 of 2016 does require a decision on export bans to be approved by the highest executive body, which is the Council of Ministers.
The duties of the various agencies involved in imposing and administering export bans need to be made clear. The authority to impose export bans is not listed under the law defining the powers of executive organs but in licensing proclamation (980/2016). However, there are no procedures on lifting export bans – proclamation 980/2016 does not cover this issue, the study argued.
Stakeholders do not have any role or information about the government’s decision until they go to commercial banks when they go to process a letter of credit so currently there is not any consultation with producers before export ban decisions are made, the study said.
Another issue is that the length of the ban seems arbitrary. Some cereal export bans in Ethiopia have been in place for longer than any type of export restrictions in other countries. The government should set out detailed rules and procedures on the imposition, administration and lifting of export bans on cereals in a regulation or directive. This should include the conditions for which export bans may be issued, the decision making process, stakeholder consultations, official notification of the decision, and the periodical review of implementation. The Ministry of Trade is recommended for this role, the report reads.
Information on the initiation and decision making process on export bans is not publicly available or reported to affected stakeholders – producers, exporters, and others, this should be changed the study argues.
Identified shortcomings of the current regime of cereal export bans should be addressed, by leaving the instrument of export bans intact but reducing the friction costs associated with them, the recommendation states.
“The management of export bans: enhancing transparency and predictability of bans and how they are imposed and lifted should be improved,” it added.
It recommended replacing export bans with a less market distorting instrument of export restrictions, such as variable export taxes and harmonizing the system with GATT and WTO principles.