Ethiopia to Replace Fuel Car Ban with Tariff Measures

Mintesinot Niggusie

Ethiopia is preparing to replace its ban on fuel-powered vehicle imports with tariff-based controls as part of ongoing efforts to align its trade system with requirements under the World Trade Organization accession process.

The adjustment would mark a shift from the restrictions introduced in early 2024, when authorities moved to limit imports of petrol and diesel vehicles in support of a transition towards electric mobility. Under the emerging framework, imports would no longer be prohibited outright but would instead be regulated through customs duties and related policy tools.

Trade Minister Kassahun Gofe (PhD) told a WTO working party meeting that the government has already applied a similar model in other areas, including the removal of the ban on used clothing, which was replaced with customs duties aligned with international trade obligations. He indicated that a comparable structure is being considered for automobiles and three-wheelers.

Officials involved in the negotiations say the proposed tariff approach is designed to meet WTO requirements that discourage import bans while still preserving policy flexibility. Under the framework being discussed, fuel-powered vehicles would be allowed into the market, but higher customs duties and related fiscal measures could be used to influence demand and discourage large-scale imports.

The discussions come as Ethiopia's accession process approaches its final stages, with fewer than 10 bilateral agreements still outstanding following an acceleration in negotiations over the past year.

Alongside tariff reforms, the government has outlined structural changes aimed at aligning domestic institutions with international standards. State-owned enterprises are being reorganised under Ethiopian Investment Holdings to strengthen transparency, improve governance, and introduce performance-based management systems.

Officials say governance reforms, including independent boards and clearer operational mandates, are intended to separate commercial decision-making from political oversight while opening selected sectors to private and foreign participation.

Additional measures tied to the accession agenda include liberalising segments of import, export, wholesale, and retail trade, expanding access to foreign currency accounts with retention guarantees, and revising customs valuation frameworks.