Trade Agreement Between Ethiopia And Djibouti

While Ethiopia is exploring other means of importing and exporting, including Sudan, Djibouti`s role is not expected to be diminished in the near future. This is evidenced by the new 756 km railway line between Addis Ababa, the Ethiopian capital, and the Djiboutian coast. The first freight train, which is expected to be completed in 2016, began in November 2015 with the transport of wheat on the line. A new 550 km fuel pipeline between the two countries will also help strengthen bilateral relations. The $1.55 billion project will allow Ethiopia to import diesel, gasoline and jet fuel through the 240,000-barrel-per-day canal. Ethiopia`s state news agency said the agreement reached over the weekend during a visit by Ethiopian Prime Minister Abiy Ahmed to Djibouti included joint development of facilities. In return, Djibouti would have the opportunity to take stakes in Ethiopian state-owned enterprises. These issues remain the key to Djibouti`s success and prosperity, which depends on trade, logistics and services – all dependent on a stable environment – to create growth and jobs. In fact, the country`s bilateral relations can also be viewed through this prism. This is most clear from their relationship with Ethiopia. Djibouti has taken advantage of its friendly relations with its western neighbour and the export potential that its ports offer inside Ethiopia to advance its own development agenda. Djibouti joined GATT in 1994 and became a member of the WTO in 1996.

The country is a member of the Common Market for Eastern and Southern Africa (COMESA), the League of Arab States (LAS), the Intergovernmental Authority for Development (IGAD) and the Cotonou Agreement. Djibouti remained neutral during the Ethiopian-Eritrean conflict of the late 1990s, and the country played an active role in promoting greater cooperation in the region. This is evidenced by the fact that Djibouti is home to the headquarters of the eight-member Intergovernmental Authority for Development. The regional organization, which includes Kenya, Sudan, South Sudan and Uganda, as well as the Horn of Africa countries, was established in 1986 as a trade bloc focused on economic cooperation and food security. In recent years, the body has taken a more active position on issues of conflict resolution and peace and security. But Djibouti also benefits from its biggest neighbour. In 2013, ministers from both countries signed an agreement on the construction of a gas pipeline supplying Ethiopia`s drinking water to Djibouti. Given Djibouti`s water shortage, this infrastructure will become an important long-term strategic asset and support the country`s development agenda.