19 May 2007 04:15

SOMALIA WATCH

 
SW News
  • Title: [SW News] (ION) Ethio/Djibouti Trade Relations Turn Bad
  • Posted by/on:[AMJ][Sunday, October 8, 2000]

THE INDIAN OCEAN NEWSLETTER #920 - 07/10/00
DJIBOUTI/ETHIOPIA : Trade relations turn bad

Trade tension between Djibouti and Ethiopia rose in recent weeks after a small incident turned out to be the proverbial last straw: the Ethiopian government's decision to ban imports of merchandise which had not been produced in Djibouti.

Obeying that government's orders several weeks ago, banks in Addis Ababa began refusing letters of credit for merchandise entering Ethiopia if it had merely transited via Djibouti. Apart from strategic imports (food aid, fuel, etc), only salt produced in Djibouti was authorized for import. Ethiopia is believed to be trying to protect its own industries' production, to cut its import bill, and to diversify its trade circuits.

The Djibouti government reacted to the Ethiopian stand by ordering the finance ministry to carry out a tax adjustment operation on the Ethiopian state-owned company Maritime Transit Service Enterprise (MTSE), which has been refusing to pay some Djibouti taxes but wants to impose its own monopoly on transit operations on merchandise for Ethiopia. It is expected the tax adjustment will be more than US$1 million. Ethiopia always gives the impression that it does not want to pay Djibouti taxes and invoices: for example, unpaid bills due to Djibouti forwarding agents are believed to amount to between 800 million and 900 million Djibouti francs (US$1 = 177 DF), and are equivalent to eighteen months arrears of payments.

I.O.N. - A different bilateral problem is the Djibouti government's decision to move the goal posts in the insurance sector as from the end of this year. The decision has annoyed not only French insurers represented in Djibouti, such as AGF and La Prudence, but also state-owned Ethiopian Insurance Company. It covers all the trucks carrying food aid into Ethiopia which transits through Djibouti, and is now considering closing its offices in Djibouti if the new legislation is implemented.

Copyright 2000 Indigo Publications .

 

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