Ethiopian Prime Minister Abiy Ahmed addresses attendees at an inaugural event following his being sworn in for a second five year term as Prime Minister of Ethiopia on October 04, 2021 in Addis Ababa, Ethiopia.
Ethiopian Prime Minister Abiy Ahmed addresses attendees at an inaugural event following his being sworn in for a second five year term as Prime Minister of Ethiopia on October 04, 2021 in Addis Ababa, Ethiopia.
Ethiopian Prime Minister Abiy Ahmed addresses attendees at an inaugural event following his being sworn in for a second five year term as Prime Minister of Ethiopia on October 04, 2021 in Addis Ababa, Ethiopia.
Ethiopian Prime Minister Abiy Ahmed addresses attendees at an inaugural event following his being sworn in for a second five year term as Prime Minister of Ethiopia on October 04, 2021 in Addis Ababa,

Ethiopia lashes out at US over possible trade pact expulsion


Bryant Harris
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Prime Minister Abiy Ahmed came out swinging on Thursday against US threats to remove Ethiopia from a key trade pact over the humanitarian crisis in Tigray.

The prime minister’s office released a video urging the United States not to expel Ethiopia from the African Growth and Opportunity Act (AGOA), which grants eligible participants in Sub-Saharan Africa duty-free access to the US market for thousands of products.

The video highlights a woman named Saron working in an Ethiopian garment factory using the Twitter hashtag #LetHerWork. It says she is one of hundreds of thousands young women employed in Ethiopia’s AGOA-dependent industrial parks.

“With the potential for AGOA sanctions, losing this opportunity not only means loss of occupation, but also driving millions into poverty,” a voiceover states. “And women like Saron would face forced marriage and illegal migration.”

The video represents Ethiopia’s most public pushback against President Joe Biden administration’s threatened penalties on Addis Ababa over the Tigray crisis.

It comes after US Trade Representative Catherine Tai took the unusually rare step of warning her Ethiopian counterpart Mamo Mihretu in August that “the ongoing violations of internationally recognised human rights amid the ongoing conflict and humanitarian crisis in northern Ethiopia” could “affect Ethiopia’s future [AGOA] eligibility if unaddressed.”

Cameron Hudson, a nonresident senior fellow at the Atlantic Council’s Africa Centre, told The National that he expects the Biden administration to notify Congress of Ethiopia’s expulsion from AGOA by November 1.

“It would have both a practical impact and also a symbolic impact,” said Mr Hudson.

“This would put Ethiopia in a distinct minority in having been kind of unceremoniously removed from this programme, and so it’s just another measure of where the bilateral relationship is.”

While most countries that benefit under AGOA primarily export raw materials, Ethiopia is unique in that it relies on the trade pact for tariff-free exports of its light manufacturing industry, including garments.

“It’s a lot of money for them,” Karl Von Batten, the head of the consulting firm Von Batten-Montague-York told The National. “In five years, the projection was a few billion dollars.”

Mr Von Batten has been lobbying the Biden administration and Congress to expel Ethiopia from AGOA in the hopes it will prompt Mr Abiy’s wealthy backers to pressure him to end the conflict in Tigray.

“What it’s going to do is impact the power brokers who are making millions off this, who are grassroots supporters of Prime Minister Abiy,” said Mr Von Batten. “We’re hoping that it will compel them to come to the table to call for a ceasefire, negotiations, peace talks.”

“It pains me to do this because this is going to affect people’s lives, but it’s the law.”

AGOA stipulates that a country must “not engage in gross violations of internationally recognised human rights” in order to receive preferential trade status.

Under US law, the president must publish a determination as to whether AGOA beneficiaries such as Ethiopia continue to meet the eligibility requirements in the federal register every year.

The National first reported last month that the State Department is reviewing whether Ethiopia’s actions in Tigray constitute a genocide. A genocide designation could make it hard to justify keeping Ethiopia in AGOA under the law’s eligibility requirements.

Mr Biden also signed a broad executive order last month paving the way for sanctions on all actors responsible for human rights violations in the Tigray civil war, including the Ethiopian and Eritrean governments as well as the Amhara Regional Government and the Tigray People’s Liberation Front.

Before the threats of AGOA expulsion, the Ethiopian government previously had little to say as a public response to the Biden administration’s interagency pressure campaign over Tigray.

“I look at this video in the context of what the Ethiopian government is doing more broadly, which is not responding to the overwhelming criticism with introspection, with the review of its own policy,” said Mr Hudson.

“This video is a consistent policy of trying to spin their way out of this. And this conflict in Tigray, if it has been marked by anything, it has been marked by propaganda efforts to explain away what is going on through a very advanced and sophisticated propaganda campaign led in large part by the Ethiopian government.”

Although Ethiopia has maintained an internet, phone and media blackout in Tigray, witnesses have described widespread human rights abuses, including the displacement and murder of civilians, gang rape, the destruction of civilian infrastructure and the burning of crops.

The Ethiopian government has also blocked humanitarian aid to Tigray, recently expelling UN aid workers.

An Amnesty International report released last month found that Ethiopian forces and their allies “subjected hundreds of women and girls to sexual violence”, war crimes that may also amount to crimes against humanity.

Fighters from the Tigray People’s Liberation Front have also retaliated with their own abuses during raids on villages in Amhara, including a massacre last month that killed 120 people.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Updated: October 07, 2021, 10:02 PM