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World Trade Indicators 2009/10
Eritrea Trade Brief
Trade Policy percent against the euro in 2008, making the country’s
exports less expensive in foreign currency terms.
Eritrea has made significant progress since
independence in 1993 in liberalizing its trade regime. Eritrea belongs to the seven-member
In 1994, the country radically reduced the number of Intergovernmental Authority on Development
tariffs and simplified its customs procedures. Its MFN (IGAD), which is currently planning to create a free
1
Tariff Trade Restrictiveness Index (TTRI) is 5.8 trade area. The country is also a member of the
percent, below the average for both Sub�Saharan Common Market for Eastern and Southern Africa
Africa (SSA) (11.3 percent) and low�income countries (COMESA), which established a customs union in
(11.6 percent). Tariff protection for agricultural June 2009 and plans to fully implement it in 2012. As
products is much less restrictive (4.2 percent) than for negotiations between the Eastern and Southern Africa
non-agricultural products (8.5 percent). Based on the (ESA) group and the EU towards a full Economic
TTRI, it ranks 66th out of 125 countries (where 1st is Partnership Agreement (EPA) could not be completed
least restrictive). The maximum MFN tariff imposed prior to the December 2007 deadline, the preferences
by Eritrea was 25 percent as of 2006. under the Cotonou Agreement elapsed. Eritrea,
however, maintains a similar level of preferences to
As a step towards making its economy more open, the the EU market under the “Everything But Arms�
country is planning to launch a free trade zone at its (EBA) initiative for least developed countries. The
Massawa harbor later in 2009 to attract foreign country continues to negotiate a comprehensive EPA
investment. With this free trade zone, Eritrea would with the EU as part of the ESA group. The country is
remove trade barriers such as taxes and quotas and neither a member of the WTO nor an applicant for
minimize bureaucracy at the harbor, encouraging membership.
further trade.
Behind the Border Constraints
External Environment Eritrea ranks in the bottom 5 percent of friendly
According to Eritrea’s Market Access TTRI
2 business environments according to the Ease of Doing
(including preferences) of 0.9 percent, the country’s Business index, on which it ranked 175th out of 183
exports face much lower barriers than an average SSA countries in 2009. Reflecting the extent of trade
(3.9 percent) or low-income country (5.6 percent). facilitation in the country, Eritrea’s score on the
Similarly, the weighted average overall rest of the Logistics Performance Index (LPI) is 2.19 on a scale
world tariff (including preferences) faced by the of 1 to 5, compared to the averages of 2.35 and 2.29
country is a relatively low 1.7 percent, with 3.1 percent for its SSA and low-income comparators, respectively.
for agricultural products and 1.4 percent for non- It ranks 124th (out of 150) in the world and 29th (out of
agricultural products. The Eritrean currency, the nakfa, 39) in the SSA region (with South Africa leading the
which is pegged to the U.S. dollar, depreciated by 7 regional group). Among the LPI subcategories, its
strongest performance is in lowering domestic logistics
costs while its weakest performance is in ensuring the
Unless otherwise indicated, all data are as of August 2009 timeliness of shipments in reaching their destination.
and are drawn from the World Trade Indicators 2009/10
Database. The database, Country Trade Briefs and Trade Outcomes
Trade-at-a-Glance Tables, are available at
http://www.worldbank.org/wti. Real trade growth (in constant 2000 US dollars) is
estimated to have been only 3.7 percent in 2008,
If using information from this brief, please provide the although this is a significant improvement over the
following source citation: World Bank. 2010. “Eritrea contraction of 1.6 percent in 2007. Growth will remain
Trade Brief.� World Trade Indicators 2009/10: Country Trade positive in 2009 but at a lower rate of 1.8 percent.
Briefs. Washington, DC: World Bank. Available at Imports increased by an estimated 3.9 percent in 2009
http://www.worldbank.org/wti.
World Trade Indicators 2009/10 Eritrea Trade Brief
after falling by 1.5 percent the year before, while References
exports grew by an estimated 2.7 percent following a
2.3 percent fall in 2007. Both imports and exports are Capitaleritrea. 2009. “Eritrea to Attract Investors with
expected to continue to register positive growth in Free Trade Zone at Sea Ports.� Capitaleritrea. May
2009, albeit at lower rates of 1.7 percent and 2.1 19, 2009. .
In nominal terms, trade growth accelerated to an COMESA. 2009. “COMESA Launches its Customs
estimated 12.7 percent in 2008 from 5.2 percent in Union.� COMESA. July 24, 2009.
2007. While import growth rose from 1.2 percent in .
from 29.8 percent to an estimated 17.5 percent. Europa. 2009. “Africa, Caribbean, Pacific—Regional
Services exports grew at an estimated rate of 8.6 Negotiations of Economic Partnership
percent in 2008, compared to 24.2 percent in the Agreements.� Europa. June 2009. .
estimated growth of 45.8 percent in 2008, a little lower
The Economist Intelligence Unit (EIU). 2009. “Country
than the growth rate of 51.5 percent in 2007, but are
Report—Eritrea.� EIU. May 2009. .
recent discovery of gold is expected to boost exports
The Intergovernmental Authority on Development
in the near future, with the country’s Bisha gold mine
scheduled to begin production in 2010. (IGAD). 2008. “IGAD Member States and
Development Partners Discuss Minimum
Integration Plan for the Region.� IGAD. November
Notes 4, 2008. .
1. TTRI calculates the equivalent uniform tariff that
would keep domestic welfare constant. It is weighted by
import shares and import demand elasticity.
2. MA-TTRI calculates the equivalent uniform tariff of
trading partners that would keep their level of imports
constant. It is weighted by import values and import
demand elasticities of trading partners.