bedasso7_Michael TeweldeXinhua via Getty Images_agoa ethiopia Michael TeweldeXinhua via Getty Images

Economic Sanctions Won't Bring Peace to Ethiopia

The exclusion of Ethiopia from the African Growth and Opportunity Act is intended to stop human-rights abuses in Tigray, but there is little evidence that such measures affect the behavior of political elites. Instead, they limit options for low-skilled workers and damage bilateral relationships.

ADDIS ABABA/CHICAGO – The recent decision by US President Joe Biden’s administration to revoke Ethiopia’s eligibility for the African Growth and Opportunity Act (AGOA) has revived the debate over the effectiveness of imposing economic sanctions on poor countries. The administration cited “gross violations of internationally recognized human rights” in the conflict in northern Ethiopia as the basis for the move. But it is unclear how Ethiopia’s exclusion from the program will end the violations, especially given the involvement of multiple state and non-state actors in the conflict.

AGOA offers eligible countries in Sub-Saharan Africa duty-free access to the US market for selected products. Ethiopia stands to lose preferential access to a market segment worth $240 million, which is equivalent to roughly 9% of the country’s total exports. The loss will be felt most acutely by the apparel and leather industries, which employ around 200,000 people, most of whom are women.

In general, there is little theoretical support for using international economic sanctions to influence governments’ domestic political behavior. What explanations there are derive from the Heckscher-Ohlin model of international trade, according to which a country benefits from exporting goods produced with its most abundant resources and importing goods that use resources that are scarce. If sanctions are imposed and trade is limited, the country’s supply and demand balance will be disrupted and overall welfare will decline – something political leaders would like to avoid.