International trade procedures

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Eritrea was part of the first Ethiopian kingdom of Aksum until its decline in the 8th century. It came under the control of the Ottoman Empire in the 16th century, and later of the Egyptians. The Italians captured the coastal areas in 1885, and the Treaty of Uccialli (May 2, 1889) gave Italy sovereignty over part of Eritrea. The Italians named their colony after the Roman name for the Red Sea, Mare Erythraeum, and ruled there until World War II. The British captured Eritrea in 1941 and later administered it as a UN Trust Territory until it became federated with Ethiopia. Eritrea was made an Ethiopian province on Nov. 14, 1962. A civil war broke out against the Ethiopian government, led by rebel groups who opposed the union and wanted independence for Eritrea. Fighting continued over the next 32 years.

In 1991, the Ethiopian People's Revolutionary Democratic Front deposed the country's hard-line Communist dictator Mengistu. Without Mengistu's troops to battle, the Eritrean People's Liberation Front was able to gain control of Asmara, the Eritrean capital, and form a provisional government. In 1993, a referendum on Eritrean independence was held, supported by the UN and the new Ethiopian government. Eritrean voters almost unanimously opted for an independent republic. Ethiopia recognized Eritrea's sovereignty on May 3, 1993, and sought a new era of cooperation between the two countries.

Eritrea and Ethiopia disagreed about the exact demarcation of their borders, and in May 1998 border clashes broke out. Both impoverished countries spent millions of dollars on warplanes and weapons, about 80,000 people were killed, and refugees were legion. The war essentially ended in a stalemate, and a formal peace agreement was signed in Dec. 2000. In Dec. 2005, an international Court of Arbitration ruled that Eritrea had violated international law when it attacked Ethiopia in 1998.


Eritrea is located in the Horn of Africa and is bordered on the northeast and east by the Red Sea, on the west and northwest by Sudan on the south by Ethiopia and on the southeast by Djibouti. The country has a high central plateau that varies from 1,800 to 3,000 meters (6,000-10,000 ft.) above sea level. A coastal plain, western lowlands, and some 300 islands comprise the remainder of Eritrea's landmass. Eritrea has no year-round rivers.

The climate is temperate in the mountains and hot in the lowlands. Asmara the capital, is about 2,300 meters (7,500 ft.) above sea level. Maximum temperature is 26o C (80o F). The weather is usually sunny and dry with the short or belg rains occurring February-April and the big or meher rains beginning in late June and ending in mid-September.


Eritrea's population comprises nine ethnic groups, most of which speak Semitic or Cushitic languages. The Tigrinya and Tigre make up four-fifths of the population and speak different but related and somewhat mutually intelligible, Semitic languages. In general, most of the Christians live in the highlands, while Muslims and adherents of traditional beliefs live in lowland regions. Tigrinya and Arabic are the most frequently used languages for commercial and official transactions. In urban areas, English is widely spoken and is the language used for secondary and university education.


Eritrea's Government faced formidable challenges following independence. With no constitution, no judicial system, and an education system in shambles, the Eritrean Government was required to build institutions of government from scratch. Currently, the Government of Eritrea exercises strict control of political, social, and economic systems, with nearly no civil liberties allowed.

On May 19, 1993, the PGE issued a proclamation regarding the reorganization of the government. The government was reorganized, and after a national, freely contested election, the Transitional National Assembly, which chose Isaias as President of the PGE, was expanded to include both EPLF and non-EPLF members. The EPLF established itself as a political party, the People's Front for Democracy and Justice (PFDJ). The PGE declared that during a 4-year transition period it would draft and ratify a constitution, draft a law on political parties, draft a press law, and carry out elections for a constitutional government.

In March 1994, the PGE created a constitutional commission charged with drafting a constitution flexible enough to meet the current needs of a population suffering from 30 years of civil war as well as those of the future, when prospective stability and prosperity would change the political landscape.A new constitution was ratified in 1997 but has not been implemented, and general elections have not been held. The government had announced that Transitional National Assembly elections would take place in December 2001, but those were postponed and new elections have not been rescheduled.

The present government structure includes legislative, executive, and judicial bodies. The legislature, the Transitional National Assembly, comprises 75 members of the PFDJ and 75 additional popularly elected members. The Transitional National Assembly is the highest legal power in the government until the establishment of a democratic, constitutional government. The legislature sets the internal and external policies of the government, regulates implementation of those policies, approves the budget, and elects the president of the country. The president nominates individuals to head the various ministries, authorities, commissions, and offices, and the Transitional National Assembly ratifies those nominations. The cabinet is the country's executive branch. The ministries are agriculture; defence; education; energy and mines; finance; fisheries; foreign affairs; health; information; labour and human welfare; land, water, and environment; local governments; justice; public works; trade and industry; transportation and communication; and tourism.


The Eritrean economy is largely based on agriculture, which employs 80% of the population but currently may contribute as little as 12% to GDP. Agricultural exports include cotton, fruits and vegetables, hides, and meat, but farmers are largely dependent on rain-fed agriculture, and growth in this and other sectors is hampered by lack of a dependable water supply. Worker remittances and other private transfers from abroad currently contribute about 32% of GDP.

After independence, Eritrea had established a growing and healthy economy. But the 1998-2000 war with Ethiopia had a major negative impact on the economy and discouraged investment. Eritrea lost many valuable economic assets in particular during the last round of fighting in May-June 2000, when a significant portion of its territory in the agriculturally important west and south was occupied by Ethiopia. As a result of this last round of fighting, more than one million Eritreans were displaced, though by 2007 nearly all have been resettled. Eritreans also lost livestock worth some $225 million, and 55,000 homes worth $41 million were destroyed during the war. Damage to public buildings, including hospitals is estimated at $24 million. Much of the transportation and communication infrastructure is outmoded and deteriorating, although a large volume of intercity road-building activity is currently underway.


The Eritrean Government has started a free zone program in Eritrea. The objective of the program is to contribute to the development of an internationally competitive business sector in Eritrea by creating an environment in which domestic and foreign investors will be encouraged to invest in export-related business activities. The Government believes that the program will, inter alia,

(a) create employment opportunities,

(b) extend the technology base

(c) help develop the technical and managerial skill of the Eritrean Workforce,

(d) expand Eritrea's external business and marketing contacts,

(e) help build industrial projects of all kinds and storage facilities for raw and processed materials, (excluding storage of drugs).

The first free zone has been set up at the port of Massawa and is ready to accept investments which contribute to the achievement of the above objectives. Investors will find that the Free Zone Program is extremely business-friendly as the following articles of the Eritrean Free Zones Proclamation indicate


The synergy that exists between India Africa can be gauged from the recent trends in Indo-African trade relation wherein bilateral trade has risen to US$25.0 billion in 2006-07 from US$967 million in 19990-91 due to the rise in both exports to and imports from Africa countries.

YEARS 2002-03 2003-04 2004-05 2005-06 2006-07

Export 3,137.9 3,861.7 5,578.4 7,013.6 10,255.7

Imports 3,444.4 3,202.1 4,006.4 4,878.8 14,722.8

Total Trade 6,582.3 7,063.8 9,584.8 11,892.42 4,978.5

Trade Balance 306.4 659.6 1,572.0 2,134.7 -4,467.1

Indian's exports to Africa reached US$10.3 billion in 2006-07 from a relatively low figure of US$394 million in 1990-91. As a result, the share of Africa in India's total exports has risen from a marginal2.2% in 1990- 91 to a healthy 8.2% in 2006-07. Concomitant rise in imports from Africa during the comparable period attest to increased two-way trade relation wherein India's imports from Africa during the comparable period attest to increased two-way trade relations where India's imports from Africa rose from US$573 million in 1990-91 to US$14.7 billion in 2006-07, with the resultant 7.7% share in India's total imports, up from 2.4%share in 1990-91.

Bilateral Trade During 2006-07

During the year 2006-07, India's Exports to Africa registered a sharp rise of 46.2% to reach US$10.3 billion, from US$7.0 billion during the pervious year. India's imports from Africa also recovered in 2006-07 to reach US$14.7billion from US$4.9 billion the pervious year. Consequently, due to large imports from the region, India experienced a trade deficit of US$4.5 billion with Africa in 2006-07 as against a trade surplus of US$2.1 billion in 2005-06.

Major Trading Partners

South Africa remained the leading destination for India's exports during 2006-07, accounting for 22% of total export to Africa. Other major export destinations include Kenya (12.8% of total exports to Africa), Nigeria (8.8%), Mauritius (7.2%), Ghana (4.5%), Sudan (3.9%), Algeria (3.3%), Djibouti (3.0%) and Tanzania (2.9%).


The trade relations between these countries are very old. Historically, there were strongtrade ties during the Axumite kingdom. Agriculture is very important in both these Countries. It is to be noted that more than 70% Eritreans and 60 per cent Indians depend on agriculture as their mainstay and hence there is a need to re-focus on agriculture. Both the countries have resources, good climate, and water resources. The concentration on agriculture along with industries requires a sustainable policy in Eritrea. Agriculture was focused through five-year plans in India. Even after 15 years of Independence, Eritrea did not adopt five year plan strategies, therefore it can learn Indian experience. Naturally, the state has to play an important role to protect. It is to note that, after liberalisation policies in 1991, the private sector had emerged as an important force to drive the economy and become the backbone of Indian economy that accounts 70% of the GDP. Agriculture, horticulture, floriculture, sea food industries, agro industries, agro-based industries and food industries are in the private sector that includes small and large scale industries. India has almost 3.57 million units in the small-scale sector. They employ more than 20 million people and contribute USD 165 billion to the Indian economy. The role of private sector is substantial in the growth of sustainable economic development in India. Eritrea also experience the same situation with the small scale industries but could not contribute more to the national economy due to the competition from the large industries within the country and other competition from foreign trade.


Year India's exports % growth India's Imports % growth Total % growth

2003-04 10.72 0.25 10.97

2004-05 8.44 -21.28 0.99 300.67 9.43 -14.00

2005-06 8.18 -3.09 0.99 -0.35 9.17 -2.80

2006-07 6.64 -18.71 0.34 126,361.4 6.98 -23.77

2007-08 110.61 1,564.82 1.49 337.72 112.10 1,504.93

India's export to Eriteria:

(Values in US$ Million)

HSCode Commodity 2006-07 2007-08 % Growth

10 Cereals. 0.57 0.07 -87.56

17 Sugars and Sugar Confectionery. 0.48 11.60 2,305.29

19 Preparations of Cereals, Flour,

Pastry cooks Products.


21 Miscellaneous Edible Preparations. 0.10

25 Salt; Sulphur; Earths And Stone, 0.00 0.70 15,755.80

Plastering Materials, Lime And Cement.

27 Mineral Fuels, Mineral Oils 92.23

28 Inorganic Chemicals 0.10 0.06 -38.20

29 Organic Chemicals 0.17 0.02 -89.31

30 Pharmaceutical Products 0.70 1.61 131.65

32 Tanning Or Dyeing Extracts 0.02

33 Essential Oils And Resinoids 0.14 0.00 -99.46

37 Photographic Or Cinematographic Goods. 0.01

38 Miscellaneous Chemical Products. 0.10 0.35 265.27

39 Plastic And Articles Thereof. 0.20 0.17 -17.74

40 Rubber And Articles Thereof. 0.70 0.51 -27.67

42 Articles Of Leather,Saddlery 0.01

48 Paper And Paperboard; 0.30 0.42 37.29

49 Printed Bookds, Newspapers, Pictures And

Products Of The Printing Industry 0.23 0.24 2.63

52 Cotton. 0.12 0.24 91.70

54 Man-Made Filaments. 0.03

55 Man-Made Staple Fibres. 0.03 0.04 22.07

56 Wadding, Felt And Nonwovens 0.09 0.04 -53.90

59 Impregnated, Coated, Covered Or

Laminated Textile Fabrics 0.12

70 Glass And Glassware. 0.04

72 Iron And Steel 0.60 0.46 -23.16

73 Articles Of Iron Or Steel 0.04 0.14 218.22

74 Copper And Articles Thereof. 0.00

75 Nickel And Articles Thereof. 0.02

76 Aluminium And Articles Thereof. 0.14

82 Tools Implements,Cutlery, Spoons. 43 0.29 -31.98

84 Nuclear Reactors, Boilers, Machinery 0.40 0.35 -11.90

85 Electrical Machinery and Reproducers 0.14 0.19 31.72

87 Vehicles Other Than Railway 0.03 0.32 1,130.76

90 Optical, Photographic Cinematographic

Measuring,Checking Precision 0.04 0.04 -0.24

92 Musical Instruments 0.01

94 Furniture; Bedding, Mattresses 0.02 0.01 -66.10

95 Toys, Games And Sports Requisites 0.16

97 Works Of Art Collectors' Pieces And Antiques. 0.01 0.01 32.89

98 Project Goods; Some Special Uses. 0.40

99 Miscellaneous Goods. 0.20 0.01 -97.52

Total 6.64 110.61 1,564.82

Exchange rate:

2006-2007: 1US$ = Rs. 45.2849

2007-2008: 1US$ = Rs. 40.2607

India's import from Eriteria:

(Values in US$ Million)

HS Code Commodity 2006-07 2007-08 % Growth

38 Miscellaneous Chemical Products 0.01

41 Raw Hides And Skins

And Leather 0.09 0.82 843.87

71 Natural Or Cultured Pearls,Precious 0.01

72 Iron And Steel 0.10 0.31 206.65

74 Copper 0.11 0.25 130.84

76 Aluminium 0.01 0.02 17.96

84 Nuclear Reactors, Boilers, Machinery 0.02

85 Electrical Machinery And Equipment

Television ImageAnd Sound Recorders 0.08

99 Miscellaneous Goods 0.01

Total 0.34 1.49 337.72

Exchange rate:

2006-2007: 1US$ = Rs. 45.2849

2007-2008: 1US$ = Rs. 40.2607























India's Total Export

































India's Total Import

































India's Total Trade



























India's Trade Balance







The Legal System

Eritrea is a civil law country. Unlike the common law system where judges can base their judgments on both statutes and rules of law developed by higher courts, the Eritrean judges apply only statutes. Court decisions in Eritrea (as in other civil law countries of the world) are enforceable only on the parties to the dispute. Thus, they do not establish binding precedents, although they can be used to persuade judges. At present, Eritrean laws are passing through a transitional phase. After liberation in May 1991, Eritrea inherited the basic codes of Ethiopia as modified to suit the new Eritrean reality. Among the main Ethiopian statutes that were modified and adopted by the Provisional Government of Eritrea are the Civil Code, Commercial Code, Maritime Code, Penal Code, Civil Procedure Code, and Criminal Procedure Code. The laws entered into force on September 15, 1991 after a Commission revised them. The laws were received as transitional, aimed at shaping the new economic and social life of Eritrea until the country developed a legal system of its own.

The government continues to revise the transitional codes and to issue new Proclamations and regulations addressing various aspects of life. During the first six years of independence, over ninety Proclamations and nearly twenty regulations were promulgated. These legislative measures brought law and order to the newly emerging state and helped to shape the society disintegrated by the thirty-year war. A new constitution was also drafted after much debate between Eritreans living in the country and those living in the Diaspora. Customary law and Sharia law are the other sources of law in Eritrea, both of which are restricted to areas of private life, specifically, marriage, divorce, and inheritance. The Transitional Civil Code severely restricts the various local customary laws, leaving little room even in these areas. Sharia law, which was ignored by the Ethiopian Civil Code, operates almost without restriction in the field of family law under the Transitional Civil Code of Eritrea. Moslems constitute fifty percent of the country's population and they attach great significance to this religious Sharia law, particularly with respect to marriage and divorce.

Private Investment Law

On December 30, 1991 the Provisional Government of Eritrea passed the country's first law on private investment. Eager to speed up economic growth, the government enacted Investment Proclamation No. 18/1991225 seven months after Eritrea's liberation from forty years of colonial rule by Ethiopia and more than one and a half years before the country declared independence. The measure was a step towards reversing past restrictive policies by allowing the participation of the private sector in business activities. Investment Proclamation No. 18/1991 encouraged both nationals and foreigners to invest in Eritrea. The Eritrean Investment Center (EIC) used the law as a basis for approving investment projects. Under this law the EIC handled or processed over two hundred investment projects.

Investment incentives

The investment policy of Eritrea provides following incentives to foreign and domestic investors:

* Both local and foreign private sector investors are allowed to participate in all sector of the of the economy with no restriction.

* Priority foreign exchange allocation given to exporters.

* Up to 100% retention on foreign currency earning.

* No tax on dividends declared.

* Exports are exempted from export duties and sale taxes.

Technology Transfer Agreement

The Proclamation defines Technology Transfer Agreement to mean agreements with investors regarding, but not limited to

(1) The use of patents, trademarks, trade names, and copyright

(2) Training for and provision of technical knowledge and information

(3) Technical services including but not limited to, technical assistance engineering, and consultancy; and

(4) Acquisition of managerial and marketing skills

The agreement must be approved by an authorized government body and registered with the EIC. The EIC is also authorized to renew the agreement which otherwise expires after the lapse of its duration.

Role of India in Eritrean Development

Eritrea is hiring a great number of professors, associate professors, assistant professors, lecturers and teachers from India to teach at the colleges, institutions at tertiary level and schools. It is observed that more than 800 teachers are teaching at various colleges, vocational training centres and high schools in Eritrea. Surprisingly, about 80% of the faculty in the newly established Eritrea Institute of Technology is Indians. There are agricultural scientists, and other technical experts in different domains have been working in Eritrea for many years. Further, there are some Eritrean students studying in India for their B.A., MA/MSc.,Ph.D degrees. This helps a lot in human resource development of Eritrea. And of course, many Indian teachers have been involved in Eritrea since the 1960s even before its independence. Indian teachers have educated many leaders of Eritrea including the president Isaias Afwerki and some ministers. The education sector of Eritrea has an excellent relation with India. India has been focusing on human resource development since independence. That is one of the main strengths of India, which, one hope would be rubbed off to Eritrea through this collaboration. In 2006, Minister of Eritrean Education Mr. Osman Saleh has visited India and makes agreements with the Indian government in human capacity building.

It is observed that the Indian community promotes goodwill and understanding among people in Eritrea. They are the bridge that makes the two countries come close together. The contribution for the Indian community is very important. The Indian community living here contributes a lot to the economy of the country. Large number of Eritrean is going to India for education, business, tourism etc. This contact between the two peoples is a great contribution for the enhancement of the relation between the two countries.


Both India and Eritrea are developing countries. India as a leader of Third world made a huge stride in human resource development and agriculture development where as Eritrea, a young nation still striving hard to develop these areas and thus achieve self reliance. Eritrea has been using Indian human resources, as part of its capacity building in education, agricultural and other related areas.

India Offer to Africa in Agriculture Sector

India's trade with Africa, the Government of India launched an integrated programme "Focus Africa" in the year 2002-03. The main objective of the programme is to increase interactions between the two regions by identifying the areas of bilateral trade and investment. The "Focus Africa" programme emphasized on major trading partners of the region, namely Eritrea Ethiopia, Nigeria, South Africa, Mauritius, Kenya, Tanzania and Ghana, which together account for around 69% of India's total bilateral trade with the sub-Saharan Africa region. Confederation of Indian Industries (CII) Africa Committee has the mandate to further business co-operation that helps establish a symbiotic relationship between India and emerging African economies.

The Committee through wide ranging activities, like:

1] Develop strategies to enhance economic, industrial and trade relations,

2] Identifies areas of mutual co-operation,

3] Highlights issues of concern and evolves suitable policy recommendations,

4] Frames guidelines and checklists for different forms of industrial co-operation, and

5] Represents industry sectors seeking greater mutual co-operation.

Export-Import Bank of India (EXIM India) operates a number of financing and support programmes to facilitate and promote India's trade and Investment in the African region. The EXIM Bank operates a programme to support overseas investment by Indian promoter through joint ventures/ wholly owned subsidies. Such support includes finance in selected cases, directs participation in equity along with Indian promoter, to set up such ventures overseas (CII India-Africa Project Partnership). EXIM India has also come out with a bilingual (English and French) magazine titled "Indo-African Business" which focuses on bilateral trade and investment between India and Africa. The magazine addresses the business information needs of companies who are interested in trade with the African region. With a view to promoting and facilitating bilateral trade with countries in the Africa region, EXIM India works closely with Government of India. It has a representative office in Johannesburg, South Africa, which plays a role in facilitating economic cooperation with the African region, and is closely associated with several other Banks' initiatives.


Exim Bank extends $20 million line of credit to Eritrea

Export-Import Bank of India (Exim Bank) has extended a line of credit of $20 million to the African state of Eritrea for financing eligible goods and services, machinery and equipment, including consultancy services from India, the Reserve Bank of India said in a release.

The funds would be used for financing multipurpose agricultural projects not exceeding $10 million - the proposed projects include artificial insemination development project, poultry water and feeder, establishment of milk collection centres, pressurised irrigation system (drip irrigation system), solar pumps project and soil survey and land evaluation equipment - and multipurpose educational projects not exceeding $10 million - which include purchase of teaching materials including books, laboratory/educational equipment, chemicals, computers etc for seven Eritrean institutions of higher education, including Eritrean Institute of Technology (EIT), CSH, CBE, COMSAT, OROTTA, HAC and CASS, in addition to the National Board of Higher Education - in Eritrea.


* Production of appropriate technologies- produces through public and private investments in agricultural research;

* Human capital investments and vocational skills of poor people by investment in private and public schools, training programs, on-the-job experience and health

* Investment in infrastructure like dams, irrigation facilities, telecommunications and roads.

* Indian export and import decrease in 2007-08 by 5.0242