Abstract:
While the freedom to move capital is necessary for foreign investors, the power of the state to
regulate capital transfer is necessary to prevent volatile capital from causing financial crises as
well as to mitigate such crises when they occur. Thus, in regulating capital flow, a balance
should be made between the right to transfer funds and the state’s right to protect the stability of
its economy. This study is to examine the extent to which measures to mitigate the crisis and
prevent future crises are permissible under Ethiopian bilateral investment treaties(BIT) when
compared with International Monetary Fund’s Articles and General Agreement on Trade in
services (GATS) rules and its implication on Ethiopia’s accession to World Trade Organization
(WTO). It is found that the Ethiopian bilateral investment treaties, unlike the International
Monetary Fund’s Articles and General Agreement on Trade in services rules , leave little room
when it comes to capital flows regulation. This is the case despite the increasing economic
evidence showing that certain capital controls can be useful in preventing or mitigating
economic crises. It also stands in contrast with rules under the International Monetary Fund’s
Articles and General Agreement on Trade in services rules that majority of Ethiopian BITs allow
for free transfer of capital without any restriction. Therefore, drawing on review analysis
conducted in the study, the thesis suggests a range of policies that could be deployed to make the
Ethiopian bilateral investment treaties more consistent with the International Monetary Fund’s
Articles and General Agreement on Trade in services rules.
