This study examines the economy wide impact of CFTA on Ethiopia. The analysis is made basedrnon Ethiopian social accounting matrix (SAM) of 2009/10 constructed by EDRI. The study hasrnutilized a recursive dynamic CGE model. The model is simulated for an import tariff reductionrnon different sectors using three different scenarios. The scenarios involve joining CFTA at onerntime, in 2016, or through phases, a 25% tariff removal each year from 2016-2019. Anotherrnscenario involves excluding strategic sectors from the CFTA.rnThe impact of CFTA result shows, Government revenue also decreases as tariff revenue is anrnimportant source of revenue for the Ethiopian government. GDP and trade balance are, however,rnpositively affected. The increase in GDP might be associated to the increase in disaggregatedrnproduction. The larger increase in exports as compared to the increase in imports leads to anrnimprovement in trade balance. Household consumption expenditure also increases. This might berndue to the availability of cheap consumption commodities from abroad due to the removal ofrntariff. On the other hand, our results show a decrease in investment which might be attributed tornthe inability of domestic producers to compete with foreign suppliers at a lower price.rnOur findings also show that protection of strategic sectors benefits only producers in thesernsectors. Exclusion of strategic sectors from CFTA helps producers face less competition as thernprice of imported commodities will include tariffs. Protection of strategic sectors will alsornincrease government revenue. The impact of protecting strategic sectors on the overall economy,rnhowever, is negative, which is it results in a decrease in GDP.