This paper presents a structuralist CGE mode l for Ethiopia 's to assess the potential costs and benelit srnof WTO membership . The analyses is made based on Ethiopian social accounting matrix (SAM) ofrn200112002 constructed b y World Bank. The model is simulated for alternative policies scenariosrn(import tariff reduction) depicting full and in discriminating liberalization. Gradual and rnrationalizedrnliberalization and instantaneous tariff liberalization. The simulation experiment suggest that the impactrnof trade liberalization ha s mixed effect on the Ethiopian economy rn.rnImport tariff reduction is likely to increase domestic production and expo rt of commodities particularlyrnproduced in agriculture and service sector. It also increase gross domestic product of the country but itrnis not large as stated by man y financial institutes Such as World bank. IMF and WTO .rnOn the other hand . tariff reduction has negative effect on government revenue investment and on terms or trade.rnrn The result shows there is reduction in investment which is opposite to the expectation.rnThere is a cap it al flight form the country and it is al so disincentive for investors. Thern GovernmentrnRevenue reduction in the short run is high. In addition to this the industrial sector shows reduction rninrnproduction because of more competition from abroad (due to protection reduced in this sector rnrnAn import ant policy implication o f this analysis is that the successes of trade liberalizationrn criticallyrndepend on strategic the government should set and improvements in the institution of the country.