Ecuador said the import surcharge imposed to restore its balance-of-payments situation has allowed it to register a merchandise trade surplus from January to September. However, the Central Bank of Ecuador predicts negative economic growth this year, the delegation said. This is mainly due to the earthquake that hit the country in April, affecting its main non-oil exporting industries including fisheries and coffee.

Ecuador reiterated that its dollarized economy does not allow it to correct its external account imbalances through monetary or fiscal policies and re-emphasized the importance of the surcharge to “consolidate the country's economic recovery”. “We aspire not to be regarded as a country that suffered an earthquake, but one that has overcome this natural disaster and is on the route to recovery,” Ecuador said.

Ecuador started reducing surcharge rates in January, when it lowered the 45 per cent top rate on final consumer goods to 40 per cent. In April, Ecuador eliminated the 5 per cent surcharge rate on non-essential capital and primary capital goods and in October it announced a further lowering of the top rate to 35 per cent. Ecuador also lowered the 25 per cent rate, applied on products such as ceramics, tyres, motorbikes and TVs, to 15 per cent. This means there are now only two applicable surcharge rates: 15 per cent and 35 per cent. The surcharge now covers 18 per cent of imports compared with approximately 30 per cent in January, Ecuador said.

The remaining surcharge rates will be reduced by one-third by April 2017 and completely phased out by June 2017, according to the schedule Ecuador presented in May, when it extended for another year the phasing out of the surcharge.

As part of the consultations with Ecuador, a representative from the International Monetary Fund (IMF) made an assessment of Ecuador's current balance-of-payments situation.

Members welcomed Ecuador's transparency efforts(1) but remain divided on the measure's conformity with WTO rules.(2) While some questioned its economic justification and called on Ecuador to terminate the measure as soon as possible, others said it fully complies with WTO provisions. The concerns expressed by members during previous consultations are available here.


Next steps

As requested by some WTO members, the Committee on Balance-of-Payments Restrictions will resume its consultations in April 2017 to reassess the situation.

Read the previous reports on the consultations regarding Ecuador’s measure here:

WTO members consult with Ecuador on its import surcharges imposed on balance-of-payments grounds — June 2015

WTO members remain divided on Ecuador’s import surcharge for balance-of-payments reasons — October 2015

Ecuador starts phasing out import surcharge — February 2016

Consultations continue on Ecuador’s import surcharge as WTO members remain divided — June 2016

  1. In addition to providing regular assessment of its balance-of-payments situation, Ecuador notified the measure in June 2015 and the extension in May 2016. Back to text
  2. WTO rules allow developing countries to control their level or value of imports when, as part of their process of economic development, they are faced with balance-of-payments difficulties. Read the Understanding on Balance-of-Payments Provisions and Article XVIII:B of the WTO General Agreement on Tariffs and Trade (GATT) 1994. Back to text

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