BALANCE OF PAYMENTS

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Ecuador justified the need for this measure on the grounds of addressing a difficult economic environment and restoring its balance of payments stability, which worsened following the earthquake that struck the country last year. In April 2016, the government decided to extend for another year the phasing out of the surcharge, from June 2016 to June 2017, and notified the WTO.

Ecuador noted that, over the past few months, the Ecuadorian economy has shown signs of “slight recovery” and that according to a forecast from the Central Bank of Ecuador, GDP would grow by 1.4 per cent this year following a decline of 1.5 per cent in 2016. Ecuador stressed that the balance-of-payments measure has helped to improve economic conditions in the country but reiterated it upholds the decision to “strictly comply with the commitments acquired” within the WTO to effectively remove the surcharge.

Ecuador started phasing out the surcharge on 31 January 2016, reducing the highest imposed rate from 45 per cent to 40 per cent, and has gradually reduced it since. Ecuador said that currently only two rates — of 23.3 per cent and 10 per cent — remain in place, affecting 2,153 tariff lines, 800 less than in April 2015. 

“The final step will be taken in June … Ecuador will forward the Committee the relevant notification demonstrating compliance,” said Ecuador’s Foreign Trade Minister Juan Carlos Cassinelli, the head of the Ecuadorian delegation attending the meeting.

During the six rounds of consultations of the committee on this issue, members were divided on whether the import surcharge complied with WTO rules. Many applauded the transparency and efforts by Ecuador throughout the process and several members considered the measure fully justifiable, given the difficult economic environment, as well as compliant with WTO rules. 

Other members reiterated their concern about the consistency of the import measure applied by Ecuador with the rules of the international trading system. These members urged Ecuador to keep making progress and confirm the dismantling of the surcharge as soon as possible.

Next steps

The chairperson of the committee, Moldovan Ambassador Tudor Ulianovschi, proposed that members bring these consultations with Ecuador to an end after the committee is notified of the removal of the measure in June.

Under paragraph 13 of the Understanding of the Balance of Payments Restrictions of the General Agreement on Tariffs and Trade (GATT) 1994, the committee will report on its consultations to the General Council. The report should indicate the committee’s conclusions on the different elements of the plan for consultations, as well as the facts and reasons on which they are based.

In the absence of consensus, the committee’s conclusions should record the different views expressed by members. Once the government of Ecuador confirms the removal of the measure, the chairperson of the committee will ask the WTO Secretariat to prepare a draft report for circulation to members. Members will be given time to provide further comments on this report which can be adopted by the committee in a final meeting.

The chairperson proposed that, were the import surcharge measure not to be removed in accordance with the presented schedule, he would convene another meeting and members would continue the consultation process.

The committee agreed with the proposal.

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

https://www.wto.org/english/news_e/news16_e/bop_29nov16_e.htm

https://www.wto.org/english/news_e/news16_e/bop_23jun16_e.htm

https://www.wto.org/english/news_e/news16_e/bop_17feb16_e.htm

https://www.wto.org/english/news_e/news15_e/bop_16oct15_e.htm

https://www.wto.org/english/news_e/news15_e/bop_29jun15_e.htm

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