RESTRICTED  
  
WT/BOP/R/11 3 
 
10 August  2017 
(17-4335) Page: 1/3 
Committee on Balance -of-Payments Restrictions   
 
 
 
REPORT ON THE MEETIN G OF 2 1 JULY 2017 
1.  The Committee met on 21 July 2017 under the Chairmanship of Mr. Tudor Ulianovschi 
(Moldova).  The Agenda of the meeting was contained in WTO/AIR/BOP/10 dated 30 June 2017.   
2.  The Chairman  said that  the purpose of the meeting was to resume the  consultations with 
Ecuador. At  the meeting of 25 April  2017, Ecuador had committed to remove by 1 June 2017 the 
measure taken for balance -of-payments pu rposes. On 16 June 2017 Ecuador had notified the WTO 
that it had removed the measure effective 1 June 2017 (document WT/BOP/N/84). Following this, 
a draft report had been  circulated to Members on 21 June (document WT/BOP/W/43). Comments 
on this report ha d been received from Ecuador, the United States, and the IMF. The Secretariat 
had incorporated these comments in a revised report which ha d been made available on the 
Members' website (document WT/BOP/W/43/Rev.1).  
3.  The representative of Ecuador  said that the meeting had been convened to conclude 
consultations on Ecuador's balance of payments measure in accordance with GATT Article XVIII.B 
and the BOP Understanding. He began by underlin ing the transparency and objectivity with which 
the process of consultation s with Ecuador had been conducted. He thanked the Chair as well as his 
predecessors for the fitting and objective  conduct of the proceedings and for having guided the 
Committee's work with all due neutrality. He expressed gratitude  for Members' support who  had 
understood the difficulties Ecuador had gone through on account of the severe deterioration  in its 
external sector which had necessitated the implementation  of economic policy measures , including 
the balance of payments safeguard in order to help Ecua dor face the unfavourable trends in the 
international economic climate . 
4.  He noted that t he conclusions formulate d under GATT Article XV:2 had confirm ed the relevance 
and legitimacy of those measures pursuant to  GATT Article XVIII:B.  The adverse  international 
economic environment  over the preceding two years had affected  the performance of Ecuador's  
economy , which, instead of achieving  an average growth of 5.2% as had been the case for the 
period 2010 -14, had slowed to  0.2% in 2015 and had fallen  by 1.5% in 2016 , figures which 
reflected the impact of the decline  in the price of crude oil, the appreciation of the dollar, and the 
contractual payment s to oil companies, to which must be added  the effect of the earthquake in 
April of the previous year,  which had been equivalent to a 0.7% decrease in  GDP. 
5.  Nevertheless , as a result of the economic measures that Ecuador had taken including the 
balance of payments measure, from the second quarter of 2016 signs had emerged that the 
downturn in  Ecuador's econ omy had started to reverse itself . The recovery in economic activity 
was consistent with the performance of a number of  financial variables such as deposits  and credit . 
Ecuador's current account balance in the first quarter of 2017 had shown a surplus of 
US$325  million and economic growth had climbed to  2.6%, in comparison  with the first quarter of 
2016, thus foreshadowing positive annual growth for 2017 . 
6.  A dollar ized economy , such as Ecuador's,  lacked the main tool of monetary and exchange rate 
policy to meet working capital requirements with the result that external shocks had a sudden and 
significant impact on the economy's liquidity  and seriously disrupted growth, employment and the 
overall wellbeing of the population. Ecuador still had challenges to face, one of them being  the 
artificial competitiveness afforded  by the depreciation of the currencies of Ecuador's trading 
partners in relation  to the dollar , which had begun at the end of 2014 and was still ongoing . As he 
had already explained, this gener ally had at least two effects for a dollar ized economy. First of all 
it made imports cheaper which  affected domestic production and increased the outflow of dollars. 
Second, it diminished the competitiveness of exports on the markets of  Ecuador's trading p artners WT/BOP/R/113  
 
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  with depreciated currencies as well as on other markets where Ecuadorian products were 
competing with the exports of those same partners , which reduced the inflow of dollars to the 
economy , all of which affected Ecuador's liquidity . It was for this  reason that  stability of Ecuador's 
external sector was so vital for achieving  healthy, sustained and sustainable economic 
development, to meet the legitimate aspirations of Ecuador ians and for the benefit of Ecuador 's 
trading partners . 
7.  In exercising the r ight enshrined in GATT Article XVIII:B , Ecuador had engaged in the  
consultation process in a transparen t and rigorous manner. Ecuador had met the commitments 
undertaken before  the Committee , having provided in due time all the macroeconomic information 
required and having respected the notified timetable for dismantling the measure. The balance of 
payments safeguard measure had been eliminated on 1 June 2017.  
8.  The application of the safeguard measure within the framework of  GATT Article XVIII:B had 
enabled E cuador to safeguard its external financial position , partially restore  macroeconomic 
equilibrium in the economy and , above all , preserve  Ecuador's dollar ized economy. Lastly, with 
regard to the draft report  circulated , he informed the Committee that Ecuado r had given its 
consent to the IMF for its statements to be included in  the report which  would be submitted in due 
course to the General Council. Furthermore, he said he would be grateful if the Secretariat would 
prepare a summary of Ecuador's opening  statement of June 2015 for inclusion  in Section  1.1 of the 
report , while still maintaining the full text of the statement as  Annex 1. He said that Ecuador 
agreed with the suggestions on the report made by the United States ' delegation . 
9.  The Chairman  sugges ted that the Committee move into informal mode and go through all 
paragraphs of the report on which comments had been received. Returning to formal mode, the 
Chairman said that the discussion had been fruitful and efficient and thanked Members for their 
constructive spirit. Members had reached agreement on the changes to be made to the report on 
the balance of payments consultations with Ecuador. They had also decided to include the IMF's 
statement in the report. He suggested that the Committee entrust the Secretariat to incorporate 
the changes as discussed in the meeting and that the Committee adopt the report ad referendum . 
The report on the consultations with Ecuador would be submitted to the next meeting of the 
General Council. It was so agreed . 
10.  The repr esentative of the United States  was pleased to hear confirmation that Ecuador had 
phased out its import surcharge on 1 June. However the United States was aware that the 
government of Ecuador might be considering new tariff increases and was monitoring the  change 
in import volumes for the same goods that had been subject to import surcharges. Now that the 
consultations were finally being concluded and Ecuador had eliminated the surcharges in question , 
she urged the government of Ecuador not to implement new  replacement trade measures that 
might have the same or worse effect.  
11.  The representative of the European Union  said the EU  appreciated the complete dismantling of 
the safeguard measure adopted in March 2015. The EU believed that th e measure not only 
jeopar dized the economic development of the country but also that it w as incompatible with 
WTO rules. As the U .S. representative had just done, she urged Ecuador not to be tempted to take 
new measures that might be incompatible with WTO rules in the near or more  distant future.  
12.  The representative of Canada  thanked Ecuador for the continued updates that it had provided 
to the Committee and in particular for the detailed report it had provided that day. Canada warmly 
welcomed the elimination of the safeguard measur e. Although Ecuador had made progress over 
time in reducing or eliminating the various surcharges he regretted that Canada's concerns 
regarding the discriminatory manner in which the surcharges had been  applied had not been 
addressed. He recalled that the measure had been  in place for more than two years and as the 
Committee had heard the surcharges had had a real impact on trade flows and commercial 
networks  and for some Members the  bilateral trade effects had been significant. He urged any 
Member consider ing a similar action to exercise caution and to consider all alternatives in view of 
the heavy consequences for the multilateral trading system.  
13.  The representative of the Plurinational State of Bolivia  highlighted three points on the 
Ecuadorian experience.  First of all the Plurinational State of Bolivia had borne witness to the 
difficult economic situation faced by Ecuador over the preceding three years which had been WT/BOP/R/113  
 
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  aggravated by a natural event. Ecuador had taken  a decision to impose  a balance of payment s 
measure in order to eliminate its external deficit. Second, the Plurinational State of Bolivia 
highlighted the transparency with which Ecuador had applied GATT Article XVIII:B. Third, the 
Plurinational State of Bolivia congratulated Ecuador for having di smantled the safeguard measure 
and for complying with its commitment to remove it. 
14.  The representative of Japan  expressed its appreciation to Ecuador for the continued updates 
and welcomed the dismantling of the measure. Japan shared the interest expressed by the 
representative of the United States on a possible new measure  and asked  Ecuador to provide a 
clarification . He encouraged Ecuador to ensure compatibility with the relevant WTO Agreements in 
the event  of the introduction of such a measure.  
15.  The repres entative of the Bolivarian Republic of Venezuela  congratulated Ecuador for the 
transparency and seriousness with which it had acted and for  complying with its commitment to 
dismantle the measure despite the fact that there were still issues to be overcome.  the Bolivarian 
Republic of Venezuela trusted Ecuador's judgement to act with the transparency and seriousness 
that it had demonstrated during the consultation period.  
16.  The representative of China  welcomed the adoption of the report and thanked Ecuador for 
submitting numerous documents and notifications. China would follow the issue closely and would 
appreciate if Ecuador could notify Members of any subsequent action if any.  
17.  The representative of Cuba was grateful for the comprehensive updated information offered 
by Ecuador on  the safeguard measure applied in March 2015. As Cuba had stated previously 
Ecuador had duly compl ied with the principle of transparency within the Organization  by attend ing 
the various meeting s of the Committee and inform ing Members of the steps taken with regard to 
the safeguard measure applied. Cuba recognized the manner in which Ecuador had conducted 
itself in meetings of the Committee and welcomed the gradual way in which Ecu ador had  
develop ed its economic indexes to allow  a full dismantlement of the measure, a measure which 
was necessary to guarantee Ecuador's macroeconomic balance and to counter the effects of the 
international environment.  
18.  The representative of Mexico  thank ed Ecuador for its efforts to dismantle the measure and for 
the transparency demonstrated in the process. Mexico recognized that the situation had not been 
easy and therefore the efforts made by the government deserved full recognition. Similarly, given 
that the challenges would certainly remain , he echoed other colleagues in stating that Mexico did 
not believe that other measures would be necessary in the future.  
19.  The representative of Turkey  welcomed Ecuador 's elimination of the surcharge on imports and 
thanked Ecuador for the transparency provided throughout the process. As noted in previ ous 
meetings of the Committee Turkey  had some systemic and trade concerns about the measure and 
he sincerely hoped that Ecuador would not need to take similar measures in the future.  
20.  The representative of Ecuador  informed Members that the Ecuadorian government was not 
considering establishing or re-establishing any new safeguard measure for balance of payments  
purposes . He informed Members that on  1 January 2017 the trade a greement between the 
European Union and Ecuador had come into effect. Other trade negotiations were ongoing. The 
agreement signed with Nicaragua had been approved by Ecuador's  Assembly . Ecuador was 
working on a trade agreement with Cuba and hoped to conclu de negotiations currently under way 
with Honduras  at the end of August . 
21.  The Chairman  thanked Ecuador for its statement and for the assurance provided. As he had 
previously state d the changes discussed at the meeting on the report on the consultations with 
Ecuador would be introduced by the Secretariat and the report would be adopted ad referendum .  
22.  The Committee took note  of the comments made.  
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