WORLD TRADE  
ORGANIZATION  WT/TPR/M/148 
25 August 2005 
 (05-3757) 
Trade Policy Review Body 
  
 
 
 
TRADE POLICY REVIEW 
 
ECUADOR 
 
Draft Minutes of Meeting  
 
Chairperson:  H.E. Mr Don Stephenson (Canada) 
 
 
Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE RE PRESENTATIVE OF ECUADOR 4  
III. STATEMENT BY THE DISCUSSANT 8  
IV. STATEMENTS BY MEMBERS 11  
V. REPLIES FROM THE REPRESENTATIVE OF ECUADOR AND 
ADDITIONAL COMMENTS 19  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 27  
 
 
Note: Advance written questions by WTO Memb ers and the replies provided by Ecuador are 
reproduced in documents WT/TPR/M/148/Add.1 and WT/TPR/M/148/Add.2 and will be 
available online at http://www.wto.org/ english/tratop_e/tpr_e/tp_rep_e.htm.    WT/TPR/M/148 
 Page 3 
 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The Chairperson welcomed members of the Trade Policy Review Body to the first Review of 
Ecuador.  He greeted the delegation of Ecuador le d by H.E. Mr. Cristian Espinosa Cañizares, and the 
discussant, H.E. Mr. Fernando de Mateo y Venturini (Mexico).  As usual, the discussant would speak 
in his personal capacity.  In  accordance with established procedures, the discussant had made 
available, in advance, outlines of the themes he intended to raise (document WT/TPR/D/124). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of meetings.  The report by Ecua dor was contained in document WT/TPR/G/148 and 
that of the Secretariat in document WT/TPR/S/ 148.  Copies of advance written questions, submitted 
by:  Argentina;  Chile;  Mexico;  Canada;  Japan;  European Union;  United States;  Colombia;  and 
Brazil had been transmitted to the delegation of Ecuador.  These questions and the responses provided 
by Ecuador are reproduced in WT/TPR/M/148/Add.1 and WT/TPR/M/148/Add.2. 
3. The Chairperson noted that both the Secretariat Report and the Report by Ecuador highlighted 
Ecuador's positive economic performance in recent years.  One of the principal challenges facing 
Ecuadorean policy-makers was to ensure that th e economy remained on this high-growth path.  
Therefore, it would be interesting to learn about  the main policy initiatives being considered by 
Ecuador to achieve sustainable growth.  In particul ar, it would be useful to hear the views of the 
Ecuadorean delegation on the role that further ope ning of Ecuador's trade and investment regime 
could play in supporting the process of consolida ting improved economic performance, especially in 
the light of some remaining obstacles identifie d by the Secretariat Report.  These included non-
automatic licensing requirements, slow customs procedures, and investment restrictions in the 
telecommunications and electricity sectors. 
4. The Secretariat Report and the Report by Ecuador referred to the multiplicity of initiatives 
that Ecuador was pursuing on the trade negotia ting front.  No doubt Members would appreciate 
Ecuador's views on the interaction between deep er Andean economic inte gration and Ecuador's 
bilateral liberalization efforts, for example with the United States, and on the role of the multilateral 
trading system in these efforts. WT/TPR/M/148 
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II. OPENING STATEMENT BY THE RE PRESENTATIVE OF ECUADOR 
5. The representative of Ecuador
 noted that Ecuador had been the first country to accede to the 
WTO.  Ecuador's accession had been preceded by a long negotiating process, after which Ecuador had 
adopted not only commitments that changed its extern al trade substantially, but also legal reforms to 
harmonize its legislation with the disciplines agreed upon during the Uruguay Round, in which 
Ecuador did not participate. 
6. Ecuador's trade policies had not undergone  substantial changes following the recent 
constitutional succession.  The principal macroeconom ic indicators reflected the solidity of the 
domestic economy and the continuity of the trade strategy.  Figures on inflation, economic growth, 
employment, fiscal accounts, and official reser ves had all improved markedly.  The Ecuadorean 
economy had performed well during the last five year s, with the economic growth rate exceeding the 
population growth rate.  Since the economic crisis  of 1999, per capita GDP had practically doubled, 
from US$1,296 to US$2,325. 
7. During the past decade, Ecuador had actively so ught to integrate into the world economy.  
The objective of Ecuador's trade policy was to fo ster its multilateral, regional, and bilateral 
integration.  Ecuador had entere d into regional trade agreements, including the Andean Community 
and the Economic Complementation Agreement with MERCOSUR.  It participated in negotiations 
towards a Free Trade Area of the Americas, curren tly suspended, and towards a free-trade agreement 
with the United States.  Additionally, Ecuador a nd its Andean partners were assessing the launch of 
negotiations towards an Association Agreement with  the European Union, which would eventually 
lead to the establishment of a free-trade area between the two regions. 
8. Ecuador's policies were aimed at attracting fore ign direct investment for development, and 
sought to strengthen its institutions with a view to  facilitating the participation of domestic producers 
in trade and creating incentives for employment.  Ecuador was promoting a trade strategy that 
favoured employment.  Ecuador's Minister of Labour  was taking part in ILO meetings, where he had 
explained the national policy on youth employme nt, whose objective was to promote employment, 
foster quality and productivity, a nd strengthen social cohesion. 
(1) MACROECONOMIC ENVIRONMENT  
9. Ecuador's GDP had grown by 6.6% in 2004, the hi ghest rate in 16 years.  Nominal GDP had 
reached US$30.3 billion.  During the last decade, per capita GDP had grown at an average rate of 
0.9% in real terms, which showed an improvement  in domestic purchasing power.  The oil sector had 
grown by 35% in 2004, contributing 4.5 percentage  points to total economic growth.  The non-oil 
sector had grown by 2.5%, and its contribution to total GDP growth was 2.1 percentage points.  
Although the recovery of the non-oil sector had been  less dynamic than that of the oil sector, it had 
recorded positive growth in 2004.  Favourable conditi ons in the oil sector, including high world prices 
and increased domestic production by private companies,  had resulted in an increase in fiscal revenue 
during 2003-04.  Increased production had resulted fro m the operation of the new heavy crude oil 
pipeline (OCP), which allowed greater private sector participation in the extr action and transport of 
hydrocarbons. 
10. Since the adoption of the U.S. dollar as legal te nder, inflation had shown a downward trend.  
Underpinning this result was the di sciplined management of the fiscal accounts, which had registered 
primary surpluses since the adoption of the U.S. do llar.  As at December 2004, annual inflation was 
1.9%, substantially lower than the 6.1% of the previous year.  Ecuador had achieved the lowest 
inflation rate in Latin America. 
11. Ecuador's trade account was positive, at US$262 million in 2004.  The depreciation of the 
U.S. dollar and low domestic inflation had contribute d to the depreciation of the real exchange rate.   WT/TPR/M/148 
 Page 5 
 
 
This had had a positive effect on domestic compe titiveness.  Ecuador had strengthened its external 
position, registering increases in its international reserves, and in the balance of the Fund for 
Stabilization, Social and Productive Investment, and Public Debt Reduction (FEIREP).  International 
reserves had been US$1.44 billion in December 2004, up US$277 million over the previous year. 
12. The strengthening of the fiscal position had had a bearing on the public debt-to-GDP ratio, 
which fell by more than five percentage points following the purchase of domestic debt with FEIREP 
resources.  The Government had sent a Bill to Congress seeking to incr ease the share of FEIREP 
resources allocated to the promotion of health, edu cation, and science and technology.  As a result of 
the disciplined management of public finances, it had been possible to attain primary surpluses with 
which to meet domestic and foreign debt obligations .  As a share of GDP, total external debt had 
registered a downward trend.  Between 2003 a nd 2004, public external debt decreased by 
US$529 million.  Public debt was US$11.1 billion in  December 2004.  This represented 36.5% of 
GDP, 5.4 percentage points less than in 2003.  Tota l private debt was US$5.95 billion in 2004, 16.6% 
higher than in 2003.  Of total private debt, privat e oil companies' debt was US$2.6 billion in 2004.  
Fiscal discipline and orderly management of public  finances had improved country risk, as measured 
by the Emerging Market Bond Index (EMBI), which was 690 points in December 2004. 
(2) TRADE POLICY  
13. Ecuador's trade policy had several long-term goals:  to meet the needs of the domestic market;  
to consider protection mechanisms in conformity  with Ecuador's international commitments;  to 
identify priority sectors, particularly those with competitive potential;  and to support the most vulnerable so that they could respond to trade lib eralization.  These general objectives encompassed 
more specific ones, such as consolidating and deep ening Ecuador's export orientation, which implied 
diversifying Ecuador's product offers  and destinations;  creating an environment with clear rules for 
trade and foreign investment;  reducing tariff a nd non-tariff barriers with a view to reducing 
inefficiencies in certain sectors;  and enhanc ing productivity and competitiveness to develop scale 
economies and increase participation in global trade. 
14. Ecuador's dollarized monetary regime made it diffi cult to manage monetary policy.  For this 
reason, it was imperative to direct the development strategy towards activities that generated foreign 
exchange.  In doing this, it was necessary to cons ider the structure of domestic production.  Policies 
needed to foster the development of synergies among  exporters and suppliers of the domestic market.  
Exports needed to become a vehicle of innovati on through demand for intermediate goods, services, 
and technology, and a channel for training.  On th e other hand, in developing countries like Ecuador, 
whose comparative advantage lay in primary sectors, it was crucial to implement policies that resulted 
in a gradual opening to internationa l competition, to allow public and private sectors time to develop 
sectors that incorporate greater knowledge and value added. 
15. Since 1997, Ecuador's trade policies had been subject to the Foreign Trade and Investment 
Law, which created the Council on Foreign Trade and Investment (COMEXI) as the supreme trade-
policy making body in Ecuador. 
16. During the latter part of the 1980s, Ecuador had in itiated various structural reforms, including 
in trade policy.  This period had coincided with  the growth of non-traditional exports.  Among the 
most important structural reforms was tariff re form, which began in 1989 with the basic goal of 
simplifying the tariff structure and reducing protection.   As a result of this reform, the average tariff 
fell from 29% in 1989 to 11% in 1994;  the number of tariff rates fell from 14 to seven.  In 1992, the 
maximum tariff had been reduced from 290% to 40% .  The maximum tariff was currently 35%, and 
was applied exclusively to the automotive sector.  Ecuador did not apply seasonal tariffs.  The simple 
average applied MFN tariff was 11.4%, with a coefficient of variation of 0.6. WT/TPR/M/148 
Page 6  
 
17. The Government had continued to modernize customs procedures.  The creation of the 
Ecuadorean Customs Corporation four years ago had in volved considerable inv estment in information 
systems, human resources, and institutional refo rm.  The modernization process had allowed the 
transfer of customs information through electr onic data exchange between foreign traders and 
customs, to reduce clearance times. 
18. In the light of the scarce progress in multilateral trade negotiations, and particularly the Doha 
Round, Ecuador had adopted a negotiating strategy ai med at deepening its trade links, both with the 
Andean Community and the remainder of the Hemis phere.  This had resulted in the conclusion of a 
free-trade agreement with MERCOSUR.  Ecuador w as also negotiating a free-trade agreement with 
the United States.  Similarly, Ecuador and its A ndean partners expected to initiate negotiations 
towards an association agreement with the Europ ean Union, which would include a free-trade zone. 
19. During the past decade, Ecuador's trade policy had strongly emphasized the economy's 
insertion in and opening to global markets.  Th e degree of openess had increased since the 1980s.  
The number of products exported by  Ecuador had also risen, at an annual average rate of 11% 
between 1990 and 2004.  Imports of consumer goods had increased, especially since the adoption of 
the U.S. dollar as legal tender.  The pattern of  imports of raw materials and capital goods had 
remained similar to that observed in the 1980s, and had varied strongly.  Between 1985 and 1999, 
Ecuador's terms of trade had deteriorated;  since 2000,  they had recovered, due in large measure to the 
increase in world oil prices. 
20. Foreign direct investment was another element of Ecuador's integration into world markets.  It 
had an important effect on the economy and genera ted positive externalities.  Changes to the legal 
framework, both at the Andean and national levels, facilitated the inflow of foreign capital during the 
1990s.  At this time, foreign direct investment flows into Ecuador had averaged US$459 million per 
year, i.e., 5.4 times more than during the previous decade.  From 1997, when a new legal framework was introduced, foreign direct investment flows had exceeded US$500 million per year, 
notwithstanding the 1999 economic cr isis.  Ecuador had entered into  a period of stability since 2000, 
which had created the correct environment for foreign investment;  foreign capital inflows 
increased by 13% in 2000, and by 85% in 2001.  Th is investment had been mostly in the petroleum 
sector and the construction of the heavy crude oil pi peline.  Foreign direct investment in 2004 was 
US$1.3 billion, US$265 million less than a year earlie r.  At an aggregate level, foreign direct 
investment remained an essential source of finance for the balance of payments. 
(3) S
TRUCTURAL REFORMS  
21. Oil sector policies were based on four pillars:  increasing reserves and prod uction of crude oil;  
optimizing oil income derived by the State;  managing the hydrocarbons industry ethically;  and 
respecting environmental and social standards.  As a result of several reforms and an incentive 
scheme, authorization had been granted in 2000 for the construction of a heavy crude oil pipeline by 
private companies.  The pipeline was completed in  2003 and could transport 400,000 barrels per day. 
22. Structural reform in the electricity sector had begun with the adoption of the Law on the 
Electricity Sector Regime of October 1996.  The law established the regulatory and institutional framework governing the sector.  It was aimed at achieving the active participation of the private 
sector in electricity through investment in gene ration, transmission, and distribution, leaving 
supervision, control, and regulation activities to the State. 
23. The Law on Economic Transformation required that "all telecommunications services be 
provided under free competition, avoiding monopolies, restrictive practices or abuse of dominant 
position, and unfair competition;  guaranteeing nati onal security;  and promoting the efficiency, 
universality, accessibility, continuity, and quality of the service".  This law had opened the 
Ecuadorean telephone market to free competition, which had led to an increase in the number of  WT/TPR/M/148 
 Page 7 
 
 
services available to consumers, a reduction in costs, and a higher participation of the 
telecommunications sector in the economy.  It had also enhanced industries' access to information and 
communications technologies, thus increasing productivity. 
24. Through various reforms to th e Labour Code, Ecuador had prom oted greater labour mobility, 
and the orientation of labour towards the most produ ctive activities.  The reforms had also facilitated 
the adjustment of businesses to changes in demand.  All this favoured producti ve activities and led to 
higher employment. 
(4) WTO  NEGOTIATIONS  
25. Ecuador attached great importance to the Doha Round.  However, its expectations, like those 
of other developing countries, had been frustrated by slow progress in the negotiations.  Ecuador stood 
ready to adopt ambitious liberalization commi tments, as long as the willingness of other WTO 
Members was commensurate.  Ecuador was concer ned that agriculture negotiations, aimed at 
increasing market access, eliminating export subsid ies, and substantially reducing domestic support, 
had come to a halt due to lack of commitment by Me mbers that most distorted agricultural trade.  
With respect to non-agricultural market access, Ecua dor maintained an average tariff that was low in 
relation to the rest of the countries in the regi on, as a result of commitments adopted during its 
accession to the WTO in 1996.  Any tariff reductions by Ecuador in the context of the Doha Round 
would show an important level of  ambition, and would have to take into account the flexibilities 
described in the negotiating modalities, bearing in  mind the level of ambition in the agriculture 
negotiations. 
26. As regards services, Ecuador maintained a policy based on openness.  Ecuador's list of 
commitments at the WTO was open and ambitious, and included multiple sectors.  Ecuador would 
continue to contribute to the negotia tions toward the liberalization of this vital sector of the economy.  
Ecuador shared common legislation on intellectual pr operty rights with other Andean countries.  It 
had supported reforms to the WTO TRIPS Agreement. 
27. Ecuador's efforts had been significant since its accession to the WTO, and Ecuador hoped that 
its trading partners would recognize this when r eading the Report by Ecuador.  It had undergone 
important political changes, but had sustained trade policy. WT/TPR/M/148 
Page 8  
 
III. STATEMENT BY THE DISCUSSANT 
28. The discussant
 H.E. Mr. Fernando de Mateo y Ventur ini (Mexico) noted the similarities 
between Ecuador and Mexico.  In addition to sharin g historical and cultural features, both countries 
had undergone serious economic crises, most recently  in 1995 in Mexico and in 1999 in Ecuador, and 
natural disasters.  Both countries also had important  oil industries.  Ecuador and Mexico had both 
undertaken wide-ranging structural reforms in order to integrate into the global trading system. 
29. Ecuador was important in terms of territory, pop ulation, and natural resources.  It deserved 
credit for overcoming the 1999 economic crisis and for its  rate of economic growth in recent years.  It 
had also succeeded in reducing its current account de ficit, and its country risk.  Above all, non-oil 
fiscal income had increased sharply.  Between 1999 and 2004, non-oil income had grown by 112%, 
compared with 57% for oil inco me.  VAT collection had grown by 200% during the same period.  
This was a very positive development.  However, c oncerns remained regarding the large role of oil 
income in the State budget.  The 1999 economic crisis had led to structural ad justments that touched 
upon all aspects of the economy.  The key element of this adjustment had been the introduction of the U.S. dollar as legal tender.  Because of the lack of  U.S. dollar reserves in Ecuador at the time of 
dollarization, the exchange rate had been set at a re latively reduced real level.  This had led to an 
increase in inflation, rather than the decrease that had been hoped fo r.  However, Ecuador currently 
had one of the lowest inflation rates in Latin Amer ica.  Fiscal policy had improved markedly in recent 
years, due to the disciplined management of fiscal  accounts, improvements in tax administration, and 
high international oil prices. 
30. On the other hand, resources were generally pre-assigned to certain areas, and it appeared 
very difficult to reassign them in the State budget.   The tax base was small, notwithstanding fiscal 
reform.  Another feature shared by Ecuador and Mexico was the large number of VAT exemptions;  
this complicated VAT collection.  Ecuador remained highly vulnerable to external shocks:  crude oil 
represented 40% of exports, and while it appeared th at international oil prices would remain high for 
some time, at some point they would drop, eith er following a decrease in demand or changes in 
technology.  Bananas were another important co mponent of the export basket, and an important 
foreign exchange earner.  Remitta nces were a further source of in come for Ecuador.  A drop in the 
rate of growth of countries hosting migrant wo rkers could have a serious effect on Ecuador's 
economy.  An oil shock could lead to adjustment  problems for Ecuador's economy.  Faced with an 
external shock, Ecuador could not adjust the excha nge rate, and the scope for using fiscal policy as an 
anti-cyclical tool was severely limited.  Relying on government expenditure to respond to an external 
shock would lead to inflation.  In the absence of su ch options, the adjustment to a shock would mostly 
take place through a decline in real salaries.  Alt hough there had been important reforms in the labour 
area, an adjustment of this nature would be difficult to carry out. 
31. Foreign investment had grown, particularly in the oil sector.  In principle, Ecuador did not 
discriminate between national and foreign investors.   There were fiscal incentives for investments 
above a certain threshold and for strategic investme nts.  The discussant was interested in learning 
whether such incentives might pose problems under the WTO TRIMs Agreement.  He trusted that this 
topic would be an issue for further discussion. 
32. Ecuador had been very active since becoming a member of the WTO.  Ecuador had been an 
important actor in dispute settlement, and had tested  the limits of the system.  In the Doha Round, 
Ecuador had presented specific propo sals on various topics.  Participation in regional trade agreements 
and in the WTO had allowed Ecuador to di versify its productive structure and exports. 
33. Ecuador's customs regime appeared inefficient.  Around 70% of imports were subject to 
inspection.  Additionally, the involvement of non- specialists in the customs process could create 
complications.  The discussant requested the Ecuador ean delegation's view on this issue.  Customs 
clearance, which took an average of 12 days, was among the slowest in Latin America.  The use of  WT/TPR/M/148 
 Page 9 
 
 
estimated and minimum prices created problems for importers.  In addition, Ecuador maintained a variety of customs fees, taxes, and contributions, which seemed to exceed the cost of the service.  
However, since the beginning of the year Ecuador had implemented a customs modernization plan.  
The discussant hoped that the plan would bring about major changes in customs procedures.  
Ecuador's participation in the ongoing negotiations on trade facilita tion could help it to overcome 
some of its problems in this area. 
34. Tariff escalation was a significant feature of Ec uador's tariff regime, and resulted in a high 
level of effective protection.  To some extent, Ec uador's tariff regime reflected the common policy of 
the Andean Community.  The Secretariat Report hi ghlighted the inverse correlation between high 
levels of effective protection and the value added of exports.  Ecuador's ta riff regime might have 
resulted in exports with lower le vels of value added than might otherwise have been the case. 
35. There had been complaints about the use of im port licences as barriers to trade, including by 
Andean Community members.  The discussant as ked whether, following the implementation of 
COMEXI Resolution 297, the list of products subj ect to licensing would be further reduced.  
Regarding contingency measures, Ecuador had ne ver used countervailing duties and had only made 
limited use of anti-dumping duties.  However, safeg uard cases had been on the rise.  With respect to 
standards and technical regulations, Ecuador recogni zed the equivalence between its own standards, 
ISO standards, and standards considered "reputable ".  The discussant asked how Ecuador intended to 
ensure that there was no discrimination between "re putable" standards and other foreign standards that 
might achieve the same objective.  Ecuador's c onformity evaluation system lacked uniformity, 
transparency and predictability.  The discussant wa s interested in hearing Ecuador's views on this 
assessment.  A number of SPS measures appeared to ha ve been implemented, but none of them had 
been notified to the WTO. 
36. Ecuador maintained export bans and restric tions on certain goods, including some types of 
wood.  Other restrictions were applied on goods covered by internationa l agreements.  Ecuador 
maintained drawback and maquila schemes, a nd export-processing zones.  The discussant was 
interested in learning more about Ecuador's experience with these schemes.  The Secretariat Report 
showed that the value of imports under these sch emes was limited;  imports under the drawback 
regime were US$76 million.  He requested informat ion on the value of exports by companies that 
benefited from these schemes, and on their contribution to value added. 
37. The process for establishing a company in Ecuador  was fairly expeditious and reasonable, 
according to UNCTAD.  In most cases, the State le t demand and supply set prices.  In the area of 
competition policy, Ecuador lacked an executive body.   On the other hand, the Secretariat of the 
Andean Community was authorized to carry out investigations on anti-competitive practices.  It would be interesting to hear about the degree of overlap, if any, between the activities carried out by Ecuador 
and the Secretariat of the Andean Community.  Th e privatization process had slowed down somewhat, 
after a period of fast progress.  There remained fe w State companies, approximately 60 according to 
the Secretariat Report.  Petroleum exports had to be  transported by shipping companies that were at 
least 51% State owned.  It would be interesting to  hear whether this arrangement was not acting as a 
bottleneck for the country's principal export product.   The discussant also asked about Ecuador's plans 
to continue the application of the 1993 Modernizat ion Law, which authorized the State to carry out 
privatizations.  Ecuador had ma de important efforts in the area of intellectual property. 
38. Tariff protection was higher for agriculture and fi sheries than for the rest of the economy.  
Ecuador maintained a price band system, tariff quot as, and minimum prices for banana exports.  The 
discussant requested information on the scope of so- called absorption requirements.  Mining products 
in Ecuador were the property of the State.  This was a feature shared by almost all Spanish-speaking 
countries, and sometimes gave rise to confusion.   The manufacturing sector represented a small share 
of GDP, and its development had been modest in recent years.  The discussant was interested in 
knowing what steps Ecuador was taking to assist in the development of manufacturing.  Ecuador and WT/TPR/M/148 
Page 10  
 
Mexico had similar problems in the area of electricity.  Ecuador had partly solved these problems.  However, there was an urgent need to promot e greater private participation in this sector. 
39. Services were a fundamental part of Ecuador 's economy, accounting for more than 50% of 
GDP.  Services also played a crucial role in empl oyment.  Ecuador had made important efforts to 
improve basic services, such as telecommunications a nd financial services.  However, there was still 
significant room for improvement.  The financial se rvices sector was one of the hardest hit by the 
1999 economic crisis.  The use of the principle of flex ible reciprocity in air transport was an attractive 
alternative to absolute reciprocity.  This was so mething that all WTO Members had to work on during 
the ongoing Doha negotiations.  Ecuador had not yet submitted its services offer, and the discussant 
asked when Ecuador planned to do this.  WT/TPR/M/148 
 Page 11 
 
 
IV. STATEMENTS BY MEMBERS 
40. Members welcomed the delegation of Ecuador, and thanked the discussant for his comments, 
and the Secretariat for its Report.  Members comm ended Ecuador for the impor tant steps it had taken 
since the 1990s to liberalize its trade regime.  Me mbers appreciated Ecuador's commitment to and 
participation in the WTO. 
41. The representative of Argentina  noted that Ecuador's economy was small and based on 
exports of primary products.  Oil had been the ma in export product since the beginning of the 1970s.  
Ecuador's macroeconomic volatility was high, even relative to other Latin American economies, and 
was influenced by export performance and fluctua tions in the terms of trade.  These intrinsic 
conditions of Ecuador's ec onomy had not changed as a result of the monetary regime adopted in 2000;  
they were the key elements in understanding Ecuador's  structural challenges.  During the past five 
years, Ecuador's economic indicators had shown encour aging signs, particularly the GDP growth rate, 
which had exceeded the population growth rate.  In 2004, the economy had grown by 6.6%, largely 
due to increased production and exports of oil followi ng the start of operations of the heavy crude oil 
pipeline.  Inflation showed a decreasing trend.  It  had been 1.9% in 2004, compared with 64.9% in 
2000, and 6.1% in 2003.  In 2004, the trade balance had been positive and higher than in the previous 
year.  This was explained by high oil prices and increased oil exports.  Although prospects for 2005 
were positive, with a GDP growth rate of 3.2% , Ecuador faced challenges such as increasing its 
competitiveness, reducing production costs in the energy sector, and improving the business climate to attract investment.  From a structural viewpoint, th e features that posed the highest risk were extreme 
external vulnerability and loss of  competitiveness.  Although trade results were satisfactory, the 
results for non-oil exports were less encouraging.   Between 1990 and 1995, five products (bananas, 
coffee, cocoa, shrimp, and non-processed fish) account ed for about three-quarters of non-oil exports.  
Between 2000 and 2003, thei r importance had diminished to sli ghtly less than 50%.  Additionally, 
trade balances with destinations to which o il was exported were nega tive.  Although Ecuador's 
economy was currently benefiting from foreign capital inflows, a change in external circumstances 
could have adverse economic consequences. 
42. Bilateral relations between Arge ntina and Ecuador were deeply rooted in regional, social, 
and cultural factors.  The broad bilateral relatio nship went beyond strictly commercial aspects, 
encompassing cooperation projects in areas such as mining and air transport.  At the same time, 
Argentina's direct investment in Ecuador had r eached significant levels.  Argentine investors had 
participated in the construction of the heavy crude oil pipeline.  The bilateral relationship had been 
strengthened recently with the entry into force of  Economic Complementation Agreement 59 between 
MERCOSUR and Ecuador, Colombia, and Venezuela. 
43. The representative of Chile
 noted that in spite of economic and political swings since its 
accession to the WTO in 1996, Ecuador had made significant progress towards increasing the predictability and transparency of its trade and i nvestment regime through unilateral, bilateral, 
regional, and multilateral initiatives.  Ecuador was an active and trustworthy participant in the 
multilateral trading system.  Ecuador had also participated actively in the WTO Dispute Settlement Body.  One of Ecuador's disputes had been with  Chile and had been re lated to wood panels.  
Fortunately, the two countries had reached a comm on understanding, avoiding the establishment of a 
panel.  Chile did not foresee any new dispute with  Ecuador, but if one arose, Chile hoped that a 
similar spirit of cooperation would allow them to find a prompt and effective solution.  Chile and 
Ecuador shared a similar vision of the WTO, as re flected by convergent positions in various areas, 
including subsidies, trade facilitati on, and development.  Both countri es expected balan ced results in 
all negotiating areas covered by the Doha Round, par ticularly in those of interest to developing 
countries and, above all, in agriculture.  Chile and Ecuador also shared a common objective in the 
Subsidies Negotiating Sub-Group, as reflected by both  countries' membership in the Friends of Fish 
Group, which favored a ban on all subsidies to the fishing sector through the adoption of a negative 
list. WT/TPR/M/148 
Page 12  
 
44. The bilateral economic relationship between Ec uador and Chile took place in the context of 
Economic Complementation Agreement 32, which ente red into force on 1 January 1995;  Chile hoped 
that the initiative to expand th e Agreement to cover trade in services would materialize in the 
medium-term, once Ecuador's negotiating team had finalized negotiations with the United States.  
Chile also hoped that Ecuador would present its initi al services offer in the WTO negotiations soon.  
Economic Complementation Agreement 32 had recently been expanded to provide duty-free access to 
hydrocarbon imports from Ecuador beginning in 2004 .  Additionally, Chile and Ecuador had signed in 
April 2004 a Bilateral Co-operation and Mutual Assi stance Agreement in Cu stoms-related Matters, 
which had been incorporated into Ec onomic Complementation Agreement 32. 
45. The representative of Mexico
 stated that Mexico and Ecuador shared numerous bonds that 
joined them in a common future.  Their economies were linked by th eir relative geographic proximity, 
and by the trade liberalization and harmonization e fforts that had taken place regionally, most recently 
in the context of the Free Trade Area of the Americ as.  Efforts in the context of the Latin American 
Integration Association (ALADI) were also important.  While trade exchange was limited, it had grown steadily in recent years.  In 2004, trade between Mexico and Ecuador was US$207 million, up 
13% from the previous year.  Among ALADI partne rs, Ecuador ranked eighth as a destination for 
Mexican exports, and Mexico ranked sixth as a buye r of products from Ecuador.  Mexico hoped that 
both countries' populations would be nefit from increased exchange. 
46. Progress in multilateral trade liberalization w as a necessary condition to promote further 
liberalization at the bilateral level.  Mexico reitera ted the importance of Ecuador 's participation in, and 
commitment to the multilateral trading system, and the need to display a more active role in the 
current round of negotiations.  Mexico called on Ecuador to present an initial services offer that 
reflected a good level of ambition in the sectors a nd modes of supply that were important to its 
development.  Mexico was concerned that Ecuador l acked a system to facilitate full implementation of 
its obligations under the WTO TBT and SPS Agreemen ts;  this lack offset Ecuador's comparative 
advantage.  Ecuador's legal and administrative re forms had increased its level of compliance with 
WTO commitments and resulted in a more liberal trading environment.   
47. The representative of Canada
 noted that Canada and Ecuador enjoyed a strong commercial 
relationship, with two-way trade reaching C$29 0 million in 2004.  In 2003, Canada had been 
Ecuador’s leading foreign investor, with signifi cant investments in oil and gas, and growing 
involvement in telecommunications and mining. These investments were in part due to the Foreign 
Investment Protection Agreement and the Double Taxation Agreement, which governed relations 
between Canada and Ecuador.  Since becomi ng a WTO member, Ecuador had been through 
challenging times.  Canada commended Ecuador for having adopted measures that had contributed to 
the country’s macroeconomic stabilization.  Maintaini ng fiscal discipline in a context of high levels of 
poverty and unemployment was a challenge;  Canada  encouraged Ecuador to pursue and reinforce 
measures aimed at prudent control of  public expenditures.  Canada ur ged Ecuador to take appropriate 
measures to mitigate the effects of the undergrou nd economy, particularly illegal trade and piracy. 
48. Despite Ecuador’s recent achievement of macroeconomic stability, Canada was concerned 
about the effect of Ecuador’s political instability and lack of judicial security on its economic development and trade relationships .  Canadian investors had an interest in Ecuador, but lack of 
transparency and contracting irregularities within the public sector had limited Canadian investment.  
Ecuador’s attractiveness as a foreign investment des tination could be strengthened if the Government 
of Ecuador signaled a firmer commitment to the principles of transparency, due process of law, and to 
the strengthening of democratic institutions.  Concern over Ecuador’s willingness to enforce the 
rulings of international bodies, particularly internat ional arbitration panels, ha d also limited Canadian 
investment.  Canada encouraged Ecuador to abide by and honor the rulings made under international 
arbitration and to resolve all trade disputes in accordance with the principl es of transparency, good 
faith and due process of law.  Expeditious, fair and transparent solutions to trade disputes would 
benefit foreign investors and Ecua dor alike.  Canada believed that governments committed to a liberal  WT/TPR/M/148 
 Page 13 
 
 
and transparent trade regime would be better placed to enjoy the benefits of increased international 
trade and global economic growth.  Canada encour aged Ecuador to undertake significant reforms in 
this direction and to ensure a WTO-consistent re gime.  Canada recognized that this was not easy; 
however, combined with efforts by the internationa l community to secure lasting institutional stability, 
further trade liberalization would enhance Ecuado r’s prospects for long-term economic growth and 
social development. 
49. The representative of Japan  stated that Ecuador had achieved steadfast real GDP growth, had 
stabilized inflation in recent years, and had made  progress in the liberalization of some sectors, 
including electricity and telecommunications.  Dolla rization in 2000 was an epoch-making policy and 
had proven to be very effective in stabilizing a nd reviving the economy, although it seemed to have 
had some side effects.  Bilaterally, through gran ts Japan had continued to assist Ecuador in its 
development efforts, for example through assistance in increasing food production, enhancing basic 
health services, developing water resources, and tr aining.  Japan hoped that Ecuador would continue 
to achieve sustainable growth based on a stable economy. 
50. Japan appreciated that Ecuador had bound the entirety of its tariff schedule in the WTO and 
that it had progressively reduced MFN rates.  U nder the GATS Ecuador had made relatively broad 
specific commitments, which included acceptance of the Fourth and Fifth Protocols.  However, there 
was room for improvement, for example in customs valuation, customs clearance, and import licensing, and with respect to the applied tari ff rates that exceeded their WTO bindings.  Japan 
appreciated Ecuador’s active participation in the WTO, although there was also room for 
improvement.  For example, Ecuador had not submi tted replies to the list of questions on customs 
valuation, nor had it notified any sanitary or phyto sanitary regulations.  Ecuador had also failed to 
notify its import licensing regime.  On trade in se rvices, Ecuador had neither adopted the Reference 
Paper nor tabled an initial offer.  Ecuador was not a signatory to any plurilatera l agreement.  Ecuador's 
Report stated that historically, and particularly si nce joining the Andean Pact, Ecuador's strategy had 
been predominantly regional.  Nevertheless, the process of opening up to trade, which had begun at 
the end of the 1980s, had meant a reorientation of Ec uador's trade strategy with greater emphasis on 
bilateral strategies.  Japan believed that the multilate ral trade system should be a priority for Ecuador, 
and that regional and bilateral measures should be  a complement.  Japan hoped that Ecuador would 
continue to participate actively in the WTO. 
51. The representative of the European Union
 noted that relations be tween the European Union 
and Ecuador stretched back 30 years.  Their pa rtnership included political, economic, and social 
elements, focusing on rural development, e nvironment, institution building, and economic 
cooperation.  Ecuador's economy had recently be nefited from increased growth, which could be 
attributed to a favorable external environment, in particular the expansion of the oil sector and higher 
oil prices.  Ecuador had made efforts to strengthe n its administrative and legal framework, laying the 
foundation for a stronger economy.  It had also worked towards trade liberalization by lowering its 
applied tariffs and carrying out a customs reform.  Ecuador had made attempts to privatize state-
owned enterprises, thereby fostering private sector development.  These efforts provided a good basis for continued reform with a view to  furthering Ecuador's development. 
52. More needed to be done, however, in order to cr eate an efficient market and promote growth 
and development.  Efforts to introduce a compe tition policy and carry out private sector reform, 
particularly in the transport, finance, and teleco mmunications sectors, should continue, along with the 
introduction of a framework to increase direct invest ment and market opening with respect to foreign 
service providers.  This would help Ecuador to di versify its export base.  The transparency and 
openness of Ecuador's procurement system could be enhanced by allowing more participation by 
foreign companies.  The Plurilateral Agreement on Government Procuremen t could serve as a good 
set of rules to support Ecuador's efforts in this ar ea.  The initiated customs reform created a good basis 
for streamlining Ecuador's customs regime.  Howe ver, customs formalities were burdensome, and 
might give rise to non-transparent practices.  While  Ecuador had reduced its  applied tariffs, there WT/TPR/M/148 
Page 14  
 
remained a large gap between bound and applied rates, giving rise to significant insecurity.  Ecuador 
had been tormented by political instability, which had also affected its economic stability and 
development.  The WTO system could assist c ountries by providing strong rules and market 
opportunities.  However, it could not fully counter losses arising from stability and security problems.  Economic development and stability went hand in hand. 
53. The EU shared Ecuador's views on regional inte gration, which could help to consolidate 
regional trade and foster economic development.  Ecuador had played a key part in the Andean 
regional integration initiative.  The level of regi onal economic integration was the key to a mutually 
beneficial free trade agreement:  full benefits could be achieved throug h arrangements covering 
substantially all sectors and products.  Unbalanced liberalization hampered development, and resulted 
in limited benefits in a few areas of interest to  a few participants only.  The EU was therefore 
following with great interest the Andean services liberalization process scheduled for 2005.  While 
consolidation of regional trade would be of bene fit for development, multilateral trade talks provided 
an important platform for better integration of developing countri es in the global trading system.  
Market opening and strengthening of global rul es would benefit all WTO Members, including 
Ecuador.  Ecuador had taken important steps to a ddress the relationship between trade and sustainable 
development.  The EU looked forward to continuing  to explore this issue in close cooperation with 
Ecuador;  and was interested in Ecuador's assessme nt of the potential for ensuring a strong synergy 
between trade and sustainable development.  The EU's continuing partnershi p with Ecuador in the 
field of technical assistance for capacity building, w as aimed at assisting Ecuador in its infrastructure, 
customs, and export diversification efforts.  It s goal was to strengthen the foundation for taking 
advantage of the benefits from increased trade.  The representative asked for Ecuador's view on how 
its policies affected its own development a nd that of other countries in the region. 
54. The representative of the United States
 noted that trade between the United States and 
Ecuador was expanding.  The United States was Ec uador's principal trading partner, accounting 
for about 40% of Ecuador's exports and nearly 43% of its foreign direct investment.  U.S. goods 
exports to Ecuador had been $1.7 billion in 2004, up 15.2% from the previous year;  U.S. imports 
from Ecuador had been $4.3 bil lion, up 57.4%.  Ec uador benefited from duty-free access to the 
United States for most of its exports under the Andean Trade Preference Act, and since May 2004 
Ecuador had been participating in the negotia tion of a U.S.-Andean free-trade agreement.  
The United States hoped that this agreement woul d be a key component in Ecuador’s continued 
reform programme and would assist its economic grow th.  In particular, it hoped that the agreement 
would stimulate the expansion of Ecuador’s non-oil exports and help  to diversify its economic base 
further.  Ecuador had taken positive steps sinc e the 1990s;  MFN tariffs had been reduced, and 
Ecuador's entire tariff schedule had been bound.  Ec uador should be proud of its near doubling of per 
capita GDP during the period 2000-04, combined with  the decline of inflation to only 1.9%.  
Increased oil revenues had contributed to Ecua dor’s economic success, as had greater household 
consumption and economic reforms,  including tax reform.  The United States had become concerned 
about Ecuador’s implementation of its WTO obligations  in several areas.  The tariffs applied to some 
products appeared to be higher than bound rates.  Ecuador comm itted to phase out its price band 
system in its WTO accession protocol by 2001;  how ever, Ecuador still applied a price band system on 
more than 150 agricultural products.  Although th e United States commended the improvements in the 
transparency of Ecuador’s trade regime sin ce the 1990s, it urged Ecuador to follow-up on these 
improvements by notifying its sanitary and phytonsan itary measures and technical barriers to trade, 
and bringing its other notificati ons up to date, such as those under the Agreement on Subsidies and 
Countervailing Measures. 
55. The United States urged Ecuador to look at its customs procedures, as improvements in 
this area would help Ecuador reap the full benefits of lower tariffs and other trade liberalization.  
According to the Secretariat Report, customs clearan ce took an average of 12 days in 2004;  another 
study had found that the cost of customs clearance amounted to around 15% of the value of imports.  The preshipment inspection programme, the import licensing regime, the requirement for Central  WT/TPR/M/148 
 Page 15 
 
 
Bank approval for all imports exceeding US$4,000,  and the sheer number of entities and documents 
involved in customs procedures, a dded substantially to the cost of  doing business.  Ecuador should 
benefit immensely from the negotiations on trade fac ilitation in the Doha Round, but the United States 
urged Ecuador not to wait until the conclusion of negotiations before taking action in this area.  
The United States encouraged Ecuador to build on its comprehensive intellectual property law with 
better enforcement, as the effective protection of intellectual property rights could be an important 
driver of growth and foreign direct investment:  the lack of effective enforcement had led to the 
majority of international record companies closi ng their offices in Ecuador.  The United States sought 
assurances that Ecuador’s taxes on distilled spirits  were being applied equally on imports and 
domestically produced goods.  It urged Ecuador to adopt a more transparent tax regime that applied 
the same tax rate for all products, such as a fixe d rate per degree of alcohol.  The United States 
encouraged Ecuador to show a high level of amb ition in the Doha negotiati ons and called on Ecuador 
to submit its initial services offer.   
56. The representative of Colombia  noted that Ecuador and Colombia shared historical, cultural, 
economic, and trade ties, reflected in excellent relations  not only at the bilateral level, but also in the 
context of the Andean Community and the multilate ral trading system.  Ecuador had undertaken 
drastic changes to its internal policies, which had had an enormous impact on its international trade 
relations.  One of the most important changes was th e adoption of the U.S. dollar as legal tender;  this 
had forced the economy to improve its competitivene ss.  Ecuador had brought inflation under control;  
it had fallen from 6.1% in 2003 to 1.9% in 2004.   Although economic growth had slowed down 
somewhat between 2001 and 2003, Ecuador registered a surprising 6.9% GDP growth rate in 2004.  In 
spite of this, Ecuador's participation in the wo rld market was still small,  and its dependence on 
commodity exports large.  This resulted in a hi gh level of vulnerability to changes in commodity 
prices.  Ecuador's income depended on exports of o il, bananas, flowers, shrimp, and tuna.  Trade 
restrictions applied by Ecuador's trading partners  to these products greatly affected Ecuador's export 
performance. 
57. Ecuador was Colombia's third largest trading partner, and its second largest in the Andean 
Community.  For this reason the success of Ecuador's trade policy was part of the success of Colombia's trade policy.  At the bilateral leve l, Colombia and Ecuador had developed a fruitful 
integration process that included a free-trade area, a common external tariff affecting an important 
share of tariffs, and soon, the liberalization of services trade.  The two countries' authorities had 
entered into agreements to facilitate bilateral tr ade, including in the area of customs and border 
protection, and progress had been made on the mutu al recognition of quality certification.  Trade 
between Colombia and Ecuador had shown an upward trend in the past decade:  in 1993, bilateral 
trade was US$395.1 million;  by 2004, it had grown 3.5 fold, to US$1.4 billion.  Ecuador participated 
actively in various fora;  at the multilateral le vel, Ecuador had sought access for its export products, 
particularly bananas. 
58. The representative of Brazil
 congratulated Ecuador for its average GDP growth of 4.1% 
between 2000 and 2004, which had followed a severe economic and financial crisis that had caused 
real GDP to fall by 6%.  According to the Secret ariat Report, the positive performance of the economy 
during 2000-04 was largely attributable to a favorable external environment and prudent 
macroeconomic policies.  Brazil we lcomed Ecuador's Central Bank fo recast of 3.9% real GDP growth 
for 2005, and appreciated that per capita GDP had doubled in the last years, and that inflation had 
been drastically reduced.  Intern ational trade was important to Ec uador's economy:  exports included 
agricultural and fisheries products, and oil, the main export commodity, which accounted for 10% of 
GDP and 43% of exports.  For this reason, varia tions in international oil prices made Ecuador's 
economy particularly vulnerable.  Agricultural pr oduction, which had been strongly affected by 
El Niño in 1998, had recovered only recently.  Braz il supported efforts by Ecuador to diversify its 
exports to weather the negative impact of any future shocks. WT/TPR/M/148 
Page 16  
 
59. Ecuador had undertaken major reforms to its trad e regime since 1990.  It had bound its entire 
tariff at 30%, and MFN tariffs had been reduced c onsiderably, to an average of 11.4%. However, 
customs clearance times were relatively long, and Ecuador applied variable tariff rates to certain 
agricultural products.  Ecuador had never imposed countervailing measures and its use of anti-
dumping and safeguard measures had been limited.  In the area of technical standards, Brazil 
appreciated the adoption of technical regulations  following the principles laid down in the WTO 
Agreement on Technical Barriers to Trade.  Ecuador 's participation in the Andean Community and its 
WTO commitments had enhanced the predictability of  its investment regime and legal framework.  
Ecuador was involved in several negotiating pro cesses.  Brazil welcomed the signing by Ecuador, 
Colombia and Venezuela, of Economic Comp lementation Agreement 59 with MERCOSUR in 
December 2003.  This agreement, which entered into force on 1 April 2005, sought to form a free-
trade area between its members and would contribu te to the economic dynamism of the region. 
60. The representative of Honduras
 noted that Ecuador was firmly committed to a market-
oriented economic regime and ac tive integration into the global economy.  Ecuador's economy 
displayed an increasing degree of openness.  H onduras valued Ecuador's steps to liberalize and 
improve the predictability and transparency of its tr ade and investment regime in unilateral, regional, 
and multilateral initiatives.  This reflected Ecua dor's belief that these policies were vital for 
sustainable economic growth, consistent with its development needs.  Trade openness was the new 
pillar of economic growth in Ecuador.  It was cl ear that Ecuador considered that higher economic 
growth was key to combatting poverty, and that it could only be achieved with policies that improved 
resource allocation, create opportunity, and foster greater private initiative.  For Ecuador, this new 
way of thinking had led to a shift in trade po licy formulation, from a framework based on import 
substitution towards one based on export-oriented open regionalism.  This framework rejected 
protectionist policies, reinforced deeper integrati on with strategic trade partners, and rested upon the 
WTO rules-based system.  Honduras encouraged Ecua dor to take the necessary steps to complete 
successfully the work to enhance its integration into the world economy. 
61. The representative of Bolivia  noted Ecuador's significant progress in terms of economic 
policy, particularly macroeconomic stability, and uni lateral market opening, which had translated into 
an average tariff rate of 11.9%.  Bolivia was confid ent that Ecuador would successfully face the fiscal 
reforms necessary to further its productive developmen t and export policies.  This would avoid the use 
of contingency measures in the absen ce of an exchange rate policy.  Ecuador's integration strategy 
involved creating and consolidating trade links and participating in regiona l integration processes, 
guaranteeing foreign direct investment, and seeki ng access to technologies in development-related 
aspects.  Trade relations between Ecuador and Boli via took place in the context of the Cartagena 
Agreement and other Andean legislation.  Apart from the ancient ties that united the two countries, 
Ecuador was one of Bolivia's most important and st rategic trade partners.  Total bilateral trade had 
fluctuated during the past decade:  the trade bala nce had been positive for Ecuador in some years and 
for Bolivia in others.  Various integration measures in the area of infrastructure and energy, and 
border cooperation had enhanced Ec uador's participation in international trade.  Together with 
Ecuador and Colombia, Bolivia participated in the South American Regional Infrastructure Integration 
Initiative, in addition to agreements in the cont ext of the Andean Community and ALADI.  Ecuador 
and Bolivia were also members of the Amazonian Cooperation Agreement. 
62. The representative of Uruguay  noted Ecuador's active participa tion in the WTO, and its firm 
commitment to the multilateral trading system.  Ecua dor was a promoter of trade liberalization, which 
was key to economic growth and deve lopment.  Ecuador played a key role in the regional integration 
process, including in the trade liberalization agreem ent with MERCOSUR.  Since the beginning of the 
1990s, Ecuador had taken substantial steps to liberalize and increase the predictability and 
transparency of its trade and investment regime w ithin unilateral, regional, and multilateral initiatives.  
International trade was important to Ecuador's economy.  Although export diversification had 
increased, exports of oil and agricultural products still dominated Ecuador's export basket.  Ecuador 
participated actively in the agriculture negotiations of the Doha Round;  it maintained that agriculture  WT/TPR/M/148 
 Page 17 
 
 
should be subject to the same rules as non-agri cultural goods, which would ensure equitable and 
market-based trade in agriculture. 
63. The representative of Venezuela  recognized Ecuador's efforts towards achieving a stable 
growth rate.  Economic growth had been positiv e between 2000 and 2004.  Venezuela commended 
Ecuador for its achievements with respect to c ontrolling inflation and reducing the current account 
deficit.  Venezuela also recognized Ecuador's partic ipation in the multilateral sphere, particularly the 
WTO.  Bilateral trade had been decreasing in recent years.  Venezuela hoped that this trend would be 
reversed, as there was broad potential for developm ent of economic and trad e relations between the 
two countries, which were members of the And ean Community and ALADI.  Venezuela hoped that 
the Economic Complementation Agreement signed in  December 2003 between Venezuela, Ecuador, 
and Colombia and MERCOSUR would spark mutually beneficial trade between the members. 
64. The representative of India  noted that the economic and financial crisis of 1998-99 had posed 
an enormous challenge for Ecuador.  Overcoming this challenge had required difficult structural 
reforms, and had been rendered even more difficult by the high level of public debt and the economy's 
high reliance on the oil sector.  Ecuador had adopted the U.S. dollar as legal tender to contain the high 
level of inflation, giving up the option of an i ndependent monetary policy.  These measures had led 
Ecuador to achieve an average annual GDP growth  rate of 4.1% between 2000 and 2004.  India 
wished Ecuador success in its future reform endeavors.   Bilateral trade was very small, but it had been 
expanding, and there was huge untapped potential for bilateral cooperation, particularly in 
communications and information technology, pharmac euticals, and petroleum.  India was working 
closely with Ecuador to strengthen further th e bilateral trade and economic relationship. 
65. The representative of Korea  welcomed Ecuador's efforts to stabilize its economy through 
prudent macroeconomic policies.  Measures to redu ce the public debt and strengthen fiscal disciplines 
constituted important steps forward in reformin g fiscal policy, the remaining macroeconomic 
adjustment tool after dollarization.  These reform efforts had contributed to overcoming the economic 
and financial crisis of the late  1990s, and achieving economic growth.  Korea would be pleased to see 
continued reform efforts by Ecuador. 
66. Korea noted that Ecuador had bound all its tariffs and had reduced MFN applied rates 
considerably in the context of reforms to its tr ade regime in the 1990s.  This had increased trade 
opportunities and had contributed to the transparency of the trade regime.  However, there seemed to 
be scope for further improvement by addressing non-ta riff barriers, which could undermine the effects 
of liberalization.  Further trade opportunities c ould be created by removing or reducing import 
prohibitions.  Import licensing needed to be administ ered so as to ensure that it was not used as a non-
tariff barrier.  Long and complicated customs procedur es increased transaction costs, and needed to be 
streamlined.  In this regard, Korea welcomed th e customs modernization programme;  its successful 
implementation would enhance the efficiency, effectiv eness, and transparency of customs procedures.  
Regarding technical standards and regulations, Ko rea welcomed progress made by Ecuador towards 
converting mandatory standards into voluntary ones, th e notification of several technical regulations to 
the WTO in early 2005, and efforts to adopt te chnical regulations in accordance with the WTO 
Agreement on Technical Barriers to Trade.  Contin uing with these efforts would increase transparency 
and the conformity of its technical regulations re gime with WTO rules.  Although Ecuador was not a 
member of the WTO Government Procurement Ag reement, Ecuador's efforts to enhance the 
transparency and effectiveness of its government procurement regime, and achieve better value for 
money, would benefit from adopting the Agreement' s rules and disciplines, as appropriate.  Korea 
encouraged Ecuador to join the Government Proc urement Agreement.  The Doha Round negotiations 
could serve as a useful vehicle for further reform and liberalization in Ecuador.  Korea encouraged 
Ecuador to table its initial services offer, address the substantial differenc e between bound and applied 
tariff rates in the context of the non-agricultura l market access negotiations, and take advantage of 
negotiations on trade facilitation to improve customs procedures. WT/TPR/M/148 
Page 18  
 
67. The representative of Turkey
 stated that Ecuador's economic and trade policies were heading 
generally in the right direction.  Ecuador had ma de substantial efforts to liberalize its trade and 
investment regime through national, regional, and multilateral tools;  the substantial reduction of MFN 
tariffs was worth stressing.  Ecuador's econo mic performance was good:  since overcoming the 
economic crisis in 1999, its real GDP had grow n continuously, averaging 4.1% between 2000-04.  
Turkey believed that this was an important st ep towards sustainable development.  On the 
macroeconomic front, further reforms appeared to be needed in public finance and the fiscal side, in 
order to consolidate the gains from the monetary si de.  This seemed to be important in terms of 
improving the flexibilities in macroeconomic policy ma nagement.  Regarding the structure of trade, 
further export diversification was needed:  e xports were dominated by petroleum and a few 
agricultural products.  Ecuador's investment regime  and environment was relatively predictable and 
stable. 
68. Although several areas of trade policy generate d some concerns to Members, Turkey was 
pleased to hear about Ecuador's strong willingness for further economic reform, particularly with respect to consolidating and deepening exports, furt her reducing tariffs and non- tariff barriers, and to 
improving governance and privatization through structur al reforms.  Turkey shared the views voiced 
by Japan regarding the need for regional trade agreements to be complementary to the MFN 
liberalization process.  As expressed by the Euro pean Union, Turkey hoped that Ecuador would 
overcome the problems posed by political instability, which was vital for economic stability.  In the 
Doha Round, Turkey had great sympathy towards Ecuador’s views on elimin ating distortions in 
agriculture, and on reaching an ambitious outcome in non-agricultural market access.  WT/TPR/M/148 
 Page 19 
 
 
V. REPLIES FROM THE REPRESENTATIVE OF ECUADOR AND ADDITIONAL 
 COMMENTS 
(1) ECONOMIC AND INSTITUTIONAL ENVIRONMENT  
69. The representative of Ecuador  noted that Ecuador's investment  regime was one of the most 
open in the region, and perhaps in the world.  Fore igners were able to carry out direct investment 
without prior authorization.  This testified to th e openness and transparency of Ecuador's investment 
regime.  Foreign investors enjoyed the same rights and treatment as domestic investors, in accordance 
with the principle of national treatment.  Foreigners had the right to repatriate profits, and could enter 
into tax stability agreements.  Ecuador's Constitu tion recognized the possibility to resort to 
international arbitration.  Ecuador was a member of  various international arbitration systems;  it 
recognized any judgment.  The legal framework for investment was composed  of Andean Community 
Decisions 24, 220, and 291, the Law of Foreign Trade and Investment, and the Law on Investment 
Promotion and Guarantees.  Investment promotion w as within the ambit of the Corporation for Export 
and Investment Promotion (CORPEI), a not-for-prof it organization that worked jointly with other 
government institutions and the private sector.  The investment promotion policy was contained in the 
National Plan for Investment Promotion 2000-10, which sought to increase domestic and foreign 
investment in:  agri-business, forestry, tourism, mining, aquaculture and fishing, and other sectors depending on demand and the availability of financ ial and human resources.  Ecuador felt it was 
important to maintain a stable legal and political frame work to ensure the inflow of direct investment 
for Ecuador's productive development.  The Govern ment was working to simplify the domestic legal 
regime, and to establish clear long-term rules.  Re garding concerns expressed about the compatibility 
of Ecuador's investment regime with the WTO TR IMs Agreement, Members had had an opportunity 
to review Ecuador's legislation in the context of  its WTO accession.  Ecuador had identified its trade-
related investment measures and had agreed to  eliminate measures incompatible with WTO 
disciplines;  it had met all its commitments in this ar ea.  It did not maintain performance requirements, 
which it believed worked against the logic of the market and efficiency. 
70. With regard to trade policy formulation, Ecua dor's development model, adopted in the early 
1980s was based on the progressive opening and deregul ation of the economy.  Exports were at the 
core of this model, given their be nefits in terms of foreign-exchange , employment, and value-added.    
The success of development models based on the ex ternal sector depended not only on the degree of 
openness of a country like Ecuador but also on the de gree of openness of the international system as a 
whole.  The commitment of developed countries to promoting an open and transparent multilateral 
trading system in which products of interest to  developing countries enjoyed market access was 
essential.  Ecuador's participation in the And ean Community and other integration schemes 
complemented and was fully compatible with its WTO commitments;  it was in full compliance with 
GATT Article XXIV and GATS Article V, and had availed itself of the right to make use of the enabling clause.  The adjustment of the legal and institutional framework governing trade required 
considerable efforts by public ins titutions and the private sector.  To this end, Ecuador sought to take 
advantage of technical assistance and capacity building opportunities offered by international 
organizations, including the WTO, and by Ecuador' s main trading partners, particularly the more 
developed ones.  Ecuador thanked the United St ates, the European Unio n, Canada, Japan, and 
Switzerland for supporting trade capacity building in  Ecuador.  This support was helping Ecuador to 
achieve a more suitable trade policy. 
71. The discussant and a number of delegations ha d expressed interest in Ecuador's efforts to 
diversify trade.  Ecuador sought additional trading pa rtners.  Together with Colombia and Venezuela, 
Ecuador was implementing Economic Complementat ion Agreement 59 with MERCOSUR.  Ecuador 
was also negotiating a free-trade agreement with the United States, its main trading partner.  This 
agreement would establish more stringent standard s on Ecuador's trade policy.  Ecuador was willing 
to strengthen trade relations with other partners through similar exercises.  Together with the other 
members of the Andean Community, Ecuador hoped to begin negotiations towards an Association WT/TPR/M/148 
Page 20  
 
Agreement with the European Un ion, which included a free-trade area.  These trade initiatives also 
had an important political component.  The creation of the South American Community had led to broader levels of ec onomic integration. 
72. Regarding competition policy, Ecuador's Constitutio n stipulated that the State must promote 
the development of competitive activities and market s, and ban monopolistic practices.  Ecuador had 
prepared a new draft organic law in cooperation with the private and consumer sectors, other 
specialized State entities, the And ean Community, and the European Union.  The draft law would be 
sent to Congress shortly.  It was hoped that it would be approved by the end of 2005.  The draft law 
provided for the establishment of an institution to deal with competition matters.  The Commission of 
the Andean Community had recently approved D ecision 608 (Disciplines for the Protection and 
Promotion of Free Competition in the Andean Communi ty), which formed part of Ecuador's domestic 
legislation. 
73. The topic of political stability and its possible impact on Ecuador's international trade 
commitments was important.  Over the past ten ye ars, Ecuador had undergone a series of political 
changes.  In spite of these changes, Ecuador's tr ade and economic policies, and its commitments vis-a-
vis multilateral credit agencies and the WTO, remain ed coherent and stable.  The three elements 
essential to ensure stability were to maintain pol itical and legal security, which was fostered by 
Ecuador's WTO membership;  to develop infrastructur e;  and to develop stable markets, which was 
achieved to a large extent through trade agre ements and the application of WTO rules.  
Notwithstanding Ecuador's recent political changes, the political commitment to continue along the 
path to stability remained unaltered. 
(2) T
RADE POLICIES BY MEASURE  
74. The discussant and a number of Members had expressed concerns about Ecuador's customs 
procedures.  Ecuador remained committed to the mo dernization of its customs regime.  This process 
sought to increase investment in human resources and strengthen computer systems.  It also involved far-reaching institutional reform.  In ternal cooperation was key in carrying out the modernization of 
the customs regime, as was external cooperation from a number of sources.  Ecuador was working to 
improve its customs procedures, and, in the contex t of the current bilateral trade negotiations, had 
adopted exacting commitments to re duce customs clearance times and simplify requirements.  The use 
of risk criteria, ex-post audits, and advance clearance  were in the pipeline.  Ecuador took note of the 
discussant's comment regarding the involvement of non-specialist personnel in customs matters.  The 
presence of the armed forces in customs was aimed at reducing corruption;  Ecuador was committed 
to replacing members of the armed forces involved in  customs with civil personnel.  A new customs 
administration was about to take office and woul d be led by individuals  who had handled tax 
administration reform.  Tax administration had im proved considerably because Ecuador had put in 
place policies developed by experts;  the same would occur with customs. 
75. Regarding import licensing, Ecuador had decided to  reform this instrument, including through 
the gradual elimination of a large share of products subject to licensing.  To this end, COMEXI had 
adopted a rigorous schedule aimed at leaving in place only the requirements necessary for the 
administration of tariff quotas, the application of safety schemes, or the compilation of statistics, etc.  COMEXI Resolutions 183 and 297, which harm onized the import licensing regime with WTO 
disciplines, had been notified to the WTO in ear ly June 2005, in accordance with one of the 
recommendations contained in the Secretariat Report. 
76. Ecuador was committed to responding to the WTO questionnaire on customs valuation.  Its 
preshipment inspection regime was fully compatible with WTO disciplines.  At the time of Ecuador's 
WTO accession, it maintained a series of mechanis ms providing for minimum and reference prices;  
these had been replaced with a preshipment inspecti on system, which had had positive results in terms 
of the application of the WTO Customs Valuation Agre ement.  As part of the customs reform process,  WT/TPR/M/148 
 Page 21 
 
 
Ecuador was ready to do without pre-shipment inspec tion.  This would require legislative changes.  
The President of Ecuador had expressed interest in  carrying out this reform.  Ecuador had adopted 
general rules of origin in the context of its prefer ential trade agreements;  these rules had recently been 
replaced by specific origin requirements.  The agreement with MERCOSUR had specific rules of 
origin that were open and did not cause problems to  third-country trade flows;  in the bilateral 
negotiations with the United States, specific orig in requirements had been improved, based on the 
U.S. experience in other preferential agreements. 
77. The simple average applied MFN tariff rate was 11.4%.  In 1990, Ecuador applied much 
higher tariffs, and since it was not a GATT member at this time, it was not obliged to apply these tariffs on an MFN basis.  Ecuador had notified its legislation on the administration of tariff quotas to 
the WTO.  This legislation was still in force.  It had not applied tariff quotas every year, because 
applied tariffs had been below th e in-quota bound tariff rate.  In  cases where tariff quotas had been 
applied, Ecuador had fo llowed its legislation. 
78. Ecuador and other members of the Andean Co mmunity, had adopted common legislation on 
sanitary and phytosanitary measures.  This legislati on also applied to countries that were not members 
of the Andean Community.  Part of this legislati on had been notified to the WTO.  Ecuador was aware 
that it had additional notification obligations in this  area, and hoped to comply with them in the near 
future.  Ecuador would welcome external c ooperation to address the remaining institutional 
weaknesses of its sanitary and phytosanitary regime , which like that of many other developing 
countries, had some deficiencies.  Ecuador would maintain its efforts to strengthen and increase 
transparency, while applying the necessary measures to  protect health, based on scientific evidence. 
79. Ecuador did not provide export subsidies, and si nce it did not have the necessary resources, it 
had no plans to do so.  In the Doha Round negotia tions, Ecuador had called on developed countries to 
adopt ambitious commitments in this area, partic ularly with respect to agriculture.  Ecuador 
maintained duty drawback and temporary entry prog rammes.  It also had a maquila programme and 
export processing zones.  All of these schemes were applied in conformity with Ecuador's 
international commitments.  In response to the discussant's questions, neither the duty drawback 
programme nor export processing zones had had a significant impact in terms of fiscal revenue lost.  
The benefits provided by these programmes to the productive sector had also been limited, mainly 
because Ecuador had sought to prevent the pr ogrammes from becoming illegal export or production 
subsidies. 
80. Although Ecuador was not a signatory to th e plurilateral Agreement on Government 
Procurement, it had clear and transparent rules to comp ly with its bilateral commitments in this area.  
However, Ecuador recognized the need to improve  on some aspects of its government procurement 
regime.  In the context of the Andean Community , Ecuador had commitments only with respect to 
public procurement of services, not of goods.  Ec uador was considering the adoption of exacting 
disciplines in this area in the cont ext of its trade negotiation with the United States, and was tabling 
interesting offers that went beyond the commi tments of many WTO Members in the GPA. 
81. Ecuador's law on intellectual prope rty was one of the most advanced in the region.  It had 
been the first developing country to be review ed by the WTO TRIPS Council, which had confirmed 
that Ecuador's intellectual property rights legislati on was fully compatible with the TRIPS Agreement.  
Ecuador's commitments in the Andean Community  were very advanced.  Andean Community 
legislation established a common system on copyri ght, industrial property, genetic resources, and 
plant varieties.  Ecuador's nati onal and regional commitments went far beyond its WTO commitments.  
Ecuador was making significant efforts with respect to  the enforcement of intellectual property rights.  
Piracy was a scourge affecting many countries.  Ec uador was by no means exempt, but it was evident 
from Ecuador's efforts to combat piracy that its cour t system was taking considerable steps in terms of 
enforcement. WT/TPR/M/148 
Page 22  
 
(3) S
ECTORAL POLICIES  
82. Agriculture was the main source of employment  in Ecuador, and one of the principal sources 
of exports.  World trade in agriculture was highly dist orted and Ecuador was a victim of this situation.  
Ecuador had made several notifications on the administration of import licences for agricultural 
products, in response to the Secretariat Report.  Ec uador hoped that it would be able to complete its 
notification obligations in this area shortly.  The functioning of the price band system had been fully 
explained in the context of the WTO dispute Chile—Price Band System .  Andean countries had taken 
part in the dispute as third parties.  The Panel,  and subsequently the Appe llate Body, had confirmed 
that the difficulties found in connection with Chile's price band system were only part of that system, and not part of the Andean system.  Additionall y, countries like Colombia and Venezuela, which 
applied the same price band system as Ecuador, had explained the Andean price band system in their 
respective Trade Policy Reviews.  The system w as aimed essentially at neutralizing the market 
distortions caused by subsidies.  Ecuador did not  subsidize its agriculture sector and had adopted 
WTO commitments in this area.  Ecuador had comp lied with its commitment to abolish the price band 
system in force at the time of its WTO accession.  Ecuador had recognized that its "tariff adjustment 
mechanism" was not in conformity with GATT Articl e II and had therefore agreed to eliminated it.  
The mechanism had been replaced with the And ean price band system, which was compatible 
with WTO disciplines.  After its accession to the WTO, Ecuador had been subject to a review of 
its accession commitments, and had replied to comments by Members in the General Council, 
regarding such commitments.  In 2001 Ecuador inform ed WTO Members that it had complied with its 
commitments.  Since then, the topic of the pri ce band system had not resurfaced either in the 
General Council or any other WTO body. 
83. The oil sector was one of the most important for Ecuador, and had received high levels of 
foreign investment.  The contracts through which the pr ivate sector participated in this sector were 
fully transparent.  The State's participation in these contracts did not infringe upon the TRIMs Agreement.  The disputes over the applicability of th e drawback regime to the oil sector were being 
reviewed in domestic courts, or in arbitration syst ems.  The representative of Ecuador stated that it 
would be difficult to provide additional comments as the disputes had yet to be resolved.  Some of the 
disputes subject to international arbitration had b een appealed, and Ecuador was awaiting the results 
before taking further action. 
84. Ambassador de Mateo y Venturini and several Members had voiced concerns about the delay 
in Ecuador's initial services offer.  Ecuador had b een reviewing its measures that affected trade in 
services, and would be in a position to submit its  initial services offer as soon as this review was 
completed.  This would likely be towards the end of June 2005.  Ecuador's current services 
commitments in the WTO were among the most open in the region.  The telecommunications sector was one of the economy's most liberal and with the highest levels of competition.  The Law on Economic Transformation created a regime based on free competition set up to promote efficiency, 
universal access, continuity, and service quality.  There were three mobile services providers.  
Ecuador was not promoting privatization in the area of fixed telephony, but it was prepared to seek 
increased competition and eliminate monopolistic practi ces by state-owned companies.  Ecuador had 
an independent telecommunications regulator.  Ec uador had restrictions on the establishment of 
financial and insurance companies in its WTO commitments.  These restrictions were mostly 
prudential in nature.  Ecuador di d not apply any prohibition on the est ablishment of financial entities.  
However, these entities were required to meet the conditions defined in Ecuador's domestic 
legislation.  These conditions applied on a national treatment basis.  Several foreign banks were 
assessing the possibility of establishing in Ecuador.  Ecuador had not adopted specific commitments on maritime transport in the WTO;  the Secretar iat Report covered in de tail the legal framework 
pertaining to this sector.  Regarding maritime transport of hydrocarbons, which was subject to a 
reservation by Ecuador, the reservation did not act  as a bottleneck because Ecuador's legislation 
foresaw the possibility of chartering additional vessel s.  In these cases, a flag waiver was applied.  WT/TPR/M/148 
 Page 23 
 
 
85. The discussant  stated that regional integration c ould have "spaghetti bowl" effects on the 
multilateral trading system.  However, regional inte gration also offered fundamental advantages to 
developing countries.  The WTO's approach could be characterized as mercantilist.  This could be 
traced back to a mercantilist approach by the political elites of many WTO Members and it was 
difficult to find quick solutions to profound problems .  In other words, it was easier to enter into 
bilateral and regional agreements.  These agreements  afforded countries' commitments legal certainty.  
Whereas the domestic legal framework could change, it was more difficult to change the international 
legal framework.  The WTO also provided Ecuador w ith a framework that affo rded legal certainty.  
With respect to investment, WTO investment di sciplines only covered trad e-related investment 
measures.  In the context of the free-trade agreement with the United States, there would certainly be a 
chapter on investment.  The discussant asked whet her in the context of bilateral and regional 
negotiations, Ecuador had been able to confirm that it had one of the most open investment regimes in 
the world.  On services, the negotiations in the c ontext of the Andean Community and the free-trade 
agreement with the United States followed a negative list approach.  For this reason, Ecuador already 
had an inventory of all restrictions affecting trad e in services.  In this regard, the discussant asked 
about the degree of openness of Ecuador's market to foreign service suppliers.  Turning to the 
economic environment, the economy was sensitive to  the prices of a few export products.  Ecuador 
had developed certain mechanisms to deal with  a possible external shock, including the oil 
stabilization fund.  The discussant asked about the exte nt to which such a fund could absorb external 
shocks. 
86. The representative of the European Union  was pleased that Ecuador and the European Union 
shared a common view with respect to liberaliza tion and the major role played by the WTO in 
advancing such liberalization. 
87. The representative of Mexico  appreciated that the armed forces would be replaced by 
individuals who had managed internal  tax reform.  Those in charge of  administering internal revenue, 
however, usually sought to increase tax collection.  Ecuador would benefit from active participation in 
the WTO negotiations on trade facilitation, and from involving those in charge of the customs 
modernization programme in these negotiations.  Mexico, like other WTO Members, was awaiting 
Ecuador's initial services offer.  With regard to agriculture, Ecuador maintained a number of measures 
to protect this important sector, like most other WTO Members.  Given Ecuador's strong export interests in this area, it would be useful for Ecua dor to participate more act ively in the agriculture 
talks.  Ecuador should share its views and concerns  with respect to the n eed to open agricultural 
markets.  Ecuador was an active user of the Dis pute Settlement Mechanism and had tested the limits 
of the system.  Thanks to Ecuador there were so-cal led "revision panels".  At  this time, Ecuador was 
participating in an arbitration process that had no precedent in the history of the WTO.  Mexico had 
learned a lot from Ecuador and belie ved that Ecuador's renewed partic ipation in the WTO negotiations 
would be very helpful given its experience. 
88. The representative of Canada
 noted that, according to Ecuador 's written replies, the results 
brought about by the Law on Economic Transfor mation of 2000 would be ratified in the GATS 
negotiations.  The representative of Canada asked wh ether this would translate into the adoption of 
commitments on basic telecommunications in the ongoing GATS negotiations. 
89. The representative of the United States  stated that the United States was aware of Ecuador's 
efforts to increase its exports to developed country  markets.  These efforts were reflected in the 
bilateral trade agreement under ne gotiation between Ecuador and th e United States.  Given the 
existing direction of trade, he asked about the degree to which Ecuador felt it was important to 
reorient its trade, particularly in its non-traditi onal exports, to other developing countries beyond its 
immediate region.  In this regard, he sought furthe r details on efforts being considered by Ecuador to 
diversify its export base, and the priority areas in different negotiating settings, not only at the WTO, 
but perhaps also in the context of  bilateral mechanisms.  Work under  way on customs valuation would 
require legislative changes.  This seemed odd, because customs valuation amendments often took WT/TPR/M/148 
Page 24  
 
place through regulatory changes.  He asked why le gislative changes would be required.  The United 
States was also interested in learning more about the status of this legislation, specifically whether it 
had already been drafted and submitted to Cong ress.  The United States would also appreciate 
responses to the WTO check-list on customs valuation.   It appeared that import licensing would be 
used only in connection with administration of ta riff quotas, safety, and statistical information.  
Ecuador had not submitted its response to the qu estionnaire on import licensing reflecting the most 
recent COMEXI resolution.  There were several import restrictions in place, on used clothing, 
vehicles, used parts, and used tyres.  At the time of its accession to the WTO, Ecuador committed to 
abolish these import prohibitions.  None of them seemed  to relate to the thr ee criteria for the use of 
import licensing outlined by the representative of Ecua dor.  He asked about Ecuador's steps to come 
into conformity with its accession commitment.  On intellectual property, the United States was 
pleased to hear that Ecuador recognized the existe nce of a piracy problem, and was taking steps to 
address it.  The United States had raised this issue with Ecuador on other occasions.  He asked what 
steps Ecuador was taking to establish specialized co urts to address intellectual property disputes, as 
called for in its law.  Additionally, no ex offici o actions had ever been brought under the Copyright 
Law.  The United States sought Ecuador's views on the reasons why the Government had been unable 
to bring such actions.  With respect to the price band system, the fact that no disputes had been brought against Andean Community members, did not mean that the system was in full conformity with WTO rules.  Ecuador adopted the commitm ent to phase out the price band systems and the 
United States was not convinced that the commitment to use such price band system in the context of 
the Andean Community would necessarily override an individual member's commitment in a protocol 
of accession. 
90. The representative of Ecuador
 shared Ambassador de Mateo y Venturini's concern about the 
spaghetti bowl effects of regional integration.  To a gr eat extent, Ecuador's efforts to participate in that 
spaghetti bowl had to do with the slow progress in th e Doha Round, and the difficulties faced in other 
regional negotiations such as the Free Trade Area of the Americas, where it had proven impossible to 
reach consensus among a higher number of countries.  Ecuador's investment regime was very open.  
Dollarization had made capital restrictions irreleva nt.  In the context of dollarization it was also 
extremely difficult to apply fore ign exchange controls or control profit repatriation through 
administrative measures.  The investment disciplin es being discussed in the bilateral trade negotiation 
with the United States were not new to Ecuador;   Ecuador already had a very broad bilateral 
investment treaty with the United States, with elem ents that went beyond what the United States was 
willing to offer other Andean countries that did not have such bilateral inv estment treaties.  The 
Andean Community did not have an investment regime, and the Andean countries participating 
in the negotiations with the United States were r eady to turn the commitments adopted with the 
United States into multilateral commitments.  Th is was an example of how to move forward 
negotiations with other countries.  Regarding ser vices, negotiations within the Andean Community 
and with the United States were proceeding on the basis of negative lists.  Ecuador was reviewing 
measures to be eliminated in the context of the fr ee-trade negotiations with the United States.  This 
review had not yet been completed.  How far Ecuador could go in the ongoing WTO services 
negotiations depended not only on a fu ll understanding of Ecuador's restri ctions, but also on the lists 
presented by other WTO Members.  Regarding th e vulnerability of Ecuador's economy, the oil 
stabilization fund had grown due to high oil prices,  and Ecuador was assessing how to redistribute 
these resources.  However, Ecuador's law governing expenditure was very strict, so as to enable 
Ecuador to maintain stability in the context of dollarization.  The existence of a fund did not make up for the vulnerability of Ecuador's economy.  Ecuador was interested in promoting greater export diversification, both in terms of products and markets.  WTO negotiations should aim to 
eliminate tariff escalation, in order to facilitate exports of value-added products.  Ecuador had 
increased its export offer significantly.  During the past ten years, Ecuador's export offer had moved 
from 300 products to more than 1,200.  Ecuador's new export products, particularly manufactured 
products, were mostly destined to the Andean Comm unity and, to a lesser extent, other countries in 
South America.  Ecuador would like some of its  new export products to reach developed country 
markets, where they were often subject to restrictions.  WT/TPR/M/148 
 Page 25 
 
 
91. In response to the comment by Mexico, the repr esentative stated that the team in charge of 
customs reform was not focused on attaining increased  tax collection.  That team had succeeded in 
reforming the tax administration system becaus e it had modernized the system, facilitating the 
interaction between the Internal Revenue Servi ce and the customer, not because it had sought to 
increase collection.  Ecuador was committed to the negotiations on trade facilitation and would 
participate more actively in this area.  Ecuador's initial services offer, which it intended to present in 
the next few days, responded to offers presented by other Members;  it did not necessarily reflect the degree of openness that existed in Ecuador.  While Ecuador was planning to make new offers in the 
WTO, other WTO Members were withdrawing commitmen ts, particularly with respect to mode 4.  
Ecuador was concerned about this.  Ecuador had important agricultural interests;  it was the main 
producer of several agricultural products in the wo rld.  However, certain products were sensitive, 
because the poorest segment of its population de pended on these products, and not because Ecuador 
was inefficient or because it had no export inte rests.  These sensitivities could not simply be 
disregarded on the basis of efforts to increase efficiency, production, and market access.  For 
developing countries, the livelihood of many pe ople depended on the continued production of 
sensitive products.  In the case of Ecuador, the sensiti vity of a product was related to the low degree of 
technology used in its produc tion, which in turn could be attributed  to a lack of resources.  For other, 
perhaps developed countries, the sensitivity of a prod uct was related to the maintenance of efficiency 
levels or methods of production that did not co rrespond to their geographical situation.  Ecuador 
participated actively in the WTO Dispute Settleme nt Mechanism in response to the market access 
restrictions on its main agricultural export in the European Union.  Ecuador hoped to continue its 
active participation in the review of the U nderstanding on Rules and Procedures Governing the 
Settlement of Disputes.  Developing countries were still facing difficulties in fully using the dispute 
settlement system, considered the crown jewel of the WTO system. 
92. Regarding comments by the United States, Ecuador was interested in improving its exports to 
developed countries.  For Ecuador, the most significan t markets were located in  those countries.  The 
economies of Ecuador and develope d countries were complementary.  Nonetheless, Ecuador had not 
neglected developing countries.  Ecuador's negotiati ons in the Western Hemisphere, specifically with 
the Andean Community and MERCOSUR, were aimed at increasing exports to developing countries.  
Brazil was a very interesting market for Ecuadorean products, but it had traditionally been closed to 
them.  The recent negotiations sought to open that market;  since the signing of the agreement with 
MERCOSUR, Ecuador's exports to Brazil had doubled.  For bananas, however, entry to the Brazilian 
market was almost as difficult as entry to the EU market.  Reforms to Ecuador's customs valuation 
regime required legislative changes;  the Organi c Law on Customs was being reformed.  Some of 
these reforms were aimed at facilitating trade a nd implementing the commitments adopted at the 
Andean Community level.  To the extent that cu stoms procedures were improved, customs valuation 
would also be enhanced.  Ecuador applied three cr iteria, mentioned previously, to determine which 
products were subject to import licensing.  Some licensing requirements did not correspond to any of 
the three criteria.  For this reason, Ecuador had d ecided to improve its licensing regime through future 
COMEXI decisions aimed at reducing the number of  products covered.  In  addition, Ecuador was 
seeking to reduce the number of Government agencies that required licences, as some products were 
subject to licensing by more than one Government agency.   
93. With respect to used products, Ecuador was c oncerned that the sale of used products could 
have dumping features that required some form of c ontrol.  Ecuador was not the only country that had 
concerns in this respect and that  maintained a regime to control inflows of used products.  It had 
designed a system based on technical regulations and licences, aimed at controlling the potential 
damage caused by these imports, not only to domes tic producers, but also to the environment and 
consumer health.  This was why Ecuador had not yet eliminated the import bans on certain used 
goods.  Other used goods were allowed to enter Ecua dor.  On intellectual property, in particular the 
question on the existence of specialized courts to  address intellectual property disputes, important 
resource limitations had prevented Ecuador from establishing such courts .  In the past year, Ecuador 
had established specialized tribunals to defend childre n's and women's rights, for example to deal with WT/TPR/M/148 
Page 26  
 
child pornography.  These were priority areas.  The protection of intellectual property rights was also 
a priority, and Ecuador was committed to establishing sp ecialized tribunals in accordance with its law;  
it was in the process of securing resources and training personnel towards this end.  The United States 
did not share Ecuador's view on the price band system;  the issue was being discussed in the context of the bilateral free-trade negotiations. 
94. The discussant
 noted that a country seeking to diversify its trade must diversify its markets, 
and above all, its products.  Ecuador  had managed to do that in a very short period of time.  However, 
Ecuador's continued dependence on fi ve or six products for up to 70%  of its exports left it in a 
difficult situation when international prices for th ese products declined.  The discussant stated that 
Ecuador should not apologize for its drawback a nd export processing zone programmes.  As long as 
these policies complied with multilateral and regional disciplines, countries should take advantage of 
such policies to diversify their export base.  He s uggested that Ecuador might enhance the application 
of these programmes to increase their impact.  It was very important to have efficient customs procedures, and Ecuador was on the right path towards this goal.  The change in customs 
administration was fundamental.  The main objective should be the simplification of customs 
procedures and the eradication of corruption;  these  problems affected many countries.  On sanitary 
and phytosanitary measures, Ecuador should submit  all its WTO notifications as soon as possible.  
With respect to Ecuador's initial services officer, each  country had to negotiate in accordance with the 
offers of other countries.  However, many WTO members had already tabled an initial offer, and 
would like to see Ecuador's offer as soon as possible.   Ecuador was a major participant in the Doha 
Round.  A country seeking to develop did not face an easy task.  Trade policy was only one of the 
instruments required, but it was a central instrument .  In a country seeking to increase its exports and 
turn them into a motor for development, domestic producers needed to be able to obtain inputs at 
international prices.  The WTO and regional and bilateral agreements o ffered this opportunity.  WT/TPR/M/148 
 Page 27 
 
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
95. The first Trade Policy Review of Ecuador has shed light on Ecuador's trade and investment 
policies and practices, and on the economic and in stitutional framework within which they are 
formulated and implemented.  We owe this to  the participation of Vice-Minister Espinosa, 
Ambassador Escudero, and the rest of the Ecuador ean delegation;  the thoughtful interventions by 
Ambassador de Mateo;  the questions of the Member s;  the documentation prepared for the meeting;  
and the domestic consultation and review process th at underlie this documen tation.  Throughout the 
review process, the authorities of Ecuador have s hown a strong commitment to transparency and thus 
made a key contribution to the success of this Review. 
96. I should first like to emphasize that Memb ers welcomed the positive performance of 
Ecuador's economy in recent years, as reflected by th e growth in per capita income, low inflation and 
the reduction in public debt.  These achievements we re attributed to both domestic reforms and a 
favourable external context, and followed a series of  adverse developments in the latter part of the 
1990s.  Members encouraged Ecuador to maintain fi scal discipline and persevere with its structural 
reform programme to make the economy more  resilient to future external shocks. 
97. Members acknowledged Ecuador's efforts to strengt hen its legal and institutional framework.  
They commended Ecuador for taking significant step s to implement its WTO commitments but noted 
that Ecuador could further enhance transparency  by fulfilling its outstanding WTO notification 
obligations.  Members took note of the importance that Ecuador attaches to bilateral and regional 
initiatives, and emphasized the need to ensure th at those initiatives are complementary to the 
multilateral trading system.  Ecuador was invited to enhance its attractiveness as an investment 
destination by using WTO commitments to give gr eater predictability to its legal and institutional 
framework. 
98. Members welcomed the significant steps Ecuador had taken to liberalize its trade regime 
through unilateral, regional, and multilateral initiatives.  In particul ar, Members noted that Ecuador 
has bound its entire tariff schedule, and that applied rates have fallen considerably.  However, the 
wide gap between applied and boun d rates reduces predictability, and some applied rates appear to 
exceed their bound levels.  Ecuador's limited use of  contingency measures was highlighted.  Several 
Members questioned Ecuador's application of certain  import charges, its use of a price-band system, 
and the administration of tariff quotas. 
99. The persistence of some non-tariff barriers was a source of concern.  In particular, Members 
urged Ecuador to continue the reform of its import licensing regime.  They also referred to Ecuador's 
lengthy customs procedures, and invited Ecuador to  pursue its modernization programme and to take 
full advantage of on-going trade facilitation negotiati ons in the WTO.  Members invited Ecuador to 
adhere fully to WTO obligations in the areas of customs valuation, sanitary and phytosanitary 
measures, and technical barriers to trade. 
100. Ecuador provided information on the scope  and use of the drawback and maquila 
programmes, and answered questions on comp etition policy, government procurement, and 
intellectual property rights. 
101. Members praised Ecuador for adopting relativel y broad commitments under the GATS.  They 
encouraged Ecuador to adhere to the WTO Refere nce Paper on telecommunications, and urged it to 
table a comprehensive and ambitious offer in the context of the WTO services negotiations.  Members 
encouraged Ecuador to persevere with the refo rm process in electricity, financial services, 
telecommunications, and transport in order to improve the competitiveness of its economy. 
102. I conclude by thanking the Ecua dorean delegation for the oral and written responses provided 
during the meeting.  I look forward to receiving out standing answers within the delay allowed.  WT/TPR/M/148 
Page 28  
 
I welcome Ecuador's ongoing efforts to liberalize and improve the predictability and transparency of 
its trade regime, and encourage Ecuador to take ad vantage of the current favourable economic climate 
to address remaining trade and investment barriers.  I trust that our discussions in this Review will 
help Ecuador identify and ease those barriers to  ensure the sustainability of economic growth. 
__________