RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/BOP/R/94 
12 October 2009 
 
 (09-4951) 
Committee on Balance-of-Payments Restrictions  
  
 
REPORT ON THE MEETING OF 25 SEPTEMBER 2009 
 
 1. The Committee met on 25 September 2009, under the Chairmanship of 
Ambassador Darlington Mwape (Zambia), to hold c onsultations with the Governments of Ecuador 
and Ukraine to assess the progress in the dismantling of the measures taken for balance-of-payments 
purposes by each of those Members.  The ag enda for the meeting was contained in 
document WTO/AIR/3416.  The Committee also resu med consultations with the Government of 
Bangladesh;  the report on those consultations has been circulated in document WT/BOP/R/64. 
2. The Chairman
 recalled that Ecuador had notified th e WTO on 18 February 2009 (document 
WT/BOP/N/65) that it had applied tariff surcha rges and quantitative restrictions on 630 tariff 
sub-headings at the ten-digit level, representing 8. 7 per cent of all the tariff lines, for a year, until 
22 January 2010.  The notification had been upda ted on 30 March 2009 (document WT/BOP/N/67).  
The Committee had held consultations with Ecuador  on 22 and 24 April 2009, and from 2 to 
4 June 2009.  It had recognized the unique circum stances faced by Ecuador with regard to its 
balance-of-payments situation, which had been nega tively affected by a combination of factors.  
Ecuador had agreed to replace most of the quantitati ve restrictions by price-based measures no later 
than 1 September 2009 and to progressively modi fy the level and scope of the measures as its 
balance-of-payments situation improved.  The Committee had decided that, for the purposes of 
Article XVIII.B 12(b) of the GATT 1994 and paragraph 7 of the Understanding on the 
Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994, it would meet 
in September and November 2009. 
3. More recently, Ecuador had notified the WT O on 16 July 2009 and 8 September 2009 
(documents WT/BOP/N/70 and WT/BOP/N/72, r espectively), and had further explained in 
WTO document WT/BOP/G/17, that it had passed le gislation to convert into tariff surcharges the 
quantitative restrictions applied on 271 HS tariff s ubheadings at the ten-digit level.  The tariff 
surcharges applied were mostly ad valorem , at levels of 3, 12, 30 and 35 per cent.  For the majority of 
these subheadings (234), the level used was 12 per cent ad valorem .  Specific duties had been applied 
on a few products, including tyres and some fruit. 
4. The representative of Ecuador  stated that pursuant to the commitments undertaken by 
Ecuador during the consultations held in the Ba lance-of-Payments Committee meetings of 22 and 
24 April 2009 and 2 and 3 June 2009, as set out in the conclusions of the Committee's report 
contained in document WT/BOP/R/91 of 11 June 20 09, Ecuador had submitted the periodic report for 
the Committee meeting of September 2009, in a ccordance with Article XVIII.B 12(b) of the 
GATT 1994 and paragraph 7 of the Understanding on the Balance-of-Payments Provisions of the 
GATT 1994. 
5. He said that, by means of the communications in documents WT/BOP/N/65, 
WT/BOP/N/65/Rev.1 and WT/BOP/N/67, Ecuador had originally notified WTO Members of a 
regime of measures under Article XVIII.B 12(b)  of the GATT 1994 taken to safeguard its 
balance-of-payments equilibrium.  The measures applie d to 630 tariff subheadings, slightly more than 
8 per cent of the tariff universe.  The products c hosen were chiefly consumer goods and included only WT/BOP/R/94 
Page 2  
 
  those considered to be non-essential or luxur y goods which would not affect the economy's 
production activity.  The period of application of the measure originally proposed was one calendar 
year, until 22 January 2010.  The measure initiall y involved the following:  (a) imposition of an 
ad valorem  surcharge of 30 or 35 per cent on 75 tariff subh eadings;  (b) imposition of a specific tariff 
on 284 tariff subheadings, chiefly footwear and ma de-up articles;  and (c) imposition of quantitative 
restrictions on 271 tariff subheadings according to  the value of imports, with a 30 or 35 per cent 
reduction in the value imported in 2008. 
6. During the consultations in the Committee,  Ecuador undertook to  conduct ongoing 
monitoring of the measures applied and to evalua te its balance-of-payments position on a regular 
basis in order to inform WTO Members of possible amendments to the adopted measures in the event 
of any positive developmen ts.  Sensitive to the concerns expressed by its trading partners in the 
context of Committee consultations , Ecuador endorsed the recommendation to make the regime more 
flexible without sacrificing the effectiveness of  the measures adopted to address the serious 
difficulties detected in respect of its balance-of-p ayments.  In early compliance with its commitment 
to "replace most of the quantitative restric tions by price based measures no later than 
1 September 2009", Ecuador had notified the Comm ittee in the communications of 29 June 2009 and 
16 July 2009 contained in documents WT/BOP/N/ 69 and WT/BOP/N/70 of its replacement of the 
quantitative measures by price-based measures, in  accordance with the recommendations of several 
WTO Members during the recent Committee consultations. 
7. The amendment to the regime imposed by Ecuador with a view to safeguarding its 
balance-of-payments equilibrium basically consis ted of the replacement of quantitative measures by 
price-based surcharges.  This conversion, described  in the notifications mentioned in the preceding 
paragraph, was completed for the remaining 20 tari ff subheadings pursuant to Resolution No. 503 of 
Ecuador's Foreign Trade and Investment Council.  Accordingly, all of the tariff subheadings with 
quantitative restrictions were now subject to a tari ff surcharge system.  Surcharge levels were 3 per 
cent, 12 per cent, 30 per cent and 35 per cent ad valorem , and a surcharge in the form of a specific 
tariff applied in a few instances, mainly to tyres and to three tariff subheadings corresponding to fruit.  
The applied level for the great majority of  those subheadings (234) was 12 per cent ad valorem , which 
meant that the price-based measures preferred by WTO Members reached an average level of 15 per cent ad valorem .  Ecuador had thus met its commitment to ensure that changes to the measures did not 
"result in more trade restrictiv e market access conditions" than the quantitative measures originally 
imposed. 
8. Furthermore, Ecuador was able to report that, although the desired levels of equilibrium had 
not been achieved, its balance-of-payments show ed a positive trend.  The critical level of the 
economy's liquidity, reported during previous consultations, had improved.  The Ecuadorian 
Government continued to monitor developments in so far as the risk levels of  the dollarization regime 
in force in the country remained high.  A number of external factors, such as the recovery of oil 
prices, a slow but gradual recovery in global de mand for the commodities exported by Ecuador, and 
greater stability of the world econom y, had, however, been recorded. 
9. The impact of the trade measures adopted had c ontributed to gradual restoration of monetary 
and fiscal equilibrium in the Ecuadorian economy and,  in that respect, Ecuador was appreciative of 
the support and understanding of WTO Members.  Ec uador would continue to  submit periodic reports 
to the Balance of Payments Committee, as it had undert aken to do and in compliance with all its other 
commitments in that context. 
10. The representative of the United States  stated his appreciation of the commitments Ecuador 
had made in the Balance-of-Payments Committ ee report to replace most of the quantitative 
restrictions by price-based measures, modify  the level and scope of the measures as its 
balance-of-payments situation improved, remove a ll trade measures for balance-of-payments purposes  WT/BOP/R/94 
 Page 3 
 
 
  no later than 22 January 2010 and to provid e periodic reports on the situation to the 
Balance-of-Payments Committee. 
11. The United States commended Ecuador for moving quickly to comply with some of those 
commitments and appreciated the action taken unde r Resolution No. 487 of 22 June 2009, which had 
replaced most of Ecuador's quantitative restrictions  by price-based measures.  The United States 
hoped to get a better understanding of the steps Ecuador  was taking to modify the level and scope of 
the measures in line with improvements in Ecuador's  economic situation, a nd to remove all trade 
measures for balance-of-payments purposes no later than 22 January 2010.  The United States recalled 
that Article XVIII:B of the GATT, as well as the commi tments Ecuador had made  in paragraph 31 of 
the Balance-of-Payments Committee report, called for Ecuador to relax its balance-of-payments 
restrictions as conditions improved.  The United States was pleased to have seen improvements in 
Ecuador's external account this year.  Oil prices ha d nearly doubled since their lows in January 2009, 
resulting in moderate trade surpluses for the months  of June and July, compared to the sizeable 
deficits witnessed in the first quarter.  At the same time, second quarter remittances had increased by 
nearly 10 per cent over those received by Ecuador in  the first quarter of 2009.  Together, those 
two factors had likely led to an improvement in Ecuador's current account relative to January 2009 
when it had first imposed its trade restrictions. 
12. In recent months, Ecuador had received a US$480 million loan from the Fondo Latino 
Americano de Reserva  (FLAR) and a US$1 billion advance fro m China for an oil contract, which 
together exceeded the US$900 million it had paid ou t to retire US$2.9 billion in defaulted bonds in 
May and June.  Those net inflows had likely led to  an improvement in the capital account.  Moreover, 
bank deposits had stabilized after falling by roughly 6 per cent in the first quarter, signalling capital 
flight pressures had eased.  Together, those improve ments in the external accounts had contributed to 
an increase in Ecuador's Net Foreign Assets (NFAs).  NFAs had increased over 70 per cent to US$4.4 billion as of 11 September since their low point at the end of May, reaching December 2008 
levels, before Ecuador had imposed its balance-of-payments measures. 
13. Despite those improvements, the United States noted that Ecuador continued to face deep 
fiscal challenges due to the Government's reluctance  to adjust expenditures sufficiently after a sharp 
drop in revenue.  However, any significant declin es in Ecuador's NFAs that might have occurred in 
the coming months would mainly be the result of government withdrawals to meet fiscal financing 
needs rather than a worsening of its current account deficit.  The United States recalled that Ecuador 
had repeatedly stated that improvement in its extern al conditions was needed if the trade restrictions 
were to be relaxed.  That improvement had occu rred, and the United States requested that Ecuador 
adhere to its commitments and re lax the level and scope of its balance-of-payments measures.  The 
United States further requested that the level and th e scope of Ecuador's rest rictions be relaxed as 
soon as possible to alleviate the negative effects on trade.  For example, United States confectioners 
had reported a 47 per cent decline in the sale of c hocolate products to Ecuador in 2009 compared to 
the same period in 2008.  United States pet food sales had declined by almost 20 per cent in 2009 
compared to the same period in 2008.  In May, the newspaper El Comercio  had reported a decline of 
56 per cent in footwear for the period January 2009 to  15 April 2009, compared to the same period in 
2008 (imports had decreased from US$25.7 million to US$11.2 million). 
14. The United States recognized that Ecuador had domestic production of both chocolate 
products and footwear, and would like to caution ag ainst any tendency to maintain restrictions on 
those sectors as a form of industrial policy through import substitution.  The United States was 
concerned by a report on 30 July 2009, in the newspaper HOY , which stated that Ecuadorian footwear 
production had grown by 30 per cent since the beginni ng of 2009.  In addition to running foul of the 
intention of WTO balance-of-payments measures, import substitution policies simply did not work.  
The deficiencies of import-restricting policies in encouraging the development of competitive 
industries were widely recognized.  Import protectio n rarely developed competitive industries for the WT/BOP/R/94 
Page 4  
 
  country engaged in the protection.  Sheltering an industry from competition did not make it a viable 
producer, but instead encouraged inefficiencies a nd long-term dependence on protection.  The import 
substituting country, in fact, often substituted mi cro-management by government for relatively 
efficient resource allocation by competitive markets.  The effect could be inadvertently to inhibit the 
investment of scarce resources in areas of the ec onomy which did, in fact, have the potential for 
strong performance.  The net effect of import subs titution policies was often to reduce rather than 
enhance the economic well-being of the restricting country. 
15. Based on the improvements in Ecuador's economic  situation and to alleviate the negative 
effects of the restrictions on trade, the United St ates requested that Ecuador take concrete action 
progressively to relax the level and scope of its remaining balance-of-payments measures and report 
on the steps it had taken at the November consulta tions.  The United States also requested that 
Ecuador provide information on the specific steps it was taking to fully remove the restrictions by 
22 January 2010, in accordance with its commitments. 
16. The representative of the United States then stated  that he wished to pose some questions to 
the representative of the IMF.  Given the rise in oil prices and the external financing received by 
Ecuador in the form of a US$480 million loan fr om the FLAR and a US $1 billion advance from 
PetroChina for an oil contract, how had the outlook for the country's balance-of-payments changed since the April BOP Committee consultations ?  During the April consultations, the 
IMF representative had attached great importance to the level of Ecuador's NFAs, stating that, aside 
from the level of NFAs, their trend and speed of change over time were critical.  He asked how had 
Ecuador's NFA situation evolved since the April consu ltations?  He also wished to know what was the 
IMF's projection for the level of NFAs at the e nd of 2009?  If the projection implied a decline from 
their current level (US$4 billion), would that main ly be the result of the Ecuadorian Government 
using reserves to finance a worsening of the curre nt account or a failure significantly to reduce the 
fiscal deficit?  If it was the latter, how effectiv e would continuing the import restrictions be in 
addressing the fiscal deficit?  He asked the IMF' s view of the Government of Ecuador's recent 
announcement to use NFAs to support domestic invest ment.  How high was the risk that NFAs could 
be placed in illiquid instruments, leading to a de f acto NFA reduction?  Noting that it appeared that 
Ecuador would experience a recession this year, he wi shed to know whether the removal of Ecuador's 
import restrictions could facilita te a faster economic recovery. 
17. The representative of Canada
 said that he would like to join the United States in showing 
Canada's appreciation for Ecuador 's modification of its quantitativ e restrictions to price-based 
measures.  At the same time, it was worth notin g that replacing the quantitative restrictions by 
price-based measures did not necessarily mean that  Ecuador's measures were less import-restrictive 
overall.  Given the considerable improvement in oi l prices in 2009 and the substantial part that oil 
played in the commercial balance, in Canada's view this justified the removal of some import 
restrictive measures on an immediate basis.  Canada believed that Ecuador should reassess its 
balance-of-payments situation by November.  In that respect, during the April consultations, the 
Central Bank of Ecuador had estimated that imports would need to decline by US$2.2 billion in order 
to redress their balance-of-payments problem;  with  the increase in oil prices above IMF forecasts for 
2009, as well as the decline in imports, Canada consid ered that the necessary adjustment in imports 
was less than initially forecast.  As  such, Canada considered that the level of import restrictions 
should be reviewed and removed for the November  meeting.  Canada did not see any compelling 
economic evidence that would justify the current  measures remaining in  place for any prolonged 
period.  In Canada's view, Ecua dor should begin to take steps now to ensure the removal of the 
current measures by the time of the January meeting.  Finally, Canada also wished to ask the IMF if it 
planned to undertake an Article IV assessmen t before the Committee r econvened in November. 
18. The representative of Colombia  highlighted the positive recovery in Ecuador's economy since 
the consultations held in April and June 2009.  A ccording to available data from the Central Bank of  WT/BOP/R/94 
 Page 5 
 
 
  Ecuador, freely disposable international reserves ha d shown a strong upward trend since June, rising 
to almost US$1.3 billion.  Ecuador's foreign tr ade had also increased over this period.  The 
performance in the trade balan ce had been positive as well, with US$114 million and US$21 million 
in June and July, respectively.  There had also be en a modest recovery in total exports and in oil 
exports.  Total exports fell by 44 per cent betw een January and March 2009 compared to the same 
period in 2008, while the decline from January to Ju ly 2009 had been less (41 per cent).  Oil exports, 
in particular, had fallen by 66 per cent in Marc h but by a lesser amount in July (58 per cent). 
19. Although oil prices had not reached the previous year's levels, they had been increasing since 
February, from an average of US$30/barrel for WTI to  US$70/barrel the previous month.  In addition, 
Ecuador's Government had recently announced that purchases abroad had fallen by roughly 
US$1.6 billion between January and July 2009 compar ed to the same period the previous year.  The 
largest decrease in imports concerned raw material s, US$540 million, while the decrease in imports of 
consumer goods was US$346 million and in capital goods US$68 million. 
20. Ecuador had stated that the target of the measure was to achieve a reduction of around 
US$1.4 billion in imports;  according to the aforem entioned figures, that target had already been 
reached.  Likewise, an improvement had been noted in  the real exchange rate index, both in general 
and bilaterally with other countries, a result of the more substantial devalua tion of the dollar since 
March 2009.  According to the information provided,  it was clear that from June to August there had 
been a significant recovery both in the balance-o f-payments and in the trade balance, as well as in 
Ecuador's competitiveness as a result of the exchange rate. 
21. Secondly, Colombia would like to highlight with  satisfaction the efforts made by Ecuador to 
meet its commitment to the Committee regarding th e replacement of quantitative restrictions by 
price-based measures.  In August, Ecuador had re placed most of the quantitative restrictions in 
accordance with the Committee's proposals and had i ssued Resolution No. 487.  Also in August, 
Ecuador had published Resolution No. 503, conve rting the remaining quotas still in effect 
(20 subheadings) into a 12 per cent ad valorem  surcharge.  With those final adjustments, it could be 
assumed that Ecuador had complied with the recommendations of the Balance-of-Payments 
Committee. 
22. As no official up-to-date information was availa ble, it was impossible to measure the impact 
which this new provision might be having on Colomb ia's exports.  Consequently, it could not be 
determined whether the adjustments had made the r estrictions imposed more stringent.  Nevertheless, 
the figures available in July 2009 (Table 1) showed  that the decline in Colombia's exports of the 
products concerned had slowed down somewhat.  It could thus be assumed that, in principle, the 
changes introduced had at least not had an y negative impact on Colombia's exports. 
23. Thirdly, regarding the commitment progressively  to modify the level and scope of the 
measures as the balance-of-payments situation impr oved and to eliminate all trade measures taken for 
balance-of-payments purposes by 22 January 2010 at  the latest, Colombia considered it extremely 
positive that the Ecuadorian authorities had taken all the action required to alleviate the situation of 
businesses affected by the aforementioned measures.  Colombia would continue to follow up 
developments in Ecuador's economy and the measur es to be adopted by its authorities, and would 
return to the question at the Committee's next meeting in November. 
24. The representative of Chile  welcomed the report submitted by Ecuador, which reflected 
positive developments in the balance-of-payment s position, a trend that it was hoped would be 
maintained in the future.  Chile also thanke d and congratulated Ecuador on having met its 
commitment to replace the quota-based restrictive measures by tariffs.  Chile hoped that the favourable developments in its balance-of-payme nts position would enable Ecuador to start to 
"progressively modify the level and scope of the measu res" in order to bring them into line with the WT/BOP/R/94 
Page 6  
 
  provisions of the GATT and the BOP Understanding, me asures which in any event had to be lifted by 
22 January 2010 at the latest.  Lastly, Chile acknow ledged the constructive and transparent spirit in 
which Ecuador had dealt with the process both at the multilateral level in the WTO and at the bilateral 
level. 
25. The representative of the European Communities
 welcomed the notification submitted by 
Ecuador whereby it had communicated that it had gradually replaced quantitative restrictions by 
ad valorem  duties in line with the commitments undertaken  in the Committee consultations in June.  
However, the European Communities also noted th at Ecuador had committed to progressively modify 
the level and scope of the measures as its balance- of-payments situation improved.  And, as noted in 
the document submitted by Ecuador in September (WT/BOP/G/17), its  overall economic situation and 
its balance-of-payments had seen notable improvements following the recovery in oil prices and in 
global demand for Ecuador's export products.  The EC  therefore encouraged Ecuador to continue its 
progress to implement all the commitments it had under taken during the consulta tions and to relax or 
phase out the remaining trade restrictive measures be fore their expiry on 22 January 2010.  The EC 
also looked forward to further measures from Ecuador in this respect at the meeting of the Committee 
in November, as agreed in th e Committee's consensus report. 
26. She said that the EC would also like to take advantage of the presence of the IMF's 
representative to ask a few questions.  The EC woul d like to ask the IMF to update the Committee on 
its assessment of Ecuador's external balance situa tion.  As previous speakers had indeed noted, the 
projections for the balance-of-payments had initially b een based on a projection of oil prices that had 
since been exceeded, and global demand for other Ecuadorian export commod ities had recovered in 
the meantime.  The IMF had previously expected Ec uador's external account to deteriorate sharply in 
2009 before improving moderately in 2010.  The EC wished to know if that assessment still held in 
light of the developments in the global economy or if it needed to be reviewed.  Had Ecuador been 
able to secure the external funding  it had been seeking?  Did the IM F consider that Ecuador had taken 
other measures to restore the balance-of-payments equilibrium on a sound and lasting basis notably in 
the fiscal area?  Overall, was it the IMF's view that severe trade restrictions still seemed appropriate in 
view of recent and prospective developments? 
27. The representative of Brazil  thanked Ecuador for its co mmunications WT/BOP/N/70, 
WT/BOP/N/72 and WT/BOP/G/17.  Brazil considered that they addressed some of the main concerns 
raised by Members in the Committee.  First, they  announced that quantitative restrictions had been 
completely replaced by price-based measures, in lin e with what the Committee had established in its 
report.  Secondly, Brazil appreciated Ecuador's transparency in informing Members about the 
measures that had been adopted and about the evolu tion of its balance-of-payments situation.  Brazil 
was glad to know that Ecuador's balance-of-payme nts had been evolving positively, although there 
remained some difficulties.  Brazil continued to be ready to work constructively with Ecuador 
regarding the monitoring of the implementation of the balance-of-payments-related measures. 
28. The representative of Cuba  welcomed the information provide d by the delegation of Ecuador 
orally and in writing, noting that it showed  a certain improvement in the economic and 
balance-of-payments situation.  Nevertheless, he considered that Members should refrain from 
drawing the hasty conclusion that this was indicativ e of a sound and lasting situation that meant that 
the crisis had been left behind.  Taking into account the global economic environment, Ecuador, like 
other developing countries, was surrounded by an ocean of crisis.  It was therefore too early to draw 
the definitive conclusion that the problem had been resolved.  The decline in Ecuador's imports could 
not solely or fundamentally be attributed to the measures it had adopted for balance-of-payments 
reasons.  It was rather basically a result of the crisis, of the problem of lack of liquidity because of fewer imports and lower export prices, particularly fo r oil.  As had already been stated, oil prices had 
recovered but continued to be un stable and had not returned to their 2007 and 2008 levels.  In 
addition, Ecuador was no stranger either to the l ack of international commercial credit, which had  WT/BOP/R/94 
 Page 7 
 
 
  fallen by billions of dollars.  According to so me sources, the shortfa ll was around US$6 billion.  
Ecuador's situation was not immune from this global trade financing scenario, which was an 
additional source of tension for its balance-of-payments. 
29. Furthermore, Cuba did not c onsider it appropriate for some countries that had been a 
significant cause of the current international problem s to give Ecuador lessons on what it should do as 
regards domestic economic policy and trade.  Ther e was a high degree of uncertainty regarding how 
to deal with the global crisis.  Cuba also cons idered it inappropriate to make demands on Ecuador 
when some of those making such demands had not officially notified the WTO of the many millions 
of their aid to banks, insurance and real estate companies.  This aid might even in fact be 
subsidization prohibited by the WTO's rules.  C uba viewed as positive Ecuador's communication that 
it had replaced quantitative restrictions by price- based measures prior to the date on which it had 
undertaken to do so, even though the measures app lied by Ecuador concerned only 600 subheadings 
or just over 8 per cent of its tariff universe.  Consequently, the measures taken by Ecuador for obvious 
balance-of-payments reasons had an infinitesimal or very limited effect on the country's tariff 
universe.  Cuba called on the Government of Ecua dor to continue applying measures that would 
enable the country's economy to recover. 
30. The representative of Panama  thanked the delegation of Ecua dor for the report submitted.  
Panama understood Ecuador's problem s, which had led to the adopti on of measures to restore the 
equilibrium of its balance-of-payments.  Panama wish ed to underline the efforts made in the bilateral 
talks with Ecuador to ensure that the measure s did not cause unnecessary prejudice to its economic 
interests and did not become an unreasonable barrier to the free flow of trade between the 
two countries. 
31. Panama welcomed the partial consideration gi ven to its bilateral requests whereby Panama 
had asked that nine entries corresponding to th e textile sector in Annex 2 and five entries 
corresponding to the footwear sector in Annex 2 be moved to Annex 1 of COMEXI Resolution 
No. 466 of 9 January 2009, and that the tariff surcha rge of 30 per cent on television sets be reviewed.  
Even though Ecuador had adjusted the restricti ons intended to restore its balance-of-payments 
situation contained in the annexes to Resolution No. 466 by means of the annexes attached to 
COMEXI Resolution No. 487 of 22 June 2009, in doin g so it had only partly responded to Panama's 
request.  It had not, therefore, complied with one of the precepts of the balance-of-payments 
Understanding, namely, that a Member applying such  measures should ensure th at they have the least 
disruptive effect on trade.  One example of the effe ct on Panama's trade was given in paragraph 44 on 
page 13 of the background document by the Secr etariat of the Committee on Balance-of-Payments 
Restrictions, WT/BOP/S/15/Rev.1, where it is stated that imports of some US$100 million from Panama (over 20 per cent of imports from Panama in 2007) had been affected by the measures.  The 
products concerned were mainly washing machin es (HS 8450), and reception apparatus for television 
and telephony (HS 8527 and 8528). 
32. Panama asked Ecuador to take into account th e need to consider special cases as Annexes 1 
and 2 to COMEXI Resolution No. 487 had caused c onsiderable prejudice to Panama's trade.  The 
prejudice suffered by Panama was directly caused  by the heavy specific taxes on clothing and 
footwear in addition to the tariff surcharg es on certain goods such as television sets. 
33. Despite Resolution No. 487, trade between Panama and Ecuador remained seriously affected 
by the measures adopted to the extent that there had been an alarming drop of almost 40 per cent in 
the case of television sets, reception apparatus fo r radio-broadcasting, sound recording and video 
reproduction equipment, inter alia .  Total trade between the two Members had fallen by 26 per cent, 
with Ecuador's exports decreasing by  over US$50 million during the fi rst half of 2009 in comparison 
with the same period in 2008.  In such a situation,  Panama expressed its deep concern at the negative WT/BOP/R/94 
Page 8  
 
  impact of these measures and repeated its request so  that existing trade flows would be disrupted as 
little as possible. 
34. The delegation of Panama noted that in paragraph 114 of document WT/BOP/G/15 of 
16 April 2009 submitted by Ecuador re ference was made to the measures to be applied for one year as 
of 22 January 2009.  According to paragraph 1 of the Understanding on the Balance-of-Payments 
Provisions of the General Agreement on Tariffs a nd Trade 1994, the time schedule for the removal of 
measures should be progressive and should take into account favourable developments in the 
balance-of-payments.  Furthermore, paragraphs  29, 31 and 32 of the report of the Committee on 
Balance-of-Payments Restrictions on the consu ltations with Ecuador, document WT/BOP/R/91 of 
11 June 2009, included, inter alia , Ecuador's commitment to progressively modify the level and scope 
of the measures as its balance-of-payments situati on improved.  The delegation of Panama, taking into 
account the proposal made in document WT/BOP/G/15,  on the basis of the criteria outlined during the 
consultations held in the Committee on Balance-of-P ayments Restrictions, which were founded on the 
commitments undertaken in the text of documen t WT/BOP/R/91 of 11 June  2009, and referring in 
particular to paragraph 17, asked the Republic of Ecuador to submit without delay a time schedule for 
the gradual phasing out of the measures adopted.  In the communication read out today by the 
delegation of Ecuador, there was an indicati on of positive developments in Ecuador's 
balance-of-payments situation and, moreover, it was re ported that the critical levels of liquidity in the 
economy had shown encouraging signs of recovery. 
35. Panama took note of Ecuador's commitment to  conduct ongoing monitoring of the measures 
applied and to evaluate its balance-of-payments position on a regular basis in order to inform 
WTO Members of possible amendments to the adopted measures in the event of any positive 
developments.  Panama noted the positive developments indicated by  the delegation of Ecuador and 
requested that the impact on Panama be evaluated as it considered that the scope and scale of the 
measures seriously prejudiced Panama's economy. 
36. Panama was of the view that a favourable outcome such as that described was indeed 
conducive to consideration of its requests for revi ew of the measures adopted so that the serious 
prejudice caused to the economies of Panama and other Members could be attenuated.  In conclusion, Panama wished to submit some questions  to Ecuador in writing (see Annex I). 
37. The representative of Venezuela
 said that, with all the respect due to the representative of the 
IMF, he wished to recall that in the 1990s it had been one of the international organizations which, 
through its recommendations, had guided Latin America towards neoliberalism, resulting in 
indebtedness and an economic crisis that had had a so cial impact.  With the aim of forcing Ecuador to 
suspend its measures, countries with develope d economies alleged special situations and 
circumstances such as a rise in oil prices, but forgot  to indicate that to a large extent the crisis 
affecting Ecuador was the result of the global cris is caused by those countries, so Ecuador was a 
victim and not an offender.  The numerous measu res taken by the developed countries to end the 
crisis through subsidies and the rescue of fina ncial institutions and the automobile industry, inter alia , 
euphemistically called "incentives"  at the WTO, had created more  trade distortions than the 
balance-of-payments restrictions which Ecuador had necessarily had to apply. 
38. The effects of the crisis would be paid for many years by people who did not have large 
amounts of money to confront a situation created  by the world's developed economies because they 
did not have the controls needed to halt speculation in the financial sector. 
39. Venezuela paid tribute to the sense of responsibility shown by Ecuador and its compliance 
with the WTO's rules and asked other countries, above  all, those with developed economies, to be as 
transparent as Ecuador had been.  WT/BOP/R/94 
 Page 9 
 
 
  40. The representative of Argentina  said that he wished to join those delegations that had 
welcomed Ecuador's compliance with the commitmen ts undertaken at the consultations held in 
April and June 2009.  Likewise, he wished to re fer once again to the significant limitations for 
Ecuador of having a dollarized monetary system.  That had been widely recognized during the consultations held in the Committee and recorded in the final report.  It was therefore obvious that a 
prudent attitude was required so that the improveme nt in Ecuador's balance-of-payments situation 
could be consolidated.  Argentin a welcomed Ecuador's commitment to the principle of transparency, 
which had been apparent at each stage of the process. 
41. The representative of Korea
 welcomed Ecuador's actions to replace quantitative restriction 
measures by price-based measures, in line with the Committee's recommendation.  Korea also 
appreciated Ecuador's timely notification to Member s of its implementation si tuation and its economic 
conditions.  Given that Ecuador's current economi c situation, including its balance-of-payments 
situation, had recently improved, Korea looked forw ard to the removal of the remaining restrictive 
measures by Ecuador on the scheduled date. 
42. The representative of the Dominican Republic  welcomed the representative of Ecuador's 
written and oral presentations providing the latest data on economic and financial developments.  His 
country endorsed Argentina's statement calling for caution regarding removal of the restrictions 
imposed because there had been a slight improvement in the external situation.  Ecuador's special 
position as a dollarized economy meant that the situa tion had to be kept under review in order to 
verify that there had indeed been an improveme nt.  The restrictions imposed had been required 
precisely because of the characteristics of the moneta ry system governing Ecuador's economy and the 
absence of a monetary stabilization fund to assist in cases where external shocks  absorbed its internal 
liquidity.  That had obliged Ecuador to adopt  such measures to safeguard its economy from 
contracting still further and to prevent more losses of jobs and fiscal revenue.  The decline of some 
30 per cent in the value and volume of imports was the consequence of the equally large decline in 
exports caused by the international crisis, as had also been the case for the Dominican Republic's 
economy, and was not the effect of the measures im posed.  The improvement in Ecuador's external 
performance showed the efficacy  of the measures.  The Dominican Republic hoped that, as this 
improvement became more marked, the restricti ons could be eliminated on the date fixed, 
22 January 2010. 
43. The Chairperson then gave the floor to the re presentative of the IMF to answer the questions 
submitted by Members. 
44. The representative of the IMF  noted that, since the April consultation, Ecuador's short-term 
macroeconomic outlook had impr oved somewhat, in the context of more favourable external 
conditions.  International prices fo r the Ecuadorian oil mix had risen significantly in recent months, 
although they remained well below their 2008 average.   Under current WEO projections, the price for 
the Ecuadorian mix would average US$51 per barrel in 2009 and US$68 per barrel in 2010.  While 
lower than in 2008, prices for other commodities were al so projected to be stronger than envisaged in 
April.  In this context, and with an improved outlook for global growth, the Ecuadorian economy was 
now projected to contract by 1 per cent in 2009, and to expand by 1.5 per cent in 2010. 
45. Despite the recent recovery in oil prices, the fi scal accounts were still projected to remain in 
deficit in 2009-2010.  While the authorities had announced plans to cut primary public spending 
sharply this year, available data showed that they had not yet adhered to these plans.  During 
January-May 2009, primary expenditure by the n on-financial public sector (NFPS) had grown by 
17 per cent year-on-year, driven mainly by rapid gr owth in current spending.  Revenue had fallen by 
35 per cent, reflecting a drop of almost two thirds in oil receipts.  On the basi s of current policies and 
oil price projections, the IMF staff envisaged N FPS deficits of 3.5 per cent of GDP in 2009 and 
1.25 per cent of GDP in 2010. WT/BOP/R/94 
Page 10  
 
  46. Financing requirements had widened in recent months.  Gross NFPS financing needs were 
now projected at about 8.7 per cent of GDP in 2 009, up from 6.5 per cent in April.  This increase 
reflected mainly the costs associat ed with the repurchase of defaulted external bonded debt and the 
allocation of funds from the Social Security Ins titute for on-lending to the private sector.  These 
additional needs were being covered with an oil-collateralized loan (US$1 billion, or 1.75 per cent of 
GDP) from the State-owned company PetroChina, a nd with the recent SDR allocation to Ecuador 
(US$400 million) by the IMF.  So far, financ ing from regional multilate ral lenders had been 
significantly lower than initially expected by the authorities, and would likely remain so during the 
remainder of this year. 
47. The outlook for the external accounts had not e xperienced significant ch anges since the April 
consultation.  While exports were  benefiting from higher commodity prices, this was being largely 
offset by higher imports and a sharper decline in worker remittances than previously anticipated.  The 
external current account was project ed to register deficits of about 3 per cent of GDP in 2009 and 
2010.  Taking into account projected NFPS financing n eeds and expected external financing, official 
net foreign assets would decline from three months of imports at the end of 2008 to under two months 
of imports at the end of 2009 and the end of 2010.  This was broadly in line with projections at the 
time of the April consultation. 
48. There had been specific questions on the outlook for NFAs.  The IMF was projecting NFAs to 
fall to about US$2.5 billion at the end of this year from about US$4.5 billion at the end of 2008.  
There had also been questions on the recent a nnouncement by the Ecuadorian authorities of their 
intention to use NFAs to support domestic investment and the risk that they could be placed in illiquid 
instruments.  The IMF did not have any precise inform ation on this and he considered that it would be 
a bit speculative to talk about how this would affect NFAs and their liquidity. 
49. Another specific question had been posed on the removal of import restrictions facilitating the 
fast economic recovery.  Certainly, the removal of  import restrictions should help competitiveness in 
the long run, but in the short run it would probably not make much of a difference. 
50. There had been a specific question on the timing of the next Article IV consultation and, in 
particular on whether the report would be available for the November meeting of this Committee.  His 
understanding from discussions with the Ecuador team  was that they hoped to schedule a mission for 
the next Article IV consultation during the rest of this year.  However, there was as yet no agreed 
date.  Even if a mission could take place, give n the small amount of time between now and the 
November Committee meeting, it would be almost im possible to have a report available.  Based on 
his information from the Ecuadorian team, the IMF did not expect to have an Article IV report 
available for the Committe e's November meeting. 
51. The representative of Ecuador
 thanked the representative of the IMF for his intervention, 
which had been extremely clear about the economic si tuation in his country.  There could be no doubt 
that Ecuador remained in a difficult balance-of-p ayments situation which required that the measures 
be maintained until the date set for their removal. 
52. Ecuador had undertaken to replace most of th e quantitative restrictions by price-based 
measures, but it had gone much further and had dismantled all the price-based quantitative 
restrictions.  That should be viewed by Member s as a positive and effective step taken by Ecuador. 
53. Ecuador had also undertaken progressively to modify the level of the measures as the 
balance-of-payments situation improved, which, as explained by the representative of the IMF, was 
not the case.  Ecuador therefore maintained its co mmitment to notify and progressively modify the 
level of the measures if the balance-of-payments situation improved, which was presently not the 
case.  WT/BOP/R/94 
 Page 11 
 
 
  54. In addition, he was surprised that, on this o ccasion, some developed Members wanted to give 
lessons on protectionism, when it was precisely tho se Members that were the principal cause of the 
current international financial crisis because of thei r failure to control speculation.  It was also those 
same developed countries that had adopted milli on-dollar rescue programmes for banks, insurance 
companies and the automobile industry.  Those pr ogrammes had not yet been notified to the WTO to 
allow Members to decide whether or not they  were consistent with WTO commitments. 
55. In view of the foregoing, a distinction had to be drawn with the transparency shown by 
Ecuador in applying its measures.  Members that wanted to give Ecuador lessons in protectionism 
were the same as those that had returned to protectio nist measures, more precisely to subsidies for the 
export of specified products.  That did not precisel y facilitate conclusion of the Doha Round.  Those 
Members were also those which, in their anti-dum ping investigations, applied measures that were 
totally inconsistent with the Anti-Dumping Agreem ent and had several times been condemned by the 
Appellate Body. 
56. Ecuador expressed its willingness to meet with Members such as Panama that had expressed 
specific concerns.  Ecuador had already held several meetings with Panama at the bilateral level and 
its concerns, as well as those of other Members, would always be addressed positively.  His country 
also hoped that Panama would show the same solid arity that Ecuador had expressed when it agreed 
that Panama should extend its export subsidies until 2015.  Many of the products coming from 
Panama in fact came from those areas that applied prohibited export subsidies to be phased out by 
2015 and approved by Ecuador at that time, bear ing in mind the solidarity among Members that 
should exist in that respect. 
57. Ecuador would like to know whether many of the products mentioned by Panama such as 
footwear, textiles, refrigerators, electronic goods, were  in fact Panamanian products.  Ecuador thought 
that this was the case and was prepared to meet w ith Panama to discuss its concerns.  It wished to 
recall also that in the consultations and in the c onclusions, Ecuador had not committed itself to a time 
frame for phasing out the measures.  It had been decided that Ecuador would replace or progressively 
modify the level of its measures as the balance-of-payments situation improved, which was not at 
present the case.  Ecuador was read y to continue consulting with the Committee, and to come and 
explain its concerns to Members in November.  It was also prepared to reply to all the questions raised 
with the same transparency with which it had act ed throughout the consultations in the Committee. 
58. The Chairperson  stated that, before turning to the sec ond part of the consultations, he would 
like to take the opportunity to remind Members that  on 19 October the Committee would meet for the 
adoption of its Annual Report and to hold the eight h annual review under China's transitional review 
mechanism in accordance with paragraph 18 of its Protocol of Accession.  This meeting would take 
place in October rather than in November, as had been  the case in previous years, in consideration of 
the request by the Chair of the General Council th at all General Council s ubsidiary bodies finalize 
their reports by the end of October so that they could be available before  a General Council meeting 
in mid-November, just prior to the Ministerial Conference.  Reminding Members that the Committee 
had agreed to hold consultations with Ecuador in  November, the Chairperson suggested that the 
consultations be brought forward to  19 October to take advantage of  the meeting scheduled for that 
date.  It was so agreed. 
59. Turning to Ukraine, the Chairperson recalle d that on 4 March 2009 Ukraine had notified to 
the WTO, on the basis of paragraph 9 of the Unde rstanding on the Balance-of-Payments Provisions of 
the GATT 1994, the introduction, as of 7 March 2009, of an import surcharge of 13 per cent on 
imports of certain products for BOP purposes for a period of up to six calendar months (document 
WT/BOP/N/66).  On 14 May 2009, Ukraine had notified the WTO that the 13 per cent import surcharge had been eliminated on all imports ex cept refrigerators (HS 8418) and motor vehicles 
(HS 8703) (document WT/BOP/N/68).  The trade m easures applied by Ukraine on refrigerators and WT/BOP/R/94 
Page 12  
 
  motor vehicles covered 63 HS subheadings, at a ten-dig it level, or some 0.6 per cent of all tariff lines.  
The Committee had held consultations with Ukrain e on 23 and 25 June 2009 a nd had concluded that 
the measures taken by Ukraine were not justified by  its BOP situation and had not been applied in a 
manner consistent with the requirements set fo rth in Article XII of the GATT 1994 and the 
Understanding.  The Committee had noted Ukraine's commitment to eliminate the measures no later 
than 7 September, as set out by the legislation, to  firmly endeavour to eliminate them by mid-July, 
and to immediately notify to the Committee the action taken.  The Committee had agreed to convene 
to consider the action taken. 
60. On 8 September 2009, Ukraine had notified the Committee that the 13 per cent import 
surcharge for imports classified under UKTZED codes 8418 and 8703 had been discontinued as of 
7 September 2009 according to the Law of Ukrain e "On Introducing Changes to Some Laws of 
Ukraine to Improve the Balance-of-Payments of Ukraine in Connection with the Global Financial 
Crisis" No. 923-VI.  With this brief introduction, he wished to give the floor to the representative of 
Ukraine. 
61. The representative of Ukraine
 said that her country did not have much to say because the 
situation was quite clear today:  the measures ha d been discontinued and Ukraine had duly notified 
this to WTO Members.  On behalf of her delega tion, she would like to thank the Members of the 
Committee for their fruitful and productive work in the Committee since the sp ring and the Secretariat 
for its input and organization and staff input, as well as the representative of the IMF for joining 
efforts in this exercise. 
62. The representative of th e European Communities  regretted that Ukraine had not been able to 
remove the 13 per cent surcharge by mid-July as it had endeavoured to do in the Committee.  She 
recalled that the measures had not been justified by  Ukraine's balance-of-payments situation and had 
not been applied in a manner consistent with  the requirements set by the GATT 1994 and the 
Understanding.  Nevertheless, the EC was happy to  know that the surcharge had finally expired on 
7 September and trusted that the Ukrainian au thorities had taken good note of the very clear 
conclusions in the Committee's consensus repor t and would refrain from introducing any new 
restrictive measures.  Protecting domestic producer s by restricting international trade would only 
aggravate the difficult situation that the Ukrainia n economy was facing and could seriously undermine 
its credibility as a trading partner.  The EC would continue to follow developments very closely. 
63. The representative of the United States  joined the EC in its statement and thanked Ukraine for 
removing the trade restrictions. 
64. The Chairperson  thanked all Members for their comments  and questions, and stated that the 
Committee took note of the comments made.  WT/BOP/R/94 
 Page 13 
 
 
  ANNEX I 
 
 
Committee on Balance-of-Payments Restrictions  
 
Communication of Panama- Questions to Ecuador  
 
25 September 2009 
 
 
On this occasion, the Republic of Panama su bmits the following questions and expresses the 
following concerns relating to the measures taken by Ecuador on balance-of-payments restrictions: 
 (1) What objective steps will Ecuador take to comply with the commitments laid down in the 
report of the Committee on Balance-of-Payment s Restrictions (document WT/BOP/R/91 of 
11 June 2009), according to which, inter alia , it undertook progressively to modify the level and 
scope of the measures as the balance-of-payments situation improved, taking into account Ecuador's 
commitment to remove the measures completely by 22 January 2010 at the latest?  (2) Bearing in mind the positive developments  in its balance-of-payments position and the 
satisfactory recovery of liquidity in its economy, reported in document WT/BOP/G/17 of 
15 September 2009, what will be Ecuador's time fr ame for the gradual dismantling of the measures 
imposed on trade with Panama, which have  led to a decline of over US$50 million? 
 (3) On the basis of the objectiv e parameters and indicators showing recovery of its economy, 
would the Republic of Ecuador be in a position to lift the measures in certa in specific cases where 
there has been substantial impairment of trade,  for example, in the case of Panama, reception 
apparatus for television and telephony, cl othing, footwear and washing machines? 
 (4) What is Ecuador's position concerning Panama 's request submitted in Note ONCI-N-081-09 
and repeated in Note ONCI-N-229-09, requesting, inter alia , lifting of the measures for trade with 
Panama, particularly in the case of those products most affected, in order to attenuate the serious 
prejudice suffered by Panama's trade, if Ecua dor's economy is in a favourable situation? 
 
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