WORLD TRADE  
ORGANIZATION  RESTRICTED  
 WT/BOP/R/100  
19 August 2010  
 
 (10-4387 ) 
  Committee on Balance -of-Payments Restrictions   
 
 
 
REPORT ON THE MEETING OF 28  JULY  2010  
 
 
1. The Committee met on 28 July 2010, under the chairmanship of Mr Raimondas Alisa uskas 
(Lithuania).  The agenda of the meeting is contained in airgrams WTO/AIR/3590 and 
WTO/AIR/3590/Add.1.  
2. Ecuador i nformed the Committee of the 30  per cent reduction in the tariff surcharges applied 
for balance -of-payments purposes.  The Committee agreed  to meet again at the end of July 2010 to 
monitor the final dismantlement of the measures.  
3. The Chairman  said that he had convened the meeting in accordance with the agreement 
reached at the last meeting of the Committee on 8 June 2010.  During that meeting , Ecuador had 
committed itself to the elimination of all measures taken for balance -of-payments purposes by 
23 July 2010, and the Committee had agreed to meet again in late July 2010 to monitor the gradual 
dismantlement of the measures.  He reminded Member s that Ecuador had reduced the tariff 
surcharges introduced in January 2009 for balance -of-payments purposes on three occasions:  in 
January 2010 (by 10 per cent), in February (by 30 per cent), and in June (by 30 per cent).  
By COMEXI Resolution No. 580 th e remaining 30 per cent reduction had been implemented as from 
23 July 2010, terminating the measures adopted for balance -of-payments purposes as from that date.  
The Resolution had been notified to the WTO on Monday 26 July and copies thereof were availab le 
for consultation among the documents distributed for the current meeting.  
4. The documentation for the meeting also included t he report on the meetings of 26  May and 
8 June, contained in WTO document  WT/BOP/R/99, which was also in the set of documents 
distributed for the meeting.  
5. The agenda for the current mee ting was contained in documents  WTO/AIR/3590 and 
WTO/AIR/3590/Add.1, and was the following:  
 "A. Information by Ecuador on progress in implementing the schedule of tariff surcharge 
reductions contained  in COMEXI Resolutions 533, 549 and 566 (WT/BOP/N/74, 75, 
76 and 76/Corr. 1 (in English only)).  Document  WT/BOP/N/77, containing 
Resolution No. 580, should be added to that list."  
 
 "B. Other business."  
 
6. The Chairman invited the representative of Ecuador t o provide information to the Committee 
about the notification concerning the steps taken to achieve the dismantlement of the measures, in 
accordance with the provisions of COMEXI Resolution No. 580. 
7. The representative of Ecuador  said that, under the commit ment made by his country to 
eliminate the balance -of-payments safeguard measure in accordance with the reduction timetable set 
forth in Resolutions Nos. 533 and 549 of Ecuador's  Foreign Trade and Investment Council 
(COMEXI), he was pleased to announce that , pursuant to COMEXI Resolution No. 580, already WT/BOP/R/100  
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  notified to the WTO, Ecuador had implemented the fourth and last stage in the phasing out  of the 
safeguard measure adopted at the beginning of 2009.  
8. Resolution No. 580, in force since 23  July 2010, had elimi nated the remaining 30  per cent of 
tariff surcharges introduced in 2009;  as a result, the balance -of-payments safeguard measure was 
fully dismantled as from the date in question.  
9. The Government of Ecuador pointed out that the competent authorities had con tinuously 
monitored not only the evolution of  the measure , but  also the external factors directly affecting the 
external account position of the Ecuadorian economy and potentially also affecting liquidity which 
was linked to and heavily  dependent on trends  in the international economy, following the adoption of 
the dollarization regime.  
10. The marked instability of international petroleum prices, the apprecia tion of the dollar against 
the e uro and the decline in the flow of remittances to Ecuador as a result o f the economic difficulties 
faced  by some European countries, which had depressed Ecuador's macroeconomic indicators, 
specifically dur ing the months of April and May  2010, had obliged the country's economic authorities 
to conduct a more detailed analysis o f the evolution of the measures applied, so that the necessary 
caution could be exercised in taking any economic or trade -related decisions . 
11. Gradual elimination  had been geared to  forestalling any further disequilibrium  in the trade 
balance, given  the flood of imports likely to be caused  by the immediate dismantlement of the 
measure.  Nevertheless, although a phased dismantlement  had been planned , a considerable increase 
in imports had in any case occurred, which, together with other factors, both internal and external, had 
alerted the economic authorities to the growing vulnerability of the country's external sector.  
12. For example, the balance of payments for 2010 was expected to show a current account 
deficit of approximately US$362  million , that is, US$119  million  more than the figure for 2009 
(US$243  million ).  The trade balance would record a deficit of US$532  million .  A breakdown of the 
oil and non -oil trade results showed a surplus in the oil trade balance of US$5.837  billion 
(US$1.206  billion  more than  the previous year) based on a n increase in the value of crude exports;  
consequently, a decline in crude prices would entail an increase in the overall trade balance deficit.  
According to estimates by the Central Bank of Ecuador, a one dollar reduction i n the price of a barrel 
of oil would lead to a US$90  million  reduction in the overall trade balance.  
13. The oil trade balance was expected to  be reduced by a higher level of imports of fuels and 
lubricants, which had been projected to increase by 52.4 pe r cen t compared with 2009.  The  increase 
had been caused by the energy crisis, which had led to greater demand for fuel for the generation of 
thermal electricity at the beg inning of 2010, and by the shut down of the country's biggest crude oil 
refinery.  A repet ition of the early -year energy crisis in the second half of 2010 might cause the 
increase in fuel imports to exceed estimates, with subsequent damage to the trade balance.  
14. At the same time, the non -oil trade deficit was expected to increase by US$1.439  billion, 
rising from US$4.929  billion  at December 2009 to US$6.369  billion  at the end of 2010, due to 
increased imports of consumer goods ( up by 23.6  per cent in the period from January to May  as 
compared to the same period in 2009), and to imports of raw mat erials and capital goods.  As far as 
non-oil exports we re concerned, although both traditional and non -traditional exports  had been 
forecast to perform well, growth had been less strong (8.7  per cent overall) than the expected figure 
for imports (17.3 per cent). 
15. Although the balance -of-payments safeguard had been  gradually dismantled, it had 
contributed to a 6.2 increase in non -oil imports during the first half of 2010 compared with the first 
half of 2008, the latter having been a record year for imports, o bliging Ecuador to implement the  WT/BOP/R/100  
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  safeguard measure for ba lance -of-payments purposes.  The growth rate observed during the first half 
of 2010 suggest ed that th e external sector situation that  year could turn out to be more fragile than in 
2008.  
16. During the f irst half of 2010, imports subject to safeguard had declined by 18.3 per cent 
compared with the same period in 2008, while imports not subject to safeguard  had increased by 
15.6 per cent, demonstrating the effectiveness of the gradual safeguard reduction r egime in containing 
the accelerated growth of imports.  Once Ecuador had complied with its commitment to dismantle the 
safeguard measure, it was to be expected that, during the rest of the year, imports of products released 
from the safeguard  would follow the same pattern as those that had not been subject to safeguard and 
would record a level of growth that would compromise the sustainability of the Ecuadorian external 
sector.  
17. It was also important to point out that, as a resul t of the slowdown in the labo ur-intensive 
sectors of the two principal destinations for Ecuadorian migrant s, namely, Spain and the 
United  States, inflows of remittances into Ecuador had been forecast to decline by 5 per cent in 
relation to 2009 and by 16 per cent in relation to 2008.  It should be noted that remittances from those 
two countries constituted the second biggest source of foreign exchange for the Ecuadorian economy, 
exceeded only by oil revenue.  
18. On the basis of those figures, which reflected projections for the most repres entative balance - 
of-payments items, it could be seen that Ecuador's external sector was vulnerable and that the 
safeguard had had a positive effect in reducing its balance -of-payments deficit.  Nonetheless, in 
keeping with its policy of abiding by interna tional and multilateral trade commitments, Ecuador had 
given priority to dismantling the safeguard and complying with the commitment undertaken in 
February 2010.  
19. The representative of Peru thanked the Ecuadorian delegation for submitting information on 
the recent approval of COMEXI Resolution No. 580 whereby all tariff surcharges and q uotas 
introduced for balance -of-payments purposes had been reduced by 30 per cen t.  As had been pointed 
out by the  representative of Ecuador, his country had fulfilled its com mitment to eliminate all 
restrictive measures under the reduction schedule adopted in February 2010.  Peru therefore  
acknowledged and welcome d the transparent and energetic manner in which Ecuador had acted 
throughout the process of consultation in the Com mittee.  
20. Since the introduction of the safeguard measures in January of the previous year, Peru, as one 
of the main Members affected, had maintained a fluid and constructive dialogue with Ecuador as 
befitting neighbours and trading partners that shared the common objective of achieving balanced and 
comprehensive development.  In that regard, Peru was grateful for the unwavering receptiveness 
shown by the Ecuadorian authorities and their readiness to cooperate in seeking a mutually 
satisfactory solution.  
21. Peru was fully conv inced that a favourable balance -of-payments situation, as was hoped to be 
achieved by Ecuador in the coming months, would have a positive impact on that country's trade with 
its main trading partners.  
22. Finally, Peru wished to commend the good  work done by the Secretariat throughout the 
process, which had facilitated the work and the results achieved in the Committee.  That was a further 
demonstration of the effectiveness and importance of the WTO and a multilateral trading system, 
which, throu gh the consultation mechanism, had helped overcome a small trade crisis to the benefit of 
all. WT/BOP/R/100  
Page 4 
 
 
  23. The representative of the Dominican Republic  congratulated the Chairman on his balanced 
and prudent handling of the Ecuadorian case and thanked the Ecuadorian au thorities for having finally 
complied with their WTO obligations as had been their intention from the outset.  Ecuador had been 
faced with the urgent need to apply measures that would prevent a deterioration in the well -being of 
its population, a dangerous  reduction in liquidity and the accentuation of its balance -of-payments 
problems.  
24. Ecuador was a case for study, having adopted at the end of the 1990s, in the midst of a 
domestic crisis, an exchange rate regime that had helped it to stabilize its economy a nd facilitate trade 
flows.  However, that system had been severely damaged at the height of the financial crisis that had 
recently started to ebb.  Ecuador had gone through extremely difficult times when its domestic 
liquidity had fallen to dangerously low  levels on account of the steep decline in its exports.  The 
non-existence of a monetary stabilization fund , which would have provided liquidity at that time in 
order to shore up international trade flows , meant that Ecuador had had to adopt safeguard meas ures.  
Unfortunately, the country had not received the same support as other countries like Greece which, as 
a member of the European Union , had succeeded in obtaining support from EU member States and 
the European Central Bank, enabling it to overcome its  balance -of-payments and debt -related 
difficulties.  The currency on which Ecuador depended was issued by a country that did not have that 
type of fund.  Nor did that type of fund exist within organizations such as the International Monetary 
Fund which, in  this instance, should have set up an assistance fund to provide liquidity for dollarized 
economies, so that their trade flows were not damaged by the crisis.  That should also have been a 
concern of the WTO, whose purpose and function was to enable countr ies to enjoy greater facilitation 
of their international trade as an instrument of development and job creation.  
25. For that reason, while the Dominican Republic was pleased that Ecuador had been able to go 
on overcoming its problems, it still regretted that no provision had been made for an assistance 
mechanism for such countries, and that none yet existed.  In any event, the Dominica n Republic again 
congratulated the Chair man and the Ecuadorian authorities on their handling of the case.  
26. The representative of  Chile  thanked the Ecuadorian delegation for the information it had 
provided and the notification contained in COMEXI Resolution No. 580 in which it reported the 
elimination of all safeguard measures in accordance with its commitments.  Chile wished also t o take 
the opportunity to commend the work accomplished by the Chairman of the Committee and the 
support he had received from the Secretariat throughout the consultation process.  
27. Chile had been particularly affected in trade terms by the measures adopted b y Ecuador on 
balance -of-payments grounds.  From the time of introduction of those measures, the Chilean 
delegation, at capital level, had maintained contact and an ongoing fluid dialogue based on bilateral 
consultations with its Ecuadorian counterparts in order to study and monitor the effects of the 
measures taken on bilateral trade.  
28. Lastly, Chile wished to stress the transparency shown by Ecuador throughout the consultation 
process , which Chile considered to have been concluded satisfactorily with the eli mination of all the 
measures adopted within the deadline to which Ecuador had committed itself in the WTO.  
29. The representative of Brazil  thanked Ecuador for the recent notification announcing the 
complete withdrawal of the measures adopted for balance -of-payments purposes.  As on previous 
occasions, Brazil wished to congratulate Ecuador on the transparency with which it had conducted the 
entire process, for its readiness to engage in regular meetings with Members and provide all the 
information requested.  B razil reiterated its appreciation for Ecuador's compliance with the 
commitments undertaken in the Committee.   WT/BOP/R/100  
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  30. The representative of Canada  expressed satisfaction at the Ecuadorian statement and the 
complete elimination of import surcharges, as stipulated in  COMEXI Resolution No. 549.  Although 
it had hoped that the complete removal of tariff surcharges would take place no later than 
22 January  2010, as had been agreed in the Committee on 3 June 2009, Canada was in any case 
satisfied with Ecuador's complete e limination of the measures.  Canada hoped that, if Ecuador or 
other Members decided in the future to adopt measures on balance -of-payments grounds, they would 
do so in a manner consistent with Article XVIII:B of the GATT 1994 and with the Understanding on 
Balance -of-Payments Provisions of the GATT 1994.  
31. Canada wished to give full recognition to the role played by the Committee on 
Balance -of-Payments Restrictions in the consultations with Ecuador and in facilitating the discussions 
between Ecuador and the co untries affected.  Canada wished in particular to commend the current and 
previous Chairman and the WTO Secretariat for their efforts.  Finally, Canada also wished to thank 
the Ecuadorian delegation and Government for their transparency in responding to it s questions 
during the consultations.  Canada was of the opinion that the transparency shown had constituted a 
model for future consultations in the Committee.  
32. The representative of Colombia  thanked the Ecuadorian G overnment for issuing COMEXI 
Resolution No. 580 whereby the reduction timetable had been completed and the balance -of-payments 
safeguard imposed by Resolution No. 466 of 19  January  2009 had lapsed.  
33. Colomb ia also acknowledged and commend ed the helpfulness and transparency of the 
Ecuadorian G overnm ent in supporting the consultations provided for under WTO rules and 
subsequently  in reviewing periodically all its restrictive import measures taken for 
balance -of-payments purposes.   Colombia reaffirmed the need for all measures of that type to meet 
the requirements and to be applied in conformity with multi -lateral trade rules.  
34. Colombia appreciated the margin of discretion provided for in the WTO agreements for the 
application of national policies.  It was confident, therefore, that the Ecuadorian author ities had in the 
meantime been able to adopt permanent structural measures to resolve their balance -of-payments 
problems in a manner consistent with their WTO commitments.  That would ensure greater stability 
and obviate the need for the future adoption of  highly ephemeral measures of the kind that had just 
ceased to have effect.  
35. The representative of Venezuela  thanked the delegation of Ecuador for its report.  He 
considered that the item should not be closed without a brief reflection on what had been a 
North-South dispute .  The transparency of Ecuador's actions was to be commended.  Ecuador's 
transparency had given new life to the Committee which had remained inactive for a long time.  
Ecuador had availed itself of the opportunities provided by the WTO agr eements.  However, the 
major economies had placed Ecuador in the dock and the confrontation had reached a climax in 
January of that year, when it had been claimed that Ecuador's new tariff reduction notifications 
constituted a further balance -of-payments m easure.  
36. Venezuela associated itself with the Dominican Republic's insistence on the importance of 
analysing the role of the International Monetary Fund and the World Bank with respect to situations 
like the one faced by Ecuador.  
37. Nevertheless, Venezuela wis hed to give warning that, although Ecuador had kept its word and 
followed through on the dismantlement of the measures, it was in a vulnerable situation.  Venezuela 
therefore believed that attention should be paid to what had been said over and over again by the 
Ambassador of the Dominican Republic at the Committee's  meetings regarding the support role of the 
institutions created for that purpose, such as the International Monetary Fund and the World Bank.  WT/BOP/R/100  
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  38. The representative of the United States  expressed a ppreciation to Ecuador for its readiness to 
meet with the Committee that day and bring it up to date on the progress made in implementing the 
tariff surcharge reduction timetable set out in COMEXI Resolution No. 549.  The United States also 
wished to thank  the Chairman for his handling of the current meeting, and to express its appreciation 
for the work done by the Secretariat.  
39. The United States was pleased to hear that Ecuador had implemented the final reduction of 
the tariff surcharges and had eliminated quantitative restrictions as from 23 July, in accordance with 
the provisions of COMEXI Resolution No. 580 of 22 July.  The United States thanked Ecuador for the 
information provided that day.  The United States would welcome the provision by Ecuador of 
information on the application of mixed tariffs on footwear, despite that not being a measure adopted 
for balance -of-payments purposes.  The United States understood that an ad valorem  tariff of 
10 per cent plus a specific tariff of US$6 per pair had been app lied to imported footwear, together 
with an ad valorem  tariff of 10 per cent plus a specific tariff of US$5.5 per kilo on imported articles of 
apparel.  Each of those mixed tariffs replaced the current 30 per cent ad valorem  tariff.  It was not 
clear wheth er those measures would be consistent with bound WTO tariffs in that sector.  As the 
United States had already noted both in the Committee and in the Council for Trade in Goods, it 
would be helpful if Ecuador could provide justification for the use of thos e measures, as well as their 
ad valorem  equivalents and the methodology used to calculate those equivalents.  
40. The representative of the European Union  thanked Ecuador for its statement and expressed 
satisfaction with the measures provided for in Resolution No. 580, which had reduced by 30 per cent 
the tariff  surcharges adopted for balance -of-payments purposes.  The measures  introduced in 
January  2009 had  thus been fully dismantled.  The European Union also wished to take the 
opportunity to request additional  information about the implementation of the mixed tariffs applied to 
footwear and textiles.  
41. The representative of Panama  thanked Ecuador for notifying  Resolution No. 580 which 
reduced by an additional 30 per cent the tariff surcharges introduced by COMEXI  
Resolution  No. 466.  However, he had instructions from his capital to express his country's concern at 
the establishment of new mix ed tariffs on products which had  been covered by Resolution No. 466 
and which were of great impor tance to his country.  That  had been done by Decrees Nos. 367 and 372 
of 21 and 28 May 2010 , respectively.  Like other delegations, he wished  Ecuador to explain how 
those measures fitted in with the commitments undertaken in the Committee, bearing in mind that 
they related to the sa me products and that, apparently, all the mixed tariffs could exceed Ecuador's 
bound tariffs.  Panamanian exports of textiles and footwear had been severely affected and Panama 
wished to express its concern about the perpetuation of  negative effects , since  the mixed tariffs 
provided no guarantee of security and predictability owing to the existing differences in the prices of 
products.  Panama therefore reserved the right to take up that matter in more detail in the appropriate 
forums.  
42. The representative of  Ecuador  thanked Members for their statements.  Ecuador wished to 
reiterate that the questions asked specifically about the application of mixed tariffs were not within the 
purview of the Committee;  Ecuador could itself also bring before the Committee oth er inappropriate 
questions, for example concerning tariff simplification in the agriculture negotiations where the 
European Union systematically refused to comply with the requirement to simplify its mixed, matrix 
or compound tariffs, or questions relating  to the Omnibus Appropriations Act case, or again relating 
to the extension of subsidies in free zones, which also did not fall within the Committee's remit.  
43. Nevertheless, he reiterated that Ecuador was complying with its tariff binding obligations and 
that the regulations through which its mixed tariffs had been brought into force had been published on 
the COMEXI website, in accordance with the commitment undertaken and with Article X of the 
GATT.  Ecuador reiterated the information that had been provided in the Council for Trade in  WT/BOP/R/100  
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  Services on that topic.  In reply to the representative of Panama, he reiterated Ecuador's doubts about 
the source country of the goods he assumed to be Panamanian.  In any event, Ecuador wished to take 
the opportunity to thank the Chairman, his predecessor, and the Secretariat for all the support it had 
received during the consultation process and the subsequent phase, and to reaffirm its unwavering 
desire to maintain transparency in the Committee.  
44. The Chairman  thanked all the M embers for their comments and questions.  The Committee 
took note of all the statements made, which would be reflected in the report on the current meeting.  
The meeting and the 18 -month process were now at an end.  He thanked Ecuador for cooperating with 
the Committee and phasing out the measures.  He wished the Ecuadorian authorities every success in 
their efforts to achieve higher and sustainable growth.  He thanked all the Members for their 
participation and the interest they had shown throughout the pr ocess.  
 
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