WORLD TRADE  
ORGANIZATION  WT/BOP/G/20 
30 July 2010 
 
 (10-4079) 
Committee on Balance-of-Payment Restrictions Original:   Spanish 
  
 
STATEMENT BY ECUADOR 
 
Geneva, 28 July 2010
 
  
 In pursuance of Ecuador's commitment to eliminate the balance-of-payments safeguard 
measure in accordance with the tim etable for phasing it out establis hed in Resolutions 533 and 549 
issued by Ecuador's Foreign Trade and Investme nt Council (COMEXI), I am pleased to inform you 
that by COMEXI Resolution 580, already notified to  the WTO, Ecuador has implemented the fourth 
and last stage in the phasing out of the safegua rd measure adopted at the beginning of 2009. 
 
 Resolution 580, in force since 23 July 2010, el iminates the remaining 30 per cent of the tariff 
surcharges implemented in 2009, thereby termina ting in full the balance-of-payments safeguard 
measure as from that date.   The Government of Ecuador would point out th at the competent authorities have consistently 
monitored both the progress of the measure and the exte rnal factors that directly influence the results 
of the external accounts of the country's economy and that could affect liquidity, which has been 
linked to and heavily dependent on the performance of the international economy since the dollarized 
monetary system was introduced.  
 Because of the marked instability of internati onal oil prices, the appreciation of the dollar 
against the euro and a decline in the flow of re mittances to Ecuador owing to economic difficulties in 
some European countries, as a result of which the good performance of Ecuador's macro-economic 
indicators suffered, in April and May 2010 specifi cally, our economic authorities were compelled to 
assess the measures' progress in greater detail so th at the necessary caution could be exercised in 
taking any economic or trade-related decisions. 
 
 The point of eliminating the measure gradually was to prevent any further disequilibrium in the trade balance caused by the flood of imports that  immediate elimination was expected to produce.  
But although the elimination was planned in phases,  there was nonetheless a significant increase in 
imports and this, together with other factors, both internal and external, alerted the economic 
authorities to the growing vulnerability of Ecuador's external sector. 
  For example, it is estimated that the ba lance-of-payments for 2010 will show a current 
account deficit of around US$362 million, i.e. US$1 19 million more than the shortfall recorded in 
2009 (US$243 million).  The trade balance is expected  to post a deficit of US$532 million.  If oil and 
non-oil trade results are taken separately, the indica tion is that the oil trade balance will record a 
surplus of US$5.837 billion (US$1. 206 billion more than the previous year) assuming an increase in 
the value of crude exports;  consequently, a drop in  these prices would imply a deepening of the total 
trade balance deficit.  According to estimates by the Central Bank of Ecuador, a one dollar drop in the 
price of a barrel of oil would mean a reduction of approximately US$90 million in the total trade 
balance. 
 WT/BOP/G/20 
Page 2  
 
  0100200300400500600
Jan-08
Feb-08 Mar-08 Apr-08
May-08
Jun-08
Jul-08
Aug-08 Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09Sep-09Oct-09
Nov-09Dec-09
Jan-10 Feb-10
Mar-10 Apr-10
May-10
Jun-10Trends in imports of products subject to safeguard
(US$ millions)
510
223291
 
 The oil trade balance is expected to be lowe r because of an increase in imports of fuels and 
lubricants, expected to be up by 52.4 per cent over 2009.   The increase is a result of the energy crisis 
which drove up the demand for fuel for electricity ge neration at the beginning of 2010, combined with 
the stoppage of the country's largest crude refinery.  If such an energy crisis were  to be repeated in the 
second half of 2010, the increase in fuel imports could exceed the estimate, with the consequent 
adverse effects for the balance of trade. 
  The non-oil trade balance is expected to in crease its deficit by US$1.439 billion, rising from 
US$4.929 billion in December 2009 to US$6.369 billion by the end of 2010.  The cause of the increase is a rise in imports of consumer goods (up by 23.6 per cent in the period January-May as 
compared to the same period in 2009), and in im ports of raw materials a nd capital goods.  As to 
non-oil exports, although both traditio nal and non-traditional exports are expected to perform well, the 
estimate (an 8.7 per cent increase overall) is lower th an for imports (17.3 per cent).  The table in 
Annex I shows full balance-of-payment estimates for 2010.   Although the phasing out of the balance-of-payme nts safeguard has been a gradual process, it 
has contributed to the fact that in the first half  of 2010 non-oil imports increased by 6.2 per cent
1 as 
compared to the first half of 2008, a year in which imports reached unprecedented levels, compelling Ecuador to implement the balance-of-payments safeguard measure.  The increase observed in the first semester of 2010 suggests that  the external sector could be in a more vulnerable position this year 
than it was in 2008. 
 
                                                     
 
1 This figure does not include imports of fuels and lubricants needed for electricity generation and to 
cover the domestic demand for fuels, mentioned in the paragraph supra .  WT/BOP/G/20 
 Page 3 
 
 
   In the first semester of 2010, imports subject to the safeguard measure  recorded an 18.3 per 
cent drop compared to the same period in 2008 wh ereas there was a 15.6 per cent increase in imports 
not covered by the measure, which shows the ef fectiveness of gradual elimination in curbing 
accelerated growth in imports.  Once Ecuador has fulfilled its commitment to removing the safeguard 
measure, for the remainder of the year imports of  the products released from the safeguard can be 
expected to emulate the behaviour of those that we re not covered by the measure and so increase as to 
compromise the sustainability of Ecuador's external sector.  
6,767 
4,908 
1,859 4,756 6,024 
1,269 5,671 7,190 
1,519 
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 (US$ millions)Imports 1st Semester
With safeguard Without safeguard Total2010 2009 2008
 
 It should further be pointed out that owing to  reduced activity in the labour-intensive sectors 
of the two main host countries of Ecuadorian migrat ion, namely Spain and the United States, income 
from remittances to Ecuador is expected to be 5 per cent lower than in 2009 and 16 per cent lower 
than in 2008.  It must be noted that remittan ces from these two countries are the second largest source 
of foreign currency for Ecuador's economy, exceeded only by oil revenue.   These figures, which reflect the projections fo r the most representative balance-of-payment 
headings, are evidence of the vulnerability of Ecuador 's external sector and of the positive effect the 
safeguard measure has had in terms of reducing the country's balance-of-payments deficit.  
Nonetheless, in keeping with its policy of me eting its international and multilateral trade 
commitments, Ecuador has preferred to elimin ate the safeguard and to meet the commitment 
undertaken in February 2010. 
 WT/BOP/G/20 
Page 4  
 
  ANNEX I 
 
EXTERNAL SECTOR – SUMMARY TABLE  
(US$ millions) 
 2009 2010 Percentage variation (%) 
CURRENT ACCOUNT -243 -362 48.9 
TRADE BALANCE 78 -108  
Trade Balance (Recorded Trade) -299 -532 78.2 
Oil Trade Balance 4631 5837 26.0 
Non-Oil Trade Balance -4929 -6369 29.2 
Exports 13799 16825 21.9 
Oil and by-products 6965 9393 34.9 
Non-oil 6834 7431 8.7 
Imports 14098 17356 23.1 
Oil 2334 3556 52.4 
Non-oil 11764 13800 17.3 
Trade Balance (Unrecorded trade, other) 376 424  
SERVICE AND INCOME BALANCE -2817 -2763 -1.9 
Credit 1260 1380 9.5 
Debt -4078 -4142 1.6 
CURRENT TRANSFERS 2497 2509 0.5 
d/c Remittances received 2495 2370 -5.0 
CAPITAL ACCOUNT -439 -548 25.0 
FOREIGN DIRECT INVESTMENT 317 274 -13.5 
PUBLIC EXTERNAL DEBT -2664 691 -125.9 
NET RECORDED PRIVATE DEBT -823 -831 1.0 
OTHER CAPITAL 1243 -497  
NET FLOW OF ASSETS AND LIABILITIES ABROAD 1489 -186  
FREELY DISPOSABLE INTERNATIONAL RESERVES 681 910 33.6 
Source :  Central Bank of Ecuador. 
 
 
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