ANNOUNCED AS TEMPORARYNo
In June 2009 members of the WTO balance-of-payments committee and Ecuador reached an agreement on Ecuador's import restrictions after two rounds of consultations.
the beginning - reduce current account deficit through higher tariffs and lower quotas
In January 2009 Ecuador announced a series of stiff import restrictions on 630 tariff lines, affecting 8.7 percent of its 'tariff universe' and 23 percent of the volume of imports. Duties were raised on 369 tariff lines and quota restrictions imposed on 271 others for a one-year period. They cover products ranging from processed foods and shoes to cars, mobile phones and sunglasses, as well as many other goods that can be manufactured in Ecuador.
Ecuador insisted that the measures it proposed were necessary to balance its widening current account deficit. GATT Article XVIII allows developing countries to impose temporary import controls to 'forestall the imminent threat of, or to stop, a serious decline in its monetary reserves; or, in the case of 'a Member' with very low monetary reserves, to achieve a reasonable rate of increase in its reserves.' The measures must be notified to the WTO, and the country imposing them must hold consultations with other Members in the Committee on Balance-of-Payments Restrictions. The committee met in April to consider Ecuador's request for a one-year waiver for the measures adopted in January, but failed to reach agreement.
Third parties claimed that Ecuador should reduce government spending
Members did not dispute that Ecuador was indeed experiencing balance-of-payments difficulties. In its WTO notification, Ecuador said its trade deficit was likely to rise to US$3.5 billion by the end of the year (WT/BOP/N/65/Rev.1). The IMF confirmed that Ecuador's external environment had deteriorated sharply since August 2008, and projected a further deterioration of external accounts until 2010. However, the US, Canada and the EU said in April that Ecuador should have tried other means, such as spending cuts, to balance its budget before instituting import quotas. Members most affected by the import curbs - Colombia, Panama, the EU and South Korea--also complained that the measures targeted particular products and sectors of export interest to them. Colombia had seen its exports drop by 42 percent since the impositio of the quotas.
Compromise between Ecuador and third parties
Lengthy consultations in early June, however, produced a compromise. Ecuador agreed to convert most of the import quotas into tariffs by 1 September. It also promised to reassess the measures and to terminate them early if its balance-of-payment situation improves.
The safeguards apply to imports from all countries - including those that have negotiated free trade deals with Ecuador - for one full calendar year.
Subsequently, on 6 October 2009, The Council for Trade and Investment (Consejo de Comercio Exterior e Inversiones, COMEXI) issued Resolution # 524 with the following measures:
Article 1.- To reduce the tariff surcharges from 12% to 9%, stablished by the safeguards to the balance of payment (Resolution 487 of Comexi) applied to vehicles, classified in the subitems:
8703.23.90.90,8703.22.90.90, 8703.23.10.90, 8703.24.10.90, 8703.23.90.90, 8703.21.00.90, 8703.33.10.90, 8703.32.10.90, 8703.22.10.90, 8703.33.90.90.
Except the subitem: 8703.32.90.90.
Article 2.- To eliminate the tariff surcharges of 12% stablished by the safeguards to the blance of payment (Resolution 487 of Comexi) applied to load vehicles and wark vehicles classified in the following subitems:
8702.10.90.90, 8702.10.10.90, 8704.31.10.90, 8704.23.00.90, 8704.21.10.90, 8704.22.20.90, 8704.22.10.90, 8704.21.90.90, 8706.00.92.90, 8706.00.99.90, 8705.90.90.00, 8703.31.90.90.
Except the subitem: 8704.22.90.90 and 8704.10.00.9
By means of Resolution # 533 of COMEXI, published in the Official Record # 109 of 15 January 2010, the tariff surcharges established due to the safeguard for balance of payment was reduced to 10%.
On 03 February 2010, COMEXI received the report, suggesting to establish a calendar of tax relief of the safeguard measure for balance of payment and monitoring its evolution.
Therefore The Council for Trade and Investment, COMEXI, resolvedto issued the Resolution # 549 (on 03 February 2010), to stablish a chronology as follows:
a) Begining on 23 March 2010, the percentage of reduction will be of 40%.
b) Begining on 23 May 2010, the percentage of reduction will be increased to 30%, therefore it will reach 70%.
c) Begining on 23 July 2010, the percentage of reduction will increase another 30%, completing the 100% foreseen.
This calendar will be implemented based on the monthly assessments of the balance of payment performance, which will be presented by the Ad-Hoc Group of COMEXI to the Board.
The reduction of the tariff surcharges will be applied by considering the date of the shipment of the import merchandise subject to this measure.
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