NOTIFICATION UNDER PARAGRAPH 9 OF THE UNDERSTANDING
ON THE BALANCE-OF-PAYMENTS PROVISIONS OF THE
GENERAL AGREEMENT ON TARIFFS AND TRADE 1994

COMMUNICATION FROM ECUADOR

        The following communication, dated 9 May 2016, is being circulated at the request of the delegation of Ecuador.

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NOTIFICATION OF THE MODIFICATION OF THE TIMETABLE FOR THE DISMANTLING
OF THE BALANCE-OF-PAYMENTS SAFEGUARD MEASURE IMPOSED BY
THE REPUBLIC OF ECUADOR

In accordance with paragraph 1 of the Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994, and in light of the commitment made by Ecuador as result of the consultation meeting held in October 2015, Ecuador submitted to the WTO Committee on Balance-of-Payments Restrictions document WT/BOP/G/23, which contains the timetable for the dismantling of the measure restricting imports because of the disequilibrium in the country's balance of payments.

For information purposes, Ecuador also provided the Secretary of the Committee on Balance‑of‑Payments Restrictions with a copy of Resolution No. 001-2016, through which the Foreign Trade Committee (COMEX), in accordance with the reduction timetable negotiated and duly notified to the WTO, reduced from 45% to 40% the surcharge applicable to products subject to the balance-of-payments safeguard measure, thereby fulfilling the first part of Ecuador's commitment.

On 16 April this year, Ecuador was hit by an earthquake measuring 7.8 on the Richter scale. The entire country was severely affected, especially its coastal areas where the main economic activities are tourism and the production of at least three of Ecuador's leading export products: tuna, coffee and shrimp. The event resulted in the sad loss of many human lives and caused substantial material damage; its humanitarian consequences, together with the restoration and rebuilding of the cities and towns affected, will require vast amounts of resources in the short and medium-term, while the country's full recovery is a long-term undertaking.

This serious situation has occurred in the most unfavourable circumstances for Ecuador. As explained by the delegation that travelled to Geneva on three occasions, the prevailing macroeconomic conditions show a severe deterioration in the balance of payments, which the country has been unable to resolve fully despite the remedies applied through the current safeguard measure and other additional measures taken by the Ecuadorian Government. International oil prices, together with the strength of the dollar, continue to put pressure on external accounts, which now have the additional burden of restoration, reconstruction and emergency humanitarian assistance, a situation that will put even more pressure on foreign exchange outflows, the balance-of-payments, and consequently the liquidity of the economy. Ecuador has already taken the relevant economic measures to address this matter, and has activated all the contingency loans to which it has access. These loans cannot, however, provide enough to deal with this new and complex situation, which will require tremendous amounts of resources.

In this light, with a view to maintaining the transparency of the steps taken by Ecuador during this process, and in accordance with paragraph 9 of the Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994, please find attached COMEX Resolution No. 006-2016, which partially implements the timetable for April 2016, removing the 5% surcharge and deferring, for an additional year, the implementation of the rest of the timetable proposed and discussed in the Committee, so that the reduction of the existing surcharges by one third will take effect in April 2017, and so on and so forth until the measure is completely eliminated in June 2017.

RESOLUTION NO. 006-2016

THE FOREIGN TRADE COMMITTEE IN PLENARY SESSION

Whereas:

Article 389 of the Constitution of the Republic of Ecuador essentially provides that the State shall protect persons, communities and nature against the adverse effects of natural or manmade disasters through risk prevention, disaster mitigation, restoration and the improvement of social, economic and environmental conditions, with a view to minimizing the condition of vulnerability;

Pursuant to Article XVIII, Section B, of the General Agreement on Tariffs and Trade 1994 (GATT 1994), a developing country Member may, if experiencing balance-of-payments difficulties and needing to maintain the implementation of its programme of economic development, restrict the quantity or value of merchandise permitted to be imported, provided that the import restrictions instituted do not exceed those necessary to forestall the threat of, or to stop, a serious decline in its monetary reserves; that is, it may control the general level of its imports in order to safeguard its external financial position and to ensure a level of reserves adequate for the implementation of its programme of economic development;

The Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994 of the World Trade Organization (WTO) clarifies the provisions of Articles XII and XVIII:B of the GATT 1994 and of the 1979 Declaration on Trade Measures Taken for Balance‑of‑Payments Purposes, procedures for consultations, notification and documentation, and conclusions of consultations;

Paragraph 1 of this Understanding provides that Members confirm their commitment to announce publicly, as soon as possible, time-schedules for the removal of restrictive import measures taken for balance-of-payments purposes, and that such time-schedules may be modified as appropriate to take into account changes in the balance-of-payments situation;

Paragraph 9 of the Understanding provides that Members shall notify the WTO General Council of any modifications in time-schedules for the removal of such measures as announced under paragraph 1, and that significant changes shall be notified to the General Council prior to or not later than 30 days after their announcement;

Article 71 of the Organic Code of Production, Trade and Investment (COPCI), published in the Supplement to Official Journal No. 351 of 29 December 2010, created the Foreign Trade Committee (COMEX) as the body entrusted with approving national public trade policies;

Article 72(e) and (k) of the COPCI provides that the COMEX, as the governing body for trade policy, shall be responsible for: "(e) regulating, facilitating or restricting the export, import, movement and transit of goods that have not been inward cleared or are not Ecuadorian, in the cases provided for in the Code and in the international agreements duly ratified by the Ecuadorian State"; and "(k) to take cognizance of reports by the investigating authority and to adopt trade defence measures consonant with the national and international regulations in force against unfair international trade practices or an increase in imports which cause or threaten to cause injury to domestic production";

Executive Decree No. 25, published in the Supplement to Official Journal No. 19 of 20 June 2013, created the Ministry of Foreign Trade as the State body responsible for trade policy and, in its Third Amending Provision, provided that it should preside over the COMEX;

Resolutions Nos. 011 and 016, adopted by the COMEX in plenary session on 6 March and 8 April 2015, established a temporary and non-discriminatory tariff surcharge (5%, 15%, 25% and 45%) on 2,963 tariff subheadings, in order to control the general level of imports, safeguard the economy's liquidity and reduce the disequilibrium in the balance of payments;

Pursuant to Resolution No. 046-2015, which was adopted by the COMEX in plenary session on 11 December 2015 and entered into force on 16 December 2015, the COMEX decided to amend the Annex to Resolution No. 011-2015, as adopted by the COMEX in plenary session and published in the Supplement to Official Journal No. 456 of 11 March 2015, in respect of the subheadings listed in that Annex;

Pursuant to Resolution No. 047-2015, which was adopted by the COMEX in plenary session on 24 December 2015 and entered into force on 13 January 2016, the COMEX decided to amend the Annex to Resolution No. 046-2015, which was adopted by the COMEX in plenary session on 11 December 2015 and entered into force on 16 December 2015, in respect of the subheadings listed in that Annex;

In document WT/BOP/G/23, published on 26 October 2015, the Republic of Ecuador officially notified the WTO Committee on Balance-of-Payments Restrictions of the timetable for the dismantling of the measure restricting imports because of the disequilibrium in Ecuador's balance of payments;

On 21 January 2016, the COMEX in plenary session adopted Resolution No. 001-2016, which entered into force on 31 January 2016 and amended the tariff surcharge on the tariff subheadings listed in the Single Annex to Resolution No. 011-2015, adopted by the COMEX in plenary session and published in the Supplement to Official Journal No. 456 of 11 March 2015 and its amendments, by reducing it from 45% to 40%, in accordance with the timetable for the dismantling of the measure submitted to the WTO Committee on Balance-of-Payments Restrictions;

On 16 April 2016, an earthquake took place measuring 7.8 on the Richter scale, which severely affected the entire country, in particular its coastal areas, causing a loss of human life and serious economic consequences, and significantly heightening and aggravating the already very difficult economic situation and the pressure on external accounts currently experienced by Ecuador;

By means of Executive Decree No. 1001 of 17 April 2016, Mr Rafael Correa, Constitutional President of Ecuador, declared a state of emergency in the provinces of Esmeraldas, Manabí, Santa Elena, Santo Domingo de los Tsáchilas, Los Ríos and Guayas, so that all the entities of the Central and Institutional Public Administration, in particular the armed forces and national police force, and the decentralized autonomous governments of the affected provinces, could coordinate efforts with a view to taking the necessary steps to mitigate and prevent risks, and address, ensure recovery from and improve the adverse conditions caused by the earthquake on 16 April 2016;

On 17 April 2016, by means of Emergency Resolution No. SGR-OOl-2016, the Technical Secretariat for Risk Management declared a state of emergency in the country and, among other considerations, resolved that the necessary steps would be taken to address the effects of the earthquake;

By means of Executive Decree No. 1003, dated 23 April 2016, Mr Rafael Correa Delgado, Constitutional President of Ecuador, declared an eight-day period of national mourning for the sad loss of human life in the earthquake of 16 April 2016;

According to the Secretariat for Risk Management, by Thursday 27 April 2016, as a result of this natural phenomenon, 659 people had died, 40 people were missing, more than 16,601 were injured, and 29,067 were living in temporary shelter; as for the material damage caused, initial estimates valued the damage at approximately US$3,000 million, which amounts to 3% of the GDP, and drastic economic measures must be taken to address this situation;

The COMEX, meeting in plenary session on 29 April 2016, examined and approved Technical Report No. 006-BOP-AI-2016 of 27 April 2016, which was presented by the Inter‑Institutional Technical Group responsible for analysing the scope of the safeguard measure, taking into account the crisis currently affecting Ecuador; this report recommends the partial implementation of the next phase of the timetable for the dismantling of the measure, the removal of the 5% surcharge rate, and the deferral of the implementation of the subsequent phases of the timetable;

Pursuant to Resolution No. MCE-DM-2015-0003-R of 12 August 2015, Mr Xavier Rosero Carrillo, an official of the Ministry of Foreign Trade, was appointed Technical Secretary of the COMEX;

In exercise of the powers conferred under the Organic Code of Production, Trade and Investment (COPCI), in accordance with Article 70 of the COMEX Operating Regulations, issued by Resolution No. 001-2014 of 14 January 2014, and other applicable regulations;

HEREBY DECIDES:

Article 1.- To partially implement the timetable for the dismantling of the balance-of-payments safeguard measure, scheduled to take effect in April 2016, removing only the 5% tariff surcharge rate.

Article 2.- To provide that the implementation of the next phase of the timetable for the dismantling of the balance-of-payments safeguard measure takes place as from April 2017, in accordance with the following table:

To this end, the Ministry of Foreign Trade (MCE) will notify the National Customs Service of Ecuador (SENAE) of the implementation of the above timetable.

GENERAL PROVISION

FIRST.- The Technical Secretariat of the COMEX, in exercise of its powers under the COMEX Operating Regulations, shall forward this Resolution to the Official Journal for publication.

FINAL PROVISION.- This Resolution shall enter into force on 30 April 2016, without prejudice to its publication in the Official Journal, and shall be implemented in accordance with Article 112 of the Organic Code of Production, Trade and Investment (COPCI).

FOR COMMUNICATION AND PUBLICATION.- Done at Quito, Metropolitan District, on 29 April 2016.

Diego Aulestia                          Xavier Rosero

CHAIRMAN                                      SECRETARY

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