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 2 April 2015, is being circulated at the request of the delegation of Ecuador.[1]

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1.  In accordance with the notification requirements set forth in paragraph 9 of the Understanding on the Balance‑of‑Payments Provisions of the General Agreement on Tariffs and Trade 1994, Ecuador hereby notifies that on 11 March 2015, in view of the highly unfavourable economic climate prevailing in the country and its impact on the balance of payments, it introduced a temporary and non‑discriminatory tariff surcharge for a period of up to 15 months in order to regulate the general level of imports and thereby resolve Ecuador's critical balance‑of‑payments problems.

2.  The notified measure does not exceed what is necessary to address Ecuador's balance‑of‑payments disequilibrium, which is expected to amount to between US$2 billion and US$2.4 billion in 2015. If no steps are taken to correct this disequilibrium, the current account deficit for this year can be expected to reach US$3.097 billion and the trade deficit to reach US$2.404 billion.

3.  Since the second half of 2014, the international environment has been unfavourable to the Ecuadorian economy. Among other things, the fall in the international prices of oil and other commodities, the decline in remittances from Ecuadorian residents abroad, the appreciation of the US dollar, which is legal tender in Ecuador, and the monetary and exchange rate policies adopted by the country's main trading partners have affected the balance of the external sector and the liquidity of the Ecuadorian economy, and this has taken its toll on the balance of payments.

4.  The purpose of this measure is to rapidly offset the negative balance of payments and the decrease in the liquidity of the Ecuadorian economy which is heavily impacting the current monetary system.

5.  This measure is being introduced pursuant to Article XVIII, Section B of the GATT 1994 and the Understanding on the Balance‑of‑Payment Provisions of the GATT 1994, and consists of a general tariff surcharge described in Resolution No. 011-2015 issued by the Foreign Trade Committee (COMEX), published in the Supplement to Official Journal No. 456 of 11 March 2015, and attached hereto as Annex 1.

6.  In conformity with the criteria set forth in Article XVIII, Section B, paragraph 10 of the GATT 1994, products that are essential in the light of the country's policy of economic development, as well as those that meet the basic consumption needs of the Ecuadorian population, have been excluded, for example: capital goods, inputs and raw materials essential to production, medicines and medical equipment, and other goods mentioned in Article 2 of the notified Resolution.

7.  The tariff surcharge applies to 2,955 10-digit subheadings, or 38% of a total of 7,581 subheadings, which in monetary terms amounts to 31% of imports recorded in 2014.

8.  The tariff surcharge that has been adopted consists solely and exclusively of import surcharges, in conformity with paragraph 2 of the Understanding on the Balance-of-Payments Provisions of the GATT 1994. The measure is applied on top of the tariffs currently in force, and consists of an ad valorem surcharge of 5%, 15%, 25% and 45%, calculated on the basis of the c.i.f. value of imports as indicated for each tariff line in the Annex to Resolution No. 011-2015.

9.  Annex 2 of this notification lists separately the amount by which the price-based measure exceeds the bound tariff.

10.  Ecuador will monitor and assess the application of the measure on a quarterly basis in order to ensure that it is commensurate with ongoing needs to overcome the disequilibrium in the balance of payments, the intention being to relax the measure as the balance improves and eliminate it when it is no longer necessary.

11.  Pursuant to paragraph 1 of the Understanding on the Balance‑of‑Payments Provisions of the GATT 1994, Ecuador confirms its commitment to announce publicly, as soon as possible, the time‑schedule for the removal of these measures.

12.  Ecuador stands ready to enter into consultations with the WTO Committee on Balance‑of‑Payments Restrictions, in accordance with GATT Article XVIII:B, the Understanding on the Balance‑of‑Payments Provisions of the GATT 1994, and all other applicable rules and procedures.

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