CONSULTATIONS WITH ECUADOR
COMMUNICATION FROM ECUADOR
The following letter, dated 29 April 2016 and addressed to the Chairman of the Committee, is being circulated at the request of the delegation of Ecuador.
I am writing in reference to document WT/BOP/G/23, in which the Government of Ecuador announced the timetable for dismantling the balance‑of‑payments safeguard measure that has been in force since March 2015. Ecuador was due to dismantle this measure fully by June 2016.
On this occasion, and with a view to maintaining the transparency of the steps taken by Ecuador during this process, it is my duty to inform you, in accordance with paragraph 1 of the Understanding on the Balance‑of‑Payments Provisions of the GATT 1994, that the Ecuadorian Government is unavoidably obliged to modify this timetable.
This decision is based solely on events that have recently taken place in the country, and relates to the earthquake measuring 7.8 on the Richter Scale that was recorded in the coastal provinces of Manabí, Guayas and Esmeraldas, where the main economic activities are tourism and the production of at least three of Ecuador's leading export products: tuna, coffee and shrimp.
This serious situation has occurred in the most unfavourable circumstances for Ecuador. As explained by the delegation that has 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 to address the crisis. 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. Ecuador has already taken the relevant economic measures, 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.
The earthquake has so far claimed more than 655 human lives and injured more than 4,600 people. It has also caused significant damage in several cities, in some cases destroying more than 80% of buildings, and has severely affected road, tourist, sanitary, energy, educational, production and agricultural infrastructure, as well as the provision of basic services in general. The damage recorded in the area amounts to serious devastation that will require huge amounts of resources and many years to redress.
While the Ecuadorian Government is preparing detailed information on this matter, to be circulated at the forthcoming meeting of the Committee on Balance‑of‑Payments Restrictions in June 2016, preliminary calculations show that the reconstruction of quake‑devastated areas alone will require vast amounts of resources, without taking into account the serious humanitarian consequences that will also need addressing in terms of assistance to those who have been orphaned, widowed and left with disabilities.
In view of the foregoing, the Government of Ecuador has decided to extend for an additional year the reduction timetable proposed and discussed in the Committee under your honourable chairmanship, so that the reduction of the existing surcharges by one third, originally scheduled for April 2016, as set out in document WT/BOP/G/23, will take effect in April 2017, and so on and so forth until the safeguard is completely eliminated in June 2017.
Nevertheless, as a gesture of good will and in response to the concerns expressed by Member countries in the Committee, Ecuador has decided to eliminate the 5% surcharge, which means that the one‑year extension will apply to the rates of 40%, 25% and 15%.
Mr Chairman, I am sure that the members of the Committee on Balance‑of‑Payments Restrictions will understand the difficult situation currently facing Ecuador and support this new arrangement. It will remain in effect for as long as is warranted by the current conditions and will come to an end when these same conditions permit.
Lastly, Mr Chairman, may I request that, through the WTO Secretariat, you circulate this communication to the members of the Committee that you most honourably chair, so that they are made aware of the situation I have described and can make any arrangements they deem necessary.
Diego Esteban Aulestia Valencia
MINISTER OF FOREIGN TRADE