Bridges Weekly Trade News Digest • Volume 13 • Number 21 • 10th June 2009

WTO OK’s 7 More Months of Ecuador’s Import Restrictions

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Members of the WTO’s Balance-of-Payments Committee agreed last week to allow Ecuador to continue to impose import restrictions while the country struggles to bring its finances under control.

The General Agreement on Tariffs and Trade of 1994 and the General Agreement on Trade in Services both allow WTO Members struggling with balance-of-payment difficulties to raise tariffs or impose import quotas to raise revenue to help them get through the crisis.

In January, Ecuador’s president, Rafael Correa, a populist who was elected to a second presidential term last month, introduced far-reaching import restrictions intended to protect domestic producers. The safeguards apply to imports from all countries - including those that had previously struck free trade deals or preferential trade agreements with Quito - for one full calendar year. In total, the new restrictions cover 8.7 percent of all of the country’s tariff lines, which accounts for more than a fifth of its total trade volume for 2008.

But following last week’s meeting, Quito agreed to replace the quotas with price-based measures by 1 September, and promised to do away with all of its restrictive trade measures no later than 22 January 2010, the committee said.

In an official statement released after the meeting, the government of Ecuador praised the move, saying that the WTO had recognised the country’s very real financial difficulties that have resulted, at least in part, from the dollarisation of its economy roughly ten years ago.

Last week’s meeting marked the first time in a decade that the WTO has allowed a Member a balance-of-payments exception, Ecuador claimed. Trade observers say the move helps prove that the global trade body remains relevant as countries begin fighting their way back from the global economic slowdown.

At the meeting, which was held on 2 and 4 June, the Balance-of-Payments Committee also approved a draft decision that would automatically make all WTO nations members of the committee.

ICTSD reporting.