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Ecuador’s Import Surcharges Questioned at WTO

Tuesday, July 07, 2015
Sandler, Travis & Rosenberg Trade Report

World Trade Organization members consulted with Ecuador recently on import surcharges it has imposed to safeguard its balance of payments in the face of what it calls “a highly unfavorable economic climate.” These surcharges have been in effect since March 11 and consist of five percent on nonessential capital and primary capital goods, 15 percent on imports of medium need, 25 percent on ceramics, tires, motorbikes and TVs, and 45 percent on final consumer goods.

Ecuador defended the surcharges, stating that as a dollarized economy it cannot resort to other measures such as monetary or exchange rate policies to restore the equilibrium of its balance of payments. Ecuador also pointed out that the surcharges exclude essential goods such as raw materials and capital goods, medicine and medical equipment, auto parts, lubricants and fuels; will be removed after 15 months; and are restrictive but not prohibitive, as trade is still flowing into Ecuador.

A WTO press release notes that most of the 25 WTO members who spoke at the June 29-30 meeting acknowledged the deterioration of Ecuador’s balance of payments and that some expressed their agreement with the surcharges. However, several claimed that the surcharges are causing a burden on their exporters and wondered how the surcharges are helping to restore Ecuador’s balance of payments situation. They also questioned Ecuador on how the surcharges are determined, how excluding members of the Latin American Integration Association can be justified under WTO rules, whether any less trade-distortive measures have been envisaged and whether the removal of the surcharges could be accelerated.

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