♠ Posted by Emmanuel at 6/06/2009 12:41:00 PMUnbeknownst to many, member countries facing considerable balance-of-payments difficulties can petition the WTO to temporarily raise tariffs on imports. Although infrequently invoked, they do exist. Recently, Ecuador said "no mas" to trade by requesting such concessions. Let's begin with this backgrounder from Reuters:
World Trade Organisation (WTO) members agreed on Thursday to allow Ecuador to impose temporary import restrictions because of balance of payments problems. The move was hailed by rich and developing countries as proof that the rules-based trading system umpired by the WTO was working well despite the economic crisis, and that WTO members could tackle the needs of developing countries in difficulties.And here is the blurb from the WTO site:
The members reached agreement after lengthy consultations in which Ecuador agreed to modify the restrictions and phase them out early if its economy improved, according to a draft report by the WTO's committee on balance of payments restrictions, a copy of which was obtained by Reuters.
"The good thing about this is it shows the WTO works -- it gets results," said one Ecuadorean official, who asked not to be named, after the committee meeting. "And the good thing is it's a consensus, no one is imposing anything."
WTO rules allow temporary waivers to trade agreements to countries with balance of payments problems, enabling them to raise tariffs or impose quotas. This was the first time in 10 years that a WTO member had sought such an exemption, although Bangladesh received one in 2007 in a follow-up to a previous request, trade officials said.
The Committee on Balance-of-Payments Restrictions, on 4 June 2009, successfully concluded its consultations with Ecuador on trade measures taken for balance-of-payments purposes. Ecuador said the decision showed that WTO members are willing to negotiate pragmatic solutions, and that this sends a good signal for the day-to-day work of the organization.I am interested in seeing whether Ecuador will lift these supposedly temporary measures on time. If you will recall, this is the country led by a guy who's forced bondholders to accept a 65% haircut on Ecuadorian bonds issued by his predecessor. Not exactly a confidence-inspiring reflection of Ecuador's international economic dealings, methinks.
The Committee approved its report on the consultations with Ecuador. The conclusions of the report included the following:
Ecuador thanked the efforts of the Chair (Amb. Darlington Mwape of Zambia) and the WTO Secretariat, and the flexibility of members in the consultations. It said the decision showed that WTO members are willing to negotiate pragmatic solutions, and that this sends a good signal for the day-to-day work of the organization. It promised to continue to be transparent, and to listen to concerns from members.
- The trade measures applied by Ecuador covered about 8.7% of all tariff lines, affecting a volume of trade equivalent to some 23% of its total 2008 imports;
- Ecuador will replace most of the quantitative restrictions for price-based measures no later than 1 September 2009;
- Ecuador will progressively modify the level and scope of the measures as its balance-of-payments situation improves; and
- The Committee welcomed Ecuador's commitment to remove all trade measures for balance-of-payments purposes no later than 22 January 2010.