RESTRICTED
WORLD TRADE WT/SPEC/5/Rev.1
4May1995
ORGANIZATION(95-1153)
DRAFT REPORT OFTHE WORKING PARTY
OFTHE ACCESSION OFECUADOR
Revision
1. Ecuador 'srequest foraccession totheGeneral Agreement wascirculated tocontracting parties
inSeptember 1992. Atitsmeeting on29September -1October 1992, theGATT Council of
Representatives established aWorking Party toexamine theapplication oftheGovernment ofEcuador
toaccedetotheGeneralAgreementunderArticleXXXIII,andtosubmittotheCouncilrecommendations
which mayinclude adraftProtocol ofAccession. Membership oftheWorking Party wasopen to
allcontracting parties indicating thewishtoserve onit.Inpursuance oftheMinisterial Decision of
14April 1994 onAcceptance ofandAccession totheAgreement Establishing theWorld Trade
Organization (WTO) andtothedecision of31May1994ofthePreparatory Committee fortheWTO,
theWorking Party examined theapplication ofEcuador formembership intheWTO andagreed to
pursue themarket access negotiations forgoods, including anagricultural country schedule, andfor
services. Inpursuance ofthedecision adopted bytheWTO General Council on31January 1995, the
existing GATT 1947Accession Working Party wastransformed intoaWTO Accession Working Party.
Theterms ofreference andthemembership oftheWorking Party arereproduced indocument
WT/L/55/Rev.1.
2. TheWorking Party meton20July1993, 17-18 January, 21-22 April, 20September, 28and
30November, 1December 1994, 1-2[and 4]May 1995, under thechairmanship of
H.E. Mr.C.Manhusen (Sweden).
3. TheWorking Party hadbefore it,toserve asabasis foritsdiscussions, aMemorandum on
theForeign Trade Regime ofEcuador (L/7202) andthequestions submitted bycontracting partiesWT/SPEC/5/Rev.1
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ontheforeign traderegime ofEcuador, together withthereplies thereto, andotherinformation provided
bytheEcuadorean authorities (L/7268 andAddenda; L/7301 andAddenda; Spec(94)1, Addenda,
Supplement andCorrigendum; L/7488 andAddenda; L/7523 andAddendum 1;L/7566andWT/L/54).
TheGovernment ofEcuador made available totheWorking Party thefollowing documentation:
-Supreme Decree 2527-A of5.11.65 onexport duties
-Decree 1268 of6.11.72 onexport duties
-Supreme Decree 13of9.1.73 ontheExport Tariff
-Supreme Decree 185andLaw14ontheChildren 'sFund
-Supreme Decree 610oncopyright
-Supreme Decree 823ontheExport Tariff
-Ministerial Decision 8022 ontheSanitary Register, Min. ofPublic Health
-Decision 10824 oncopyright
-Supreme Decree 735oncopyright (amendment)
-Decree 487ontheExport Tariff
-LawNo.78of22.9.81 ontheExport Tariff
-LawNo.79of24.9.81 ontheExport Tariff
-Law20ontheINNFA (National Institute forChildren andtheFamily)
-Decree 2544-A ontemporary admission maquila (in-bond processing)
-Decree 2778 of1.4.87 ontheExport Tariff
-Law92ontheFondo deDesarrollo delaInfancia (Children 'sDevelopment Fund)
-Law14of24.1.89 setting uptheFONNIN
-Law56ontheInternal Taxation System
-Law72,Customs Tariff Law
-Law79onprivate-sector exemptions
-Law90of24.6.90 ontheMaquila (in-bond) Régime
-LawonGovernment Procurement
-Law107,Consumer Protection Law, LawonFreeZones, Regulation
ontheMaquila (in-bond) Régime
-Decision 447onvaluation rules
-Regulation onFreeZones
-Executive Decree 2722-A onanti-dumping controls
-Law152ontheNational Price-Setting Council (pharmaceuticals)
-Decree 3367, Tariff Adjustment
-Decision 524,tariff concessions totheAndean Group
-Decision 596,tariff concessions totheAndean Group
-Executive Decree 415,Regulation ontheSingle Régime forAndean Multinational Enterprises
-Foreign-Exchange Market
-Organic Customs LawandRegulations
-LawontheInternal Taxation System andRegulations
-LawonIndustrial Development andRegulation thereto
-LawonSmall-Scale Industry andRegulation thereto
-LawonIndustrial Zones
-LawontheMaquila (in-bond) Régime andRegulation thereto
-LawonFreeZones andRegulation thereto
-LawonthePromotion oftheAutomotive Industry
-LawonthePromotion oftheMerchant Navy
-Reforms totheImport Tariff
-Executive Decree No.396amending theImport TariffWT/SPEC/5/Rev.1
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-Import statistics forEcuador for1991 and1992, aswellasthefirstquarter of1993
-Official Journal No.349of31December 1993 which contains the"Law onModernization ofthe
State, Privatization andtheProvision ofthePublic Services byPrivate Enterprise"
-Supreme Decree 188published inOfficial Journal No.158of8February 1971which contains the
Health Code andSanitary Register
-Ministerial decision 438published inOfficial Journal No.279of20September 1993which contains
the"Order Prohibiting theImportation, Marketing, Storage orTransport ofProducts inGeneral
without theirbeing Registered intheSanitary Register"
-Ministerial Decision 8022 published inOfficial Journal No.984of22July1988 which contains
the"Food Regulations"
-Ministerial Decision 10723 published inOfficial Journal No.676of3May1991 concerning the
"Pharmacological Standards forRegistration intheSanitary Register"
-Cartagena Agreement -Decision 293: Rules ofOrigin
-Cartagena Agreement -Decision 344: Industrial Property
-Cartagena Agreement -Decision 351: Intellectual Property
-Listof"price band" products
-Listofprohibited imports
-Tariff items subject toprior authorization (September 1994)
-Import andexport trade flows
-Monetary Board Regulation 904-94 onexchange policy
-Monetary Board Regulation 863-93 ontheimportation ofmotor vehicles
-Decisions No.283,284and285oftheCommission oftheCartagena Agreement
-Law152creating theCommittee forPrice-Setting inthePharmaceuticals Sector andInter-Ministerial
Agreements of4January 1993 fixing maximum prices formedicaments
-Preferential Trade Agreements negotiated intheLAIA. Trade preferences received andgranted
byEcuador intheLAIA
-LAIA Market-Opening List
-ListofCET exceptions
-Catalogue ofEcuador 'sTechnical Standards published bytheEcuadorean Standardization Institute
-Schedule ofspecific commitments onservices
-Ministerial Decision 752repealing theDecisions onminimum customs values
-Executive Decree 1572 eliminating import restrictions
4.Inhisintroductory statements, therepresentative ofEcuador said,interalia,thatEcuador 'strade
policy overthepastfewyears hadfavoured mutual tradewithout discrimination ofanykindinaneffort
toreintegrate thecountry intotheinternational economic system inorder tomodernize itsproduction
structure, reconvert itsindustry andprofit fromitscomparative advantages. Ecuador 'sprogress had
beenachieved onitsowninitiative. Inrecent years Ecuador haddrastically reduced itsimport tariffs,
eliminated non-tariff measures andrestrictions, abolished non-tariff levies, reformed itscustoms
legislation, making itmore transparent andbringing itintolinewithinternational regulations, and
facilitated theprocedures governing foreign trade. Ecuador hadadopted newpolicy measures which
make itsforeign trade regime evenmore flexible. Within theframework oflegislation which avoids
allobstacles totheflowofgoods, ithadcompletely liberalized itsexchange regime inorder toprovide
importers withfreeaccess totheforeign exchange required fortheirpurchases abroad. Atthesame
time, Ecuador hadgonealongwaytowards bringing itscustoms dutyregime intolinewithGATTWT/SPEC/5/Rev.1
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standards. Asanindication ofitsconsiderable internal effort towards opening upitseconomy and
promoting commercial transactions withthecontracting parties, Ecuador hadbrought intoforce anew
Customs Lawembodying thestandards established byGATT andproviding forthemodernization of
customs services. Pursuant tothelegislation ontheModernization oftheState, anumber ofimportant
steps hadbeentaken towards theabolition ofmonopolies andtheprivatization ofactivities inwhich
theState participated, afactwhich should favour acompetitive environment foreconomic operators
inEcuador.Similarly,theforeigninvestmentlegislationhadbeenliberalizedtoprovidebetterguarantees
forforeign capital. Under apolicy ofeconomic modernization andopenness toforeign capital,
substantial legalandeconomic reforms hadbeencarried outwithaviewtoproviding better facilities
andtomake foreign investment inEcuador more attractive andprofitable. Thelatest reforms inthis
fieldprovided awiderange ofinvestment possibilities forforeign investors, whowereguaranteed the
same conditions asnational investors, while anumber ofrestrictions andconditions which usedto
limittheinflow offoreign capital hadbeeneliminated. Inshort, Ecuador wascarrying outefforts
aimed atrestructuring theeconomy withaviewtostrengthening overall macroeconomic equilibrium.
Ecuador would continue theliberalization ofitsforeign trade relations, asdemonstrated, interalia,
byitsintention ofacceding promptly totheGeneral Agreement. Ecuador would begrateful for
recognition bythecontracting parties ofitsefforts towards greater transparency initseconomic policy
and,byextension, initsexternal transactions. Therepresentative ofEcuador stated thattheLawon
theModernization oftheState, Privatization andProvision ofPublic Services byPrivate Enterprise
which hadentered intoforce on31December 1993 laiddown thegeneral principles andrules for
achieving administrative efficiency; regulating theprovision ofpublic services byprivate enterprise
throughtheabolitionofmonopolies,freecompetitionandthedelegationofservicesoractivitiesprovided
forintheConstitution; andfortransferring theState'sequity holdings inenterprises. Inaccordance
withthisLaw, theexercise ofthefollowing activities thatwere reserved fortheState under the
Constitution maybedelegated byconcession toprivate enterprises: (a)production, transport, storage
andmarketing ofhydrocarbons andother minerals; (b)generation, distribution andmarketing of
electricity; (c)telecommunications services; (d)production anddistribution ofdrinking water. The
Lawprovides thattheabolition ofmonopolies andtheprivatization ofStateactivities shallbecarried
outbythefollowing means: 1.national orinternational public tenders; 2.byoffering some orall
oftheshare capital onthesecurities market; and3.bypublic equity subscription orpublic auction.
TheLawdidnotcontain anyamendment tothelegislation governing transactions between State
enterprises andforeign enterprises. Following theentryintoforceoftheWTO Agreement on1January
1995, theGovernment ofEcuador reaffirmed itsdecision tobecome aMember oftheWTO Agreement,
pursuant toArticle XIIthereof. Therepresentative ofEcuador stated thatasadeveloping country
Ecuador intended toinvoke thespecial provisions concerning developing countries contained intheWT/SPEC/5/Rev.1
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Multilateral Trade Agreements. Following theentryintoforceoftheAgreement establishing theWTO,
theGovernment ofEcuador reaffirmed itsdecision tobecome aMember oftheAgreement establishing
theWTO pursuant toArticle XIIoftheAgreement.
General Comments
5.Intheir opening remarks many members oftheWorking Party welcomed Ecuador 'sinitial
application foraccession totheGeneral Agreement, which hadbeensubmitted shortly prior tothe
conclusion oftheUruguay Round ofMultilateral Trade Negotiations, andsupported Ecuador 'srequest
tobeassociated withthenegotiations. Noting Ecuador hadundertaken asubstantial process ofeconomic
andtrade liberalisation aimed atimproving thestandard ofliving ofthepopulation, increasing
employment opportunities andachieving diversification oftheproductive sectors, these members also
expressed support foranearly conclusion oftheproceedings oftheWorking Party. Some members
recalledtheirstrongregionaltieswithEcuadorandwelcomedEcuador'slonglastingandearnestdecision
tobefullyintegrated intothemultilateral trading system. Recalling therecent comprehensive economic
reforms introduced byEcuador, some members stressed thatthiswould facilitate theassumption of
GATT obligations. Some members oftheWorking Party notified theintention toenter intobilateral
market access negotiations withEcuador. Upon theconclusion oftheUruguay Round negotiations,
members welcomed Ecuador 'sapplication foraccession totheWTO. With reference tothepossible
membership ofEcuador intheWorld Trade Organization, some members stressed theneed for
comprehensive information concerning theWTO related issues andfortheearly commencement of
negotiationsconcerningmarketaccessongoodsincludingagricultureaswellasservices,TRIPS,TRIMs
etc.Theinformation submitted byEcuador inthisrespect isdescribed hereunder inthecorresponding
sections ofthisreport.
Foreign Trade Regime
6.TheWorking Party reviewed theforeign trade regime ofEcuador andthepossible terms ofa
draftProtocol ofAccession totheWTO. Theviews expressed bymembers oftheWorking Party are
summarized below inparagraphs 7to76.
Economic Policies
7.Inresponse toquestions concerning Ecuador 'sforeign debtsituation, ratesofinflation andthe
MacroeconomicStabilizationPlanandothergovernmenteconomicpolicies,therepresentativeofEcuador
saidthathisGovernment wastrying tohadachieved acomprehensive agreement forthepayment of
itsexternal debt, asameans ofestablishing suitable conditions foreconomical growth andsocial
development. Thedebtservice toexports ratio would improve ifthisagreement wasconcludedWT/SPEC/5/Rev.1
Page6
successfully. Theapplication ofprotectionist measures andexport subsidies, whatever theirnature,
wasnotGovernment policy. TheGovernment ofEcuador hadlaunched aprocess ofmodernization
oftheeconomy which tends toredefine therôleoftheState inthemanagement oftheeconomy and
society, specifying itsareasofinfluence inlinewithcurrent conditions. Government strategy favoured
competition asakeyfactor ofprogress, thefreeinteraction ofsupply anddemand, theexistence of
transparent andcompetitive markets andtheoptimum allocation ofresources withaviewtoachieving
abalanced economy. Forthemoment nobenefits weregranted under anyspecific development laws,
andthere werenoexport orcredit subsidies ortaxincentives. Theonlyprices controlled bytheState
were internal prices ofcertain oilandgasproducts fordomestic consumption, pharmaceuticals and
electricity. Certain agricultural products were subject totheprice band system. There wasno
discrimination between domestic andimported products withtheexception ofsome imported products
subject tothespecial consumption tax.Fiscal policy andthebalancing ofpublic accounts werebased
ontherationalization ofGovernment expenditures andnotontheregulation ofconsumption orincreases
ininternal taxes. Therôleofthepublic sector hadbeenstreamlined andapolicy hadbeenadopted
toeliminate subsidies andobtain forced savings within theStatestructure inorder toachieve thedesired
results. Themeasures adopted hadmade itpossible toreduce thepublic deficit in1993 to2.5per
centoftheGDP, asagainst 7percentfor1992.
Foreign Exchange System
8.Some members oftheWorking Party requested information onthefunctioning oftheforeign
exchange system, whether multiple rates applied, theplans foraunified rate,problems faced by
importers toacquire foreign exchange, etc.Therepresentative ofEcuador stated thattheexchange
system hadbeenreformed in1994. There wasnowafreeexchange system forprivate sector transactions
withaunified ratedetermined bythemarket. There werenorestrictions onforeign exchange market
operations andparticipation andnoneoninvestment transactions. Asaresult ofrecent reforms, the
foreign exchange system hadbeensimplified byeliminating theUSdollar fluctuation bandthathad
existed intheintervention market oftheCentral Bank forpublic sector transactions andtheofficial
exchange ratewhich theCentral Bank hadusedforaccounting purposes andfortransactions withthe
IMF. Thus afreeexchange system hadbeenadopted inwhich theprivate sector could acquire the
foreign exchange needed foritsactivities atthemarket rate.Foreign exchange transactions forforeign
trade purposes were nolonger carried outthrough theCentral Bank ofEcuador. There were no
restrictions onthepurchase orsaleofforeign exchange. Headded thatthecurrent foreign exchange
system worked asfollows. Inaccordance withDecree 1353 of23December 1993, published inthe
Official Journal No.349of31December 1993, theofficial exchange ratewastherateusedbythe
Central Bank ofEcuador initstransactions forthesaleofforeign exchange. There werenorestrictionsWT/SPEC/5/Rev.1
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ontheacquisition offoreign exchange oronitsremittance abroad. Allforeign exchange transactions
undertaken bythepublic sector mustbeplaced attheCentral BankofEcuador. Withpriorauthorization
fromtheMonetary Board, public sector entities, bodies andenterprises maymaintain foreign currency
accounts withtheCentral BankofEcuador orother foreign banks provided theyhaveforeign exchange
earnings andobligations abroad thatareinherent totheiroperations. TheCentral Bank ofEcuador
mayparticipate inthefreeexchange market bybuying andselling foreign exchange toandfromthe
authorized institutions. Itestablishes therates, amounts, andother terms forthese operations in
accordance withthemarket situation andtherequirements oftheMonetary Programme, including
auctions ofnegotiable securities andforeign exchange "desks". Authorized institutions thatcarry out
foreign exchange transactions mustprovide weekly totheCentral Bank ofEcuador thedaily dataon
theexchange amounts andrates intheirbuying andselling operations. Authorized private finance
companiesandprivatebanksmaycarryoutforwardforeignexchangetransactions,swapsandcall-and-put
operations andwithother derivative instruments. TheCentral Bank ofEcuador registers direct foreign
investment andreinvestment inthecapital stock ofenterprises, andalsoregisters external foreign-
currency loans incurred bytheprivate sector.
9.Inthisrespect, amember acknowledged progress inliberalizing theforeign exchange regime
ofEcuador because theacquisition, sale,retention, remittance anduseofforeign exchange appeared
tobesubstantially without restriction onprivate orcommercial persons. However, inhisopinion,
amultiple foreign exchange system stillexisted. Inparticular, theforeign exchange system forcertain
public sector transactions remained partially controlled. Inresponse therepresentative ofEcuador
saidthatthefreemarket exchange ratewasdetermined bythesupply anddemand offoreign exchange
byeconomic agents. Theforeign exchange selling rateoftheCentral Bank tothepublic sector was
setweekly atarateequivalent totheaverage selling rateofthefreemarket interbankexchange rate
oftheprevious week asrecorded attheCentral Bank'sExchange Desk. Allpublic sector exchange
transactions were[are]carried outintheCentral Bank. TheCentral Bank buysforeign exchange from
public sector enterprises ata2percentdiscount from thefreemarket rate,withtheexception of
PETROECUADOR, where discount currently issetat150sucres perdollar. Thisfixed spread of
150sucres willdropto2percentinJune1995 Allpublic sector exchange transactions arecarried
outbytheCentral Bank. TheCentral Bank buysforeign exchange frompublic sector enterprises with
a2percentfixed spread between thesaleandpurchase exchange ratesofforeign currency. Thesale
exchange rateis2percentpoints below thepurchase exchange rates. Atthemoment, for
PETROECUADOR thisspread is150sucres. Asof1July1995, PETROECUADOR willreceive
thesame treatment astherestofthepublic sector, asprovided forintheLetter ofIntent agreed with
theIMF.WT/SPEC/5/Rev.1
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[10.TherepresentativeofEcuadorstatedthattheThismodalityoftheforeignexchangeregimedescribed
inparagraph 9doesnothavenegative effects forprivate sector traders andprovides noimplicit subsidies.
TheWorking Party tooknoteofthisassurance [commitment]].
[11.10. Therepresentative ofEcuador indicated that,inconjunction withcommitments made tothe
International Monetary Fund, Ecuador would continue toreduce thespread between theratesofforeign
exchange forthepublic sector. Thisspread innowayaffects theactivities ofprivate trade operators.
TheWorking Party tooknoteofthiscommitment.]
10.Therepresentative ofEcuador stated thatthemodality oftheforeign exchange régime described
inparagraph 9doesnothave negative effects forprivate sectors traders andprovides noimplicit
subsidies. Therepresentative ofEcuador added thathisGovernment shallexercise itseconomic policies
withparticular attention toensure compliance withWTO obligations including GATT Article XV,
GATS Article XIandother international obligations. TheWorking Party took note ofthese
commitments.
Trade Policy
Tariff Regime
11.12.Members oftheWorking Party raised anumber ofquestions concerning theimport tariffs
including thestructure ofthetariffsystem, recent liberalization measures, theexemptions system, the
dutydrawbacksystem, preferential tariffregimes, thepossible levelofceiling bindings. etc.Inresponse
therepresentative ofEcuador stated thatatpresent tariff levels werequite low. In1992, thehighest
tariffrateshadbeenreduced from290percentto40andtarifflevels werecutfrom30to10.Currently
national tariff levels were thesame asthose oftheCommon External Tariff oftheAndean Group,
approved inMarch 1993 byDecision 335oftheCartagena Agreement which wasimplemented in
February 1995, i.e.5percent,10percent,15percentand20percent. However, certain tariffitems
corresponding tovehicles were subject toanadvalorem dutyof40percent. Ecuador maintained
asuitable levelofprotection foritsinfant motor vehicle industry, inparticular, because ofthemultiplier
effects onproduction andemployment. There were alsoexceptions inrelation tosome agricultural
productscoveredbythepricebandsystem.Moreover,inFebruary1995forlessthan300itemsEcuador
received permission toapply atemporary exemption of5percentage points below theCET rates.
Ecuador 'srequest wascurrently under review bytheAndean Group. Atpresent average advalorem
dutyratesbynational tariff section fluctuated between 17percentforartsandantiques and3.3per
centformineral products. Thesimple average tariff was9.3percentandtheweighted average was
6.8percent. Having regard tomodifications intheCommon External Tariff oftheCartagenaWT/SPEC/5/Rev.1
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Agreement, tariff ratescould change inthefuture within thelimits oftheagreed bindings. Atthe
present approximately 7-8percentofimports were subject topreferential tariff regimes under the
Cartagena Agreement.
12.13. Some members noted thatthedutyexemptions granted tocertain categories ofpublic andprivate
sector institutions, hadthepotential todistort trade andintroduced uncertainty about theapplicable
duties. Inresponse therepresentative ofEcuador saidthattheexemptions were notgranted onthe
basis ofapreestablished listofproducts butrather onthebasis ofthespecific individual purposes of
eachinstitution asdefined intheCustoms LawandRegulations. Goods enjoying tariffexemption could
onlybemarketed afteraperiod oftimeandthepayment oftheduties fromwhich theywereexempted.
Thelawhadeliminated alltotalorpartial exemptions fromduties onprivate sector imports andthere
wasnodiscrimination against anysupplier. Theentities andpersons exempt from thepayment of
customs duties, within thelimits andconditions laiddown inthelaw,comprised thefollowing: the
State, thepublic sector ingeneral (provincial councils, municipalities); private lawentities having
asocial orpublic purpose, created andregulated bylaw; State-owned enterprises andthose owned
byregional orlocalgovernments enjoying administrative andeconomic autonomy, aspublic orprivate
lawentities fortheprovision ofpublic services; private-law entities thathadsigned contracts with
public sector agencies orbodies forpublic works fortheprovision ofwelfare, public assistance or
educational services; legally-authorized universities, politechnical schools andinstitutions ofhigher
education, public orprivate; diplomatic andconsular missions, international ortechnical assistance
organizations andtheirmembers within thelimits andunder conditions setforth intheappropriate
legalinstruments; national orforeign travellers entering thecountry, withrespect totheirbaggage
andhousehold effects; immigrants, withregard totheirbaggage andusedhousehold effects andwork
equipment. TheMinistry ofFinance wasresponsible fortheprior authorization ofduty-free imports
ofgoods bytheabove mentioned public orprivate entities eligible forsuchexemption, andmight restrict
suchauthorization tourgent needs ofsuchentities. Noimportations ofthistypemight becarried out
without priorqualification andauthorization. Between 1989and1993, dutyfreeimports bythepublic
sector hadrepresented between 1percentand3.7percentofEcuador 'stotalimports.
13.14. Noting thatduty-free imports were permitted fordevelopment projects orworks ofnational
priority, amember oftheWorking Party asked whatwasthemeaning oftheterm"national priority".
Therepresentative ofEcuador saidthatthistermreferred toprojects classified ashaving priority by
theNational Development Council (CONADE). They included theconstruction ofsocial housing,
hydro-electric power stations, highways, irrigation systems andcanals, drinking water infrastructure,
hospital equipment andschools. Thecustoms tariff exemptions forStateowned enterprises coveredWT/SPEC/5/Rev.1
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imports byprivate entities thathadconcluded contracts withpublic sector agencies andbodies forthe
construction ofworks ontheprovision ofservices forcharitable oreducational purposes.
1415. Therepresentative ofEcuador assured theWorking Party thatimports bythepublic sector under
dutyfreeexemptions didnotcompete withordinary private sector trade andthatthere wasno
discrimination among supplying countries through theapplication ofdutyexemptions. TheWorking
Party tooknoteofthese commitments.
Market Access Negotiations
15.16. Inresponse toquestions concerning market access negotiations andtheleveloftariffbindings,
therepresentative ofEcuador confirmed thatEcuador waswilling toenter intocomprehensive market
access commitments forthepurpose ofacceding toGATT andbecoming amember oftheWorld Trade
Organization, atlevels consistent withEcuador 'sfinancial development andtrade needs andtaking
intoaccount itsdeveloping country status. Ecuador agreed toa"step approach" tobindings equal
totheCommon External Tariff oftheAndean Group plus10percentage points, i.e.bound ratesof
15,20,25and30percent. Thenegotiated exemptions totheacross-the-board ceiling binding level
areasspecified intheschedule ofEcuador thatwillbeannexed totheProtocol ofAccession ofEcuador.
TheWorking Party tooknoteofthestatement ofEcuador thatthemarket access commitments aswell
astheagriculturalcountryscheduleandtheservicescommitmentswouldconstituteEcuador'scontribution
tothemarketaccessandservicesnegotiationsrequiredformembershipintheWorldTradeOrganization.
Import Taxes andCharges
16.17. SomemembersoftheWorkingPartyaskedquestionsconcerningthenature,application,coverage
andjustification ofvarious taxesandcharges suchassurcharges, control fees,transfer fee,transit fee,
storage fee,consumption taxes, value added taxetc.These members noted thatthecontrol feeof1per
centand0.5percentforgoods entering thecountry under special customs regime andthetransit fees
which werelevied onadvalorem basis werenotconsistent withtheprovisions ofArticle VIIIofthe
GATT asinterpreted bytheGATT Panel Report onUnited States Customs UserFee.Some members
alsostated thatthe1percentand2percentlevies infavour ofINNFA represented taxation ofimports
forfiscal purposes incontravention ofGATT Articles VIIIandIIIasthere werenosimilar levies on
products ofdomestic origin. Itwasnoted thatifthese levies wereincorporated intotheapplied tariff
dutylevels ofEcuador, theratessetintheCommon External Tariff oftheAndean Group would be
attained. Inresponse therepresentative ofEcuador saidthatthecontrol feeof0.5percentforgoods
entering thecountry under special customs regime wasmeant tocover thecostofcustoms services
rendered anddidnotconstitute adirect orindirect protection fordomestic products orafiscal chargeWT/SPEC/5/Rev.1
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onimports. Theapplication ofthecontrol feedidnotdiscriminate asbetween products ortheirorigin.
Headded that,withthesuspension ofduties ongoods intransit, thetransit feewasanother customs
services feecharged fortheprovision ofgeneral services ongoods declared incustoms transit. This
feecovered onlythecostoftheservices rendered. Thelevelofthefeewasbased ontheminimum
living wage. Forgoods declared incustoms transit, thefeewas20percentoftheminimum living
wage foreachtransit waybill andforvehicles proceeding fromabroad incustoms transit, 10percent
oftheminimum living wage. Thisfeewasapplied inaccordance withtheprovisions ofArticle V
oftheGeneral Agreement. Theminimum wage wasusedasbasisforcalculating administrative costs.
Some members oftheWorking Party saidthattheuseoftheminimum living wage asthebasis for
computing thisfeewasinconsistent withGATT. Intheir view, thefeeshould bebased onthe
approximate costoftheservices rendered. Concerning thestorage fees,therepresentative ofEcuador
saidthatthese feeswere charged bytheCustoms forwarehousing andtheirincidence depended on
thelength oftimespent bythegoods inwarehouses. Therepresentative ofEcuador noted thatthe
30percenttariff surcharge andtheadditional 5percenttaxontheimportation ofluxury goods had
beeneliminated. Furthermore, the1and2percenttaxesofc.i.f.value fortheChildren 'sDevelopment
Fund andtheNational Fund forNutrition andProtection ofEcuadorean Children which hadbeenbased
onsocial security considerations hadbeenrepealed bythenewCustoms Law. Inthisrespect, heassured
theWorking Party thatEcuador would comply fullywiththeprovisions ofArticle VIIIoftheGeneral
Agreement. TheWorking Party tooknoteofthese assurances.
18.Therepresentative ofEcuador indicated thathisGovernment hasadopted measures torevise the
procedure ofapplication ofthecustoms control fee,which isonlyapplied toimports under theregime
oftemporary admission andnottoimports forconsumption. Headded thatEcuador, atthemoment,
applied onlyanadvalorem feeof0.5percentonsuchimports andhasestablished ceilings forthis
import feeof15constant unitsofvalue currently equal toapproximately US$60. The1percentfee
referred toinparagraph 17hasbeeneliminated. These ceilings aresetinorder tomake surethatthe
feecharged iscommensurate withthecostofservices rendered. TheWorking Party tooknoteofthese
commitments.
17.Therepresentative ofEcuador indicated thathisGovernment hasadopted measures which revise
theprocedure ofapplication ofthecustoms control feesof0.5percentand1percentreferred toin
paragraph 16tobring themintoconformity withArticle VIII. Ecuador haseliminated the1percent
feeandapplies onlyanadvalorem feeof0.5percenttoimports under régime oftemporary admission,
nottoimports forconsumption. Ecuador hasestablished aceiling forthe0.5percentimport feeof
15Constant Units ofValue (CUV), currently equal toapproximately US$60, inorder toensure thatWT/SPEC/5/Rev.1
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thefeecharged approximates thecostofservices rendered. Thisistheonlytaxorcharge applied
exclusively toimports other thanthecustoms tariff atthecurrent time. TheWorking Party tooknote
ofthese commitments.
Special Consumption Tax
18.19. Some members oftheWorking Party requested information onthenature ofthespecial
consumption tax,itsproduct coverage, thetaxratesandtheirmethod ofapplication. Inthiscontext
special reference wasmade tothehigher incidence ofthespecial consumption taxonimports ofcertain
tobacco products relative todomestic goods, andtotheneedtoequalize thetaxtobring itintoconformity
withArticle IIIoftheGATT. Inresponse therepresentative ofEcuador saidthatthespecial consumption
taxwasanexcise taxlevied oncigarettes (HS2401), alcohol andalcoholic beverages (HS2208), beer
(HS2203), carbonated beverages (HS2201) andmineral andpurified water (HS2202). Thelevel
oftaxation ranged from 5percentonmineral andpurified water to260percentonforeign brands
ofcigarettes made from lighttobacco manufactured locally under licence orimported. Thetaxwas
levied ontheabove products whether ofdomestic orimported origin. Therelevant charge was
determined byapplying therespective ad-valorem ratestotheex-works price orex-customs price as
appropriate. Inthecaseofconsumption ofdomestically produced goods, thetaxwaslevied ontransfer
bythemanufacturer, whether forconsideration orfreeofcharge. Inthecaseofconsumption ofimported
products, thetaxwaslevied uponcustoms clearance oftheproduct. Henoted thatinaccordance with
Article 53oftheConstitution, theNational Congress wascompetent toenact lawsgoverning anytax
matter.
19.20. Therepresentative ofEcuador acknowledged thattheSpecial Consumption Taxisapplied to
anumber ofimported products atratesinexcess ofthose applied tosimilar domestically produced
goods, andthatthispractice isnotinconformity withArticle III.Ecuador would equalize theapplication
ofthetaxnolaterthanJuly1996. Thisissue willbereviewed bytheGeneral Council asnecessary.
TheWorking Party tooknoteofthiscommitment.
Value Added Tax(VAT)
20.21. Inresponse toaquestion concerning thenature andcoverage oftheVAT, therepresentative
ofEcuador pointed outthatthistaxwasapplied toimports anddomestically produced goods
comprehensively atastandard 10percentrate.However, imports bythepublic sector werenotsubject
tothepayment oftheVAT. Thetaxable baseinthecaseofimports wasthec.i.f.value plusthetariffs,
taxes fees,duties andother costs appearing intheimport declaration andother relevant documents.
Thesaleofdomestically produced andimported agricultural products areexempt from theVAT asWT/SPEC/5/Rev.1
Page13
wellasimported anddomestically produced agricultural products inprimary form, inputs, human
medicaments, machinery andagricultural equipment wereexempted fromtheVAT. Exported products
were alsoexempt from theVAT. There wasnospecial treatment inrespect ofexemption from the
VAT onthebasis ofm.f.n. status ortheorigin oftherawmaterial imported.
21.22. Therepresentative ofEcuador stated thattheincidence oftheVATfallsequally ondomestically
produced goods andimported items inallcases andthathisGovernment would apply theVAT in
accordance withtheprovisions oftheGeneral Agreement, inparticular Articles IIIandVIII. The
Working Party tooknoteofthiscommitment.
Customs Regime
Customs Procedures andPractices
22.23. Some members oftheWorking Party asked questions onEcuador 'scustoms procedures and
practices including therequirements fortemporary admission, exonerative andsuspensive customs
procedures, documentation forcustoms declaration, thestructure andfunctions ofthenewNational
CustomsService,andEcuador'sintentionsconcerningacceptanceoftheMTNCustomsValuationCode,
etc.Therepresentative ofEcuador saidthelawontheNational Customs Service hadentered into
force on9March 1994. Thelawaimed atsimplifying procedures andimproving theefficiency of
theStateinitsfunction ofproviding customs services andregulate thelegalrelationship between the
Stateandpersons involved intheinternational movement ofgoods within thecustoms territory. The
lawhadregrouped andorganized allprovisions relating totheCustoms Service which werepreviously
contained invarious legalinstruments. Thelawhadintroduced thefollowing changes withrespect
totheprevioussystem:(i)simplifiedandreducedtheformalitiesandprocedures;(ii)allowedthetransfer
ofvarious activities totheprivate sector, suchassurveillance, control, valuation, storage andother
activities thatrelate togoods crossing thecustoms border. Inaddition, customs obligations maybe
paidinnational banking institutions; (iii)established theprinciple oftrustinthetaxpayer, through
self-assessment andadvance payment ofcustoms charges; (iv)clarified violations ofthecustoms
regulations intothecategories ofoffenses, infringements andfaults; (v)introduced a"random customs
valuation system" thatwasexercised asameans ofcontrol onthebasisofanautomatized programme;
previously, asageneral rule,customs valuation hadrequired aphysical presence; (vi)provided for
asingletypeandkindofcustomsguarantees,whereasunderthepreviouslawthereweregeneral,specific
andspecial customs guarantees ofvarying amounts andwithdifferent systems forestablishing those
amounts;(vii)downsizedtheCustomsServicebyeliminatingunnecessaryfunctionsandresponsibilities,
while atthesame timeestablishing thecustoms career asameans ofencouraging professionalization
andadvancement onthebasis ofmerit forcustoms officers; (viii) provided fortherepeal oflawsWT/SPEC/5/Rev.1
Page14
andlegalprovisions relating tocustoms matters which hadlostpractical relevance orhindered theState
fromacting efficiently. Theadministrative structure ofthecustoms service washeaded bytheMinister
ofFinance andPublic Credit, representing thePresident oftheRepublic. Thestructure alsoincluded
aconsultative andadvisory body, theCustoms Technical Committee, andtheNational Customs Service
Directorate. Thefunctions oftheadvisory Technical Committee were togiveanopinion ondraft
executive decrees relating tocustoms tariffs andvaluation rules. TheNational Customs Service
Directorate consisted oftheDistrict Administrations andtheCustoms Surveillance Service andwas
responsible forinvestigating andpreventing customs offenses. Certification orfeesbyEcuadorean
Consulates arenotrequired fordocuments relating totrade.
23.24. Withregard tothedocumentation needed forcustoms declaration purposes, therepresentative
ofEcuador stated thattheycomprised theoriginal oranegotiable copy ofthebilloflading, air
consignment noteorconsignment note; thecommercial invoice; andthecertificate oforigin ifrequired.
Moreover, sanitary registration wasneeded fortheimportation, marketing, storage ortransportation
withinthenationalterritoryofthefollowingproducts:processedfoodproductsoradditives,medicaments
ingeneral, drugs ormedical devices, cosmetics, hygienic products orperfumes andpesticides for
household, industrial oragricultural use.Afavourable report fromtheNational Hygiene Institute of
theMinistry ofPublic Health wasrequired toobtain suchregistration. Inreply toquestions astothe
justification ofsuchameasure, therepresentative ofEcuador stressed thatthepurpose oftheSanitary
Register wastosafeguard public health anddidnotconstitute unnecessary obstacles totrade.
Temporary Admission
24.25. Amember oftheWorking Party requested information ontherequirements fortemporary
admission ofgoods intothecountry. Therepresentative ofEcuador saidthatitwasincumbent upon
ontheMinistry ofFinance toauthorize thetemporary admission ofimports. Forthispurpose the
importer hadtoprovide details ofallthegoods onthecargo manifest, submit acustoms declaration
andlodge aguarantee forthevalue oftheduties andtaxes thatwould berequired fortheimportation
withrelease forconsumption ("nationalization") ofthegoods. Under thetemporary admission regime,
imported machinery andequipment could remain ifnecessary inthecountry, exempt from payment
oftaxes untilthetermination ofvalidly signed contracts between public orprivate enterprises andthe
State,ProvincialandMunicipalgovernmentsorotherpublicsectorinstitutions.Article82oftheOrganic
Customs LawandArticle 350oftheRegulation thereto listed thegoods thatmaybeintroduced under
thetemporaryadmissionregime.Thetemporaryadmissionmaybeextended,bydecisionoftheMinistry
ofFinance, depending ontheimplementation needs oftheprojects covered bytheregime. NationalizedWT/SPEC/5/Rev.1
Page15
goods orgoods manufactured inEcuador could bedispatched abroad foraperiod ofsixmonths and
returned without payment ofduties, under theprovisions fortemporary exportation.
Duty Draw-Back
25.26. Inresponse tofurther questions, therepresentative ofEcuador saidthatthedutydraw-back
mechanism hadbeenintroduced inMay1993. Under thedutydraw-back system, duties andindirect
taxespaidonrawmaterials andother imports usedintheproduction, processing orpackaging ofgoods
thatarefullyincorporated intheexported product werefullyorpartially refunded. Themechanism
benefitted onlynatural orlegalpersons whoexported products comprising imported components. There
werenostatistics concerning theoperation ofthismechanism butitfullyobserved them.f.n. principle.
Customs Valuation
26.27. SomemembersoftheWorkingPartynotedthaton1November1993,theGovernmentofEcuador
hadissued Ministerial Agreement N786establishing minimum official prices forvirtually allimports
oftextile products andclothing (HScategories 5007-6310) through theendoftheyear. TheAgreement
provided thateachtextile product andarticle ofclothing wassubject toanofficial minimum price per
kilo. Italsoappeared thatEcuador might apply similar measures toimports inother sectors, such
assteel, tires, beerandappliances.
27.28. Inresponse totherequest forinformation onthesystem ofminimum prices fortextiles and
itsjustification under theGeneral Agreement, therepresentative ofEcuador saidthatthecurrent list
ofminimum prices fortextiles hadbeenlisted inMinisterial Decision No.073of31January 1994.
Thesystem ofminimum customs values fortextiles hadhadtwoobjectives, namely todefend taxation
interests andtocounter unfair competition facing domestic products. Ecuador hadbeenobliged to
establish asystem ofminimum customs valuation prices forawiderange offabrics inview ofthe
increasing tendency toundervalue thedeclared prices oftextiles andinorder toovercome theensuing
difficulty intheapplication ofthecustoms valuation rules. There hadbeenamajor problem oftax
evasion anddisruption ofthedomestic market fortextiles. Thesystem ofminimum values hadbeen
atemporary measure aimed principally atstabilizing themarket. Nevertheless, Ministerial Decision 752
of14October 1994 hadrepealed thissystem.
28.29. Inreply toaquestion concerning ofEcuador 'sposition regarding theMTN Customs Valuation
Code, therepresentative ofEcuador saidthatEcuador 'sdomestic legislation specified thatforthe
purposes ofcustoms valuation, theprovisions oftheAgreement onImplementation ofArticle VIIof
theGATT applied. When becoming amember oftheWTO, Ecuador would notify itsdecision tomakeWT/SPEC/5/Rev.1
Page16
useofthereservation which accorded todeveloping countries therighttoadelayed implementation
ofthecomputed value method. Ecuador hadtemporarily applied onalimited basis minimum or
reference prices tocertain products including butnotlimited totextiles, steel, tires,beerandappliances.
On14October 1994, Ministerial Decision 752hadrepealed theMinisterial Decision onMinimum
Customs Values forindustrial products aswellasforagricultural products notsubject tothepriceband
mechanism. On17October 1994 Ecuador hadintroduced asystem ofpreshipment inspection which
would beimplemented inaccordance withtherelevant WTO Agreement.
30.Therepresentative ofEcuador saidthatafteraccession hisGovernment would notapply or
reintroduce minimum customs values andwould abide bytheprovisions oftheAgreements on
Preshipment Inspection andCustoms Valuation. TheWorking Party tooknoteofthesecommitments.
[29.Therepresentative ofEcuador saidthathisGovernment nolonger applied minimum values for
customs purposes anddidnotintend toapply ortoreintroduce suchmeasures afteraccession. Ecuador
would abide bytheprovisions oftheAgreements onPreshipment Inspection andCustoms Valuation
inthisregard, fromthedateofaccession, without reservation. TheWorking Party tooknoteofthese
commitments.]
Non-Tariff Measures
30.31. Some members oftheWorking Party saidthat,notwithstanding considerable progress towards
theliberalization oftrade, Ecuador stillappeared tohaveahighly complex andrather pervasive system
ofcontrols, bansrestrictions, authorizations orregistration which notonlyimpeded thefreeflowof
trade, butcould alsoleadtosignificant tradedistortions. Inthisrespect particular reference wasmade
toimport restrictions concerning usedtextiles andclothing, tiresandautomobiles, toprice controls
forpharmaceuticals andtotherestrictions affecting asignificant number ofagricultural products and
rawmaterials. Intheirview, unless Ecuador could justify theexisting restrictions interms ofthe
GATT 1994 andtheWTO Agreement, alltherestrictions would havetobeeliminated bythedate
oftheaccession ofEcuador totheWTO.
31.32. Therepresentative ofEcuador indicated thathisGovernment would eliminate bythedateof
accession allnon-tariff import andexport restrictions notaddressed inparagraphs 32,34,46and47
whichcannotbejustifiedspecificallyunderWTOprovisions,inparticulartheAgreementsonAgriculture
andImport Licensing Procedures, andArticle XIoftheGATT 1994. Such measures would notbe
applied orre-introduced afteraccession totheWTO unless specifically provided forintheWTO
Agreement. TheWorking Party tooknoteofthiscommitment.WT/SPEC/5/Rev.1
Page17
Import Prohibitions
32.33. Therepresentative ofEcuador saidthatintheviewofhisauthorities theremaining restrictions
onimports andexports wereconsistent withtheprovisions oftheGeneral Agreement. LawNo.72,
published intheOfficial Journal No.441 of21May1990, amending theTariff Law, hadinteralia
eliminated prior import deposits, quotas andprior licensing asof1January 1991. Thesystem of
prohibitions inforce wasfortheprotection ofhuman andanimal life,themaintenance ofecological
balance (preservation ofspecies) andforreasons ofnational security. Alistof28tariff subheadings
subject toimport prohibitions hadbeenannexed todocument L/7301/Add.1 asAnnex 2.Monetary
Board Resolution 893-94 of2August 1994hadreduced import prohibition tothefollowing 13items:
29035920; 29109010; 29109020; 29201010; 29201020; 40121010; 40121090; 40122000;
41032000;41072100;41072900;96011000;96019000.Theseitemscorrespondedtocertainchemical
products, unrecapped usedtires,reptile skinsandivory products. Ecuador considered thattheseimport
banswere justified under Articles XXandXXIoftheGeneral Agreement. Theimport restrictions
onrecappedtiresandusedautomobilesitemsnumber87012000,8702100010,8702100020,8702100030,
8702109010,8702900000,87029010,8702909010,8702909020,8702909030,8703100000,8703210090,
8703220090,8703230090,8703240090,8703310090,8703320090,8703330000,870390000,87041000,
8704210020,8704210090,8704220000,8704230000,8704310020,8704310090,87043200,8704900000,
87060010, 8706009019, 8706009091, 8706009099 and8707009099 andusedclothing itemnumber
6309 would belifted nolaterthan1July1996.
33.34. Some members oftheWorking Party disagreed withEcuador 'sanalysis andassertion thatall
theproducts subject toimport prohibitions werejustified under GATT Articles XXandXXI. Intheir
view,Ecuadorshouldestablishvalidcriteriaforimportingusedclothing,tiresandautomobilesconsistent
withtheneedtoprotect thehealth andconsumer safety ofitscitizens, andresort onlytotariff based
protection bound initsmarket access schedules atappropriate levels. Asprovided forinArticle III
oftheGeneral Agreement, suchcriteria should apply equally todomestic andimported products offered
forsaleandshould beadministered inconformity withtheWTO Agreement onImport Licensing
Procedures.
34.35. Therepresentative ofEcuador indicated thathisGovernment would eliminate bythedateof
accession allnon-tariff import andexport restrictions (including allquantitative restrictions currently
inplaceintheagricultural sector) thatcannot bejustified specifically under WTO provisions (e.g., bans,
quotas, permits andlicenses), inparticular theAgreements onAgriculture andImport Licensing
Procedures, andArticle XIoftheGATT 1994. Inthisregard, Ecuador would eliminate by
[1July1996][the dateofaccession] itsimport bansonusedarticles listed inparagraph 32,replacingWT/SPEC/5/Rev.1
Page18
themasnecessary withtheapplication ofobjective criteria uniformly applied todomestic andimported
goods fortheprotection ofplant, animal andhuman health andsafety administered inconformity with
theprovisions oftheAgreement onImport Licensing Procedures, e.g., bans onused clothing,
automobiles andtires. Such measures would notbeapplied orre-introduced afteraccession tothe
WTO unless specifically provided forintheWTO. Ifthisaction isnotaccomplished bythattime,
theissuewillbereviewed bytheGeneral Council. TheWorking Party tooknoteofthiscommitment.
Prior Authorization
35.36. TherepresentativeofEcuadorsaidthatthelistofproductssubjectto"priorauthorization"annexed
asAnnex 3todocument L/7301/Add.1 hadbeenliberalized bytheExecutive Decree 1572of18March
1994. Theprior authorization system consisted inobtaining theapproval ofcertain official bodies
inorder toprotect health, public morals, theenvironment andessential security interests. Insuchcases
theimporter orinterested party submitted anapplication containing therequired information for
consideration bythecompetent body. Examples ofsuchcaseswould beapplications fortheimportation
ofexplosives, which required authorization bytheNational Defence Ministry, orapplications forthe
importation ofpsychotropic substances andnarcotic drugs which required authorization bytheNational
Council fortheControl ofNarcotic Drugs andPsychotropic Substances (CONSEP). Headded that
thecurrent import licensing regime wasasfollows: theState ofEcuador guarantees therightofany
natural orlegalperson residing inEcuador tocarry outforeign trade operations. Before obtaining
animport licence, itisnecessary tocomplete adeclaration ontheappropriate form andsubmit itto
theCentral Bank ofEcuador, together withanoteorletter requesting alicence. Theimport licence
regime hadbeendulypublicized andwaswellknown toagents involved inforeign trade. Itsobjective
wasnottorestrict thequantity orvalue ofimports. Licences applied toimports fromanyorigin and
theywere automatically approved before thedispatch ofimported goods. Anyimporter whomet
therequirements necessary toobtain animport licence forgoods subject toprior authorization bythe
competent public bodies mayimport suchgoods. TheCentral BankofEcuador requires thesubmission
oftheauthorization given bythecompetent authority. Ifthecompetent public bodies consider that
theuseofsuchproducts doesnotpresent anundue riskforhealth, security andtheenvironment, they
would issuetheauthorization. Theimport ofgoods which weredangerous tohuman oranimal health,
arms andammunition, andproducts which hadanadverse environmental impact, required aprior
authorization. There wasnointention whatsoever torestrict thequantity orvalue ofsuchgoods.
Because thefreeimport regime wasfree,theimport licence wasusedprimarily forstatistical purposes.
TheCentral Bank ofEcuador issued theimport licence notmore thanthree working daysafterithad
beenapplied for.Goods which arrived inaportwithout animport licence maybecleared bycustoms
subject tonormal import requirements andsubject topayment ofafineequivalent to10percentofWT/SPEC/5/Rev.1
Page19
thec.i.f. value ofthegoods. Customs clearance ofgoods inwarehouses oronthesiteoftrade fairs
didnotrequire animport declaration endorsed bytheCentral Bank ofEcuador. Import licences must
obligatorily beobtained before thegoods areshipped andnotafterwards. TheCentral Bank wasthe
onlybodywhich issued import licences andtherewerenorestrictions regarding theperiod oftheyear
during which animport licence maybeapplied for.Importers mayonlyregister withtheCentral Bank
andtodosotheyhadtofilloutforms showing theirdomicile, theircitizenship andtaxregistration
details, together withthesignatures ofthepersons responsible forendorsing theimport documents.
Inorder toclearthegoods, theimporter mustsubmit tothecustoms, inaddition tothedocumentation
fromtheCentral Bank, afinalverification form, called the"Customs Declaration", which isusedto
calculate andsubsequently paythetariffduties. Theimport licence formcostsUS$0.20 andnodeposit
orprior payments wererequired inorder toobtain animport licence. Import licences wereusually
valid for180daysfollowing thedateofissue. Thisperiod could beextended foruptotwoyears.
Theregulations didnotprovide forthetransfer orassignment oflicences among importers. Importers
couldobtaintheforeigncurrencynecessaryfortheiractivitiesonthefreeexchangemarket;theexchange
regime wasfreeandthere werenorestrictions onaccess toforeign exchange. Detailed information
provided byEcuador inresponse tothe"Questionnaire onImport Licensing Procedures" appears in
document L/7523/Add.1.
[36.Members oftheWorking Party noted thatEcuador 's"Prior Authorization system constituted a
discretionary import licence régime andwould beWTO-inconsistent unless itcomplied withtheterms
oftheAgreement ontheapplication ofSanitary andPhytosanitary Measures andtheAgreement on
Import Licensing Procedures. Inaddition, thecriteria usedtoassess thehealthfulness ofproducts subject
tothePrior Authorization system doesnotappear tobepublished andavailable totraders asrequired
byArticle IIIoftheAgreement onImport Licensing Procedures. Members indicated particular concern
thattheprior authorization system forsome agricultural andnon-agricultural products didnotafford
exporters adequate notification ofEcuador import standards, wasnotapplied toprotect human, animal
orplant lifeorhealth, wasnotbased onscientific principles, andwasmaintained without sufficient
scientificevidence.Regardingthesematters,therepresentativeofEcuadorindicatedthattheEcuadorean
legalframework thatsustains thePrior Authorization system wasfullycompatible withtheAgreement
ontheApplication ofSanitary andPhytosanitary Measures andtheAgreement onImport Licensing
Procedures. The Ecuadorean representative remined theWorking Party members of
document L/7523/Add.1, dated 23September 1994, which presented theinformation requested in
accordancewiththeAnnextodocumentL/5640/Rev.10"QuestionnaireonImportLicensingProcedures".
Thisdocument introduces thelegalframework which isinforce inEcuador fortheimport licensing
procedures andshows aWTO-consistency. Ecuador committed toensure thattheprior authorizationWT/SPEC/5/Rev.1
Page20
régime complied fullywiththeWTO requirements, andrecognized itsobligation toensure thatthe
application ofthePrior Authorization system beconsistent with, interalia,Articles 2,5and7ofthe
Agreement ontheApplication ofSanitary andPhytosanitary Measures andArticle IIIoftheAgreement
onImport Licensing Procedures.
37.Withregard totheimportation oftelecommunications equipment, therepresentative ofEcuador
saidthatsuchimportation required prior authorization from theTelecommunications Supervision
Department (Superintendencia deTelecomunicaciones) andnotfrom theCentral Bank ofEcuador.
TheroleoftheCentral Bank ofEcuador wasconfined totheregistration ofimports forstatistical
purposes.Privateenterprisescouldobtainthenecessarylicencetoimporttelecommunicationsequipment
fortheirownuse.Alicence issued bytheTelecommunications Superintendence wasneeded toimport
interaliatelephonic terminal equipment, dataandtelex, modems, integrated service digital network
terminals, andapproved mobile cellular telephone system terminals, which areconnected toaterminal
point inapublic orprivate system, andintended toaccess oneormore telecommunications service.
Thesystem wasnotintended tolimitthequantity orvalue ofimports, merely toguarantee thecorrect
interworking ofterminals operating withtelecommunications networks. Thesystem applies tothe
import ofproducts regardless oftheircountry oforigin. Allnatural orlegalpersons mayapply for
authorizationfortheafore-mentionedequipment.Thecertificateoftype-approvalsufficesforsubsequent
imports ofsimilar equipment.
38.TherepresentativeofEcuadorreiteratedthatpriorauthorizationwasnotusedtorestrictthequantity
orvalue ofimports. Hesaidthatanyprior authorizations orlicense requirements incompatible with
theprovisions oftheGeneral Agreement 1994ortheMultilateral Trade Agreements, inparticular the
WTO Agreement onImport Licensing Procedures, would beeliminated atthetimeofaccession. From
thedateofaccession additional measures would onlybeapplied asprovided forintheArticles ofthe
General Agreement 1994, inparticular Articles IIIandXX,andtheWTO Agreements, inparticular
theAgreement onImport Licensing Procedures. Inaddition, Ecuador would ensure thatremaining
restrictions andimport permit requirements areapplied inawayconsistent withArticle XIIIofthe
GATT 1994 andshallapply allrestrictions inaccordance withtheprinciple ofnon-discrimination.
Therepresentative ofEcuador further confirmed thathisGovernment would, ifrequested, consult with
thecontracting parties concerning theeffect ofthese measures ontheirtrade. TheWorking Party took
noteofthiscommitment.WT/SPEC/5/Rev.1
Page21
Agricultural Sector
39.Some members oftheWorking Party saidthatintheirviewEcuador 'slegislation provided for
theapplication ofquantitative andother non-tariff measures onimports foranumber ofreasons which
didnotappear tohaveaGATT justification, e.g.import quotas forfruit, sugar andother agricultural
rawmaterials, andseasonal import permits. Intheirview, Ecuador should announce theelimination
bythedateofaccession ofthose restrictions thatcould notbejustified specifically under WTO
provisions. Moreover, Ecuador hadtoaddress itsremaining non-tariff restrictions onagricultural
products inthelightofitsimpending obligations under theWTO Agreement onAgriculture. Finally,
Ecuador wasasked toprovide acomprehensive listofthenon-tariff measures remaining inforce, the
nature oftherestrictions, theirlegalbasis, andtheirjustification under WTO provisions.
40.Inresponse therepresentative ofEcuador saidthattheagricultural restrictions andtheministries
orother agencies whose approval wasrequired forimportation were listed inAnnex 3ofdocument
L/7301/Add.1. Headded thatEcuador hadabolished mostnon-tariff restrictions, including licences,
quotas andprohibited imports ofagricultural products inthesame Executive Decree which had
implemented thetariff adjustment mechanism known as"price band". SomemembersoftheWorking
Party stressed thatprior authorization procedures fortheimportation ofagricultural products which
wereinconsistent withtheprovisions oftheGATT 1947andtheWTO Agreement should beeliminated.
Other members oftheWorking Party cautioned against demands toEcuador, atthetimeofaccession
toGATT 1947, which wentbeyond GATT 1947 obligations.
41.Therepresentative ofEcuador saidthatallagricultural restrictions listed inparagraph 39above
wouldbebroughtintoconformitywiththerulesoftheGeneralAgreement1994andtheWTOAgreement
onAgriculture. Seasonal restrictions onfruitimports andtheInterministerial Agreement 061of
31January 1991 concerning quotas forwheat imports hadbeeneliminated inNovember 1994. At
thetimeofaccession totheWTO, Ecuador would repeal Interministerial Agreement 067of20February
1978which wastheremaining provision inforce which allowed official bodies tosetquotas orother
restrictions fortheimport ofagricultural products. Ecuador 'scommitments regarding domestic and
exportsubsidiesarereproducedintheagriculturecountryschedule.TheagriculturalscheduleofEcuador
wassubmitted totheWorking Party. TheWorking Party tooknoteofthese commitments.
Price Band System
42.Questions wereasked concerning theprice-band system under which variable levies wereimposed
onimports ofcertain agricultural products. These questions referred tothenature ofthesystem, the
mechanism fortheestablishment andadjustment ofthepricebands, theproducts towhich itwasapplied,WT/SPEC/5/Rev.1
Page22
thejustification ofthesystem under theGATT andtheexistence ofplans forphasing itout.Some
members noted thattheuseofminimum import prices andvariable charges appeared tobeinconflict
withEcuador 'sobligations under Articles II,VIandVIIoftheGeneral Agreement 1994, theWTO
Customs Valuation Agreement andtheWTO Agreement onAgriculture. Intheirview, Ecuador should
either phase outthismechanism orbring itintoconformity withtheaforesaid obligations.
43.Inresponse therepresentative ofEcuador saidthattheprice-band system wasanAndean tariff
adjustment mechanism thatacted asameans ofstabilizing theimpact ofinternational prices inthe
Ecuadorean market. Itspurpose wastocounteract thedistortions andvariations ininternational prices
caused bytheguaranteed prices, buying-in ofsurpluses, storage subsidies, import quotas, stabilization
mechanisms,andexportbonusesandsubsidieswhich,amongothers,werepartoftheagriculturalpolicies
ofsome exporting countries. Itenabled clear andtransparent signals tobegiven totheagricultural
producingsectorsothatitcouldprogrammeitsproductionactivities.Thismechanismappliedtoimports
of130eight-digit tariff items from countries notbelonging totheAndean Group specified inthe
attachment.
44.Therepresentative ofEcuador added thatintheapplication oftheprice band mechanism, a
distinction wasdrawn between twokinds ofproducts: "Marker" product: aproduct ofwhich the
international pricewasusedtocalculate minimum andmaximum values; andsubstitutes andderivatives
ofamarker product: products which replace themarker product inindustrial useorconsumption;
andproducts obtained fromprocessing ormixing marker products. Thefunctioning oftheprice-band
system wasasfollows: (a)iftheinternational price ofanagricultural product onimportation was
below theestablished floorprice, itwassubject toanadditional charge overandabove theadvalorem
duty, termed aspecific levy; (b)iftheworld price wassomewhere between thefloor andceiling
prices oftheestablished band, thentheimport paidonlytheadvalorem duty; and(c)iftheworld
price wasabove theceiling price oftheestablished band, thentheimport wassubject toareduction
intheadvalorem duty. Tocalculate thefloorandceiling prices series ofthelast60f.o.b. prices of
therelevant market wasused. Theseries ofthef.o.b. products wasinflated bytheUnited States
consumer price index. Theaverage oftheinflated series wascalculated. Astandard deviation was
deducted fromthisaverage. Thisnewvalue wascalled thef.o.b. floorprice. Thef.o.b. ceiling price
wasobtained byadding thestandard deviation totheaverage rather thandeducting it.Finally, c.i.f.
prices wereobtained byadding freight andinsurance values tothefloorandceiling prices. Therelevant
market wasthereference market usedfortaking theinternational prices todetermine thefloor and
ceiling prices. Various criteria wereusedtoselect thereference market: (i)historical origin ofimports;
(ii)immediate, reliable andcontinuous availability ofinternational prices; (iii)representativenessWT/SPEC/5/Rev.1
Page23
ofthemarket. Thecriteria forincluding aproduct intheprice bandwerethat(a)theproduct must
beproduced intheAndean subregion; (b)theproduct must besubsidized byexporting countries;
(c)there must belarge price variations; (d)andwhere theproducts aresubstitutes forproducts
thatareincluded intheprice bandsystem. Theadditional levyordutyreduction wasdetermined by
comparing thereference international c.i.f.pricewiththec.i.f.floorandceiling prices. Thereference
international c.i.f. price wastheaverage ofthedaily prices observed intherelevant market for
15consecutive days, byasatellite information system, bytheDirectorate ofInternal andExternal Trade
oftheDepartment ofSectoral Policy andInvestment oftheMinistry ofAgriculture andLivestock.
Theadditional variable levyoverandabove theadvalorem dutywasapplicable onlywhen the15-day
reference price waslower thanthec.i.f. floor price. Thedutyreduction wasapplied onlywhen the
reference price wasabove thec.i.f. ceiling.
45.Inreply tofurther questions onthereference prices usedtodetermine thelevels ofadditional
levyordutyreduction,therepresentativeofEcuadorsaidthatthepriceswhichEcuadorusedtodetermine
tariffs werethose onthemajor commodity exchanges foragricultural products, forexample, Chicago,
Rotterdam, Thailand, Germany, Argentina andothers recognized attheglobal levelwhose datawas
widely available through specialized electronic media. Theprocedure forcollecting prices wasclear
andtransparent andtheprices werepublished fortnightly inthemain written communication media.
Thereference markets utilized forthevarious products wereasfollows: rice: Commodity Exchange
ofThailand; maize, soya, soyaoil,wheat: Chicago Commodity Exchange; palm oil:Rotterdam
Exchange; meat: Credit Commodity Corporation; poultry meat: Urner Barry Publication; barley:
prices inPortland; sugar: Contract 5ontheLondon Exchange.
46.Some members referred totheharmonization ofEcuador 'sprice band system withthatofthe
Andean Group member countries. Therepresentative ofEcuador saidthattheAndean pricebandsystem
hadbeenapproved afterthree years ofintensive negotiations bytheMinisters ofAgriculture and
Livestock ofthemember countries oftheAndean Group entered intoforce inFebruary 1995. Ecuador
hadfewer products subject tothese mechanisms thanthose proposed intheharmonized price band
system. Inconclusion, hesaidthatthetariff adjustment mechanism, alsoknown astheprice band,
wasatransitory, clear andtransparent mechanism tostabilize domestic production, allowing non-
discretionaryandrealsignalstobetransmittedtoeconomicoperatorssothattheycouldmakeappropriate
plansfortheiragriculture campaign. Itwasbased oneffective observation ofthemarket andwasupdated
asaresult ofobserving theagricultural markets relevant forEcuador 'simports. Theprice band
constituted adynamic tariffresponse which hadeliminated Stateintervention infixing prices, andalso
haddoneaway withtheexpectations ofrent-seekers whobenefitted from market distortions.WT/SPEC/5/Rev.1
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47.Noting thatthepricebandsystem wasagainst theletter andspirit oftheFinal ActoftheUruguay
Round, some members oftheWorking Party asked whether Ecuador hadplans tophase outthesystem
since ithadbeenasserted itwould betemporary innature. Intheirview, Ecuador should make a
commitment intheProtocol ofAccession foreither theearly elimination oftheprice bandsystem or
toalterthesystem tomeettheWTO obligations. Amember asked whether Ecuador would undertake
totariffy theprice band system atthetimeofaccession asstipulated under theUruguay Round
Agriculture Agreement. Another member expressed theexpectation thatthesystem would notlead
totariff levels higher thannegotiated bindings. Therepresentative ofEcuador stressed thatthistariff
adjustment mechanism wasatemporary measure bothasregards theoriginal concept applied byEcuador
anditspractical application within theframework oftheAndean Group. Theobjective ofthesystem
wastostrengthen domestic agricultural production soastominimize theriskcaused bytheuncertainty
ofinternational agricultural markets currently suffering fromthedirect andindirect subsidies discussed
atlength intheUruguay Round andwhich hadnotallowed theglobal agricultural market tobe
transparent.
48.Therepresentative ofEcuador saidthathisGovernment undertook tooperate thistariffadjustment
mechanism inconformity withtheprovisions ofArticle IIoftheGeneral Agreement 1994andwithout
impairing theratesdutybound inEcuador 'sschedule ofconcessions. Headded thatinorder tocomply
withtheprovisions oftheWTO Agreement onAgriculture, Ecuador would gradually eliminate the
price bandsystem within aseven yearperiod inaccordance withthetimetableattached tothisreport
[Ecuador 'sProtocol ofAccession]. During thisperiod Ecuador would notenlarge thecoverage of
thesystem norreintroduce products backintothesystem. TheWorking Party tooknoteofthese
commitments.
Sanitary andPhytosanitary Measures (SPS)
49.Some members oftheWorking Party noted thatthesaleofmedicines, cosmetics andfoodproducts
inEcuador required theenrolment ontheSanitary Register, aprocess thatcould takemonths foreach
product marketed. These requirements wereunduly onerous forimports andshould bestreamlined
soastoeliminate thepossibility thattheyconstituted anunnecessary impediment totrade. Inaddition,
sanitary andphytosanitary controls wereoften applied toimported agricultural commodities without
adequate notification, consultation oraclear scientific basis fortheirapplication. Thishadbeena
particular problem withpoultry where certification requirement, forhealth, sanitation orquarantine
reasons hadacted asdefacto bansonimportation.WT/SPEC/5/Rev.1
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50.Inresponse therepresentative ofEcuador stated thattheimportation ofagricultural andfood
products wassubject toa"Phytosanitary Import Licence" granted bytheMinistry ofAgriculture.
TheLawonPlantHealth anditsRegulations, issued on14January 1974, theCommunity Phytosanitary
Standards fortheAndean Subregion andtheInternational Plant Protection Convention constituted the
legalframework fortheestablishment ofthecriteria forthegranting ofthislicence. Notewastaken,
when issuing thePhytosanitary Import Licence, oftheplantdiseases thatcould reappear intheimported
product subject toquarantine orthatwere exotic toEcuador andshould therefore notbepresent in
theproduct inquestion. TheCommunity Regulations contained alistofproducts which wereprone
tocertain diseases depending ontheircountry oforigin. Onthequestion of"Sanitary Register", he
stated thatbyMinisterial Decision No.8022, published inOfficial Journal No.391of1August 1977,
theMinistry ofPublic Health hadcreated theSanitary Register, inorder toguarantee thequality of
products thatwere imported, manufactured ormarketed inEcuador. Accordingly, foraproduct to
befreely marketed inEcuador, natural orlegalpersons mustregister withtheMinistry ofPublic Health
asimporters ormanufacturers ofsuchproducts, andsubmit theirproducts foranalysis todemonstrate
thattheirconsumption orusewillnotbeharmful topublic health. Thus, processed foodproducts
oradditives,medicamentsingeneral,drugsormedicaldevices,cosmetics,hygienicproductsorperfumes
andpesticides forhousehold, industrial oragricultural usecould notbeimported, marketed, stored
ortransported within thenational territory without theappropriate sanitary registration. Afavourable
report from theNational Hygiene Institute oftheMinistry ofPublic Health wasrequired toobtain
it.Itwasstressed thatthepurpose oftheSanitary Register wastoguarantee human, animal andplant
health andhadnoprotective effect. Atpresent there werenorestrictions ontheentry ofpoultry of
United States origin intoEcuador butifthere wasanewriskofcontagion fromdiseases, therelevant
health measures would havetobeadopted regarding poultry oranyother product which endangered
animal, plant orhuman health. Thesanitary andphytosanitary measures adopted byEcuador were
inconformity withinternational standards, guidelines andrecommendations bytheCodex Alimentarius
Commission, theOffice ofInternational Epizooties andtherelevant international andregional
organizations operating within theframework oftheInternational Plant Protection Convention and
especially theFood andAgriculture Organization oftheUnited Nations (FAO). They didnotinany
wayrepresent ahindrance tofreetrade.
51.Inreply totheenquiry astotheextent towhich sanitary controls aimed atensuring thequality
ofimported products were inconformity withtheUruguay Round Agreement onSanitary and
Phytosanitary Measures (SPS), therepresentative ofEcuador gavetheassurance thatitssanitary and
phytosanitary measures anditstechnical requirements areinconformity withtheprovisions oftheWTOWT/SPEC/5/Rev.1
Page26
Agreements, inparticular theagreements onSanitary andPhytosanitary Measures andonTechnical
Barriers toTrade andtheSPSAgreement. TheWorking Party tooknoteofthese assurances.
Price Setting inthePharmaceutical Sector
52.Some members oftheWorking Party noted thatprice setting forpharmaceuticals forhuman use
might imply subsidization bytheStateandasked forinformation concerning theauthority responsible
forthepricesetting, themechanism involved, itscoverage andjustification, whether itapplied equally
todomesticandimportedproductsandrelevantstatisticaldata.InresponsetherepresentativeofEcuador
saidthat,overthelastfewyears, Ecuador hadmade anenormous effort toliberalize domestic prices
initseconomy under aprogramme toboost efficiency andproduction. Theprice-setting policy Ecuador
hadestablished inthe1970s hadbeenvirtually dismantled. Theexceptions tothistrend werefuels
andgasforhousehold use,where prices weresetbytheMinistries ofFinance andEnergy andMining;
andmedicaments. Theprice ofmedicaments hadimportant social andpolitical implications because
inEcuador thepublic health system didnotyetprovide adequate coverage forthelower income groups
ofthepopulation; andbecause measures thatcould affect themore deprived sectors ofthepopulation
wereapotential source ofsocial unrest andinstability. TheNational Council fortheSetting ofPrices
ofMedicaments forHuman Usewasresponsible forsetting theprices formedicaments. Theprice
settingforimportedanddomesticallyproducedpharmaceuticalsoperatedasfollows.Inordertoestablish
theprices ofimported products, thefollowing procedures were carried outonaproduct-by-product
basis: tothef.o.b. price wereadded international transport andimport, entry andinternal transport
costs, which determined tothecostuptothewarehouse. Operating, administrative, selling, promotion
andfinancial costswerethenadded tothewarehouse cost. Inorder toestablish thepharmacy selling
price, aprofit margin ofupto20percentofthecostwastaken intoaccount, andtoestablish the
maximum selling pricetothepublic, aprofit margin of25percentwasadded tothemaximum pharmacy
selling price. Inorder toestablish theprices oflocally manufactural products, thefollowing procedure
wascarried outonaproduct-by-product basis: thef.o.b. priceofthemainimported active principles
wasconsidered, andtothef.o.b. value oftheimported rawmaterials andexcipients were added
international transport, importation orentry costsandtransport coststothemanufacturer 'swarehouse.
Apercentage wasalsoadded forlossorwaste intheproduction process foreachproduct. Inestablishing
theproduction cost,account wastaken ofdirect andindirect labour costsandother indirect production
costs ofthemostrepresentative enterprises ofthesector established inthecountry. Operating costs
wereadded totheproduction costs, which gavethecommercial cost. Inorder toestablish thepharmacy
selling price, aprofit margin ofupto20percentofthecommercial costwastaken intoaccount, and
tosetthemaximum selling pricetothepublic, aprofit margin of25percentofthemaximum pharmacy
selling price wasadded foreachproduct. Allpharmaceutical products forhuman usecontained inWT/SPEC/5/Rev.1
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chapter 30oftheNational Customs Tariff andoftheHarmonized System weresubject tothesecontrols.
Theshare intheEcuadorean market ofimported pharmaceutical products hadbeenasfollows: in1989
49percent, in1990 45.9percent, in1991 46.3percent, in1992 35.5percent. In1992 the
consumption ofimported pharmaceuticals hadbeenworth approximately US$85 million.
53.Therepresentative ofEcuador assured theWorking Party thathisGovernment didnotintend to
extend thepricesetting policy toother sectors oftheeconomy beyond thepharmaceutical sector. The
Working Party tooknoteofthiscommitment.
Standards
54.Some members oftheWorking Party asked whether Ecuador 'sstandards andtechnical regulations
werebased onrelevant international standards, whether theywerepublished insuchawayastoenable
interested parties tobecome acquainted withthemandwhether theywereapplied equally toimported
anddomestic products. Other questions concerned thebodies responsible fortheirformulation and
implementation, howimporters andforeign exporters could make theirviews known inthestandards
setting process andEcuador 'sintentions regarding theAgreement onTechnical Barriers toTrade.
Inresponse, therepresentative ofEcuador stressed thatinternationally agreed rulesserved asabasis
forEcuador 'sstandards andtechnical regulations which weredefined according tothecharacteristics
oftheproducts when used, itsdesign andfeatures. Ecuador 'sstandards didnotconstitute abarrier
totrade anddidnotaffect thetransparency oftrade. Theprocedures involved were publicly known
andweregenerally applied. TheEcuadorean Institute ofStandardization (INEN), agovernment body
attached totheMinistry ofIndustry, Trade, Integration andFisheries wasresponsible forpreparing
standards. Hesubmitted theINEN Technical Standards Catalogue andnoted thattheonlylegislation
inthisrespect wasExecutive Decree 939of2July1993, published intheOfficial Journal No233
of15July1993entitled General Regulations onPesticides andRelated Products forAgricultural Use.
ThisRegulation hadsimplified theformalities fortheregistration ofpesticides andstreamlined the
marketing process forsuchproducts. Moreover, theConsumer Protection Lawregulated marking,
labelling andpackaging.
55.Therepresentative ofEcuador saidthathisGovernment guaranteed thatthere wasnolegalor
technical impediment totheadoption oftheUruguay Round Agreement onTechnical Barriers toTrade.
TheWorking Party tooknoteofthisassurance [commitment].WT/SPEC/5/Rev.1
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Unfair Trade Practices
56.Some members oftheWorking Party asked further information ontheanti-dumping regime and
practices ofEcuador. Questions wereasked onthematerial injury tests, themethodology employed
fordetermining serious injury, particularly inthecontext oftherequirements setoutinArticle VI
oftheGATT andtheAnti-Dumping Code, whether hearings wereopentoallinterested parties, whether
thefinalreport wasmade available tothepublic andwhether Ecuador 'sparticipation intheCartagena
Agreement could leadtotheimposition byEcuador ofanti-dumping duties onproducts theimportation
ofwhich wasaffecting thecompetitive position ofother Andean Group members, Ecuador 'sintentions
concerning acceptance oftheAnti-Dumping Code upon accession totheGATT 1947, thetiming of
theapplication ofprovisional measures, theimplementation oftheWTO Anti-Dumping Agreement,
etc.Inresponse therepresentative ofEcuador, saidthathisGovernment hadincorporated intoits
domestic legislation allofthedecisions adopted bytheCommission oftheCartagena Agreement aimed
atpractices thatcould distort tradecompetition, inparticular Decision N283. Pursuant tothisDecision
themember countries could apply anti-dumping duties toproducts originating inthird countries in
order tocorrect distortions intrade competition inthesub-regional market. Theregulations forthe
prevention andcorrection ofthepractices ofdumping andsubsidization introduced by
Decree No.2722-A, published intheOfficial Journal No.780of30September 1991, hadincorporated
theprovisions oftheAnti-Dumping Code andtheCode onSubsidies andCountervailing Duties of
theTokyo Round ofMultilateral Trade Negotiations, defined thescope ofapplication anddetermined
thetime-limits, procedures andcompetent bodies fordealing withthese questions. InEcuador, the
Ministry ofFinance andPublic Credit wasempowered toadopt measures toprevent andeliminate
thepractices ofdumping orsubsidies aftertheSpecial Commission oftheTariff Committee hadgiven
itsopinion. Inaccordance withthenational regulations toprevent oreliminate thepractices ofdumping
orsubsidies, theproducer concerned must submit forhisindustry oronitsbehalf anapplication in
writing requesting theinitiation ofthecorresponding investigation andtheapplication ofpreventive
orcorrective measures. Theapplication mustcontain sufficient evidence oftheexistence ofdumping
orsubsidies andshow thatthesepractices cause injury toindustry. Fivedaysafterreceipt oftherequest,
theMinistry ofIndustry, Trade, Integration andFisheries contacts theparties concerned directly and
requests them toprovide thenecessary information inorder tocommence theinvestigation intothe
producer orexporter oftheproduct concerned. During theinvestigation, general information andnon-
confidential documents, aswellasthesummaries oranalyses ofevidence, maybeconsulted. The
competent bodies, authorities andofficials maynotdisclose theevidence andinformation received
inconnection withtheinvestigation when theseareofaconfidential nature. Inaccordance withdomestic
legislation, thecompetent authority firstofallconvenes meetings between theparties involved sothat
theymaypresent theirpoints ofviewandadirect solution maybefound. Thetime-limit forcarryingWT/SPEC/5/Rev.1
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outtheinvestigation wasfourmonths fromthedateofreceipt oftheapplication, butthismaybeextended
byafurther twomonths atthediscretion oftheSpecial Commission. Insuchacase, theSpecial
Commission mayrecommend theapplication ofprovisional orpreventive measures untiltheMinister
forFinance adopts thefinalmeasures decided upon. When theprejudice orthelikelihood ofcausing
prejudice issufficiently serious towarrant theadoption ofprovisional orpreventive corrective measures,
apriorinvestigation iscarried outonthebasisoftheinformation available within aperiod notexceeding
twenty daysfrom thedateofreceipt oftheapplication and,inaddition, theSpecial Commission is
convened within thefollowing fiveworking dayssothatitcanexpress itsviews ontheadoption of
corrective measures. Thefinaldecisions onwhether ornotsuchpractices haveledtodumping or
subsidy andinjury todomestic industry, together withdecisions onthereduction orsuspension oftheir
application, arepublished intheOfficial Journal. Inthecaseofdumping, domestic legislation provided
fortheapplication ofduties ontheimports concerned equivalent tothemargin ofdumping determined
oralower amount when thisissufficient tocounter thethreat ofprejudice ortheprejudice caused.
Inthecaseofsubsidies, countervailing duties wereimposed ontheimports concerned foranamount
equivalent tothesubsidy oralower amount when thiswassufficient tocounter thethreat ofprejudice
ortheprejudice caused. Corrective measures toprevent oreliminate distortions duetodumping and
subsidies werenotapplied simultaneously tothesameproduct. Anti-dumping orcountervailing duties
could remain inforce foraperiod ofuptotwoyears. Thedetermination ofserious prejudice orthe
threat ofserious prejudice wasbased onofthefollowing considerations: (a)thevolume ofimports
subject tothepractice, soastodetermine iftheyhadincreased toasignificant extent bothinabsolute
terms andinrelation toEcuador 'sproduction, consumption andimports; (b)theprice ofimports
subject todumping orthegranting ofsubsidies, todetermine inparticular iftheywereconsiderably
lower thantheprices ofsimilar products asaresult ofunfair tradepractices; (c)theeffects ondomestic
industry determined onthebasis oftrends inproduction, domestic sales, market share, profits,
productivity, return oninvestments, utilization ofinstalled capacity, actual orpotential negative effects
oncashflow, inventories, employment, wages, growth andinvestment capacity. Ecuadorean legislation
provided foradministrative appeal procedures. Allinterested parties mayutilize suchprocedures.
Tothisdate, Ecuador hadnotapplied anycountervailing oranti-dumping duties.
57.Therepresentative ofEcuador confirmed thatfrom thedateofaccession totheWTO, Ecuador
willapply theprovisions oftheWTO Agreement onImplementation ofArticle VIincases involving
allegations ofdumping byimports. TheWorking Party tooknoteofthiscommitment.WT/SPEC/5/Rev.1
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Export Incentives
58.Members oftheWorking Party asked Ecuador toprovide information onmeasures aimed at
facilitating andpromoting exports especially intheareaoftaxation andsubsidies. Therepresentative
ofEcuador described themeasures tofacilitate andpromote exports. TheLawfortheFacilitation
ofExports bywater enacted byDecree No.147of23March 1992 aimed ateliminating bureaucratic
redtapeanddelays intheshipment ofmerchandises toworld markets. Thedutydraw-back system
introducedthroughExecutiveDecreeNo.762on19May1993benefittednaturalorlegalpersonswhose
activity wasoriented towards theexportation ofproducts comprising imported foreign components.
Itsapplication required thecompliance withtheconditions setforth intheLawanditsregulations.
Similarly allgoods destined forexport markets wereexempted fromthevalue added tax(VAT) without
discrimination astothedestination. Headded thatsince1990Ecuadorean policy hadbeentoeliminate
production andexport subsidies. TheTokyo Round Agreement onInterpretation andApplication of
Articles VI,XVIandXXIII oftheGeneral Agreement onTariffs andTrade [andtheWTO Agreement
onSubsidiesandCountervailingMeasures]hadrecognizedtheimportanceofpoliciestoassistproduction,
includingexportpromotionpolicies,fortheeconomicdevelopmentprogrammesofdevelopingcountries.
[Article 27oftheWTO Agreement onSubsidies andCountervailing Measures recognizes thatsubsidies
mayplayanimportant rôleineconomic development programmes ofdeveloping country Members
andaccords special anddifferential treatment todeveloping country Members withregards tothephase-
outofexport subsidies, preferably inaprogressive manner, having regard totheirdevelopment needs,
export competitiveness, etc.]
59.Therepresentative ofEcuador saidthatatpresent, thelegislation which specifically promoted
industrial andagricultural production didnotconfer benefits oradvantages; there werenoexport or
credit subsidies andnotaxincentives orencouragement. There werenoproduction subsidies inthe
formofartificial public service tariffs. Concerning theWTO Agreement, hesaidthatatthemoment,
Ecuadorean legislation didnotdistinguish between specific subsidies andgeneral subsidies. However,
given thatthespecific nature ofsubsidies hadbeendefined forthefirsttimeintheUruguay Round
Agreement onSubsidies andCountervailing Measures, Ecuador would revise itslegislation tobring
itintoconformity withthecommitments arising frommembership intheWTO by1July1996, using
thedefinition given inthatAgreement. TheWorking Party tooknoteofthisassurance commitment.
Free Trade Zones
60.Some members oftheWorking Party noted thatEcuadorean LawNo.001 (Official Journal No.625
of19February 1991) provided forfreezones thatprocess goods forexport under special régimes for
interaliataxes, tariffs andcapital andrequested thatEcuador describe thespecial regimes associatedWT/SPEC/5/Rev.1
Page31
withtheestablishment of"in-bond" regime forexport processing andwithinvestment inthefreezones.
Theyalsoasked whether Ecuador hadplans toestablish freetradezones, therationale behind it,whether
national labour lawswould beapplied insuchzones, etc.Therepresentative ofEcuador saidthatno
suchzones hasyetbeensetup,despite theexistence oflegislation fortheircreation; however, the
Government planned tocreate some aspartofitsdevelopment strategy inorder topromote foreign
investment, thetransfer oftechnology andthecreation ofemployment. They werealsointended to
promote exports andboost thecountry 'sforeign exchange earnings. With regard totheapplication
ofnational labour lawstosuchzones, hesaidthatlabour contracts insuchzonewould beoftentemporary
innature andcould notbesubject togeneral legislation.
61.Therepresentative ofEcuador saidthathisGovernment asofthedateofaccession totheWTO
would beprepared tomake acommitment thattheimported component ofsalesfrom thezones into
therestofEcuador would beassessed normal taxes, tariffs andother border measures. Ecuador 's
national legislation establishes thepayment ofnormal taxes andtariffs ontheimported component of
salesfrom thezones intotherestofEcuador. TheWorking Party tooknoteofthiscommitment.
Government Procurement
62.Some members oftheWorking Party asked forinformation onEcuador 'sgovernment procurement
practices; therulesandprocedures applied, thedegree oftransparency ofthesystem andthetreatment
offoreign anddomestic suppliers. Therepresentative ofEcuador saidthatgovernment procurement
wasdonethrough public bidding withnodiscrimination between domestic andforeign suppliers. There
wasalsonodiscrimination regarding theoftaxesorfeesoronthepresentation ofguarantees asbetween
national orforeign bidders. Theprocedures provided forintheGovernment Procurement Lawof
2August 1990published intheOfficial Journal ofthesamedatewereasfollows. Fortheperformance
ofworks, purchase ofgoods andprovision ofservices there shallbeopeninvitation totender, ifthe
amount exceeds thevalue of10,000 times thegeneral minimum wage. Thebidder shallsubmit his
tender within thetime-limit established bytheProcurement Committee (between 18and48daysfrom
theinvitation totender); apublic limited invitation totender, iftheamount doesnotexceed 10,000
butisover4,000 times thegeneral minimum wage; openpricetendering, iftheamount isover1,500
butnotmore than4,000 times thegeneral minimum wage; andselective pricetendering, iftheamount
isover150butnotover1,500 times thegeneral minimum wage. Submission ofbidsisgoverned by
Article 41oftheLaw. Bidsweresubmitted totheSecretary oftheProcurement Committee, inasealed
envelope, intheSpanish language. Bidders maybepresent attheopening oftheenvelopes. Special
pre-contractual procedures applied toprocurement relating tothepurchase ofrealestate, renting of
immovable property, leasing withoption topurchase, other contracts financed byinternational loansWT/SPEC/5/Rev.1
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granted bymultilateral institutions (theprovisions oftherespective agreements mustbeobserved) and
byforeign governments. Ineachcasepresidential authorization isrequired, together withpriorreports
bythefollowing institutions: CONADE (onthepriority oftheproject anditscompatibility with
Ecuador 'sdevelopment policies); theExternal Credit Committee (ontheadvantages oftheterms of
thefinancing offer); andthecontracting ministry orentity (onthecompetitiveness oftheprices).
TheLawprovided foraProcurement Committee ineachMinistry, dependent body orentity ofthe
public sector. TheCommittee decides ontheaward ofthecontract. TheGovernment Procurement
Lawdidnotdiscriminate between imported products norinthecharging oftaxesorfeesorpresentation
ofguaranteesasbetweennationalorforeignbidders.Nationalsupplierswerenotgivenspecialtreatment.
State Owned Enterprises
63.TheWorking Party reviewed thenature ofoperations andGATT justification oftheactivities
ofanumber Stateowned enterprises. Some members oftheWorking Party requested alisting ofthe
State owned enterprises, theirshare intheeconomy ingeneral andintrade inparticular, sectors of
activity, monopolies exercised bythem, compliance intheir operations with theprovisions of
Article XVII, aswellasfuture plans andpriorities concerning privatization. Some members ofthe
Working Party noted thattheexamination ofthisissue should notleadtorequests forcommitments
beyond theobligations provided forinArticle XVII forallcontracting parties. Inresponse the
representative ofEcuador saidthathisGovernment haddecided tomodify theroleoftheStatesector
ineconomic development. Theinvolvement oftheStateinthepast30years hadledtotheStatehaving
holdings insome 165enterprises insectors suchastransport andstorage, energy, communications,
agriculture, industry, mining, tourism, internal trade, financing andservices. Owing tothedecreasing
efficiency ofthismodel andthedemand ofcurrent economic, financial andtechnological realities,
theGovernment hadadopted apolicy ofmodernization thebasic directions ofwhich were the
rationalization andsimplification ofthepublic sector administrative andeconomic structures through
theefficient distribution offunctions andresponsibilities among itsentities ororganizations, the
decentralization ofpublic sector activities, theelimination ofState monopolies andtheprivatization
ofpublic services. TheNational Council fortheModernization oftheState (CONAM), attached to
thePresidency oftheRepublic, hadbeenentrusted withadministrative rationalization andsimplification.
Hestressed thatcommercial enterprises which werewholly orpartially owned bytheState covered
byArticle XVII oftheGeneral Agreement fullyobserved theprinciple ofnon-discrimination bothfor
their procurement andfortheir sales involving imports orexports. Furthermore there were no
monopolies inEcuador except inthecaseofnatural gasandsome petroleum products. With regard
tothesectors oftheeconomy exclusively reserved fortheState, hepointed outthataccording tothe
LawontheModernization oftheState, Privatization andProvision ofPublic Services byPrivateWT/SPEC/5/Rev.1
Page33
Enterprisewhichhadenteredintoforceon31December1993,thefollowingactivitiesthatwerereserved
fortheStateunder Article 46oftheConstitution could bedelegated byconcession toprivate enterprises:
(a)production, transport, storage andmarketing ofhydrocarbons andother minerals, (b)generation,
distributionandmarketingofelectricity,(c)telecommunicationsservices,(d)productionanddistribution
ofdrinking water. TheLawhadprovided theabolition ofmonopolies andtheprivatization ofState
activities. With regard totheshare oftheStateintheeconomy, hesaidthatin1992 theshare ofthe
Statesector intheGDPwas7.2percentadecrease fromtheaverage fortheprevious decade of8.9per
cent. In1992theshare ofStateowned enterprises intotalimports hadamounted to2percent. Ecuador
provided thefollowing listofStateenterprises orStateparticipation inenterprises involved indomestic
andinternational trade: Empresa Nacional deFerrocarriles delEstado (Transport ofpassengers, cargo
andmail); Transportes Aéreos Militares Ecuatorianos (Transport ofpassengers, cargo andmail);
InstitutoEcuatorianodeTelecomunicaciones(Regulationandoperationofthetelecommunicationssystem
anddevelopment ofitsinfrastructure); Empresa deDesarrollo Forestal CEM (Forestation and
reforestation fortheproduction offorestry products); Empresa Pesquera Nacional (Fishing, processing
andmarketing offish); Empresa Estatal dePetróleos delEcuador (Exploration andextraction of
hydrocarbons); Compañia Minera deEconomía Mixta (Gold mining); Servicios Mineros deEconomía
Mixta(Installationofmineralprocessingandsmeltingplants);AzucareraTropicalAmericana(Extraction
andprocessing ofcanesugar); Planta Hortifructícola Ambato (Production, processing andmarketing
offruits andvegetables); Alcoholes delEcuador (Production of96%alcohol); Empresa deAbonos
delEstado (Production oforganic, mineral andchemical-organic fertilizers); Fertilizantes Ecuatorianos
CEM (Import ofrawmaterials, transformation andmarketing offertilizers); CEM Cementos Selva
Alegre(Productionofcement);CementosCotopaxiC.A.(Productionofcement);EmpresadeCementos
Chimborazo C.A.(Production ofPortland cement); Industria Guapán S.A.(Production ofgreycement);
Ecuatoriana deSiderúrgica S.A. (Iron andsteel); Empresa Nacional deAlmacenamiento y
Comercialización deProductos Agrícolas (Storage andmarketing ofagricultural goods); Empresa
deSuministrosdelEstado(Marketingofofficesupplies,materialsandequipment);EmpresaEcuatoriana
deAviación(Transportofpassengers,cargoandmail);EmpresaPesqueraNacional(Fishing,processing
andmarketing offish); Empresa Estatal dePetróleos delEcuador (Exploration andextraction of
hydrocarbons); Alcoholes delEcuador (Production of96%alcohol); Fertilizantes Ecuatorianos CEM
(Import ofrawmaterials, transformation andmarketing offertilizers); Astilleros Navales Ecuatorianos
(Ship building); Empresa Nacional deAlmacenamiento yComercialización deProductos Agrícolas
(Storage andmarketing ofagricultural goods).WT/SPEC/5/Rev.1
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EMETEL
64.Members oftheWorking Party referred totheEcuadorean Telecommunications Company
(EMETEL) andasked questions about itslegalbasis andframework, thereasons foritscreation, its
procurement andcontract practices andprocedures, therational fortheimport licensing requirements;
thestandards fortheequipment employed inthetelecommunications sector andtheirconformity with
international standards, etc.Some ofthese members considered thattheprocedures andpractices of
EMETEL werenotGATT consistent. IntheirviewEMETEL should benotified under theprovisions
ofArticle XVII oftheGeneral Agreement. With regard tothestandards forequipments inthe
telecommunications sector, assurances were requested thattheywould conform withinternational
standards. Itwasalsonoted inthisrespect that,Ecuador should beprepared toadhere totheAgreement
onTechnicalBarrierstoTrade.InresponsetherepresentativeofEcuadorstatedthattelecommunications
were aservice ofpublic necessity andutility andwere alsoamatter ofpublic security, andhence
exclusively theresponsibility oftheState. Consequently, theStatemustdirect, regulate andcontrol
alltelecommunications activities, inaccordance with theConstitution andtheSpecial Law on
Telecommunications, No.184of8August 1992(Official Journal No.996of10August 1992). For
theimportation ofcertain items oftelecommunications equipment, prior authorization wasrequired
from theTelecommunications Department, andtheenterprise musthavethenecessary concession to
install theequipment. Ecuador hadestablished alegal framework thatwasinkeeping withthe
importance, complexity, scale, technological level andspecificity oftelecommunications services.
TheSpecial LawonTelecommunications hadestablished theState Telecommunications Company
(EMETEL), withitsownlegal personality, equity andresources, andadministrative, economical,
financial andoperational autonomy. Company management wassubject tothisLaw, totheregulations
issued forthepurpose, tothestandardization, certification andcontrol oftheTelecommunications
Department, andtootheroperational standards established bythevarious organs oftheStateCompany.
TheEMETEL Executive Committee wasresponsible forsetting andapproving theadministrative,
financial andtechnical standards, rulesandprocedures, while theExecutive Director wasresponsible
forplanning anddevelopment ofthecompany 'stelecommunications systems. Thetechnical standards
applied byEMETEL fortheprocurement ofgoods andservices werebased onthestandards laiddown
bytheCCITT andtheCCIR. Ecuador assured thecontracting parties thatitsstandards wereconsistent
withinternational standards within theframework oftheInternational Telecommunications Union.
According totheLaw, thecontracts concluded byEMETEL were notsubject tothegovernment
procurement lawsandregulations. EMETEL carried onitsactivities inaccordance withbusiness
management criteria. Theprocurement practices ofEMETEL wereguided exclusively bycommercial
considerations, without discrimination ofanykind. Forenterprises ofother contracting parties this
ensured transparency andfreecompetition conditions withregards totenders.WT/SPEC/5/Rev.1
Page35
65.TherepresentativeofEcuadorgavetheassurancethathisGovernmentwouldobservetheprovisions
oftheWTO including Article XVIIoftheGeneral Agreement 1994andArticle VIIIofGATS including
notification andthedescription ofStatetrading activities foralltheenterprises listed inthepreceding
paragraphs 63and64asofWTO accession. TheWorking Party tooknotethiscommitment.
Integration Agreements
66.Some members oftheWorking Party noted Ecuador 'sparticipation inanumber ofregional
integration andpreferential tradeagreements. Inparticular, questions referred totheGATT consistency
oftheLatin American Integration Association (LAIA) andtheCartagena Agreement, theirjustification
under Article XXIV oftheGATT, theoperation ofvarious mechanisms inforce inthecontext ofthe
integration processes, andthefulfilment ofthenotification requirements under theGATT. Withregard
totheCartagena Agreement somemembers enquired about thestatus ofimplementation oftheCommon
External Tariff (CET), progress made inthetradeliberalization within theAndean Group, andaspects
suchasthescope andnature oftheruleson"unfair tradecompetition" among themembers, thecommon
regime forthetreatment offoreign capital andtrade marks, patents, licences androyalties; rules of
origin andlocalcontent requirements, etc.Some other members oftheWorking Party saidthatin
theiropinion theexamination oftheregional integration agreements ofwhich Ecuador wasamember
hadbeenundertaken intheappropriate GATT bodies andtherefore would bebeyond themandate of
theWorking Party. Therepresentative ofEcuador responded thatcontracting parties members ofthe
LatinAmericanIntegrationAssociation(LAIA)andtheCartagenaAgreementcompliedwiththerelevant
obligations under theprovisions oftheGeneral Agreement andthelegalinstruments negotiated under
itsauspices, including theEnabling Clause Decision. Information concerning developments under
these Agreements wassubmitted tothecontracting parties regularly. Reports hadbeensubmitted by
themember states ofLAIA andtheAndean Group in1992(L/6985 andAdd.1 andL/7088 andL/7089,
respectively).
67.With regard totheLatin American Integration Association (LAIA) setupbythe1980 Treaty
ofMontevideo toreplace theLatin American Free-Trade Association (LAFTA) of1960, the
representative ofEcuador saidthatthelong-term goalofLAIA wasthegradual andprogressive creation
ofaLatin American common market. Theinstruments provided forachieving thisgoalwereregional
scope agreements, inwhich allmember countries participated, andpartial-scope agreements which
concerned solely theirsignatories. These instruments provided forthenegotiation ofmutual tariff
concessions.Theyalsosoughttopromoteeconomiccomplementarityanddevelopeconomiccooperation.
Theregional tariffpreference wasgranted according tothelevelofdevelopment ofeachmember country
giving orreceiving thepreference. Under themarket opening agreements signed bymembers oftheWT/SPEC/5/Rev.1
Page36
LAIA infavour oftherelatively less-developed countries, oneofwhich wasEcuador, hiscountry had
received preferences from theother eight member countries, assetoutinRegional Market-Opening
Agreement No.2.Allmember countries oftheAssociation, hadreduced national tariffs withrespect
totherestoftheworld andthushadimproved tradeconditions forimports fromnon-preferential trading
partners, oftentothedetriment ofmargins ofpreference negotiated among members oftheAssociation
andthepotential ofregional trade. In1993 thetotalvalue ofimports byLAIA member countries
from outside theAssociation hadtotalled US$61,548 million, anincrease of11percentcompared
with1992.
68.WithregardtotheCartagenaAgreement,therepresentativeofEcuadorrecalledthatthissubregional
economic integration agreement wasoriginally signed byBolivia, Chile, Ecuador andPeru. Later
onChile hadwithdrawn andVenezuela hadjoined in.Thebasic objectives oftheAgreement were
topromote andachieve balanced development among themember countries, toaccelerate growth and
generate employment, toreduce external vulnerability andimprove thecountries 'international economic
standing andtostrengthen subregional solidarity. Itwasanadvanced integration process inLatin
America andconstituted anopenandcompetitive rather thanadefensive model ofintegration. Itsought
greater participation intheworld economy andoneofitsgoals wastobecome acustoms union. For
thispurpose inMarch 1993, theCommission oftheCartagena Agreement hadadopted Decision 335
establishing theCommon External Tariff (CET), which Ecuador would implement asof1February
1995. Within theAndean Group region goods moved freely without tariffs orrestrictions ofanykind.
Inresponse toquestions regarding theexemptions from theCET allowed toEcuador, hesaidthat
Article 3ofDecision 335oftheCommission oftheCartagena Agreement hadallowed Ecuador as
arelatively lessdeveloped country tomaintain atemporary rateof5percentbelow theCETlevels
foralistofproducts, subject toreview by31December 1996atthelatest. Thismatter wascurrently
under negotiation. Moreover, since theentry intoforce ofDecision 232oftheCommission ofthe
Cartagena Agreement, theAndean Group member countries didnothavetherighttoestablish duty-free
exemptions thatinfringed sub-regional tariff commitments, except inthecases provided forbythe
Decision 335orbyDecision 322relating tothenegotiations withtheLAIA member countries. The
preferences negotiated under theLAIA partial-scope agreements were negotiated taking account the
member countries 'tariffandthemaintenance ofmargins ofpreference. Headded thatEcuador applied
therulesoforigin established bytheCartagena Agreement which werebased onthegeneral principles
ofchange oftariff heading, processing andgreater incorporation, andindicative lists, setoutin
Decision 293oftheCommission oftheCartagena Agreement issued on4April 1993. Decision 293
oftheCartagena Agreement established rules forthedetermination oftheorigin ofgoods, forthe
purposes oftheAndean Liberalization Programme.WT/SPEC/5/Rev.1
Page37
69.Some members oftheWorking Party noted thatEcuador 'sparticipation inanumber ofregional
integration andpreferential trade agreements appeared toinfluence Ecuador 'snegotiations ofthe
conditions foraccession totheGeneral Agreement andtheWTO. Theyexpressed concern thatregional
agreements werebeing citedasafactor limiting Ecuador 'sflexibility inthemarket access negotiations.
OthermembersoftheWorkingPartyrecalledthatboththeGeneralAgreementandtheWTOAgreement
hadrecognized thedesirability oftrade liberalization intheframework ofregional agreements. They
added thattheexistence ofregional agreements andinparticular theirpreferential tariff ratescould
notbeconsidered asconstraining thesovereign approach ofmembers tomarket access negotiations.
70.Therepresentative ofEcuador gavetheassurance thathisGovernment would work withother
Members ofsuchAgreements useitsbestefforts toensure thattheWTO provisions fornotification,
consultation, andother requirements concerning preferential trading systems, freetrade areas, and
customs unions ofwhich Ecuador isamember aremet,when amendments areintroduced, e.g.,
Article XXIV oftheGATT 1994, Article VofGATS andparagraph 3oftheEnabling Clause. The
Working Party tooknoteofthisassurance [commitment ].
[World Trade Organization (WTO)]
71.68. Therepresentative ofEcuador recalled thatintheMemorandum ontheForeign Trade Regime
(document L/7202) andinsubsequent documentation (L/7488 andAddenda, andL/7523 andAddenda,
andL/7566 andWT/L/54), hisGovernment hadprovided information ontrade related investment
measures,servicesandtraderelatedaspectsofintellectualpropertyrights.Ecuadorhadaimedtobecome
anoriginal member oftheWorld Trade Organization. Therefore, Ecuador hadnegotiated [andwould
implement ]commitments within theframework oftheUruguay Round Multilateral Trade Agreements
concerning market access, including agriculture aswellasservices, traderelated investment measures
andtrade related aspects ofintellectual property rights. Hestressed thatEcuador would adapt its
domestic legislation totherequirements oftheWTO Agreement andwould ratify thelegalinstruments
annexed totheWTO Agreement. [Nevertheless, ]Asadeveloping country, Ecuador intended toinvoke
thespecial provisions concerning developing countries contained intheMultilateral Trade Agreements.
TheWorking Party tooknoteofthese commitments [thisstatement ].
General Agreement onTrade inServices (GATS)
71.72. SeveralmembersoftheWorkingPartyexpressedinterestinenteringintonegotiationswithEcuador
withregard toservices andrequested information concerning theregulations applicable tothevarious
services sectors.WT/SPEC/5/Rev.1
Page38
72.73. Therepresentative ofEcuador noted thattheLawonFinancial Institutions hadsetliberal criteria
fortheorganizationandoperationofbanks,financialcompanies,factoringcompanies,leasingcompanies
andother financial intermediaries. TheSecurities Market Lawof28May1993 regulated securities
exchanges, securities houses andother intermediaries, investment funds, theissueofbonds, securities
market registration, etc.National treatment wasestablished byArticle 22oftheLawonFinancial
Institutions which stipulates that"aforeign financial institution operating inEcuador asaninstitution
oftheprivate financial system shallenjoy thesame rights andbesubject tothesame obligations, laws,
rules andregulations asareapplied tonational financial institutions". National treatment were also
provided forinArticle 44,which stipulates thatforeign investment intheinstitutions subject tothe
control andsupervision oftheOffice oftheSuperintendent ofBanks shallnotrequire priorauthorization
fromanyStatebody, andthatforeign investors shallenjoy thesame rights andbesubject tothesame
obligations asnational investors. TheLawalsoregulates capital investment abroad byinstitutions of
thenational financial system, without discrimination between national andforeign institutions, and
permits freecapital investment outside thecountry. With regard toinsurance, theEcuadorean
Government wascurrently considering newprovisions andlegislation intheinsurance sector. With
regard toprofessional services, theregulations controlling foreign labour activities, published inthe
Official Journal No.509of19January 1978asMinisterial Decision 1806oftheMinistry ofLabour,
stipulate inArticle 4thatanyforeigner wishing towork inEcuador must holdtheappropriate visa,
fillintheforms provided foreachcasebytheMinistry ofLabour andsubmit thenecessary certificates
insupport ofhisapplication. Thisprovision alsoapplies totheorganized immigration ofprofessionals,
technicians andother persons assisted byinternational bodies recognized byEcuador. Theabove-
mentioned regulations provide foraCarnet Ocupacional (work permit), theonlyofficial document
authorizing foreigners towork inthecountry. Professionals ortechnicians must, where appropriate,
submit acertificate fromaneducational institution oranassociation authorizing themtocarry outtheir
professional activity. Inthespecific caseofauditing services forfinancial institutions, itwasalso
necessary toregister withtheOffice oftheSuperintendent ofBanks andtoobtain thecorresponding
authorization. Withregard tomaritime transport, Article 13oftheLawontheSimplification ofExports
andWater Transport, published intheOfficial Journal No.901of25March 1992, stipulates thatwater
transport toandfromEcuador shallbebased ontheprinciple ofeffective reciprocity andshallbesubject
totheprovisions oftheconventions onwater transport towhich Ecuador isparty. Effective reciprocity
isunderstood tomean access byforeign ships transporting imported orexported cargo generated by
Ecuador under thesame conditions asthose granted bytheforeign country inquestion toships sailing
under theEcuadorean flagortoships chartered oroperated byEcuadorean shipping companies. The
Consejo Nacional delaMarina Mercante yPuertos (National Merchant Navy andPortCouncil) may
impose temporary restrictions onforeign companies orvessels sailing under theflagofathirdcountryWT/SPEC/5/Rev.1
Page39
when suchcountry imposes similar restrictions onships belonging to,orchartered oroperated by,
Ecuadorean shipping companies. Innocasewillfreecompetition inexport shipping beaffected. The
above-mentioned Lawcontains acargo reservation withrespect tohydrocarbons. Withregard toland
transport, Decision 257oftheBoard oftheCartagena Agreement ontheInternational Transport of
Goods byRoad stipulates thatunder nocircumstances shallrestrictions beimposed onthefacilities
forfreetransit andtransport ofpersons, vehicles orgoods applicable among theAndean countries
orwithrespect tothirdcountries. Thisformoftransport canonlybeoperated byanauthorized carrier.
With regard toairtransport, withtheadoption on16May 1991 oftheOpen Skies Agreement
(Decision 297oftheCommission oftheCartagena Agreement), thecountries oftheAndean Group
hadestablished asingle airspace permitting thefreeairtraffic ofpassengers, cargo andmailinaircraft
fromandtoeachoftheinternational airports located intheAndean subregion. Thisdecision stipulates
thatthemember countries oftheAndean Group shallgrant freeexercise oftherights relating tothe
third, fourth andfifthfreedoms oftheaironregular passenger, cargo andmailflights made within
thesubregion. Withregard totelecommunications, inaccordance withtheConstitution andtheSpecial
LawonTelecommunications, No.184of8August 1992(Official Journal No.996of10August 1992),
without prejudice totheconstitutional reservation infavour oftheStatewithrespect totheeconomic
exploitation ofnatural resources andoftheservices mentioned inArticle 46,paragraph 1ofthe
Constitution, theStatemaydelegate theprovision oftelecommunication services toprivate enterprises.
73.74. Therepresentative ofEcuador saidthatinconformity withparagraph 5oftheFinal Actofthe
Uruguay Round, hisGovernment hadsubmitted aschedule ofspecific commitments inthefieldof
services circulated indocument L/7566. Some members noted that,asagreed bythePreparatory
Committee fortheWorld Trade Organization, following theconclusion ofthenegotiations pursuant
tothetechnical verification process, theschedule hadbeen approved bythePreparatory Committee
fortheWTO. Theofferonfinancial services hadbeenpresented inaccordance withtheSecond Annex
onFinancialServicesandtheDecisiononFinancialServices.AfterbecomingaWTOMember,Ecuador
would participate inthenegotiations onmaritime transport services, basictelecommunications, financial
services andmovement ofnatural persons.
Trade Related Investment Régime Measures (TRIMs)
74.75. Some members oftheWorking Party asked information about thelegalframework forinvestment
inEcuador, whether therewaspreferential taxation treatment forexport related investments, thenature
oftaxbenefits, theexistence oflocalcontent regulations, export performance requirements, national
treatment, restrictions onremittance ofprofits, barriers toforeign investment, etc.Inresponse the
representative ofEcuador saidthatwithout prior approval, direct foreign investment could bemadeWT/SPEC/5/Rev.1
Page40
inallsectors oftheeconomy under thesame conditions asinvestment byEcuadorean natural orlegal
persons. Thesoleareas where foreign investment remained prohibited were defence activities,
communicationmediaandinternalairtransport,whileminorityshareholdingwaspermittedinthefishing
sector. Under Article 18oftheConstitution, foreign natural orlegal persons maynotdirectly or
indirectly acquire orretain ownership orother realrights relating toimmovable property, norrent
suchproperty, obtain theuseofwater, establish industries orfarms orconclude contracts relating to
non-renewable natural resources andingeneral toproducts ofthesub-soil andallminerals orsubstances
distinct innature fromthesoil,inthefrontier areas andthereserved areas established bythecompetent
bodies, unless inanyoftheabove cases authorization hasbeenobtained inaccordance withthelaw.
TheEcuadorean legislation introduced inJanuary 1993 Decree 415hadlifted thebarriers toforeign
investment.Thecurrentrulesallowedtheunrestrictedrepatriationofprofits,hadremovedtherestriction
onforeign shareholdings inexcess ofalimitof49percentinanyenterprise, andhadeliminated the
requirement ofpriorapproval ofinvestment bythecompetent Ministry formostsectors. Investments
wereregistered solely withtheCentral Bank ofEcuador, andtechnology contracts withtheMinistry
ofIndustry, Trade, Integration andFishery (MICIP). There werenorestrictions oninvestments related
tolocalcontent requirements norconcerning export performance requirements. Headded thatforeign
investment wasallowed inthefinancial sector. With theapproval oftheSecurities Market Law, the
taxsystem applied toforeign investors wasnowthesame asthatapplied tonational investors. With
regard toanypossible restrictions onshare holding byforeigners, hestated thatasageneral rule,current
Ecuadorean legislation didnotestablish restrictions onforeign shareholding inindustry. Investments
inthefisheries sector were anexception tothisrule. Inaccordance withArticle 19oftheLawon
Fishing andFishery Development, thisactivity wasreserved tonational enterprises orjointventures
(inwhich foreign shareholding must noexceed 49percent). Foraforeign enterprise toengage in
non-traditional fishery activity, ithadtoobtain authorization from theNational Council forFishery
Development. Withregard tolimitations ontheremittance ofprofits byforeign investor, hestressed
thatEcuadoreanlegislationdidnotprovideforanylimitationorrestrictiononforeigninvestorsremittance
oftheirprofits abroad. Concerning thetaxtreatment forexports, hesaidthattaxbenefits forspecific
industries hadbeeneliminated andexport companies wereliable totax;however, likeinmostcountries,
exports wereexempted frominternal taxes. Moreover, foreign enterprises didhaveaccess totheexport
promotion anddevelopment mechanisms under thesameconditions onEcuadorean orjointenterprises.
Henoted thatDecision 291oftheCommission oftheCartagena Agreement hadadopted acommon
regime forthetreatment offoreign capital.
75.76. Inconclusion therepresentative ofEcuador saidthathisGovernment would comply withthe
commitment inrespect oftransparency andnotification contained inArticle XoftheGATT 1994andWT/SPEC/5/Rev.1
Page41
inArticle 6oftheAgreement onTrade Related Investment Measures (TRIMS). Moreover, Ecuador
hadreviewed theAgreement onTrade-Related Investment Measures andwaswilling tocomply with
thecommitments itlaysdown assoonasitbecomes aWTO member. Withrespect tonational treatment
andquantitative restrictions, Ecuador would undertake nottomaintain measures inconsistent withthe
provisions ofArticles IIIandXIofGATT 1994. Withregard toexceptions totheAgreement onTrade-
Related Investment Measures, Ecuador would ensure thatsuchexceptions arecovered bytheprovisions
ofGATT 1994. Atpresent Ecuador didnotapply anyofthemeasures foreseen intheTRIMS
Agreement. However, anAndean agreement fortheautomotive sector which wasnotinforceincluded
certain domestic content requirements. When itbecomes amember oftheWTO, Ecuador would notify
within theprescribed time-limits alltheTRIMS itapplies thatarenotinconformity withtheprovisions
oftheTRIMS Agreement. AnAndean Group agreement between Colombia, Venezuela andEcuador
fortheautomotive sector includes certain domestic content requirements. Themeasures ofthisAndean
Group agreement hadbeen notified byColombia andVenezuela under Article 5oftheTRIMs
Agreement. Ecuador willalsonotify thisTRIM andphase itoutinaccordance withtheProtocol of
Accession ofEcuador totheWTO. TheWorking Party tooknoteofthese commitments.
Trade Related Aspects ofIntellectual Property Rights (TRIPS)
76.77. Some members oftheWorking Party asked questions onthestatus ofintellectual property
protection inEcuador including towhat extent pharmaceutical products, microorganisms andplant
species wereprotected, whether Ecuadorean legislation gaveadequate protection tosoftware, whether
piracy inthisareawaseffectively prevented andprosecuted. Ecuador wasasked toaddress theissue
ofhowitslawsandregulations concerning theprotection ofintellectual property wereconsistent with
theprovision oftheWTO TRIPS Agreement andtodescribe legislation pending which would fully
address thisissue. Inresponse therepresentative ofEcuador saidthatEcuadorean lawonintellectual
property rights consisted primarily ofthefollowing texts. TheCopyright Law, enacted bySupreme
Decree No.610andpublished intheOfficial Journal, No.0149of13August 1976, andtheregulations
thereto, issued through Decision (Acuerdo) No.10824 andpromulgated inOfficial Journal No.4945
of13December 1977. Supreme Decree No.2821 published inOfficial Journal No.0735 of20
December 1978 hadamended thisLaw, including initprotection against piracy inthereproduction,
distribution orsaleofillegal copies ofphonograms. On17December 1993, Ecuador andtheAndean
Group member countries hadadopted Decision 351establishing acommon regime oncopyright and
neighbouring rights. Thisregime provides adequate andeffective protection ofauthors ofliterary,
artistic andscientific works aswellasofperformers, producers ofphonograms andbroadcasting
organizations(radioandtelevision),andalsoobligesAndeanGroupmembercountriestograntprotection
nolessfavourable thanthatgranted totheirnationals. With regard totherights thatarerecognizedWT/SPEC/5/Rev.1
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andprotected, theAndean Group Decision recognizes authorship ofthework, integrity andother rights
ofamoral nature thatmaybeexercised bytheauthor, hisheirsortheStateintheirabsence. Italso
recognizes theownership rights consisting intheexclusive rightoftheauthor toauthorize orprohibit
thereproduction, marketing, translation, arrangement ortransformation ofhisworks. Theduration
oftherights recognized inDecision 351shallbenolessthanthelifeoftheauthor and50years after
hisdeath. When ownership oftherights isvested inalegalperson, theperiod shallbenolessthan
50years from thedateofmaking ofthework intheform ofdisclosure orpublication ofthework.
Theprotection granted bythiscommon regime covers literary, artistic andscientific works thatmay
bereproduced ordivulged byanymeans known orthatbecomes known. Suchworks include works
expressedinwriting(books,pamphlets,etc);lectures,addresses,speeches;dramatic,dramatico-musical
andchoreographic works andentertainments indumb show; fineartsworks, drawings, paintings,
sculptures,engravings,etc;illustrations,maps,sketches;computerprogrammes(software);anthologies
orcompilations ofvarious works anddatabases which byreason oftheselection orarrangement of
theircontents constitute personal creations. Decision 351alsogrants protection ofneighbouring rights,
which aretherights ofpersons whotakepartnotinthecreation oftheworks butrather intheir
dissemination. Theprotection covers performers, producers ofphonograms andbroadcasting
organizations. Thenewcommon regime forindustrial property adopted bytheCommission ofthe
Cartagena Agreement byDecision 344hadcome intoforce inJanuary 1994. Thisnewregime, which
wasapplied byEcuador, wascompatible withtheprovisions ofinternational conventions onthissubject,
andinparticular withtheAgreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPS).
Thus, itcontains rulesnotonlygoverning thegrant oftrade marks andpatents butalsoprotecting for
thefirsttimeindustrial secrets andappellations oforigin. Other intellectual property rights covered
bytheTRIPS Agreement would alsobeprotected. With regard tothetermofpatent protection, the
newdecision brings theAndean regime intolinewiththeprovisions oftheUruguay Round Agreement
onTrade-Related Aspects ofIntellectual Property Rights, extending thetermto20years counted from
thefiling date. Thelegislation inforce inthecommon regime forindustrial property established by
Decision 344provides protection forindustrial designs andutility models. Apatent onautility model
isgranted for10years toanynewform, configuration orarrangement ofelements ofanydevice,
instrument ormechanism orother object oranypartthereof enabling ittofunction better ordifferently.
Utility model patents donotcover processes ormatters thatcannot beprotected byaninventor 'spatent.
Sculptures, architectural works, paintings, engravings, lithographic works oranyother object ofa
purely aesthetic nature arenotconsidered utility models. Decision 344provides inArticle 81that
"signs thatareperceptible, sufficiently distinctive andcapable ofgraphical representation maybe
registered astrademarks." Decision 344states thatregistration ofatrademark shallbeforatermof
10years fromthedateofregistration andmayberenewed automatically forsuccessive periods of10WT/SPEC/5/Rev.1
Page43
years without having toprove useofthetrademark. InlinewiththeAgreement onTrade-Related
Aspects ofIntellectual Property Rights, theindustrial property regime inforce inEcuador through
theadoption ofDecision 344includes achapter onindustrial secrets, protecting aperson incontrol
ofanindustrial secret against disclosure, acquisition oruseofthesecret without hisconsent. In
conclusion, therepresentative ofEcuador assured theWorking Party thathisGovernment considered
thatitwould havenodifficulties, asfarastrade-related aspects ofintellectual property rights are
concerned, inentering intothecommitments inthisfieldrequired formembership intheWorld Trade
Organization byJuly1996. Thelegislation inforce inEcuador, which incorporates theAndean Group
common regime, covers thecommitments thecountry would enter into. Moreover, insome cases,
thenational legislation confers broader protection thanthatrequired under theTRIPS Agreement. The
Working Party tooknoteofthese assurances commitments.
Conclusions
77.76. TheWorkingPartytooknoteoftheexplanationsandstatementsofEcuadorconcerningitsforeign
trade régime, asreflected inthisreport. TheWorking Party tooknoteoftheassurances given by
Ecuador inrelation tocertain specific matters which arereproduced inparagraphs 16,51,55and70
ofthisreport. TheWorking Party tooknoteofthecommitments given byEcuador inrelation tocertain
specific matters which arereproduced inparagraphs 10,14,17,19,21,29,31,34,38,41,48,53,
57,59,61,65,75,and76ofthisreport. TheWorking Party tooknotethatthese assurances andand
noted thatthese commitments hadbeenincorporated inparagraph 2(a)oftheProtocol ofAccession
ofEcuador totheWTO.
78.77. Having carried outtheexamination oftheforeign trade régime ofEcuador andinthelightof
theexplanations, assurances andcommitments given bytherepresentative ofEcuador, theWorking
Party reached theconclusion that,subject tothesatisfactory conclusion oftherelevant market access
tariff negotiations formarket access forgoods including anagricultural country schedule, Ecuador
beinvited toaccede totheGeneral Agreement Agreement Establishing theWTO under theprovisions
ofArticle XXXIII XII.Forthispurpose theWorking Party hasprepared thedraftDecision andProtocol
ofAccession reproduced intheAppendix tothisreport. Itisproposed thatthese textsbeapproved
bytheGeneral Council when itadopts thereport. TheWorking Party noted thattheSchedule ofSpecific
Commitments inServices which hadbeenapproved bythePreparatory Committee fortheWTO was
reproduced indocument L/7566. ThisSchedule would beannexed totheProtocol ofAccession of
Ecuador. When thetariffmarket access negotiations between Ecuador andcontracting parties Members
inconnectionwithaccessionhavebeenconcluded,theresultingScheduleofEcuadorandanyconcessions
granted bycontracting parties Members asaresult ofnegotiations withEcuador would beannexedWT/SPEC/5/Rev.1
Page44
totheProtocol. TheDecision would thenbesubmitted toavotebycontracting parties Members in
accordance withArticle XXXIII XII.When theDecision isadopted, theProtocol ofAccession would
beopenforacceptance andEcuador would become acontracting party Member thirty daysafterit
accepts thesaidProtocol. TheWorking Party agreed, therefore, thatithadcompleted itswork
concerning thenegotiations fortheaccession ofEcuador totheGATT 1947 Agreement Establishing
theWTO.
78.Having carried outtheexamination oftheforeign trade régime ofEcuador andinthelightof
theexplanations, commitments andconcessions made bytherepresentative ofEcuador, theWorking
Party reached theconclusion thatEcuador beinvited toaccede totheAgreement Establishing theWTO
under theprovisions ofArticle XII.Forthispurpose, theWorking Party hasprepared thedraftDecision
andProtocol ofAccession reproduced intheAppendix tothisreport, andtakes noteofEcuador 's
Schedule ofSpecific Commitments onServices (document L/7566) anditsSchedule ofConcessions
andCommitments onGoods thatareannexed totheProtocol. Itisproposed thatthesetextsbeadopted
bytheGeneral Council when itadopts thereport. When theDecision isadopted, theProtocol of
Accession would beopenforacceptance byEcuador which would become aMember thirty daysafter
itaccepts thesaidProtocol. TheWorking Party agreed, therefore, thatithadcompleted itswork
concerning thenegotiations fortheaccession ofEcuador totheAgreement Establishing theWTO.WT/SPEC/5/Rev.1
Page45
APPENDIX
ACCESSION OFECUADOR
Draft Decision
TheGeneral Council,
Having regard totheresults ofthenegotiations directed towards theestablishment oftheterms
ofaccession oftheRepublic ofEcuador totheAgreement Establishing theWorld Trade Organization
andhaving prepared aProtocol fortheAccession ofEcuador,
Decides ,inaccordance with Article XIIoftheAgreement Establishing theWorld Trade
Organization, thattheRepublic ofEcuador mayaccede totheAgreement Establishing theWorld Trade
Organization ontheterms setoutinthesaidProtocol.WT/SPEC/5/Rev.1
Page46
PROTOCOL OFACCESSION OFECUADOR
TOTHE AGREEMENT ESTABLISHING THE WORLD TRADE ORGANIZATION
DRAFT
TheWorld Trade Organization (hereinafter referred toasthe"WTO"), pursuant totheapproval
oftheGeneral Council oftheWTO accorded under Article XIIoftheMarrakesh Agreement Establishing
theWorld Trade Organization (hereinafter referred toas"WTO Agreement"), andtheRepublic of
Ecuador (hereinafter referred toas"Ecuador"),
Taking noteoftheReport oftheWorking Party ontheAccession ofEcuador totheWTO in
document WT/L/ ...(hereinafter referred toasthe"Working Party Report"),
Having regard totheresults ofthenegotiations ontheaccession ofEcuador totheWTO,
Agree asfollows:
PartI-General
1.Upon entry intoforce ofthisProtocol, Ecuador accedes totheWTO Agreement pursuant to
Article XIIofthatAgreement andthereby becomes aMember oftheWTO.
2.TheWTOAgreementtowhichEcuadoraccedesshallbetheWTOAgreementasrectified,amended
orotherwise modified bysuchlegalinstruments asmayhaveentered intoforcebefore thedateofentry
intoforce ofthisProtocol. ThisProtocol, which shall comprise thecommitments referred toin
paragraph ...oftheWorking Party Report, shallbeanintegral partoftheWTO Agreement.
3.Except asotherwise provided forinparagraphs ...oftheWorking Party Report:
(a)Those obligations intheMultilateral Trade Agreements annexed totheWTO Agreement that
aretobeimplemented overaperiod oftimestarting withtheentry intoforce ofthatAgreement
shallbeimplemented byEcuador asifithadaccepted thatAgreement onthedateofitsentry
intoforce;WT/SPEC/5/Rev.1
Page47
(b)Those notifications thataretobemade under theMultilateral Trade Agreements annexed
totheWTO Agreement within aspecified period oftimestarting withthedateofentry intoforce
oftheWTO Agreement shallbemade byEcuador within thatperiod oftimestarting withthe
dateofentry intoforce ofthisProtocol.
4.Thestaging ofthedismantling oftheTariff Adjustment Mechanism shallbeimplemented as
specified in[paragraph 48oftheWorking Party Report and]thetime-table attached hereto.
PartII-Schedules
5.TheSchedulesannexedtothisProtocolshallbecometheScheduleofConcessionsandCommitments
annexed totheGeneral Agreement onTariffs andTrade 1994 (hereinafter referred toasthe"GATT
1994") andtheSchedule ofSpecific Commitments annexed totheGeneral Agreement onTrade in
Services (hereinafter referred toas"GATS") relating toEcuador. Thestaging oftheconcessions and
commitments listed intheSchedules shallbeimplemented asspecified intherelevant parts ofthe
respective Schedules.
6.Forthepurpose ofthereference inparagraph 6(a)ofArticle IIoftheGATT 1994 tothedate
ofthatAgreement, theapplicable dateinrespect oftheSchedules ofConcessions andCommitments
annexed tothisProtocol shallbethedateofentry intoforce ofthisProtocol.
PartIII-Final Provisions
7.This Protocol shall beopen foracceptance, bysignature orotherwise, byEcuador until
31December 1995.
8.ThisProtocol shallenter intoforce onthethirtieth dayfollowing thedayofitsacceptance.
9.ThisProtocol shallbedeposited withtheDirector-General oftheWTO. TheDirector-General
oftheWTO shallpromptly furnish acertified copyofthisProtocol andanotification ofacceptance
thereto pursuant toparagraph 6toeachMember oftheWTO andtoEcuador.WT/SPEC/5/Rev.1
Page48
10.ThisProtocol shallberegistered inaccordance withtheprovisions ofArticle 102oftheCharter
oftheUnited Nations.
Done atGeneva this...dayof...onethousand ninehundred andninety-five, inasingle copy
intheEnglish, French andSpanish languages eachtextbeing authentic, except thataSchedule annexed
hereto mayspecify thatitisauthentic inonlyoneormore ofthese languages.WT/SPEC/5/Rev.1
Page49
ANNEX
SCHEDULE CXXX -ECUADOR
PartI-Goods
PartII-Services
[TOBECOMPLETED ]WT/SPEC/5/Rev.1
Page50
ATTACHMENT TIMETABLE FOR THE DISMANTLING OFTHE TARIFF ADJUSTMENT
MECHANISM OVER SEVEN YEARS
OVERVIEW
YEAR NUMBER OFTARIFF HEADINGS REMOVED* %DISMANTLED
FIRST YEAR 0 0%
SECOND YEAR 0 0%
THIRD YEAR 0 0%
FOURTH YEAR 29 22%
FIFTH YEAR 44 34%
SIXTH YEAR 29 22%
SEVENTH YEAR 28 22%
TOTAL DISMANTLED
130 100%
*Tariff headings areremoved withtheinitial tariff levelfor1995, andarereduced by10percentonlyintheseventh year(2001).
TIMETABLE FOR THE DISMANTLING OFTHE TARIFF ADJUSTMENT
MECHANISM OVER SEVEN YEARS
RICE BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FROM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL
TARIFF
(2001)
1006.10.90 Paddy rice,except forsowing 75.0% 2001 68.0% 67.5%
1006.20.00 Husked (brown) rice 75.0% 2001 68.0% 67.5%
1006.30.00 Semi-milled orwholly milled rice,
whether ornotpolished orglazed 75.0% 2001 68.0% 67.5%
1006.40.00 Broken rice 75.0% 2001 68.0% 67.5%
BARLEY BAND PRODUCTSWT/SPEC/5/Rev.1
Page51
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FROM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL
TARIFF
(2001)
1003.00.90 Barley, except forsowing 40.0% 1999 40.0% 36.0%
1107.10.00 Malt, notroasted 40.0% 1998 40.0% 36.0%
1107.20.00 Malt, roasted 40.0% 1998 40.0% 36.0%
WHITE MAIZE (CORN) BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FORM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL
TARIFF
(2001)
1005.90.12* Hard white maize (corn) 50.0% 2001 45.0% 45.0%
1102.20.00 Maize (corn) flour 50.0% 2000 50.0% 45.0%
*Opening ofNandina 1005.90.10 inprocess ofapproval
WHEAT BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FROM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL TARIFF
(2001)
1001.10.90 Durum wheat, except forsowing 40.0% 2001 36.0% 36.0%
1001.90.20 Other wheat, except forsowing 40.0% 2000 40.0% 36.0%
1001.90.30 Meslin 40.0% 1999 40.0% 36.0%
1101.00.00 Wheat ormeslin flour 40.0% 2001 36.0% 36.0%
1103.11.00 Cereal groats andmeal ofwheat 40.0% 2000 40.0% 36.0%
1108.11.00 Wheat starch 40.0% 1998 40.0% 36.0%WT/SPEC/5/Rev.1
Page52
POULTRY CUTS BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FROM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL
TARIFF
(2001)
0207.39.00 Poultry cutsandoffal, fresh orchilled,
except fattylivers ofgeese orducks 95.0% 1999 95.0% 85.5%
0207.41.00 Cutsandoffaloffowls ofthespecies
gallus domesticus, other thanlivers,
frozen 95.0% 2001 85.5% 85.5%
0207.42.00 Cutsandedible offalother thanlivers,
ofturkeys, frozen 95.0% 2000 95.0% 85.5%
0207.43.00 Cutsandedible offalother thanlivers,
ofducks, geese orguineafowls, frozen 95.0% 1999 95.0% 85.5%
YELLOW MAIZE (CORN) BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FROM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL
TARIFF
(2001)
0203.11.00 Meat ofswine, fresh orchilled,
carcasses andhalfcarcasses 50.0% 1998 50.0% 45.0%
0203.12.00 Hams, shoulders andcutsthereof, with
bone in,fresh orchilled 50.0% 199850.0%
45.0%
0203.19.00 Other meat ofswine, fresh orchilled 50.0% 1998 50.0% 45.0%
0203.21.00 Meat ofswine, carcasses andhalf
carcasses, frozen 50.0% 1999 50.0% 45.0%
0203.22.00 Hams, shoulders andcutsthereof, with
bone in,frozen 50.0% 1998 50.0% 45.0%
0203.29.00 Other meat ofswine, frozen 50.0% 1998 50.0% 45.0%
0207.10.00 Poultry notcutinpieces, fresh or
chilled 50.0% 2000 50.0% 45.0%
0207.21.00 Fowls ofthespecies gallus domesticus,
notcutinpieces, frozen 50.0% 2001 45.0% 45.0%
0207.22.00 Turkeys notcutinpieces, frozen 50.0% 2001 45.0% 45.0%
0207.23.00 Ducks, geese andguineafowls notcutin
pieces, frozen 50.0% 1999 50.0% 45.0%
0210.12.00 Bellies ofswine (streaky) andcuts
thereof, salted, inbrine, dried or
smoked 50.0% 1998 50.0% 45.0%
0210.19.00 Other meat ofswine, salted, inbrine,
dried orsmoked 50.0% 1998 50.0% 45.0%
1005.90.11* Hard yellow maize (corn) 50.0% 2001 45.0% 45.0%
1007.00.90 Grain sorghum, except forsowing 50.0% 2001 45.0% 45.0%
1108.12.00 Maize (corn) starch 50.0% 2000 50.0% 45.0%
1108.19.00 Other starches (e.g. ricestarch,
arrowroot starch) 50.0% 1999 50.0% 45.0%WT/SPEC/5/Rev.1
Page53
YELLOW MAIZE (CORN) BAND PRODUCTS (Cont 'd)
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
REMOVED
FROM
MECHANISMTARIFF IN
YEAR
REMOVEDSEVENTH
YEAR
FINAL
TARIFF
(2001)
1702.30.20 Glucose syrup, notcontaining fructose
orcontaining inthedrystatelessthan
20%byweight offructose 50.0% 1999 50.0% 45.0%
1702.30.90 Other glucose notcontaining fructose or
contain inthedrystatelessthan20per
centbyweight offructose 50.0% 1999 50.0% 45.0%
1702.40.10 Glucose containing inthedrystateat
least20%butlessthan50%byweight
offructose 50.0% 1999 50.0% 45.0%
1702.40.20 Glucose syrup containing inthedry
stateatleast20%butlessthan50%by
weight offructose 50.0% 1999 50.0% 45.0%
2302.10.00 Bran andsharps ofmaize (corn) 50.0% 2001 45.0% 45.0%
2302.30.00 Bran andsharps ofwheat 50.0% 2000 50.0% 45.0%
2302.40.00 Bran andsharps ofother cereals 50.0% 2000 50.0% 45.0%
2308.90.00 Other vegetable materials andvegetable
waste, ofakindusedinanimal feeding 50.0% 1999 50.0% 45.0%
2309.10.00 Dogorcatfood, putupforretail sale 50.0% 2000 50.0% 45.0%
2309.90.10 Sweetened forage 50.0% 2000 50.0% 45.0%
2309.90.90** Other preparations ofakindusedin
animal feeding 50.0% 1998 50.0%45.0%
3505.10.00 Dextrine andother modified starches 50.0% 1998 50.0% 45.0%
3505.20.00 Glues based onstarches etc. 50.0% 2000 50.0% 45.0%
*Opening ofNandina 1006.90.10 inprocess ofapproval
**Other thanmilkforveal, forwhich itisproposed tocreate NANDINA 2309.90.30, which isnotpartoftheSystem.
MILK BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR HEADING
REMOVED FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
0401.10.00 Milk andcream, notconcentrated nor
containing added sugar orother
sweetening matter, ofafatcontent,
byweight, notexceeding 1% 60.0% 2000 60.0% 54.0%
0401.20.00 Milk andcream, notconcentrated nor
containing added sugar orother
sweetening matter, ofafatcontent,
byweight, exceeding 1%butnot
exceeding 6%. 60.0% 2000 60.0% 54.0%
0401.30.00 Milk andcream, notconcentrated nor
containing added sugar orother
sweetening matter, ofafatcontent,
byweight, exceeding 6%. 60.0% 2000 60.0% 54.0%WT/SPEC/5/Rev.1
Page54
MILK BAND PRODUCTS (Cont 'd)
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR HEADING
REMOVED FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
0402.10.00 Milk andcream, containing added
sugar orother sweetening matter, in
powder, granules orother solid
forms, ofafatcontent, byweight, not
exceeding 1.5% 60.0% 2001 54.0% 54.0%
0402.21.00 Milk andcream, notcontaining added
sugar orother sweetening matter, in
powder, granules orother solid
forms, ofafatcontent byweight
exceeding 1.5% 60.0% 2001 54.0% 54.0%
0402.29.00 Milk andcream, inpowder, granules
orother solid form, ofafatcontent,
byweight, exceeding 1.5%,
concentrated, containing added sugar
orother sweetening matter 60.0% 2001 54.0% 54.0%
0402.91.10 Evaporated milk, notcontaining
added sugar orother sweetening
matter 60.0% 2000 60.0% 54.0%
0402.91.90 Other milkandcream, notcontaining
added sugar orother sweetening
matter 60.0% 2000 60.0% 54.0%
0402.99.90 Other milkandcream, containing
added sugar orother sweetening
matter 60.0% 2000 60.0% 54.0%
0404.10.00 Whey, whether ornotconcentrated or
containing added sugar orother
sweetening matter 60.0% 2000 60.0% 54.0%
0404.90.90* Other 60.0% 2000 60.0% 54.0%
0405.00.10 Butter andother fatsandoilsderived
from milk, fresh, salted ormelted 60.0% 1999 60.0% 54.0%
0405.00.20 Butter andother fatsandoilsderived
from milk, dehydrated 60.0% 1999 60.0% 54.0%
0405.00.90 Butter andother fatsandoilsderived
from milk, other thanfresh, salted,
melted ordehydrated 60.0% 1999 60.0% 54.0%
0406.30.00 Processed cheese, notgrated or
powdered 30.0% 1998 30.0% 30.0%
0406.90.10 Softcheeses, excluding Colonia type
cheese 30.0% 1998 30.0% 30.0%
0406.90.20 Semi-hard cheeses 30.0% 1998 30.0% 30.0%
0406.90.30 Hard cheeses, Gruyere type 30.0% 1999 30.0% 30.0%
0406.90.90 Other cheeses (e.g. offermented fresh
cream) 30.0% 1998 30.0% 30.0%
*Opening ofNANDINA 0404.90.00, inprocess ofapproval, inorder toexclude demineralized whey (0404.90.10) which is
notpartoftheSystem.WT/SPEC/5/Rev.1
Page55
SUGAR BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR HEADING
REMOVED FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
1701.11.90 Cane sugar, raw,notcontaining
added flavouring orcolouring matter,
other thanbrown sugar 50.0% 2001 45.0% 45.0%
1701.12.00 Other beetsugar, raw 50.0% 1999 50.0% 45.0%
1701.91.00 Refined caneorbeetsugar, and
chemically puresucrose, insolid
form, containing added flavouring or
colouring matter 50.0% 2000 50.0% 45.0%
1701.99.00 Refined caneorbeetsugar, and
chemically puresucrose, insolid
form, notcontaining added flavouring 50.0% 2001 45.0% 45.0%
1702.10.10 Lactose 30.0% 1998 30.0% 30.0%
1702.60.10 Other fructose containing inthedry
statemore than50%byweight of
fructose 50.0% 1999 50.0% 45.0%
1702.60.20 Fructose syrup containing inthedry
statemore than50%byweight of
fructose 50.0% 1999 50.0% 45.0%
1702.90.20 Caramel 50.0% 1999 50.0% 45.0%
1702.90.30 Flavoured orcoloured sugars 50.0% 1999 50.0% 45.0%
1702.90.40 Other syrups 50.0% 1999 50.0% 45.0%
1702.90.90 Maltose andother solid sugars
including invert sugar 50.0% 1999 50.0% 45.05
1703.10.00 Cane molasses 50.0% 2000 50.0% 45.0%
1703.90.00 Molasses resulting from theextraction
orrefining ofsugar, other thancane
molasses 50.0% 2000 50.0% 45.0%
SOYA BEAN BAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR HEADING
REMOVED FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
1201.00.90 Soya beans, whether ornotbroken,
except forsowing 40.0% 2001 36.0% 36.0%
1202.10.90 Ground nuts, notroasted orotherwise
cooked, inshell, except forsowing 40.0% 1999 40.0% 36.0%
1202.20.00 Groundnuts, shelled, whether ornot
broken 40.0% 1999 40.0% 36.05
1205.00.90 Rape orcolza seeds, whether ornot
broken, except forsowing 40.0% 2001 36.0% 36.0%
1206.00.90 Sunflower seeds, whether ornot
broken, except forsowing 40.0% 2001 36.0% 36.0%
1207.40.90 Sesame seeds, whether ornotbroken,
except forsowing 40.0% 1999 40.0% 36.0%
1207.90.90 Other oilseeds andoleaginous fruits,
whether ornotbroken, except for
sowing 40.0% 2000 40.0% 36.0%WT/SPEC/5/Rev.1
Page56
SOYA BEAN BAND PRODUCTS (Cont 'd)
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR HEADING
REMOVED FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
1208.10.00 Soya beanflour 40.0% 2001 36.0% 36.0%
1208.90.00 Other flours andmeals ofoilseeds or
oleaginous fruits, other thanthose of
mustard 40.0% 1999 40.0% 36.0%
2301.20.10 Flours andmeals offishunfitfor
human consumption 40.0% 1999 40.0% 36.0%
2304.00.00 Oilcakeandother solid residues
resulting from theextraction ofsoya
beanoil 43.0% 2001 38.7% 38.7%
2306.10.00 Oilcakeandother solid residues
resulting from theextraction ofcotton
seedoil 43.0% 1999 43.0% 38.7%
2306.30.00 Oilcakeandother solid residues
resulting from theextraction of
sunflower seedoil 43.0% 1999 43.0% 38.7%
2306.90.00 Other oilcake 43.0% 1999 43.0% 38.7%
SOYA BEAN OILBAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
HEADING
REMOVED
FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
1507.10.00 Soya beanoil,crude, whether ornot
degummed 35.0% 2001 32.0% 31.5%
1507.90.00 Other soyabeanoil,whether ornotrefined 35.0% 2000 35.0% 31.5%
1508.10.00 Crude groundnut oil 35.0% 1998 35.0% 31.5%
1508.90.00 Other groundnut oil,whether ornotrefined 35.0% 1998 35.0% 31.5%
1512.11.00 Crude sunflower orsafflower seedoil 35.0% 2000 35.0% 31.5%
1512.19.00 Other sunflower orsafflower seedoil,
whether ornotrefined 35.0% 1999 35.0% 31.5%
1512.21.00 Crude cotton seedoil,whether ornot
gossypol hasbeenremoved 35.0% 1998 35.0% 31.5%
1512.29.00 Other cotton seedoil,whether ornot
refined 35.0% 1998 35.0% 31.5%
1514.10.00 Crude rape, colza ormustard oil 35.0% 1999 35.0% 31.5%
1514.90.00 Other rape, colza ormustard oil,refined 35.0% 1999 35.0% 31.5%
1515.21.00 Crude maize (corn) oil 35.0% 2001 32.0% 31.5%
1515.29.00 Other refined maize (corn) oil 35.0% 2001 32.0% 31.5%
1515.50.00 Sesame oilanditsfractions 35.0% 1998 35.0% 31.5%
1515.90.00 Other fixed vegetable fatsandoilsandtheir
fractions, whether ornotrefined, butnot
chemically modified 35.0% 1998 35.0% 31.5%WT/SPEC/5/Rev.1
Page57
PALM OILBAND PRODUCTS
NANDINA DESCRIPTION INITIAL
TARIFF
(1995)YEAR
HEADING
REMOVED
FROM
MECHANISMTARIFF IN
REMOVAL
YEARFINAL
TARIFF
(2001)
1501.00.10 Lard andother pigfat,notrefined 35.0% 1998 35.0% 31.5%
1501.00.20 Lard andother pigfat,refined 35.0% 1998 35.0% 31.5%
1501.00.90 Other lard,pigfatandpoultry fat 35.0% 1998 35.0% 31.5%
1502.00.11 Fatsofbovine animals, sheep orgoats,
crude 35.0% 1999 35.0% 31.5%
1502.00.90 Fatsofbovine animals, sheep orgoats,
other thancrude 35.0% 1999 35.0% 31.5%
1503.00.00 Lard stearin, lardoil,oleostearin, oleo-oil
andtallow oil,notemulsified ormixed or
otherwise prepared 35.0% 1998 35.0% 31.5%
1506.00.00 Other animal fatsandoils 35.0% 1999 35.0% 31.5%
1511.10.00 Crude palm oil 35.0% 2001 32.0% 31.5%
1511.90.00 Other palm oil,whether ornotrefined 35.0% 2001 32.0% 31.5%
1513.11.00 Crude coconut (copra) oil 35.0% 1998 35.0% 31.5%
1513.19.00 Other coconut (copra) oil,whether ornot
refined 35.0% 1998 35.0% 31.5%
1513.21.10 Crude palm kernel oil 35.0% 2000 35.0% 31.5%
1513.29.10 Other refined palm kernel oil 35.0% 2000 35.0% 31.5%
1515.30.00 Castor oilanditsfractions 35.0% 1999 35.0% 31.5%
1516.20.00 Vegetable fatsandoilsandtheirfractions 35.0% 1999 35.0% 31.5%
1517.10.00 Margarine, excluding liquid margarine 35.0% 2000 35.0% 31.5%
1517.90.00 Other margarine 35.0% 2000 35.0% 31.5%
1518.00.00 Animal orvegetable fatsandoilsandtheir
fractions, boiled, oxidized, dehydrated,
sulphurized, blown, polymerized byheatin
vacuum orinertgasorotherwise
chemically modified 35.0% 1999 35.0% 31.5%
1519.11.00 Stearic acid 35.0% 1999 35.0% 31.5%
1519.12.00 Oleic acid 35.0% 1999 35.0% 31.5%
1519.13.00 Talloilfattyacids 35.0% 1999 35.0% 31.5%
1519.19.00 Other monocarboxylic fattyacids 35.0% 1999 35.0% 31.5%