QUITO, March 6 (Reuters) - Ecuador will impose a new set of variable tariffs on one-third of all its imports in an attempt to protect its oil-reliant economy, which has been hit by the plunge in global crude prices, the government said on Friday.
The measure, which begins on Wednesday an extends for 15 months, aims to improve the small Andean nation’s deteriorating trade balance by targeting mainly consumer goods but not its foreign purchases of commodities or capital goods that its industry needs.
The tariffs will range from 5 percent to 45 percent depending on the extent to which products compete with those manufactured locally.
Ecuador adopted the dollar as its currency in 2000, making domestic industry vulnerable to a flood of cheaper imports now that the currencies of several key trade partners have weakened as a result of lower oil prices slashing their export earnings.
The tariffs will make it easier for locally produced items in OPEC’s smallest member to compete in the domestic market by raising the cost of those produced abroad.
“Ecuador is facing a difficult external situation and this is the government’s reaction in the face of it,” Trade Minister Diego Aulestia told reporters, insisting commodity and capital goods would not be affected.
“We’re really targeting consumer goods and, minimally, some items necessary in manufacturing whose acquisition we believe can be deferred,” he said.
The tariffs were compliant with World Trade Organization rules, he said.
Ecuador has been struggling with a persistent trade deficit since 2009 and adopted various measures that seek to restrict imports. Last year the trade deficit was $727 million, down from $1.04 billion the year before.
The new tariffs come just weeks after an attempt to impose tariffs of 7 and 21, respectively, on imports from Peru and Colombia. It backed down amid threats of retaliatory measures. (Writing by Peter Murphy; Editing by Ken Wills)