Balance-of-payments Consultations

Balance-of-payments consultations in Global Commerce Policy

In this regard, a definition of this issue is as follows: WTO members may use GATT Article XII (Restrictions to Safeguard the Balance of Payments) in the case of developed countries and Article XVIII:B (Governmental Assistance to Economic Development) in the case of developing countries in some circumstances to impose import restrictions to shore up deteriorating foreign exchange reserves. The basic conditions under which restrictions may be taken are almost the same under these two Articles: the measures taken must be no more than is necessary (i) to forestall the imminent threat of, or to stop, a serious decline in monetary reserves, or (ii) in the case of very low monetary reserves, to achieve a reasonable rate of increase in these reserves. The entries on trade policy are here. Any WTO member taking this step has to consult the WTO membership, either before or immediately after doing so, on the nature of its balance of payments difficulties, alternative corrective measures that may be available and the possible effect of restrictions on other members. The entries on trade policy in the Encyclopedia are here. Once restrictions have been imposed, they are subject to reviews. Reviews normally use the full consultation procedures , but the simplified consultation procedures  apply in the case of least developed countries or developing countries that have adopted liberalization programs in response to earlier consultations.[1]

Balance-of-payments consultationsin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Balance-of-payments consultations” entry (OAS)

See Also