General Agreement on Tariffs and Trade

Section B

8. The contracting parties recognize that contracting parties coming
within the scope of paragraph 4 (a) of this Article tend, when they are
in rapid process of development, to experience balance of payments
difficulties arising mainly from efforts to expand their internal markets
as well as from the instability in their terms of trade.

9. In order to safeguard its external financial position and to ensure a
level of reserves adequate for the implementation of its programme of
economic development, a contracting party coming within the scope of
paragraph 4 (a) of this Article may, subject to the provisions of
paragraphs 10 to 12, control the general level of its imports by
restricting the quantity or value of merchandise permitted to be
imported; Provided that the import restrictions instituted, maintained or
intensified shall not exceed those necessary:

(a) to forestall the threat of, or to stop, a serious decline in its
monetary reserves, or

(b) in the case of a contracting party with inadequate monetary
reserves, to achieve a reasonable rate of increase in its reserves.

Due regard shall be paid in either case to any special factors which may
be affecting the reserves of the contracting party or its need for
reserves, including, where special external credits or other resources
are available to it, the need to provide for the appropriate use of such
credits or resources.

10. In applying these restrictions, the contracting party may determine
their incidence on imports of different products or classes of products
in such a way as to give priority to the importation of those products
which are more essential in the light of its policy of economic
development; Provided that the restrictions are so applied as to avoid
unnecessary damage to the commercial or economic interests of any other
contracting party and not to prevent unreasonably the importation of any
description of goods in minimum commercial quantities the exclusion of
which would impair regular channels of trade; and Provided further that
the restrictions are not so applied as to prevent the importation of
commercial samples or to prevent compliance with patent, trade mark,
copyright or similar procedures.

11. In carrying out its domestic policies, the contracting party
concerned shall pay due regard to the need for restoring equilibrium in
its balance of payments on a sound and lasting basis and to the
desirability of assuring an economic employment of productive resources.
It shall progressively relax any restrictions applied under this Section
as conditions improve, maintaining them only to the extent necessary
under the terms of paragraph 9 of this Article and shall eliminate them
when conditions no longer justify such maintenance; Provided that no
contracting party shall be required to withdraw or modify restrictions on
the ground that a change in its development policy would render
unnecessary the restrictions which it is applying under this Section.

12. (a) Any contracting party applying new restrictions or raising the
general level of its existing restrictions by a substantial
intensification of the measures applied under this Section, shall
immediately after instituting or intensifying such restrictions (or, in
circumstances in which prior consultation is practicable, before doing
so) consult with the CONTRACTING PARTIES as to the nature of its balance
of payments difficulties, alternative corrective measures which may be
available, and the possible effect of the restrictions on the economies
of other contracting parties.

(b) On a date to be determined by them, the CONTRACTING PARTIES shall
review all restrictions still applied under this Section on that date.
Beginning two years after that date, contracting parties applying
restrictions under this Section shall enter into consultations of the
type provided for in sub-paragraph (a) above with the CONTRACTING PARTIES
at intervals of approximately, but not less than, two years according to
a programme to be drawn up each year by the CONTRACTING PARTIES; Provided
that no consultation under this sub-paragraph shall take place within two
years after the conclusion of a consultation of a general nature under
any other provision of this paragraph.

(c) (i) If, in the course of consultations with a contracting party under
sub-paragraph (a) or (b) of this paragraph, the CONTRACTING PARTIES find
that the restrictions are not consistent with the provisions of this
Section or with those of Article XIII (subject to the provisions of
Article XIV), they shall indicate the nature of the inconsistency and may
advise that the restrictions be suitably modified.

(ii) If, however, as a result of the consultations, the CONTRACTING
PARTIES determine that the restrictions are being applied in a manner
involving an inconsistency of a serious nature with the provisions of
this Section or with those of Article XIII (subject to the provisions of
Article XIV) and that damage to the trade of any contracting party is
caused or threatened thereby, they shall so inform the contracting party
applying the restrictions and shall make appropriate recommendations for
securing conformity with such provisions within a specified period. If
such contracting party does not comply with these recommendations within
the specified period, the CONTRACTING PARTIES may release any contracting
party the trade of which is adversely affected by the restrictions from
such obligations under this Agreement towards the contracting party
applying the restrictions as they determine to be appropriate in the
circumstances.

(d) The CONTRACTING PARTIES shall invite any contracting party which
is applying restrictions under this Section to enter into consultations
with them at the request of any contracting party which can establish a
prima facie case that the restrictions are inconsistent with the
provisions of this Section or with those of Article XIII (subject to the
provisions of Article XIV) and that its trade is adversely affected
thereby. However, no such invitation shall be issued unless the
CONTRACTING PARTIES have ascertained that direct discussions between the
contracting parties concerned have not been successful. If, as a result
of the consultations with the CONTRACTING PARTIES no agreement is reached
and they determine that the restrictions are being applied inconsistently
with such provisions, and that damage to the trade of the contracting
party initiating the procedure is caused or threatened thereby, they
shall recommend the withdrawal or modification of the restrictions. If
the restrictions are not withdrawn or modified within such time as the
CONTRACTING PARTIES may prescribe, they may release the contracting party
initiating the procedure from such obligations under this Agreement
towards the contracting party applying the restrictions as they determine
to be appropriate in the circumstances.

(e) If a contracting party against which action has been taken in
accordance with the last sentence of sub-paragraph (c) (ii) or (d) of
this paragraph, finds that the release of obligations authorized by the
CONTRACTING PARTIES adversely affects the operation of its programme and
policy of economic development, it shall be free, not later than sixty
days after such action is taken, to give written notice to the Executive
Secretary 1 to the CONTRACTING PARTIES of its intention to withdraw from
this Agreement and such withdrawal shall take effect on the sixtieth day
following the day on which the notice is received by him.

(f) In proceeding under this paragraph, the CONTRACTING PARTIES shall
have due regard to the factors referred to in paragraph 2 of this
Article. Determinations under this paragraph shall be rendered
expeditiously and, if possible, within sixty days of the initiation of
the consultations.

Author: international

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