FOREIGN RELATIONS,) 19 5 0, VOLUME I


sary,. by borrowing here or in Canada instead of relying on import
restrictions alone. Pakistan apparently is interpreting.her obligation
to curtail imports as an obligation to reduce imports by 25 percent in
1949-50 as compared with 1947-48 so that 1950 imports may be no
smaller than 1949 imports. Nevertheless, Pakistan also appears to be
intensifying restrictions on imports from dollar ,areas. Southern
Rhodesia was -a party to the agreement to intensify but apparently
indicated her imports had already been cut to the bone so that she
may not actually be intensifying by as much as 25 percent. As South-
ern Rhodesia has a common quota with the United Kingdom in the
Fund, discrimination against all other countries in favor of United
Kingdom would not be inconsistent with GATT, but this is not true
with respect to other independent sterling-area countries. The import
restrictions imposed by South Africa are covered in a separate posi-
tion paper and are thus excluded from consideration here.
Criteria in GATT Applicable to All Import Restrictions for Balance-
    of-Payments Reasons
  Under GATT, all restrictions imposed for balance-of-payments rea-
sons, whether or not discriminatory, are subject to the requirement
that they be necessary under Article XII-2- (a) "to forestall the immi-
nent threat of, or to stop, a serious decline in ... monetary reserves,
or in the case of a contracting party with very low monetary reserves,
to achieve a reasonable rate of increase in its reserves".
  As shown in the table in Annex A, the gold and dollar reserves of
the sterling area declined between March 31, 1949 and June 30, 1949 by
about 14 percent and between June 30 and September 30 declined a
further 12 points to about 74 percent of their March 31 figure in spite
of interim measures of increased restriction on imports taken during
the third quarter of the year. As of December 31 reserves had increased
to slightly better than the June 30 figure but were still about 12 per-
cent below last March, although in terms of devalued sterling they were
well above the amount held during the first part of 1949.
   It is understood that the International Monetary Fund will very
likely take the position that the British balance-of-payments and
reserve position warranted, under the GATT, an intensification of
import restrictions of the magnitude undertaken by the United King-
dom and other Commonwealth countries, and it does not appear neces-
sary to raise any question concerning the consistency of increased
restrictions with the provisions of GATT. Though there has been
some increase recently in the level of British monetary reserves, made
possible by ECA assistance, it does not appear sufficiently substantial
to require, under GATT, relaxation of the restrictions imposed. The
United States should not press for early relaxation of restrictions,


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