FOREIGN ECONOMIC AND COMMERCIAL POLICY


737


   Under GATT, consultation regarding import restrictions also en-
 visages a consideration of alternatives. These might include devalua-
 tion, increased borrowing from ,hard-currency countries, in the case
 of the United Kingdom limiting the flow of payment to other sterling
 countries on outstanding debts which results in an unrequited diversion
 of exports to sterling countries, a decrease in the outflow of capital,
 domestic measures to limit consumption of exportable goods, and
 other internal monetary and fiscal measures. The possibility of such
 alternative measures was thoroughly considered in connection with or
 during the recent Tripartite talks, and some of them, notably devalua-
 tion, have been adopted. While the Delegation may feel free to partici-
 pate in discussion at Geneva regarding alternatives it would not appear
 necessary for it to take the initiative in such discussion or to seek to
 press specific alternatives upon the United Kingdom and the other
 countries concerned. In particular the Delegation should be careful
 to avoid statements which imply a critical attitude toward domestic
 social services and other aspects of the welfare state. The United States
 should favor the expansion of exports which will earn convertible
 currency as an alternative to import restrictions.
   Furthermore, the delicate situation between India and Pakistan
 would make it highly unneutral for this country to suggest within
the GATT framework the devaluation which India is already pressing
Pakistan to adopt.
   Article XII of GATT also requires that restrictions imposed not
prevent unreasonably the importation of token quantities of goods,
a requirement which most of the sterling countries are not observing.
The same is also true for a number of other countries, however, and
thus any raising of this question should be done generally with respect
to all those contracting parties totally excluding certain classes of
imports and not with respect to a select few contracting parties only.
Since it has been decided not to raise this question generally at the
Fourth Session, it would be inappropriate to raise it only with respect
to the sterling countries.
   Another requirement of GATT is that restrictions avoid unnecessary
 damage to the commercial interests of other contracting parties. The.
 .total exclusion of American leather belting from India may be men-
 tioned in this connection; this case has already been brought to the
 attention of India which has promised reconsideration of it.
   Furthermore, while GATT permits deviation from the standards
 of Article XIII, it is questionlable whether resort to the use of licens-
 ing instead of quotas, as envisaged in Article XIII, paragraph 1 (a),
 is necessitated by balance ,of payments ditficulties. The Delegation
 may therefore inquire whether it is not practicable ,to use -and publish