FOREIGN ECONOMIC AND COMMERCIAL POLICY


discriminatory pattern of balance-of-payments import restrictions
which is permitted is a pattern having the equivalent effect to exchange
restrictions which the contracting party is authorized to apply under
Article XIV of the Articles of Agreement of the International
Monetary Fund. Another acceptable discriminatory pattern which
may be used in applying balance-of-payments import restrictions is
the pattern which the contracting party was applying on March 1,
1948 or any adaptation of such pattern required by changing circum-
stances. Finally, contracting parties which have so elected are author-
ized to apply their discriminatory balance-of-payments import re-
strictions in a manner which departs from      a nondiscriminatory
pattern if that departure (a) would result in the importing country's
obtaining additional imports, (b) would not constitute part of an
,arrangement which would reduce the country's earnings of gold or
dollars, (c) would not cause unnecessary damage to 'other contracting
parties and (d) would not result in the import of products at prices
substantially higher than those available from hard-currency sources.t
   [In the original paper as presented for consideration to TAC on
March 3, there followed a five-page section captioned "Consistency of
OEEC measures with U.S. policies and GATT provisions." As a
result of the March 3 TAC deliberations, this section was stricken
and the following was substituted.]
                          PROPOSED ACTION
   The Delegation should seek to avoid the issues set out above from
 being raised at the Fourth Session. If they are raised, however, the
 Delegation should attempt to avoid any definitive resolution of them
 at the Session and, accordingly, should take the following line:
   1. Under the GATT discriminatory restrictions for balance-of-
 payments reasons which cannot in fact be justified on these grounds
 are not permissible and should be removed.
   2. The determination of whether particular restrictions are dis-
criminatory requires careful examination. Further, if the restrictions
are discriminatory, the determination of whether these restrictions
can be justified on balance of payments grounds requires study and
analysis of the external financial position of the particular countries
concerned land the balance-of-payments relationships between them.
The necessary information bearing on these aspects would have to be
presented before any decision could be reached.
   3. In order that an adequately documented case may be presented
 to the Contracting Parties, it would be desirable for the affected
 parties first to take the matter up between themselves in accordance
 with the provisions of Article XXIII before raising the matter with
 the Contracting Parties.

   $Canada, Ceylon, Lebanon, South Africa, Southern Rhodesia, Syria, and
the
 UK have so elected. [Footnote in the source text.]


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