7FOREIGN RELATIONS, 1950,.,VOLUME I


  The Government of the Union of South Africa wish to emphasise
that, while the modifications proposed in the attached memorandum
'have been made possible by the recent improvement in South Africa's
monetary reserves, the Union Government, in deciding to introduce
these modifications, have also been actuated by a sincere desire to
satisfy the objections put forward by the United States Delegation
during the discussions at Annecy in 1949 and again at Geneva earlier
this year.
  In submitting the attached memorandum for the advance informa-'
tion of the Government of the United States, the Government of the
Union of South Africa hope that the modifications of the import con-
trol scheme outlined will commend themselves to the Government of
the United States and will be regarded as evidence of the Union
Government's desire to promote the objects of the General Agreement
on Tariffs and Trade.

NAC Files, Lot 60D137
    Memorandum by the NAC Staff Committee to the National
                        Advisory Council

CONFIDENTIAL                      [WASHINGTON,] Ocober 13, 1950.
Doc. No. 1054
Subject: South African Restrictions
I. The Problem
   The National Advisory Council last considered South African
 exchange and import restrictions on February 28, 1950, and took Ac-
 tion No. 392, advising the United States Executive Director of the
 International Monetary Fund as to the position he should take in
 the Fund in connection with a report to GATT on these restrictions.
 Since that action was taken; the South African Government has
 announced major revisions in its system of restrictions. which are to
 become effective January 1, 1951. The immediate questions before

 the Fund are: (a) the propriety of continued maintenance of ex-
 change restrictions by South Africa at their present 'and proposed
 level, and their application on a discriminatory basis; and (b) a report
 to the GATT meeting at Torquay on the financial ,aspects of -the
 parallel problem of the South African import restrictions. It !has
 therefore become necessary for the Council to review the situation
 again and determine whether its previous instructions to the United
 States Executive Director should be revised.
 II. Background
   Under the scheme now operatiiye but which is to, be replaced on
 January 1, 1931, the Sou.h African Government issues two types of


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