WORLD TRADE WT/TC/NOTIF/BOP/1
15October 1996
ORGANIZATION(96-4341)
Original: English
TECHNICAL COOPERATION HANDBOOK ONNOTIFICATION REQUIREMENTS
Understanding ontheBalance-of-Payments Provisions oftheGATT 1994
1. Thissection oftheHandbook onNotification Requirements covers thenotification obligations
under theUnderstanding ontheBalance-of-Payments Provisions oftheGATT 1994(BOP). Itconsists
ofthefollowing fiveparts:
PartI: Overview ofnotification requirements
PartII: Listing ofthenotification obligations
PartIII: Documents concerning guidelines andformats
PartIV: "Mock" examples ofnotifications
PartV: TextoftheUnderstanding
2. Foracceding countries, notification requirements andthedeadlines forthesubmission oftheir
notifications maybeaffected bytheterms oftheirrespective Protocols ofAccession.
Note: TheHandbook onNotification Requirements doesnotconstitute alegalinterpretation of
thenotification obligations under theAgreement. Ithasbeen prepared bytheSecretariat to
assist Members incomplying withtheirnotification obligations.BOP-I -Page1
BOP-I
UNDERSTANDING ONTHE
BALANCE-OF- PAYMENTS PROVISIONS
OFTHE GATT 1994
OVERVIEW OFNOTIFICATION REQUIREMENTSBOP-I -Page2
NOTIFICATION REQUIREMENTS UNDER THE UNDERSTANDING ONTHE
BALANCE-OF-PAYMENTS PROVISIONS OFTHE GENERAL AGREEMENT
ONTARIFFS AND TRADE 1994
1. Article XII(fordeveloped countries) andXVIII:B (fordeveloping countries) oftheGeneral
Agreement allow Members toadopt restrictions onmerchandise trade tosafeguard thebalance of
payments. Indoing so,Members arecommitted togivepreference to"price-based measures" such
asimport surcharges, import deposit requirements orother equivalent trademeasures. Allrestrictive
measurestakenforbalance-of-paymentspurposesarereviewedintheCommitteeonBalance-of-Payments
Restrictions.
2. TheUnderstanding requires thatMembers notify theGeneral Council notlaterthan30days
aftertheannouncement oftheintroduction of,orsignificant changes intheapplication of,restrictive
measures taken forbalance-of-payments purposes. Members arealsocommitted toannounce time-
schedules fortheremoval ofsuchimport restrictions andtonotify anymodifications tothose schedules
totheGeneral Council. Members mustindicate theamount bywhich aprice-based measure exceeds
abound rateofduty, ifapplicable; theymustalsojustify whyaquantitative measure isusedinlieu
ofaprice-based measure, whynopublic announcement hasbeenmade ofthetimeschedule forremoval,
ifsuchisthecase,andspecify thecriteria usedtodetermine which products aresubject torestriction.
3. Inaddition, onayearly basis, eachMember maintaining suchrestrictions shallmake available
totheSecretariat aconsolidated notification, including allchanges inlaws, regulations, policy statements
orpublic notices, forexamination byMembers. Notifications shallinclude fullinformation, asfar
aspossible, atthetariff-line level, onthetypeofmeasures applied, thecriteria used fortheir
administration, product coverage andtrade flows affected.
4. Members which havereason tobelieve thatarestrictive import measure applied byanother
Member wastaken forbalance-of-payments purposes maybring thematter totheattention ofthe
Committee toenable Members toseekfurther information andclarification onthemeasure.
5. Article XIIoftheGeneral Agreement onTrade inServices (GATS) alsoallows Members,
intheevent ofserious balance-of-payments andexternal financial difficulties, toadopt ormaintain
restrictions ontrade inservices onwhich theyhaveundertaken specific commitments, including on
payments ortransfers fortransactions related tosuchcommitments. Anyrestrictions adopted or
maintained mustbe"promptly" notified totheGeneral Council. Theprocedural requirements (including
notifications oftheUnderstanding apply equally tomeasures introduced ormaintained under Article XII
oftheGATS.BOP-II -Page1
BOP-II
UNDERSTANDING ONTHE
BALANCE-OF- PAYMENTS PROVISIONS
OFTHE GATT 1994
NOTIFICATION OBLIGATIONSBOP-II -Page2
UNDERSTANDING ONBALANCE-OF-PAYMENTS PROVISIONS OFTHE GENERAL AGREEMENT ONTARIFFS AND TRADE
NOTIFICATION OBLIGATIONS
Item Notification requirement Type ofmeasure Periodicity Format Members notifying Towhom
1. Understanding onBalance-of-
Payments
Provisions oftheGATT 1994Introduction oforany
changes intheapplication
ofrestrictive import
measures taken forbalance-
of-payments purposes, as
wellasanymodification in
time-schedules ofthe
removal ofsuch measures
asannounced under
paragraph 1ofthe
Understanding. Reverse
notification isprovided for
inparagraph 10.Adhoc-prior toor
notlater than30days
after announcement of
themeasureNO WTO Members General Council
2. Understanding onBalance-of-
Payments
Provisions oftheGATT 1994Balance-of-payment
restrictions; consolidated
notification of
laws/regulations, including
allchanges inlaws,
regulations, policy
statements orpublic
notices, forexamination by
Members.Annual Under
consideration
inthe
CommitteeWTO Members WTO SecretariatBOP-III -Page1
BOP-III
UNDERSTANDING ONTHE
BALANCE-OF- PAYMENTS PROVISIONS
OFTHE GATT 1994
DOCUMENT(S)BOP-III -Page2
NONEBOP-IV -Page1
BOP-IV
UNDERSTANDING ONTHE
BALANCE-OF- PAYMENTS PROVISIONS
OFTHE GATT 1994
EXAMPLESBOP-IV -Page2
EXAMPLE OFNOTIFICATION UNDER PARAGRAPH 9OFTHE
UNDERSTANDING ONBALANCE-OF-PAYMENTS PROVISIONS
OFTHE GENERAL AGREEMENT ONTARIFFS AND TRADE 1994
Theimportsurchargeof8percentintroducedon20March1995bytheJointDecreeNo.9/1995
of17March 1995 oftheMinister ofIndustry andTrade andtheMinister ofFinance wasmodified
to7percentwitheffect from 1July1996 andto6percentasfrom 1October 1996.
Theabove modification isstipulated bytheJointDecree No.30/1996 of19June1996ofthe
Minister ofIndustry andTrade andtheMinister ofFinance, published intheOfficial Gazette on
19June1996. TheJoint Decree isattached hereto.BOP-IV -Page3
30/1996. (VI.19.) IKM-PM
Joint Decree oftheMinister ofIndustry andTrade
andtheMinister ofFinance ontheModification oftheJoint Decree
No.9/1995. (II.17.) IKM-PM ontheintroduction ofageneral import surcharge
Inexercise ofthepowers conferred bySection 2,Paragraph 2,subparagraph e)oftheDecree 21/1976.
(VI.29) MToftheCouncil ofMinisters ontheCommercial Customs Tariff, weorder thefollowing:
Section 1
Thegeneral import surcharge of8percentprovided forinSection 1oftheJointDecree No.9/1995
(III.17.) IKM-PM ontheintroduction ofageneral import surcharge willbemodified to7percent
asfrom 1July1996 andto6percentfrom october 1996.
Section 2
ThisDecree enters intoforce on1July1996.
ImreDunai Dr.Péter Medgyessy
Minister ofIndustry andTrade Minister ofFinanceBOP-V -Page1
BOP-V
UNDERSTANDING ONTHE
BALANCE-OF- PAYMENTS PROVISIONS
OFTHE GATT 1994
TEXT OFTHE UNDERSTANDINGBOP-V -Page2
UNDERSTANDING ONTHE BALANCE-OF-PAYMENTS PROVISIONS
OFTHE GENERAL AGREEMENT ONTARIFFS AND TRADE 1994
Members,
Recognizing theprovisions ofArticles XIIandXVIII:B ofGATT 1994andoftheDeclaration
onTrade Measures Taken forBalance-of-Payments Purposes adopted on28November 1979
(BISD 26S/205-209, referred tointhisUnderstanding asthe"1979 Declaration") andinorder toclarify
suchprovisions1;
Hereby agree asfollows:
Application ofMeasures
1. Members confirm theircommitment toannounce publicly, assoonaspossible, time-schedules
fortheremoval ofrestrictive import measures taken forbalance-of-payments purposes. Itisunderstood
thatsuchtime-schedules maybemodified asappropriate totakeintoaccount changes inthebalance-of-
payments situation. Whenever atime-schedule isnotpublicly announced byaMember, thatMember
shallprovide justification astothereasons therefor.
2. Members confirm theircommitment togivepreference tothose measures which havetheleast
disruptive effect ontrade. Suchmeasures (referred tointhisUnderstanding as"price-based measures")
shallbeunderstood toinclude import surcharges, import deposit requirements orother equivalent trade
measures withanimpact ontheprice ofimported goods. Itisunderstood that,notwithstanding the
provisions ofArticle II,price-based measures taken forbalance-of-payments purposes maybeapplied
byaMember inexcess oftheduties inscribed intheSchedule ofthatMember. Furthermore, that
Member shallindicate theamount bywhich theprice-based measure exceeds thebound dutyclearly
andseparately under thenotification procedures ofthisUnderstanding.
3. Members shallseektoavoid theimposition ofnewquantitative restrictions forbalance-of-
payments purposes unless, because ofacritical balance-of-payments situation, price-based measures
cannot arrest asharp deterioration intheexternal payments position. Inthose cases inwhich aMember
applies quantitative restrictions, itshallprovide justification astothereasons whyprice-based measures
arenotanadequate instrument todealwiththebalance-of-payments situation. AMember maintaining
quantitative restrictions shallindicate insuccessive consultations theprogress made insignificantly
reducing theincidence andrestrictive effect ofsuchmeasures. Itisunderstood thatnotmore than
onetypeofrestrictive import measure taken forbalance-of-payments purposes maybeapplied onthe
same product.
4. Members confirm thatrestrictive import measures taken forbalance-of-payments purposes
mayonlybeapplied tocontrol thegeneral levelofimports andmaynotexceed whatisnecessary to
address thebalance-of-payments situation. Inorder tominimize anyincidental protective effects, a
Member shalladminister restrictions inatransparent manner. Theauthorities oftheimporting Member
shallprovide adequate justification astothecriteria usedtodetermine which products aresubject to
restriction. Asprovided inparagraph 3ofArticle XIIandparagraph 10ofArticle XVIII, Members
may, inthecaseofcertain essential products, exclude orlimittheapplication ofsurcharges applied
across theboard orother measures applied forbalance-of-payments purposes. Theterm"essential
1Nothing inthisUnderstanding isintended tomodify therights andobligations ofMembers under
Articles XIIorXVIII:B ofGATT 1994. Theprovisions ofArticles XXII andXXIII ofGATT 1994
aselaborated andapplied bytheDispute Settlement Understanding maybeinvoked withrespect to
anymatters arising fromtheapplication ofrestrictive import measures taken forbalance-of-payments
purposes.BOP-V -Page3
products" shallbeunderstood tomean products which meetbasicconsumption needs orwhich contribute
totheMember 'seffort toimprove itsbalance-of-payments situation, suchascapital goods orinputs
neededforproduction.Intheadministrationofquantitativerestrictions,aMembershallusediscretionary
licensing onlywhen unavoidable andshallphase itoutprogressively. Appropriate justification shall
beprovided astothecriteria usedtodetermine allowable import quantities orvalues.
Procedures forBalance-of-Payments Consultations
5. TheCommittee onBalance-of-Payments Restrictions (referred tointhisUnderstanding asthe
"Committee") shallcarry outconsultations inorder toreview allrestrictive import measures taken
forbalance-of-payments purposes. Themembership oftheCommittee isopentoallMembers indicating
theirwishtoserve onit.TheCommittee shallfollow theprocedures forconsultations onbalance-of-
payments restrictions approved on28April 1970(BISD 18S/48-53, referred tointhisUnderstanding
as"fullconsultation procedures"), subject totheprovisions setoutbelow.
6. AMember applying newrestrictions orraising thegeneral level ofitsexisting restrictions
byasubstantial intensification ofthemeasures shallenterintoconsultations withtheCommittee within
fourmonths oftheadoption ofsuchmeasures. TheMember adopting suchmeasures mayrequest
thataconsultation beheldunder paragraph 4(a)ofArticle XIIorparagraph 12(a) ofArticle XVIII
asappropriate. Ifnosuchrequest hasbeenmade, theChairman oftheCommittee shallinvite the
Member toholdsuchaconsultation. Factors thatmaybeexamined intheconsultation would include,
interalia,theintroduction ofnewtypes ofrestrictive measures forbalance-of-payments purposes,
oranincrease inthelevelorproduct coverage ofrestrictions.
7. Allrestrictions applied forbalance-of-payments purposes shallbesubject toperiodic review
intheCommittee under paragraph 4(b)ofArticle XIIorunder paragraph 12(b) ofArticle XVIII, subject
tothepossibility ofaltering theperiodicity ofconsultations inagreement withtheconsulting Member
orpursuant toanyspecific review procedure thatmayberecommended bytheGeneral Council.
8. Consultations maybeheldunder thesimplified procedures approved on19December 1972
(BISD 20S/47-49, referred tointhisUnderstanding as"simplified consultation procedures") inthe
caseofleast-developed country Members orinthecaseofdeveloping country Members which are
pursuing liberalization efforts inconformity withtheschedule presented totheCommittee inprevious
consultations. Simplified consultation procedures mayalsobeusedwhen theTrade Policy Review
ofadeveloping country Member isscheduled forthesame calendar yearasthedatefixed forthe
consultations. Insuchcases thedecision astowhether fullconsultation procedures should beused
willbemade onthebasis ofthefactors enumerated inparagraph 8ofthe1979 Declaration. Except
inthecaseofleast-developed country Members, nomore thantwosuccessive consultations maybe
heldunder simplified consultation procedures.
Notification andDocumentation
9. AMember shall notify totheGeneral Council theintroduction oforanychanges inthe
application ofrestrictive import measures taken forbalance-of-payments purposes, aswellasany
modifications intime-schedules fortheremoval ofsuchmeasures asannounced under paragraph 1.
Significant changes shallbenotified totheGeneral Council prior toornotlaterthan30daysafter
their announcement. Onayearly basis, eachMember shall make available totheSecretariat a
consolidated notification, including allchanges inlaws, regulations, policy statements orpublic notices,
forexamination byMembers. Notifications shallinclude fullinformation, asfaraspossible, atthe
tariff-line level, onthetypeofmeasures applied, thecriteria usedfortheiradministration, product
coverage andtrade flows affected.
10. Attherequest ofanyMember, notifications maybereviewed bytheCommittee. Suchreviews
would belimited totheclarification ofspecific issues raised byanotification orexamination ofwhether
aconsultation under paragraph 4(a)ofArticle XIIorparagraph 12(a) ofArticle XVIII isrequired.
Members which havereasons tobelieve thatarestrictive import measure applied byanother MemberBOP-V -Page4
wastaken forbalance-of-payments purposes maybring thematter totheattention oftheCommittee.
TheChairman oftheCommittee shallrequest information onthemeasure andmake itavailable to
allMembers. Without prejudice totheright ofanymember oftheCommittee toseekappropriate
clarifications inthecourse ofconsultations, questions maybesubmitted inadvance forconsideration
bytheconsulting Member.
11. Theconsulting Member shallprepare aBasic Document fortheconsultations which, inaddition
toanyother information considered toberelevant, should include: (a)anoverview ofthebalance-of-
payments situation andprospects, including aconsideration oftheinternal andexternal factors having
abearing onthebalance-of-payments situation andthedomestic policy measures taken inorder torestore
equilibrium onasound andlasting basis; (b)afulldescription oftherestrictions applied forbalance-of-
payments purposes, theirlegalbasisandstepstaken toreduce incidental protective effects; (c)measures
taken since thelastconsultation toliberalize import restrictions, inthelightoftheconclusions ofthe
Committee; (d)aplanfortheelimination andprogressive relaxation ofremaining restrictions.
References maybemade, when relevant, totheinformation provided inother notifications orreports
made totheWTO. Under simplified consultation procedures, theconsulting Member shallsubmit
awritten statement containing essential information ontheelements covered bytheBasic Document.
12. TheSecretariat shall, withaviewtofacilitating theconsultations intheCommittee, prepare
afactual background paper dealing withthedifferent aspects oftheplanforconsultations. Inthecase
ofdevelopingcountryMembers,theSecretariatdocumentshallincluderelevantbackgroundandanalytical
material ontheincidence oftheexternal trading environment onthebalance-of-payments situation
andprospects oftheconsulting Member. Thetechnical assistance services oftheSecretariat shall,
attherequest ofadeveloping country Member, assist inpreparing thedocumentation forthe
consultations.
Conclusions ofBalance-of-Payments Consultations
13. TheCommittee shallreport onitsconsultations totheGeneral Council. When fullconsultation
procedures havebeenused, thereport should indicate theCommittee 'sconclusions onthedifferent
elements oftheplanforconsultations, aswellasthefactsandreasons onwhich theyarebased. The
Committee shall endeavour toinclude initsconclusions proposals forrecommendations aimed at
promotingtheimplementationofArticlesXIIandXVIII:B,the1979DeclarationandthisUnderstanding.
Inthose cases inwhich atime-schedule hasbeenpresented fortheremoval ofrestrictive measures
taken forbalance-of-payments purposes, theGeneral Council mayrecommend that,inadhering to
suchatime-schedule, aMember shallbedeemed tobeincompliance withitsGATT 1994obligations.
Whenever theGeneral Council hasmade specific recommendations, therights andobligations of
Members shallbeassessed inthelightofsuchrecommendations. Intheabsence ofspecific proposals
forrecommendations bytheGeneral Council, theCommittee 'sconclusions should record thedifferent
views expressed intheCommittee. When simplified consultation procedures havebeenused, thereport
shallinclude asummary ofthemain elements discussed intheCommittee andadecision onwhether
fullconsultation procedures arerequired.