WORLD TRADE WT/BOP/R/37
12November 1997
ORGANIZATION(97-4935)
Committee onBalance-of-Payments Restrictions
REPORT (1997) OFTHE COMMITTEE ONBALANCE-OF-PAYMENTS RESTRICTIONS
1. Thisreport hasbeenprepared inpursuance oftheProcedures foranAnnual Overview ofWTO
Activities andforReporting under WTO (WT/L/105).
2. Since thebeginning of1997, theCommittee hasheldconsultations witheight Members.
3. InJanuary 1997, theCommittee continued itsconsultations withIndia, suspended since
December 1995. TheCommittee welcomed India'scontinued commitment toward economic reform
andliberalization, andnoted itsprogressive removal ofquantitative restrictions notified under
Article XVIII:B. TheCommittee alsonoted theIMF'sstatement thatIndia'scurrent monetary reserves
were notinadequate andwere notthreatened byaserious decline. India cautioned thatitsbalance
ofpayments needed closemonitoring andthattheprecipitate removal ofquantitative restrictions notified
under Article XVIII:B could undermine thestability ofitseconomy andthereform process. The
Committee agreed toresume theconsultations withIndia atthebeginning ofJune1997 toconsider
aplanfortheelimination ofmeasures notified under Article XVIII:B andtoconclude theconsultations
consistently withallrelevant BOPprovisions. Indrawing upaplan,Indiawould givedueconsideration
toMembers 'interests inabalanced manner.1TheCommittee reconvened inJunetoconsider India's
plantoeliminate themeasures notified under Article XVIII:B.2Intheabsence ofagreement within
theCommitteeonspecificproposalsforrecommendationbytheGeneralCouncil,arecordofthedifferent
views expressed wasproduced andcirculated toMembers, inaccordance withparagraph 13ofthe
Understanding.3
4. InMarch, theCommittee resumed itsconsultations withNigeria. TheCommittee recalled
thatatitsprevious meeting, Members considered thattheimport prohibitions inforce inNigeria could
nolonger bejustified under Article XVIII:B andtheUnderstanding ontheBalance-of-Payments
Provisions oftheGATT. Atthattime, Nigeria hadstated itscommitment toproceed withtheirearly
elimination andtodisinvoke Article XVIII:B. Members welcomed theremoval oftwoitems from
theimport prohibition list,butexpressed disappointment thatsixitems onthelistremained inplace.
TheCommittee didnotaccept Nigeria 'sproposal foraphase outbytheyear2005.4When consultations
resumed attheendofJuly, Members welcomed thesubmission ofatimeschedule forthephasing
1WT/BOP/R/22, 3March 1997.
2WT/BOP/N/24, 22May 1997.
3WT/BOP/R/32, 18September 1997.
4WT/BOP/R/25, 27March 1997.WT/BOP/R/37
Page2
outofNigeria 'sremaining import prohibitions.5MostMembers called fortheirelimination immediately
oroveramuch shorter time-frame thanthatproposed byNigeria. TheNigerian delegation agreed
tocommunicate theviews expressed byMembers oftheCommittee totheappropriate andcompetent
authorities fortheirconsideration andtoconsult interested Members inthecourse ofNovember. On
thatbasis, theCommittee decided tosuspend theconsultations andresume, withaviewtoconcluding,
inearly February 1998.6Since March, Members havereserved theirrights under GATT 1994.
5. InApril, Pakistan consulted withtheCommittee. Committee Members recognized thatPakistan
wasfacingaseriousbalance-of-paymentsproblemandagreedthatitwasjustifiedinresortingtomeasures
inaccordance withArticle XVIII:B ofGATT 1994. While Members appreciated thereduction ofitems
ontheNegative Listfrom 214to68since 1989, some pointed outthatmany oftheitems listed should
more appropriately bejustified under other WTO provisions, e.g.ongrounds ofhealth, safety, public
morals orsecurity.7Some alsoquestioned therecourse toquantitative restrictions, noting thatpriced-
based measures werenormally tobepreferred. Andattention wasdrawn totheabsence ofaphase-out
schedule.WhenconsultationsresumedinNovember,followingthesubmissionofadditionalinformation
requested bytheCommittee, theCommittee agreed thattheconsultations would bedeemed tobe
concluded provided Pakistan publicly announced, within twelve months, aschedule, taking account
ofmacroeconomic developments andtheinterests oftrading partners, fortheremoval ofthemeasures
within areasonable period oftime.
6. On2May, theCommittee consulted withBangladesh under simplified procedures. Members
recognized that,since thelastconsultation, thebalance-of-payments situation haddeteriorated and
remained precarious. Noting areduction inthenumber ofquantitative restrictions inrecent years,
someMemberscommendedBangladeshfornotintensifyingrestrictionsbutcontinuingwithitsprogramme
oftrade liberalization. Members called forfurther information andclarification, inaccordance with
Paragraph 11oftheUnderstanding, regarding thelegalbasis, system andeffects ofrestrictions and
observed that,under Paragraph 1oftheUnderstanding, Members were committed toannouncing
time-schedules fortheremoval ofrestrictions taken forbalance-of-payments purposes. Noting that
fullconsultations hadnever beenheldwithBangladesh, theCommittee determined thatfullconsultations
would bedesirable, asameans ofclarifying thebalance-of-payments situation andpromoting greater
transparency. TheCommittee invited theGovernment ofBangladesh toconsider holding suchfull
consultations intheautumn of1998, or,inanycase, before May1999.8
7. TheCommittee resumed itsconsultations withTunisia inJune. Itcommended theTunisian
authorities fortheirsound macroeconomic policies which hadledtoanimprovement intheexternal
situation. Although thebalance-of-payments position hadstrengthened andthere appeared tobeno
threat ofaserious decline inthelevelofreserves, opinions differed astowhether thesituation was
stable orremained fragile. According totheIMF, theoutlook wasencouraging. While acknowledging
theresidual nature oftheremaining restrictions, some Members emphasised thatsectoral measures
werenotinaccordance withtheprovisions oftheUnderstanding noranappropriate wayofaddressing
abalance-of-payments problem. Tunisia undertook tophase-out theremaining restrictions infoursteps
5WT/BOP/N/27, 16July1997.
6WT/BOP/R/35, 19September 1997.
7WT/BOP/R/27, 15July1977.
8WT/BOP/R/28, 28May 1997.WT/BOP/R/37
Page3
from1July1997, ending 1July2000.9TheCommittee invited Tunisia toaccelerate implementation
ofthisphase-out planshould circumstances permit.10
8. InJuly,theCommittee mettoconsider asix-month, noninterest bearing import deposit scheme
introduced bytheCzech Republic on21April 1997.11TheCommittee expressed appreciation forthe
timely Czech notification ofthemeasure under consideration, while regretting theabsence fromitof
anytime-schedule fortheelimination ofthemeasure. Amajority ofMembers oftheCommittee argued
thatthemeasure wasinappropriate, particularly inthatitscoverage ofimports wasselective, and
ill-designed toredress macroeconomic imbalances. They urged theCzech authorities toeliminate it
during orbefore theirforthcoming review; ortopresent totheCommittee, before theresumption
oftheconsultation inSeptember, atime-schedule foritselimination within 1997. TheCzech delegation
maintained thatthemeasure wasinfullconformity withCzech obligations under Article XIIandthe
1994 Understanding, andstressed thatitwaswithout protectionist intent.12
9. Subsequently, on29August, theCzech Republic notified theWTO thatithadabolished the
scheme on21August andwasnolonger applying restrictions under cover ofArticle XII.13
10. AlsoinJuly,theCommittee heldconsultations withBulgaria under Article XIIonits5percent
import surcharge, introduced tosafeguard thebalance ofpayments on4June1996.14Bulgaria intends
toreduce thesurcharge annually withelimination foreseen for1July2000. TheCommittee commended
Bulgariaforhavingmaintained,duringitsrecentdifficulties,itscommitmenttoreformandliberalization.
Itrecognized that,although Bulgaria 'sreserve position hadimproved recently, itsbalance-of-payments
situation wasstilldelicate, andnoted, interalia,boththecontinuing importance ofmarket-oriented
policies andBulgaria 'scontinuing reliance onthetimely disbursement ofofficial external assistance.
Itfound thatrecourse toArticle XIIofGATT 1994wasjustified. Some Members oftheCommittee
urgedBulgariatoacceleratetheeliminationofthismeasure,asrecommendedbytheIMFinitsstatement,
andexpressed theirhopetoseeprogress inthisregard bythenextconsultation. Bulgaria affirmed
thatitwould keepunder continuous review thecompatibility ofthismeasure withitsobligations under
GATT Article XII:2(b).15
11. InOctober, theCommittee consulted withtheSlovak Republic, under Article XII,onitsimport
surcharge, applied sinceAugust onthemajority ofimports attherateof7percent.16Theconsultations
were suspended untilDecember 1997.
9WT/BOP/N/25, 3July1997.
10WT/BOP/R/31, 30July1997.
11WT/BOP/N/19 andAdd.1, 29April and21May 1997, respectively.
12WT/BOP/R/33, 18September 1997.
13WT/BOP/N/29, 15September 1997.
14WT/BOP/N/18, 27March 1997.
15WT/BOP/R/34, 18September 1997.
16WT/BOP/N/28, 30July1997.WT/BOP/R/37
Page4
12. InFebruary, theoutgoing Chairman, Mr.Peter Witt(Germany) handed overtheChairmanship
toMr.Peter R.Jenkins (United Kingdom). Atthatmeeting, theCommittee granted regular observer
status tothefollowing international, intergovernmental organizations: ACP Secretariat, EBRD, EFTA,
OECD, UNCTAD andtheWorld Bank.17
13. Inthecourse of1997, sixWTO Members joined theCommittee (Costa Rica, Ecuador,
Hong Kong China, Nigeria, Slovenia andSouth Africa).18
14. On1January 1997, theSlovak Republic andPoland eliminated import surcharges introduced
on3March 1994 and1December 1992, respectively.19Turkey disinvoked thebalance-of-payments
provisions witheffect from thesame date.20On1July, Hungary eliminated its3percentimport
surcharge; Bulgaria lowered its5percentimport surcharge to4percentwitheffect from thesame
date.21
17WT/BOP/R/23, 19February 1997.
18WT/BOP/INF/6, 16July1997; andWT/BOP/INF/6/Corr.1, 24July1997.
19WT/BOP/N/15, 24January 1997; WT/BOP/N/16, 19February 1997.
20WT/BOP/N/22, 15May 1997.
21WT/BOP/N/26, 15July1997; WT/BOP/N/30, 13October 1997.WT/BOP/R/37
Page5Table 1
BOP CONSULTATIONS IN1997
Member LastConsultation Follow up
Bangladesh May1997 TheCommittee recommended thatBangladesh holdfullconsultations in1998 ornolaterthanMay1999.
Bulgaria July1997 TheCommittee decided torecommend totheCouncil thatBulgaria bedeemed incompliance withitsWTO obligations.
Bulgaria lowered its5percentsurcharge to4percenton1July1997.
Czech Republic July1997 TheCzech Republic abolished theimport deposit scheme, introduced on21April 1997, on21August 1997.
Hungary September 1996 Hungary eliminated theimport surcharge on1July1997.
India January andJune1997 Views expressed intheCommittee arerecorded inWT/BOP/R/32.
Nigeria March andJuly1997 Noconclusion. Consultations toresume inFebruary 1998.
Pakistan November 1997 TheCommittee concluded onthebasis ofatimeschedule forremoval ofthemeasures tobesubmitted within twelve months.
Poland June1995 Poland eliminated thesurcharge on1January 1997.
Slovakia October 1997 Slovakia eliminated a7.5percentsurcharge imposed in1994 on1January 1997. On1Mayitadopted animport deposit
scheme which wasreplaced bya7percentsurcharge on21July.
SriLanka November 1995 Consultations tobeheldinFebruary 1998.
Tunisia June1997 Tunisia agreed tophase outrestrictions by1July2000.
Turkey June1995 Turkey disinvoked thebalance-of-payments provisions asof1January 1997.