WORLD TRADE
ORGANIZATIONWT/WGTDF/W/3
21 June 2002
(02-3444)
Working Group on Trade, Debt
and Finance
WTO PROVISIONS RELEVANT TO THE RELATIONSHIP
BETWEEN TRADE AND FINANCE AND TRADE AND DEBT
Note by the Secretariat
I. INTRODUCTION
1. This Note has been prepared by the Secretariat in response to a request from the Working
Group at its first meeting for a factual paper on WTO provisions that might be relevant to the Group's
work, taking into account any provisions identified by Members in this regard.1
2. The importance of a well-functioning international financial system has always been a matter
of priority for international trade and the multilateral trading system.  It figured in the drafting of the
GATT, where attention was paid to ensuring complementarity between the multilateral trade rules and
the financial policy disciplines of the International Monetary Fund (IMF).  It received attention in
various GATT bodies, particularly in the late-1970s and early-1980s, by the (then) ContractingParties, and it was elaborated on in several areas of the Uruguay Round negotiations.
3. The result is that provisions that might be deemed relevant to the relationship between trade
and finance can be found in many WTO Agreements and related Ministerial Declarations and
Decisions.  These are listed and reproduced in the A nnex to this Note, along with selected extracts
from the Analytical Index (1995) that relate to those provisions.  They are arranged by topic.  TheSecretariat has not been able to identify any WTO prov isions that deal directly with the topic of trade
and debt.
4. Two issues of particular concern have been the need for exchange rate stability  to provide a
predictable price mechanism for conducting international transactions, price-based trade policies, and
trade negotiations, and the need to ensure that the rules-based trading system is not frustrated by theundisciplined use of multiple exchange rate arrangements  or exchange restrictions .
5. The Articles of Agreement of the International Monetary Fund (IMF) and the provisions of
the WTO are designed to complement each other in this regard, and between them to provide a
coherent set of rules and disciplines for the progressive liberalisation of international trade and
payments.  GATT Article XV requires WTO Members to cooperate with the IMF with the aim of
                                                     
1 WT/WGTDF/M/1 and W/1.  The Note will be updated in the light of delegations' comments.This document has been prepared under the Secretariat's own
responsibility and without prejudice to the positions of Members
and to their rights and obligations under the WTOWT/WGTDF/W/3
Page 2
pursuing a coordinated policy with regard to exchange questions and questions of quantitative
restrictions and other trade measures.  It also obliges WTO Members not to frustrate the intent of the
GATT provisions by exchange action, nor the provisions of the IMF Articles of Agreement through
trade action.
6. Other WTO provisions translate this into specific obligations.  For example:  GATT Article
II:3 prohibits Members from altering their method of converting currencies so as to impair the value
of their tariff concessions;  GATT Article VII requires Members normally to use exchange rates
recognized by the IMF when valuing goods for customs purposes;  Article VI:2 and 3 (Ad. Note)
treats multiple currency practices in certain circumstances as constituting a subsidy to exports;  GATT
Article XVI (Ad. Note) permits the use of multiple exchange rates in accordance with the IMF
Articles of Agreement;  and the Agreement on Trade-Related Investment Measures treats foreign
exchange balancing requirements as a quantitative import restriction.
7. Following the second amendment of the IMF Articles of Agreement in 1978 to reflect the
breakdown of the par value  exchange rate system, adjustments to some of the GATT provisions
relating to exchange rates were made by the CONTRACTING PARTIES.  Since then, and notably in
the Uruguay Round Agreements that contain provisions relating to the use of exchange rates, market
exchange rates have been used as the point of  reference.  For example, in the Agreement on
Agriculture, the "Guidelines for the Calculation of Tariff Equivalents" (Attachment to Annex 5:3)
require Members to convert external prices to domestic currencies generally using the annual average
market exchange rate for the same period as the price data;  and Article II:2.4.1 of the Agreement on
Implementation of Article VI of the GATT 1994 requires that currencies be converted using the rate
of exchange on the date of sale, or in certain circumstances the forward exchange rate.
8. The importance of the disciplined use of exchange restrictions, as well as close institutional
cooperation with the IMF, has been carried over into the GATS.  Under GATS Article XI, a Member's
rights and obligations are related directly to its IMF rights and obligations, including its ability to use
exchange actions which are in conformity with the IMF Articles of Agreement.  The GATS prohibits
a Member from applying restrictions on international transfers and payments for current transactionsrelating to its specific commitments, and restrictions on capital transactions inconsistently with its
specific commitments, other than in the context of the GATS provisions allowing restrictions to be
imposed for balance-of-payments purposes, or, in the case of capital account restrictions, at the
request of the IMF.
9. Provisions giving Members flexibility in meeting their trade policy obligations in the event of
them encountering serious balance-of-payments and external financial difficulties  are included in
both the GATT and the GATS, as well as in the Agreements on Trade-Related Investment Measuresand on Government Procurement.  GATT Articles XII and XVIII:B and GATS Article XII allow a
Member to impose trade restrictions to safeguard its external financial position and its balance-of-
payments, subject to certain conditions.  In the case of the GATS, restrictions on payments or
transfers for transactions related to the Member's  specific commitments are also permitted in these
circumstances, subject to the restrictions being consistent with the IMF Articles of Agreement.GATT Article XV sets out the role of the IMF in relation to Members' use of these balance-of-
payments provisions.
10. Trade in financial services is an important area in the WTO of interaction between trade
policies and financial policies.  The GATS Annex on Financial Services contains provisions that
ensure a Member shall not be prevented from taking measures affecting trade in services forprudential reasons , or to ensure the integrity and stability of the financial system.
11. GATT Articles XXXVI:6 and XXXVIII:2(c) contain provisions that refer to the relationship
between developing country Members' export earnings and their need for adequate financialWT/WGTDF/W/3
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assistance for development  to alleviate the burdens they assume in the interest of their economic
development.  The Uruguay Round Decision on Net- Food Importing Countries recognizes the need of
least-developed and net food-importing countries for financial assistance to improve their agricultural
productivity and infrastructure.
12. The Enabling Clause, and the WTO Agreements on Subsidies and Countervailing Measures
and on Technical Barriers to Trade require, inter alia , that a developing country Member's financial
needs  be taken into account in the application of certain of their provisions, or in the case of the
Enabling Clause in the context of trade negotiations.
13. The GATT contains a few provisions linking a Member's trade policy to its tax policy .
GATT Article XXVIII bis requires that trade negotiations be conducted on a basis which affords
adequate opportunity to take into account a Member's fiscal revenue needs.  GATT Article XXXVII
requires developed country Members, to the fullest extent possible, to avoid and reduce fiscalmeasures that hamper significantly the growth of consumption of primary products of export interest
to developing countries.
14. The functioning of the international financial system, and specifically of the exchange rate
system, was discussed in the GATT in the late-1970s and early-1980s as a matter of concern to
Members, usually in the context of institutional cooperation  with the IMF.  One of the three issues
on which the mandate of the Consultative Group of Eighteen focused was "the international
adjustment process, and the co-ordination, in this context, between the GATT and the IMF".
Discussions also took place in the GATT Council, and in that context in 1984 the IMF prepared a
study at the request of the Contracting Parties on "Exchange Rate Volatility and World Trade".  In
1984, the CONTRACTING PARTIES urged the IMF to take into account their concern about therelationship between exchange rate instability and international trade in the IMF's efforts to review the
operation of the international monetary system.
15. The GATT Contracting Parties discussions on this issue fed into the drafting of the Punta del
Este Declaration that launched the Uruguay Round negotiations.  It contained several references to the
relationship between trade and finance.
• In the Chapeau to the Declaration, Ministers declared themselves "mindful of the negative effects
of prolonged financial and monetary instability in the world economy, the indebtedness of a largenumber of less-developed contracting parties, and considering the linkage between trade, money,
finance and development;".
• Two Objectives (Part A) of the negotiations were to:
• "increase the responsiveness of the GATT system to the evolving international economic
environment, through facilitating necessary structural adjustment, enhancing the
relationship of the GATT with the relevant international organisations and taking accountof …. the importance of an improved trading environment providing, inter alia , for the
ability of indebted countries to meet their financial obligations;"
• foster concurrent cooperative action at the national and international levels to strengthen
the inter-relationship between trade policies and other economic policies affecting growthand development, and to contribute towards continuing, effective and determined efforts
to improve the functioning of the international monetary system and the flow of financialand real investment resources to developing countries;".
• In Part E, Functioning of the GATT System, where negotiations should aim to develop
understandings and arrangements "to increase the contribution of the GATT to achieving greaterWT/WGTDF/W/3
Page 4
coherence in global economic policy-making through strengthening its relationship with other
international organisations responsible for monetary and financial matters.".
16. At the end of Uruguay Round, Ministers adopted the Declaration on the Contribution of the
WTO to Achieving Greater Coherence in Global Economic Policy-making which called, inter alia ,
for increased cooperation with the IMF, and which has since formed the basis for the Secretariat incarrying out its work on Coherence.  Reports are submitted each year by the Director General to the
General Council on the Secretariat's Coherence activities.WT/WGTDF/W/3
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ANNEX
SELECTED WTO PROVISIONS
I. PROVISIONS RELATED TO EXCHANG E RATES ..........................................................7
A. G ENERAL AGREEMENT ON TARIFFS AND TRADE .......................................................................7
B. A GREEMENT ON AGRICULTURE ................................................................................................10
C. A GREEMENT ON PRESHIPMENT INSPECTION .............................................................................10
D. A GREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON
IMPLEMENTATION OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994 ..................11
E. A GREEMENT ON IMPLEMENTATION OF ARTICLE VII OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE 1994...................................................................................................11
F. A GREEMENT ON TRADE –RELATED INVESTMENT MEASURES .................................................11
II. PROVISIONS RELATED TO MULTIPLE EXCH ANGE RA TES..................................11
A. G ENERAL AGREEMENT ON TARIFFS AND TRADE .....................................................................11
III. PROVISIONS RELATED TO EXCHANGE RESTRICTIONS .......................................13
A. G ENERAL AGREEMENT ON TARIFFS AND TRADE .....................................................................13
B. G ENERAL AGREEMENT ON TRADE IN SERVICES .......................................................................17
IV. PROVISIONS RELATED TO THE BALANCE-OF- PAYMENTS ..................................18
A. G ENERAL AGREEMENT ON TARIFFS AND TRADE .....................................................................18
B. G ENERAL AGREEMENT ON TRADE IN SERVICES .......................................................................25
C. U NDERSTANDING ON THE BALANCE -OF-PAYMENTS PROVISIONS OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994 .............................................................................25
D. 1979 D ECLARATION ON "TRADE MEASURES TAKEN FOR BALANCE -OF-PAYMENTS
PURPOSES " .............................................................................................................................. ..27
E. A GREEMENT ON TRADE -RELATED INVESTMENT MEASURES ...................................................27
F. A GREEMENT ON GOVERNMENT PROCUREMENT .......................................................................27
V. PROVISIONS RELATED TO  FINANCIAL SE RVICES ..................................................27
A. G ENERAL AGREEMENT ON TRADE IN SERVICES .......................................................................27
VI. PROVISIONS RELATED TO FINANCIAL ASSISTANCE FOR ECONOMIC
DEVELOPM ENT ...................................................................................................................2 8
A. G ENERAL AGREEMENT ON TARIFFS AND TRADE .....................................................................28
B. A GREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES ..............................................29
C. A GREEMENT ON TECHNICAL BARRIERS TO TRADE ..................................................................29
D. A GREEMENT ON IMPORT LICENSING PROCEDURES ..................................................................30
E. A GREEMENT ON GOVERNMENT PROCUREMENT .......................................................................30
F. D ECISION ON MEASURES CONCERNING THE POSSIBLE NEGATIVE EFFECTS OF THE
REFORM PROGRAMME ON LEAST -DEVELOPED AND NET FOOD-IMPORTING
DEVELOPING COUNTRIES ..........................................................................................................31WT/WGTDF/W/3
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G. D ECISION OF 28 N OVEMBER 1979: D IFFERENTIAL AND MORE FAVOURABLE
TREATMENT RECIPROCITY AND FULLER PARTICIPATION OF DEVELOPING COUNTRIES ..........31
VII. PROVISIONS RELATED TO FISCAL REVENUE  MEASURES ...................................32
A. G ENERAL AGREEMENT ON TARIFFS AND TRADE .....................................................................32
VIII. PROVISIONS RELATED TO INSTITUTIONAL ISSUES...............................................34
A. D ECLARATION ON THE CONTRIBUTION OF THE WORLD TRADE ORGANIZATION TO
ACHIEVING GREATER COHERENCE IN GLOBAL ECONOMIC POLICY -MAKING .........................34
B. D ECLARATION ON THE RELATIONSHIP OF THE WORLD TRADE ORGANIZATION WITH
THE INTERNATIONAL MONETARY FUND...................................................................................35WT/WGTDF/W/3
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I. PROVISIONS RELATED TO EXCHANGE RATES
A. GENERAL AGREEMENT ON TARIFFS AND TRADE
Article II
II:3 :  "No contracting party shall alter its method of determining dutiable value or of
converting currencies so as to impair the value of any of the concessions provided
for in the appropriate Schedule annexed to this Agreement".
II:6(a):  "The specific duties and charges included in the Schedules relating to
contracting parties members of the International Monetary Fund , and margins of
preference in specific duties and charges maintained by such contracting parties, are
expressed in the appropriate currency at the par value  accepted or provisionally
recognized by the Fund at the date of this  Agreement. Accordingly, in case this par
value is reduced consistently with the Articles of Agreement of the International
Monetary Fund by more than twenty per cen tum, such specific duties and charges and
margins of preference may be adjusted to take account of such reduction; provided
that the CONTRACTING PARTIES (i.e., the contracting parties acting jointly as
provided for in Article XXV) concur that su ch adjustments will not impair the value
of the concessions provided for in the appropriate Schedule or elsewhere in this
Agreement, due account being taken of all factors which may influence the need for,
or urgency of, such adjustments".
Analytical Index2:  Article II, para. 6(a)
"Currency at the par value accepted or provisionally recognized"
Article IV of the original Articles of Agreem ent of the International Monetary Fund required
each member of the Fund to state a par value for its curr ency in terms of gold or U.S. dollars of a fixed
gold value, as part of a system of fixed exchange  rates.  A change in the par value of a member’s
currency could be made only after consultation with the Fund.
As revised in 1978, Article IV of the IMF Article s no longer requires the stating of par values
and instead provides that “each member undertakes to collaborate with the Fund and other members to
assure orderly exchange arrangements and to promote a stable system of exchange rates”.3
“The Working Party noted that the rules for the adjustment of bound specific duties in
Article II:6(a) of the General Agreement were drafted on the assumption that the members of the
International Monetary Fund maintain par values for their currencies.  However, under the present
Articles of Agreement of the Fund, as amended on 1 April 1978, Fund members are no longer obliged to
maintain par values but have the right to adopt ex change arrangements of their choice.  Some Fund
members have floating exchange rates, and other main tain the exchange rate against one other currency,
a basket of currencies or an international unit of a ccount.  The Working Party concluded that the right to
adjust specific duties in the present monetary situ ation could not be called into question but that the
                                                     
2 All references are to the Analytical Index, "Guide to GATT Law and Practice", 1995.
3 Section 4 of Article IV as revised provides that “The Fund may determine, by an 85 per cent majority
of the total voting power, that international economic conditions permit the introduction of a widespread systemof exchange arrangements based on stable but adjustable par values. ...  Upon making such determination, theFund shall notify members that the provisions of Schedule C [on Par Values] apply”.  Articles of Agreement of
the International Monetary Fund, 2 UNTS 39 (1947) as amended 1 April 1978.WT/WGTDF/W/3
Page 8
modalities for the application of Article II:6(a) needed to be adjusted to take into account the changes in
the international monetary system”.4
Adjustment of specific duties in accordance with paragraph 6(a)
The “Guidelines for Decisions under Article II: 6(a) of the General Agreement”, adopted on
29 January 1980, provide that:
“In the present monetary situation the C ONTRACTING PARTIES  shall apply the provisions of
Article II:6(a) as set out below unless they consider that this would not be appropriate in the
circumstances of the particular case, for example becau se it would lead to an impairment of the value of
a specific duty concession ...
“If a contracting party, in accordance with Arti cle II:6(a) of the General Agreement, requests
the C ONTRACTING PARTIES  to concur with the adjustment of bound specific duties to take into account
the depreciation of its currency, the C ONTRACTING PARTIES  shall ask the International Monetary Fund
to calculate the size of the depreciation of its currency and to determine the consistency of the
depreciation with the Fund’s Articles of Agreement. ...
“The C ONTRACTING PARTIES  shall be deemed to have authoriz ed the contracting party to adjust
its specific duties ... if the International Monetary Fund advises the C ONTRACTING PARTIES  that the
depreciation calculated as set out above ... is in excess of 20 per cent and consistent with the Fund’s
Articles of Agreement and if, during the sixty days fo llowing the notification of the Fund’s advice to the
contracting parties, no contracting party claims that  a specific duty adjustment to take into account the
depreciation would impair the value of a concession ...”.5
The Decision provides rules for calculating the size of the depreciation, in the case of one contracting
party or in the case of contracting parties memb ers of a customs union which define their common
specific duties in terms of a unit of account composed of the currencies of the members.
Article VII
VII: 4(a):  "Except as otherwise provided for in this paragraph, where it is necessary
for the purposes of paragraph 2 of this Article for a contracting party to convert into
its own currency a price expressed in the currency of another country, the
conversion rate of exchange to be used shall be based, for each currency involved,
on the par value as established pursuant to the Articles of Agreement of the
International Monetary Fund or on the rate of exchange  recognized by the Fund, or
on the par value established in accordance with a special exchange agreement entered
into pursuant to Article XV of this Agreement".
VII:4(b):  "Where no such established par value and no such recognized rate of
exchange exist, the conversion rate  shall reflect effectively the current value of
such currency in commercial transactions".
VII:4(c):  "The CONTRACTING PARTIES, in agreement with the International
Monetary Fund, shall formulate rules governing the conversion by contracting parties
of any foreign currency  in respect of which multiple rates of exchange  are
maintained consistently with the Articles of Agreement of the International Monetary
Fund. Any contracting party may apply such rules in respect of such foreign
                                                     
4 L/4858, adopted on 29 January 1980, 27S/149, 150, para. 5.
5 L/4938, adopted on 29 January 1980, 27S/28-29.WT/WGTDF/W/3
Page 9
currencies for the purposes of paragraph 2 of this Article as an alternative to the use
of par values. Until such rules are adopted by the Contracting Parties, any contracting
party may employ, in respect of any such foreign currency, rules of conversion  for
the purposes of paragraph 2 of this Article which are designed to reflect effectively
the value of such foreign currency  in commercial transactions".
VII:4(d):  "Nothing in this paragraph shall be construed to require any contracting
party to alter the method of converting currencies  for customs purposes which is
applicable in its territory on the date of this Agreement, if such alteration would have
the effect of increasing generally the amounts of duty payable".
Analytical Index: Article VII,  para. 4
Par values and conversion rates of exchange
In discussions at the Geneva session of the Pr eparatory Committee it was agreed that “cases in
which an alteration in the rate of exchange, with or without par value, is introduced are adequately
covered by paragraphs 4(a) and (b)”.6  
Article IV of the original Articles of Agreem ent of the International Monetary Fund required
each member of the Fund to state a par value for its curr ency in terms of either gold or U.S. dollars of a
fixed gold value, as part of a system of fixed exch ange rates.  A change in the par value of a member's
currency could be made only after consultation with  the Fund.  As revised in 1978, Article IV no longer
requires the stating of par values and instead provid es that “each member undertakes to collaborate with
the Fund and other members to assure orderly exchange  arrangements and to promote a stable system of
exchange rates”.7
The present text of paragraph 4 was agreed during the Review Session of 1954-55.  The Report
of the Review Working Party on “Schedules and Cust oms Administration” notes in this connection that:
“The amendments to paragraph 4(a) and (b), to use the words ‘par value as established’ and
‘rate of exchange recognized’ by the Fund, are intende d to cover certain exchange situations which are
likely to arise in practice and which are not provided for in the present text.  For example, in the case of
Canada the established par value accepted by the Fund is no longer the effective rate, and the Fund
recognizes the fluctuating rate for its own accounting purposes.  This type of exchange situation will be
covered by the amended text”.8
Article IV of the IMF Articles, as revised in 1978, does not refer to “recognition” of a Fund
member’s rate of exchange.  However, Article VII: 4(b) of the General Agreement provides that “Where
no such established par value and no such recognized rate of exchange exist, the conversion rate shall
reflect effectively the current value of su ch currency in commercial transactions”.
                                                     
6 EPCT/A/SR.40(2), p. 16; EPCT/154, p. 25 (note to para. 5).
7 Section 4 of Article IV as revised provides that “The Fund may determine, by an 85 per cent majority
of the total voting power, that international economic conditions permit the introduction of a widespread systemof exchange arrangements based on stable but adjustable par values. ...  Upon making such determination, theFund shall notify members that the provisions of Schedule C [on Par Values] apply”.  Articles of Agreement ofthe International Monetary Fund, 2 UNTS 39 (1947) as amended April 1, 1978.
8 L/329, adopted on 26 February 1955, 3S/205, 214, para. 18.WT/WGTDF/W/3
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B. AGREEMENT ON AGRICULTURE
Attachment to Annex 5:3 :  "The external prices shall generally be converted to
domestic currencies  using the annual average market exchange rate for the same
period as the price data".
C. AGREEMENT ON PRESHIPMENT INSPECTION
Article I
I:3: "Preshipment inspection activities are all activities relating to the verification of
the quality, the quantity, the price, including currency exchange rate and financial
terms , and/or the customs classification of goods to be exported to the territory of the
user Member".
Article II
II:6: "User Members shall ensure that, when initially contacted by exporters,
preshipment inspection entities provide to the exporters a list of all the information
which is necessary for the exporters to comply with inspection requirements. The
preshipment inspection entities shall provide the actual information when so
requested by exporters. This information shall include a reference to the laws and
regulations of user Members relating to preshipment inspection activities, and shallalso include the procedures and criteria used for inspection and for price and
currency exchange-rate verification purposes , the exporters' rights vis-à-vis the
inspection entities, and the appeals procedures set up under paragraph 21. Additional
procedural requirements or changes in existing procedures shall not be applied to a
shipment unless the exporter concerned is informed of these changes at the time theinspection date is arranged. However, in emergency situations of the types addressed
by Articles XX and XXI of GATT 1994, such additional requirements or changes
may be applied to a shipment before the exporter has been informed. This assistance
shall not, however, relieve exporters from their obligations in respect of compliance
with the import regulations of the user Members".
II:17: "User Members shall ensure that, whenever so requested by the exporters,
preshipment inspection entities undertake, prior to the date of physical inspection, a
preliminary verification of price and, where applicable, of currency exchange rate ,
on the basis of the contract between exporter and importer, the pro forma invoice and,
where applicable, the application for import authorization. User Members shall
ensure that a price or currency exchange rate  that has been accepted by a
preshipment inspection entity on the basis of such preliminary verification is notwithdrawn, providing the goods conform to  the import documentation and/or import
licence. They shall ensure that, after a preliminary verification has taken place,
preshipment inspection entities immediately inform exporters in writing either of
their acceptance or of their detailed reasons for non-acceptance of the price and/or
currency exchange rate".WT/WGTDF/W/3
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D. AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON
IMPLEMENTATION OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
Article II
II:2.4.1:  "When the comparison under paragraph 4 requires a conversion of
currencies , such conversion should be made using the rate of exchange  on the date
of sale, provided that when a sale of foreign currency on forward markets  is
directly linked to the export sale involved, the rate of exchange in the forward sale
shall be used. Fluctuations in exchange rate s shall be ignored and in an investigation
the authorities shall allow exporters at least 60 days to have adjusted their export
prices to reflect sustained movements in exchange rates during the period of
investigation".
E. AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF THE GENERAL AGREEMENT ON
TARIFFS AND TRADE 1994
Article IX
IX:1:  "Where the conversion of currency  is necessary for the determination of the
customs value , the rate of exchange  to be used shall be that duly published by the
competent authorities of the country of importation concerned and shall reflect aseffectively as possible, in respect of the period covered by each such document of
publication, the  current value of such currency  in commercial transactions in terms
of the currency of the country of importation".
IX:2:  "The conversion rate  to be used shall be that in effect at the time of
exportation or the time of importation, as provided by each Member".
F. A
GREEMENT ON TRADE –RELATED INVESTMENT MEASURES
Annex: Illustrative List
Annex:2:  "TRIMs that are inconsistent with the obligation of general elimination of
quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994
include those which are mandatory or enforceable under domestic law or underadministrative rulings, or compliance with which is necessary to obtain an advantage,
and which restrict:
(b) the importation by an enterprise of products used in or related to its local
production by restricting its access to foreign exchange  to an amount related to the
foreign exchange inflows attributable to the enterprise".
II. PROVISIONS RELATED TO MULTIPLE EXCHANGE RATES
A. G
ENERAL AGREEMENT ON TARIFFS AND TRADE
Article VI
Note Ad Article VI: 2,3:  "Multiple currency practices  can in certain circumstances
constitute a subsidy to exports which may be met by countervailing duties under
paragraph 3 or can constitute a form of dumping by means of a partial depreciation of
a country's currency which may be met by action under paragraph 2. By "multipleWT/WGTDF/W/3
Page 12
currency practices" is meant practices by governments or sanctioned by
governments".
Article VIII
Note Ad Article VIII:1 : "While Article VIII does not cover the use of multiple rates
of exchange  as such, paragraphs 1 and 4 condemn the use of exchange taxes or fees
as a device for implementing multiple currency practices ; if, however, a contracting
party is using multiple currency exchange fees for balance of payments reasons
with the approval of the International Monetary Fund, the provisions of paragraph 9
(a) of Article XV fully safeguard its position".
Article XVI
Section B-Additional Provisions on Export Subsidies
Note Ad Article XVI: " Nothing in Section B shall preclude the use by a contracting
party of multiple rates of exchange  in accordance with the Articles of Agreement of
the International Monetary Fund".
Analytical Index: Article XVI, Section B: Note
Multiple exchange rates
ad Section B of Article XVI was added at the Review Session in 1954-55.  The Report of the
Review Working Party on “Other Barriers to Tr ade” notes, concerning the provisions added to
Article XVI in the Review Session:
“A number of members of the Working Party were concerned as to the possible effect of
the proposed additional provisions on the right of countries to use multiple exchange
rates in accordance with the Articles of Agreement of the International Monetary Fund.
The Working Party has therefore recommended an interpretative note to cover this case.
It wishes also to record the fact that the draft provisions have been considered by the
Working Party on the assumption that paragraph 9(a) of Article XV in the present
Agreement will not be altered”.9
During the Review Session, Italy brought a complaint concerning action by Turkey providing
export bonuses for certain agricultural products and levying special import taxes on certain goods
deemed less-essential in order to provide the necessary  funds for the bonuses.  Italy stated that the export
subsidies had not been notified as required by Article XVI:1 and that the import taxes were inconsistentwith Article II:1(b).  Turkey stated that as part of a reform of its foreign exchange system, it had
established an Equalization Fund which was financed by the sale of import permits, and that this system
had been approved by the International Monetary F und.  A representative of the Fund confirmed that the
practices under question were multiple currency practices under the Fund Agreement and that in a
Decision concerning Turkey the Fund had stated that it did not object to the temporary continuance of
these practices and would remain in consultation w ith Turkey on these practices.  The complaint was
referred to the standing Panel on Complain ts but was withdrawn later in the session.
10
The 1960 Report on the “Review Pursuant to Article XVI:5” provides that:  “The Panel noted
that some contracting parties had interpreted appr oval by the International Monetary Fund of multiple
                                                     
9 L/334 and Addendum, adopted on 3 March 1955, 3S/222, 226, para. 21.
10 L/214 (complaint);  SR.9/7 (discussion of complaint, statements by Italy, Turkey and the Fund,
referral to Panel on Complaints); W.9/8 (written statement by Turkey);  SR.9/40 (withdrawal of complaint).WT/WGTDF/W/3
Page 13
exchange arrangements as absolving them from the obligation to notify such arrangements under
Article XVI.  The Panel wished to record its view that interpretative note 1 to Section B of Article XVI
was intended not to preclude the use by a country of multiple exchange rates which were approved by
the International Monetary Fund, but that ther e was a clear obligation to notify to the C ONTRACTING
PARTIES  multiple exchange rates which have the effect of a subsidy”.11
III. PROVISIONS RELATED TO EXCHANGE RESTRICTIONS
A. GENERAL AGREEMENT ON TARIFFS AND TRADE
Article XV
XV:1:  "The CONTRACTING PARTIES shall seek co-operation with the
International Monetary Fund to the end that the CONTRACTING PARTIES and the
Fund may pursue a co-ordinated policy with regard to exchange questions  within the
jurisdiction of the Fund and questions of quantitative restrictions, and other trade
measures within the jurisdiction of the CONTRACTING PARTIES".
Analytical Index: Article XV, para. 1
Relationship between trade measures and financial system
The Tokyo Declaration of 1973 which launched the Tokyo Round of multilateral trade
negotiations noted that:
“The policy of liberalizing world trade cannot be carried out successfully in the absence
of parallel efforts to set up a monetary system which shields the world economy from
the shocks and imbalances which have previously occurred.  The Ministers will not lose
sight of the fact that the efforts which are to  be made in the trade field imply continuing
efforts to maintain orderly conditions and to establish a durable and equitable monetary
system.
“The Ministers recognize equally that the ne w phase in the liberalization of trade which
it is their intention to undertake should facilit ate the orderly functioning of the monetary
system”.12
At their Fortieth Session in 1984, the C ONTRACTING PARTIES  adopted a Decision on “Exchange
Rate Fluctuations and their Effect on Trade” in which they “urge that their concern regarding the
relationship between exchange market instability and international trade be taken into account in
ongoing efforts within the Intern ational Monetary Fund to review the operation of the international
monetary system with a view to possible improvements” and “agree that they will keep under
consideration through further exchanges of views th e relationship between exchange market instability
and trade”.13
Concerning the relationship between the intern ational trading system and the international
financial system, and floating exchange rates, see also the 1980 Report of the Working Party on
                                                     
11 L/1160, adopted on 24 May 1960, 9S/188, 192, para. 13, Guide to GATT law and Practice:
Analytical index:p.447
12 MIN(73)1, Declaration of Ministers approved at Tokyo on 14 September 1973, 20S/19, 22, para. 7.
13 L/5761, adopted on 30 November 1984, 31S/15.WT/WGTDF/W/3
Page 14
“Specific Duties”14 and the 1983 and 1984 Reports of the Consultative Group of Eighteen and
associated Secretariat notes.15
XV:2: "In all cases in which the CONTRACTING PARTIES are called upon to
consider or deal with problems concerning monetary reserves, balances of
payments or foreign exchange arrangements , they shall consult fully with the
International Monetary Fund. In such consultations, the CONTRACTING PARTIES
shall accept all findings of statistical and other facts presented by the Fund relating to
foreign exchange, monetary reserves and balances of payments , and shall accept
the determination of the Fund as to whether action by a contracting party in exchange
matters is in accordance with the Articles of Agreement of the International Monetary
Fund, or with the terms of a special exch ange agreement between that contracting
party and the CONTRACTING PARTIES. The CONTRACTING PARTIES in
reaching their final decision in cases involving the criteria set forth in paragraph 2 (a)
of Article XII or in paragraph 9 of Article XVIII, shall accept the determination of the
Fund as to what constitutes a serious decline in the contracting party's monetary
reserves,  a very low level of its monetary reserves or a reasonable rate of increase in
its monetary reserves , and as to the financial aspects  of other matters covered in
consultation in such cases".
Analytical Index: Article XV, para. 2
"The CONTRACTING PARTIES, in reaching their final decision"
During Council discussion of the 1973 Report of the Committee on Balance-of-Payments
Measures on the consultations with Spain, the repr esentative of Spain stated his view that the
Committee, in concluding that in the case of Spai n the GATT balance-of-payments provisions were no
longer applicable, had followed too strictly the determination of the IMF.  The representative of
Uruguay stated “that the report of the IMF should be considered as one element, but not the only
element to be taken into account.  While the IMF report could not be contradicted as to the state of the
balance of payments, only the C ONTRACTING PARTIES  were competent to judge the relationship
between the balance-of-payments situation and the necess ity for greater liberalization of trade.  It was up
to GATT to decide whether measures taken were e fficient and whether they should be maintained or
not”.16  Some other contracting parties stated that in view of the IMF’s determination and the provisions
of Article XV:2 the Committee’s conclusions could not  have been different.  The Report was adopted by
the Council.17
Application of Paragraph 2: role of International Monetary Fund
In 1982-83 discussions took place concerning th e treatment of balance-of-payments problems
confronting heavily-indebted developing countri es.  A 1984 Statement by the Chairman of the
Committee on Balance-of-Payments Restrictions to th e Council, which summarized the result of these
discussions, stated, inter alia , that:
“The suggestion, that measures relating to trade policy agreed upon under standby or
extended facility arrangements with the IMF could be notified to the GATT, had already
                                                     
14 L/4858, adopted on 29 January 1980, 27S/149.
15 L/5572, 30S/96, 98-99, paras. 9-11;  L/5721, 31S/52, 53-54, paras. 7-10;  CG.18/W/74, “The
Relation between the International Trading System and the International Financial System”, dated26 April 1983.; Guide to GATT Law and Practice:  Analytical Index p. 430.
16 C/M/89, p. 7.
17 C/M/89, p. 7-8, C/M/90, pp. 2-3.WT/WGTDF/W/3
Page 15
been strongly questioned during the disc ussions in the Consultative Group of 18.
During the present informal discussions, th ere was also clear opposition to the idea that
a formal link might be established between commitments undertaken in such a delicate
context and the response of other contracting parties in the form of measures designed to
facilitate an expansion of the export earnings of the consulting country.  It is, however,
clear that under Paragraph 4 of the 1970 consul tation procedures, consulting parties are
required to keep the GATT secretariat regu larly informed of any changes in trade
measures, whether or not such measures are related to commitments vis-à-vis the Fund.
Against this background, there was no evidence of support for the suggestion that there
should be greater synchronization between consultations in the Committee and the
consultations undertaken by the IMF”.18
XV:3:  "The CONTRACTING PARTIES shall seek agreement with the Fund
regarding procedures for consultation under paragraph 2 of this Article".
XV:4: "Contracting parties shall not, by exchange action, frustrate the intent of the
provisions of this Agreement, nor, by trade action, the intent of the provisions of the
Articles of Agreement of the International Monetary Fund".
Note Ad Article XV, para. 4: "The word 'frustrate' is intended to indicate, for
example, that infringements of the letter of any Article of this Agreement by
exchange action shall not be regarded as a violation of that Article if, in practice,
there is no appreciable departure from the intent of the Article.  Thus, a contracting
party which, as part of its exchange control operated in accordance with the Articlesof Agreement of the International Monetary Fund, requires payment to be received
for its exports in its own currency or in the currency of one or more members of the
International Monetary Fund will not thereby be deemed to contravene Article XI or
Article XIII.  Another example would be that of a contracting party which specifies
on an import licence the country from which the goods may be imported, for thepurpose not of introducing any additional element of discrimination in its import
licensing system but of enforcing permissible exchange controls."
Analytical Index: Article XV, para. 4
"By exchange action frustrate"
In 1977, a panel was established in response to a complaint of the United States stating that in
February 1976 Japanese foreign exchange banks had been instructed not to open any new letters of
credit for imports of thrown silk yarn fro m the United States.  The complaint claimed, inter alia , that the
restrictions were inconsistent with Article XV “by using foreign exchange banks to thwart the principles
of the General Agreement.”  The parties reached a bilateral solution to the dispute.19
"Distinction between trade action and exchange action"
A Special Sub-Group set up in 1954 during the Revi ew Session carried out a thorough examination
of GATT provisions on balance-of-p ayments restrictions and GATT-IM F relations.  It concluded that
“in many instances it was difficult or impossible to  define clearly whether a government measure is
                                                     
18 C/125 dated 13 March 1984, approved by the Council on 15/16 May 1984 (C/M/178, p. 26), 31S/56,
59, para. 9.
19 L/4530 (complaint) and Council discussion at C/M/122, p. 7-9;  see also L/4637, Report of the Panel on
“Japanese Restrictions on Imports of Thrown Silk Yarn”, adopted on 17 May 1978, 25S/107.WT/WGTDF/W/3
Page 16
financial or trade in character and frequently it is both”.20 The Sub-Group however noted that the
division of work between the C ONTRACTING  PARTIES  and the Fund was in practice “based on the
technical nature of government measures rather th an on the effect of these measures on international
trade and finance”.
The 1981 Secretariat Background Paper on the consu ltation with Italy concerning the Italian
deposit requirement for purchases of foreign currency discusses the question of whether the Italian
scheme represents a charge on importation or  a charge on the transfer of payments:
“If the distinction between import and payments measures were made by taking into account the
purpose or the effect of the action, the Italia n scheme would probably be both a trade and an
exchange measure:  it is intended to improve Italy's payments position as well as to restrainimports, and it has had an impact both on payments for imports and the imports themselves.  If
however the distinction were made by looking at the restrictive technique used, the Italian deposit
scheme would probably have to be regarded as an exchange measure since it is formulated and
operated as a requirement to be fulfilled for th e purchase of foreign exchange rather than for
importation.
“The Executive Directors of the International Monetary Fund have decided in 1960 that, for the
purposes of Article VIII of the Fund Agreement, the criterion for distinguishing between trade and
exchange measures should normally be the tec hnique used.  ‘The guiding principle’, they
determined, ‘in ascertaining whether a measure is  a restriction on payments and transfers for
current transactions under Article  VIII Section 2, is whether it involved a direct governmental
limitation on the availability or use of exch ange as such’ (Decision No. 1034 - (60/27) of
1 June 1960).  In conformity with this princi ple the Fund has regarded the Italian measures as
constituting a restriction on current internationa l transactions requiring Fund approval under
Article VIII Section 2, an approval which it has granted un til 30 September 1981 (C/M/149, page
12).”
21
“In summary it can be said that the C ONTRACTING PARTIES  - unlike the IMF - have never formally
decided how to distinguish between trade and ex change controls ... Their approach has been to
examine particular restrictive measures affecting trade independent of the form that these measures
took”.22
The 1981 Report of the Committee on Balance-of-Payments Restrictions on the “Italian Deposit
Requirement for Purchases of Foreign Currency” notes  the view of the Italian Government “that the
GATT rules on trade measures taken for balance-of -payments purposes did not apply to the deposit
scheme because it was of a monetary nature and its main and primary effects were financial and
monetary”.  The Committee concluded, inter alia , “that the deposit scheme, though monetary in form,
had some effect on trade and that, in so far as th ese trade effects were concerned, the scheme could be
considered in the spirit of the Declaration on Trade Measures Taken for Balance-of-Payments
Purposes”.23  The deposit scheme was terminated on 7 February 1982.24
"Trade measures equivalent to exchange rate changes"
There are only two known examples of trade measur es equivalent to changes in the exchange rate
for commercial transactions.  In late 1968 Germany instituted a special 4 per cent refund on imports
                                                     
20 L/332/Rev.1 and Addenda, adopted on 2, 4 and 5 March 1955, 3S/170, 196, para. 2.
21 BOP/W/51, p. 4, paras. 9-10.
22 Ibid., p. 5, para. 14.
23 BOP/R/119, adopted on 3 November 1981, C/M/152.
24 L/5162/Add.3.WT/WGTDF/W/3
Page 17
together with a 4 per cent turnover tax levy on exports.25  In 1982, Uruguay imposed a 10 per cent
import surcharge and a 10 per cent export rebate.26
"Trade measures enforcing permissible ex change controls:  Note Ad Article XV:4"
When the Preparatory Committee examined this article in its Geneva session, one delegation
proposed that paragraph 1(c) of Article 28 [XIV] of the New York Draft Charter be transferred to
Article 29 [XV], suggesting the following wording:  “N othing in this section is intended to preclude a
Member from requiring that its exporters accept only its own currency or the currencies of any one or
more members of the International Monetary Fund, as it may specify in payment for exports”.  The
proposal stated that the provision “is misplaced in Article 28, since it does not constitute an exception to
the rule of non-discrimination on quotas.  As rephrased here, it is clearly an exchange matter rather thana provision involving quantitative restrictions, a nd would therefore belong most appropriately in
Article 29”.
27
The Sub-Committee produced a new text which was approved without any changes and inserted in
the Geneva Draft Charter and in the General Agreement.28  It was, however, considered essential to
include “as an official explanation of the text” the Note Ad paragraph 4.  The second sentence of the
Note covers the case mentioned in the original draf t quoted above.  The last sentence was inserted to
meet a request of the Czechoslovak delegation.  In the final Geneva draft, and also in the General
Agreement text, the interpretative Note refers only to  paragraph 4.  At Havana the note was attached to
the last paragraph (9 in the General Agreement).
B. GENERAL AGREEMENT ON TRADE IN SERVICES
Article XI
XI:1:  "Except under the circumstances envisaged in Article XII, a member shall not
apply restrictions on international transfers and payments  for current transactions
relating to its specific commitments".
XI:2:  "Nothing in this Agreement shall affect the rights and obligations of the
members of the International Monetary Fund under the Articles of Agreement of
the Fund, including the use of exchange actions  which are in conformity with the
Articles of Agreement, provided that a Member shall not impose restrictions on any
capital transactions  inconsistently with its specific commitments regarding such
transactions, except under Article XII or at the request of the Fund".
Article XVI
XVI: footnote 8:  "If a Member undertakes a market-access commitment in relation
to the supply of a service through the mode of supply referred to in subparagraph 2(a)
of Article I and if the cross-border movement of capital  is an essential part of the
service itself, that Member is thereby committed to allow such movement of capital .
If a movement of capital. If a member undertakes a market-access commitment in
relation to the supply of a service through the mode of supply referred to in
                                                     
25 L/3171, “Contribution toward Stabilization of the International Monetary System”, dated 6 February
1969;  see also German announcement at SR.25/9, p. 155.
26 L/5355.
27 EPCT/W/223, p. 35, referring to EPCT/W/216 pp. 5-6.
28 EPCT/A/PV/41, pp. 72-76.WT/WGTDF/W/3
Page 18
subparagraph 2(c) of Article I, it is thereby committed to allow related transfer of
capital  into its territory".
IV. PROVISIONS RELATED TO THE BALANCE-OF-PAYMENTS
A. GENERAL AGREEMENT ON TARIFFS AND TRADE
Article XII
XII:1: "Notwithstanding the provisions of  paragraph 1 of Article XI, any contracting
party, in order to safeguard its external financial position  and its balance-of-
payments , may restrict the quantity or value of merchandise permitted to be
imported".
XII:2(a):  "Import restrictions instituted, maintained or intensified by a contracting
party under this Article shall not exceed those necessary:
(i) to forestall the imminent threat of, or to stop, a serious decline in its
monetary reserves, or
(ii) in the case of a contracting party with very low monetary reserves, t o
achieve a reasonable rate of increase in its reserves.
* Due regard shall be paid in either case to any special factors which may be
affecting the reserves of such contracting party or its need for reserves, including,
where special external credits or other resources are available to it, the need to
provide for the appropriate use of such credits or resources".
Analytical Index:  Article XII, para. 2
The report of discussions at the London se ssion of the Preparatory Committee notes that
“There are, however, many factors to whic h due regard must be paid ... There may be
special non-recurrent movements of funds affe cting a country’s reserves, a country may
have special credits outside its monetary reserves which it might be expected to use to a
proper extent and at a proper rate to meet a strain on its external position, a countrywhich has high reserves may, nevertheless, have high future commitments or probable
drains upon its resources to meet in the near future.  All such factors will have to be
taken into account in interpreting movements in a country’s reserves”.
29
Also, the report of discussions at  the Havana Conference notes that
“It was the view of the Sub-Committee that the present text of Article 21 [XII] made
adequate provisions for many of the considerations put forward by the delegates of
Venezuela and Uruguay. ... It was pointed out that a country exporting principally a
small number of products would, in like c onditions, probably be considered to have
need for greater reserves than a country exporting a large variety of products,
particularly if the exports were exhaustible or subject to considerable fluctuations ofsupply or price.  A country actively embarked on a programme of economic
development which is raising levels of production and foreign trade would probably
                                                     
29  London Report, p. 13, para. (c).WT/WGTDF/W/3
Page 19
then be considered to have need for great er reserves than when its economic activity
was at a lower level”.30
XII:2(b):  "Contracting parties applying restrictions under sub-paragraph (a) shall
progressively relax them as such conditions improve, maintaining them only to theextent that the conditions specified in that sub-paragraph still justify their application.
They shall eliminate the restrictions when conditions would no longer justify their
institution or maintenance under that subparagraph".
XII:3(a):  "Contracting parties undertake, in carrying out their domestic policies, to
pay due regard to the need for maintaining or restoring equilibrium in their
balance-of-payments  on a sound and lasting basis and to the desirability of avoiding
an uneconomic employment of productive resources".
XII:3(d):  "The contracting parties recognize th at, as a result of domestic policies
directed towards the achievement and maintenance of full and productive employment
or towards the development of economic resources, a contracting party may experience
a high level of demand for imports involving a threat to its monetary reserves  of the
sort referred to in paragraph 2 ( a) of this Article.  Accordingly, a contracting party
otherwise complying with the provisions of this Article shall not be required to
withdraw or modify restrictions on the gr ound that a change in those policies would
render unnecessary restrictions which it is applying under this Article".
Analytical Index:  Article XII, para. 3(d)
Relationship to Paragraph 3(a)
“a contracting party may experience a high level of demand for imports"
The meaning of this provision was discussed th oroughly at Havana.  As a result the provision
was amplified in the Havana Charter as follows (paragraph 4(b)):  “Such a Member may find that
demands for foreign exchange on account of imports  and other current payments are absorbing the
foreign exchange resources currently available to it in such a manner as to exercise pressure on its
monetary reserves which would justify the institution or maintenance of restrictions under paragraph 3
in this Article”.31  The Interpretative Note Ad Article 21 of the Havana Charter provided:
“With regard to the special problems that  might be created for Members which, as a
result of their programmes of full employment, maintenance of high and rising levels of
demand and economic development, find themselves faced with a high level of demandfor imports, and in consequence maintain quan titative regulation of their foreign trade, it
was considered that the text of Article 21 [X II], together with the provision for export
controls in certain parts of this Charter, fo r example, in Article 45 [XX], fully meet the
position of these economies”.
XII:3(e):  "In proceeding under this paragraph, the CONTRACTING PARTIES shall
have due regard to any special external fa ctors adversely affecting the export trade of
the contracting party applying the restrictions ".
XII:4(a):  "Any contracting party applying new restrictions or raising the general
level of its existing restrictions by a substantial intensification of the measures
                                                     
30 Havana Reports, p. 105, para. 11; see also E/CONF.2/C.3/SR.38, pp. 2-3.
31 E/CONF.2/C.3/82.WT/WGTDF/W/3
Page 20
applied under this Article shall immediately after instituting or intensifying such
restrictions (or, in circumstances in which prior consultation is practicable, before
doing so) consult with the CONTRACTING PARTIES as to the nature of its
balance-of-payments difficulties , alternative corrective measures which may be
available, and the possible effect of the restrictions on the economies of othercontracting parties".
Analytical Index:  Article XII, para. 4(a)
“alternative corrective measures which may be available”
In discussions during the London session of th e Preparatory Committee in 1946, it was stated
that “the purpose of this paragraph as we see it is to make sure that before a member puts on import
restrictions it should also adequately consider w ith the international organizations concerned other
possible remedial measures such as exchange depr eciation, exchange restrictions, special grants from
the Fund, special loans from the Bank, and all this kind of thing”.32
Article XIV
XIV: 1:  "A contracting party which applies restrictions under Article XII or under
Section B of Article XVIII may, in the application of such restrictions, deviate from
the provisions of Article XIII in a manner having equivalent effect to restrictions on
payments and transfers  for current international transactions which that contracting
party may at that time apply under Article VIII or XIV of the Articles of Agreementof the International Monetary Fund, or under analogous provisions of a special
exchange agreement entered into pursuant to paragraph 6 of Article XV".
Analytical Index:  Article XIV, para 1
“equivalent effect”
The Report of the Review Working Party on “Quantitative Restrictions” notes:
“For practical reasons, the Working Party has not tried to define the phrase ‘equivalent effect’ in
paragraphs 1 and 5 of Article XIV.  It agreed, howev er, to record their view that a contracting party
which is deviating from Article XIII will not be cons idered to be in breach of its obligations under this
paragraph if the International Monetary Fund has stat ed that corresponding restrictions on payments and
transfers would have been authorized under the Artic les of Agreement of the Fund or approved by the
Fund if the contracting party in question had chosen to proceed by way of exchange restrictions rather
than trade restrictions ...
“... it was pointed out that under ... paragraph 1 of  the proposed new Article XIV, a contracting
party could deviate from the provisions of Article XIII only in a manner having equivalent effect to
restrictions on payments and transfers for current inte rnational transactions which that contracting party
might at that time apply under the Articles of Agreement of the International Monetary Fund;  it was
understood that such restrictions could be applied only on currency grounds"33
XIV: 5:  "A contracting party shall not be precluded by Articles XI to XV, inclusive,
or by Section B of Article XVIII, of th is Agreement from applying quantitative
restrictions:
                                                     
32 EPCT/C.II/QR/PV/3 p. 26.
33 Ibid ., 3S/177, paras. 28, 29, Guide to GATT Law and Practice: Analytical Index p. 420.WT/WGTDF/W/3
Page 21
(a) having equivalent effect to exchange restrictions authorised under section
3 (b) of article VII of the Articles of Agreement of the International Monetary
Fund……".
Analytical Index: para. 5
Quantitative restrictions having equivalent effect to certain authorized exchange restrictions
Article VII:3(a) of the Fund Articles provides:  “If it becomes evident to the Fund that the
demand for a member’s currency seriously threatens th e Fund’s ability to supply that currency, the Fund
... shall formally declare such currency scarce and shall thenceforth apportion its existing and accruing
supply of the scarce currency ...”.  Article VII:3( b) of the Fund Articles provides that “A formal
declaration under (a) above shall operate as an author ization to any member, after consultation with the
Fund, temporarily to impose limitations on the freedom of exchange operations in the scarce currency.
Subject to the provisions of Article IV and Schedul e C, the member shall have complete jurisdiction in
determining the nature of such limitations, but they sh all be no more restrictive than is necessary to limit
the demand for the scarce currency to the supply held  by, or accruing to, the member in question, and
they shall be relaxed and removed as rapidly as conditions permit”.
No formal declaration under Article VII:3(a) has been made by the Fund, and therefore no
exchange restrictions have been authorized under Article VII:3(b) of the Fund Articles of Agreement.
The Report of the Review Working Party on “Qua ntitative Restrictions” notes that during the
Review Session, various proposals were made to am end the General Agreement to provide for joint
action to restore equilibrium in the system of worl d trade and payments in the event that that system
became seriously unbalanced, and to avoid the imposition of unnecessarily severe restrictions oninternational trade.
34  In relation to two “scarce currency” proposals, designed for a situation where some
large and commercially important country might devel op a persistent surplus in its balance of payments
with the rest of the world, place a strain on other countries’ reserves, and cause a general scarcity of its
currency:
“There was general agreement in the Working Pa rty that such a situation might arise from a
variety of different circumstances and that the prime responsibility for the state of unbalance might resteither with the surplus or the deficit countries.
“It was noted that provisions are already contai ned in the General Agreement and also in the
Articles of Agreement of the International Monetary Fund to enable consultation to take place on the
measures that might appropriately be adopted to meet such situations. ...
“If the C
ONTRACTING PARTIES  were to find that strict application of the non-discrimination
provisions of Article XIII would cause an unnecessary contraction in world trade there are already
provisions in the GATT and in the International Monetary Fund Agreement which could be invoked to
waive temporarily the obligation imposed upon contr acting parties under that Article to apply import
restrictions in a non-discriminatory manner.
“First, the Fund may, if it finds a general scarcity of a currency under Article VII, Section 1,
approve discriminatory measures under Article VIII,  Sections 2 and 3.  Certain important countries
which are members of the Fund and GATT have stat ed that if they supported a finding under Fund
Article VII, Section 1, they would also support appropriate acti on under Article VIII."
                                                     
34 See W.19/18, W.9/22, W.9/82, W.9/136, W.9/139, L/325, GATT/174.WT/WGTDF/W/3
Page 22
“Secondly, Fund Article VII, Section 3, provides th at if it becomes evident that the demand for a
member’s currency seriously threatens the Fund’s abil ity to supply that currency, the Fund shall formally
declare such currency scarce and such a declaration authorizes certain discriminatory limitations on the
freedom of exchange operations in that currency.  Although this provision has not operated in the past
because the Fund’s ability to supply a currency has never been threatened, it is to be expected that when
the resources of the Fund are being used to support th e convertibility of currencies, any serious scarcity
of a major currency would be reflected in the hol dings of the Fund.  These provisions of the Fund
Agreement bear directly on the question of trade di scrimination;  for under Article XIV of the GATT, as
at present drafted, a contracting party would be ab le to apply discriminatory quantitative restrictions
having equivalent effect to exchange restrictions authorized by the Fund under Article VIII, Section 3, as
well as under Article VII, Section 3(b)”.35
Article XVIII:B
XVIII:8:  "The contracting parties recognize that contracting parties coming within
the scope of paragraph 4 (a) of this Article tend, when they are in rapid process of
development, to experience balance of payments difficulties arising mainly from
efforts to expand their internal markets as well as from the instability in their terms of
trade".
XVIII:9:  "In order to safeguard its external financial position  and to ensure a level
of reserves  adequate for the implementation of its programme of economic
development, a contracting party may control the general level of its imports byrestricting the quantity or value of merchandise permitted to be imported , Provided
that the  import restrictions instituted, maintained or intensified by a contracting party
under this Article shall not exceed those necessary:
(i) to forestall the imminent threat of, or to stop, a serious decline in its
monetary reserves , or
(ii) in the case of a contracting party with very low monetary reserves , to
achieve a reasonable rate of increase in its reserves.
* Due regard shall be paid in either case to any special factors which may be
affecting the reserves  of such contracting party or its need for reserves, including,
where special external credits or other resources are available to it, the need to
provide for the appropriate use of such credits or resources".
Analytical Index: paras. 8&9
The Report of the Review Working Party on “Quantitative Restrictions” notes that
“... Although all countries in balance-of-payment s difficulties inevitably have a large number of
problems in common and, therefore, the procedures rela ting to balance-of-payments restrictions are not
fundamentally different, nevertheless the countrie s coming under Section B of Article XVIII face
special additional problems which the provisions have  been adjusted to meet.  The Working Party has
recognized that for such countries balance-of-payments difficulties will tend to be generated by
development itself.  In addition, paragraph 9, alt hough modeled on paragraphs 1 and 2 of Article XII,
recognizes that the reserve problem for these countries is one of the adequacy of the reserves in relation
                                                     
35 L/332/Rev.1 and Addenda, adopted on 2, 4 and 5 March 1955, 3S/170, 174-176, paras. 16-17, 19-21.
See also other Review Session documents on these discussions:  W.9/18, W.9/22, W.9/82, W.9/136, W.9/139,
L/325, GATT/174.WT/WGTDF/W/3
Page 23
to their programme of economic development, that fo r this reason the word ‘imminent’ which occurs in
paragraph 2(a) is inappropriate in this context, and th at in order to safeguard their external position these
countries may need over a period of time to control th e general level of their imports in order to prevent
that level from rising beyond the means available to pay for imports as the progress of development
programmes creates new demands”.36
XVIII:10: "In applying these restrictions, the contracting party may determine their
incidence on imports of different products or classes of products in such a way as to
give priority to the importation of those products which are more essential in the light
of its policy of economic development;  Provided that the restrictions  are so applied as
to avoid unnecessary damage to the commercial or economic interests of any other
contracting party and not to prevent unreas onably the importation of any description of
goods in minimum commercial quantities the exclusion of which would impair regular
channels of trade;  and Provided further that the restrictions are not so applied as to
prevent the importation of commercial sample s or to prevent compliance with patent,
trade mark, copyright or similar procedures"
XVIII:11:  "In carrying out its domestic policies, the contracting party concerned shall
pay due regard to the need for restoring equilibrium in its balance of payments on a
sound and lasting basis and to the desirability of assuring an economic employment of
productive resources.  It shall progressively relax any restrictions applied under this
Section as conditions improve, maintaining them only to the extent necessary under the
terms of paragraph 9 of this Article and shall eliminate them when conditions no longerjustify such maintenance;  Provided that no contracting party shall be required to
withdraw or modify restrictions on the gr ound that a change in its development policy
would render unnecessary the restrictions which it is applying under this Section".
Interpretation under WTO: Proviso to Article  XVIII:11
In India – QR, the Appellate Body rejected India' s argument that in violation of the proviso to
Article XVIII:11, the Panel required India to change its developmental policy.  The Appellate Body
stated as follows:
"… we are of the opinion that the use of macroeconomic policy instruments is not related to
any particular development policy, but is resorted to by all Members regardless of the type of
development policy they pursue.  The IMF statement that India can manage its balance-of-paymentssituation using macroeconomic policy instruments alone does not, therefore, imply a change in India's
development policy.
…
We believe structural measures are different from macroeconomic instruments with respect to
their relationship to development policy.  If India were asked to implement agricultural reform or to
scale back reservations on certain products for small-scale units as indispensable policy changes in
order to overcome its balance-of-payments difficulties, such a requirement would probably have
involved a change in India's development policy….."
37
Note Ad XVIII:11:  "The second sentence in paragraph 11 shall not be interpreted to
mean that a contracting party is required to relax or remove restrictions  if such
relaxation or removal would thereupon produce conditions justifying the
                                                     
36 L/332/Rev.1 and Addenda, adopted on 2, 4 and 5 March 1955, 3S/170, 183, para. 44.
37 Appellate Body Report on India – QR , paras. 126 and 128.WT/WGTDF/W/3
Page 24
intensification or institution, respectively, of restrictions under paragraph 9 of
Article XVIII".
Analytical Index: Note Ad Article XVIII, para. (11)
In India – QR , rejecting the India's argument that the Pa nel erred in interpreting the term "thereupon"
contained in the Note Ad Article XVIII: 11, the Appellate Body stated as follows:
"We agree with the Panel that the Ad Note, and, in particular, the words 'would thereupon
produce', require a  causal link of a certain directness between the removal of the balance-of-
payments restrictions and the recurrence of one of the three conditions referred to in Article XVIII:9.
As pointed out by the Panel, the Ad Note demands more than a mere possibility of recurrence of one
of these three conditions and allows for the maintenance of balance-of-payments restrictions on thebasis only of clearly identified circumstances.  In order to meet the requirements of the Ad Note, the
probability of occurrence of one of the conditions would have to be clear.
We also agree with the Panel that the Ad Note and, in particular, the word 'thereupon',
expresses a  notion of temporal sequence  between the removal of the balance-of-payments restrictions
and the recurrence of one of the conditions of Article XVIII:9.  We share the Panel's view that the
purpose of the word 'thereupon' is to ensure that measures are not maintained because of some distant
possibility that a balance-of-payments difficulty may occur.
…We recall that balance-of-payments restrictions may be maintained under the Ad Note if their
removal or relaxation would thereupon produce:  (i) a threat of a serious decline in monetary reserves;
(ii) a serious decline in monetary reserves;  or (iii) inadequate monetary reserves.  With regard to the
first of these conditions, we agree with the Panel that the word 'thereupon' means 'immediately'.
…We agree with the Panel that it would be unrealistic to require that [the tow other conditions,
i.e. ] a serious decline or inadequacy in monetary reserves should actually occur within days or weeks
following the relaxation or removal of the balance-of-payments restrictions.  The Panel was, therefore,
correct to qualify its understanding of the word 't hereupon' with regard to these two conditions.  While
not explicitly stating so, the Panel in fact interpreted the word 'thereupon' for these two conditions as
meaning 'soon after'.  This is also one of the possible dictionary meanings of the word 'thereupon'.  We
are of the view that instead of using the word 'immediately', the Panel should have used the words
'soon after' to express the temporal sequence required by the word 'thereupon'.  … "
38
XVIII:(12a):  "Any contracting party applying new restrictions or raising the general
level of its existing restrictions  by a substantial intensification of the measures applied
under this Section, shall immediately after in stituting or intensifying such restrictions
(or, in circumstances in which prior consulta tion is practicable, before doing so) consult
with the C ONTRACTING PARTIES  as to the nature of its balance of payments
difficulties , alternative corrective measures which may be available, and the possible
effect of the restrictions on the economies of other contracting parties".
                                                     
38 Appellate Body Report on India – QR , paras. 114-115, 117 and 119.WT/WGTDF/W/3
Page 25
Analytical Index:  Article XVIII, para. 12a
Balance-of-payments measures other than quantitative restrictions
The Committee on Legal and Institutional Framework, which prepared the text of Part IV,
recommended an amendment to Section B of Article XVIII to permit a less-developed contracting party
to use temporary import surcharges, in place of quantitative restrictions, to safeguard its balance of
payments.39  This Recommendation was referred to the Committee on Trade and Development which
considered the question in an Ad Ho c Group on Legal Amendments during 1965/1966.40  
The Report of the Balance-of-Payments Committee on its work during the years 1970-1974
discusses the treatment of balance-of-payments surcharges during that period.41  
The 1979 “Declaration on Trade Measures taken fo r Balance-of-Payments Purposes” provides,
inter alia :  “The procedures for examination stipulated  in Articles XII and XVIII shall apply to all
restrictive import measures taken for balance-of-pay ments purposes. ... The provisions of this paragraph
are not intended to modify the substantive provisions of the General Agreement”.42  However,
paragraph 2 of the Understanding on the Balance- of-Payments Provisions of the GATT 1994 provides,
inter alia:  “It is understood that, notwithstanding the pr ovisions of Article II, price-based measures
taken for balance-of-payments purposes may be applied by a Member in excess of the duties inscribed
in the Schedule of that Member.”
B. GENERAL AGREEMENT ON TRADE IN SERVICES
Article XII
XII:1:  "In the event of serious balance-of-payments  and external financial
difficulties  or threat thereof, a Member may adopt or maintain restrictions on trade in
services on which it has undertaken specific commitments, including on payments ortransfers for transactions related to such co mmitments. It is recognized that particular
pressures on the balance of payments of a Member in the process of economic
development or economic transition may necessitate the use of restrictions to ensure,
inter alia, the maintenance of a level of financial reserves  adequate for the
implementation of its programme of economic development or economic transition".
XII:5(e):  "In consultations, all findings of statistical and other facts presented by the
International Monetary Fund relating to foreign exchange, monetary reserves and
balance of payments , shall be accepted and conclusions shall be based on the
assessment by the Fund of the balance-of-payments and the external financial
situation of the consulting Member".
C. U
NDERSTANDING ON THE BALANCE -OF-PAYMENTS PROVISIONS OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994
Application of Measures
para. 1:  "Members confirm their commitment to announce publicly, as soon as
possible, time-schedules for the removal of restrictive import measures taken for
                                                     
39 L/2281, para.7 and Annex II;  L/2297, para. 6.
40 13S/76; 14S/141.
41 L/4200.
42 L/4904, adopted on 28 November 1979, 26S/205, 206, para. 1.WT/WGTDF/W/3
Page 26
balance-of-payments purposes . It is understood that such time-schedules may be
modified as appropriate to take into account changes in the balance-of-payments
situation . Whenever a time-schedule is not publicly announced by a Member, that
Member shall provide justification as to the reasons therefor".
para. 2: "Members confirm their commitment to give preference to those measures
which have the least disruptive effect on trade. Such measures (referred to in this
Understanding as "price-based measures") shall be understood to include import
surcharges , import deposit requirements or other equivalent trade measures
with an impact on the price of imported goods. It is understood that, notwithstanding
the provisions of Article II, price-based measures taken for balance-of-payments
purposes  may be applied by a Member in excess of the duties inscribed in the
Schedule of that Member. Furthermore, that Member shall indicate the amount bywhich the price-based measure exceeds the bound duty clearly and separately under
the notification procedures of this Understanding".
para. 3:  "Members shall seek to avoid the imposition of new quantitative
restrictions for balance-of-payments purposes  unless, because of a critical balance-
of-payments situation, price-based measures cannot arrest a sharp deterioration in
the external payments position . In those cases in which a Member applies
quantitative restrictions, it shall provide justification as to the reasons why price-
based measures are not an adequate instrument to deal with the balance-of-payments
situation.  A Member maintaining quantitative restrictions shall indicate in successive
consultations the progress made in significantly reducing the incidence and restrictiveeffect of such measures. It is understood that not more than one type of restrictive
import measure taken for balance-of-payments purposes may be applied on the same
product".
para. 4:  "Members confirm that restrictive import measures taken for balance-of-
payments purposes may only be applied to control the general level of imports and
may not exceed what is necessary to address the balance-of-payments situation.  In
order to minimize any incidental protective effects, a Member shall administer
restrictions in a transparent manner. The authorities of the importing Member shall
provide adequate justification as to the criteria used to determine which products are
subject to restriction. As provided in paragraph 3 of Article XII and paragraph 10 of
Article XVIII, Members may, in the case of certain essential products, exclude or
limit the application of surcharges applied across the board or other measures appliedfor balance-of-payments purposes. The term "essential products" shall be understood
to mean products which meet basic consumption needs or which contribute to the
Member's effort to improve its balance-of-payments situation , such as capital goods
or inputs needed for production. In the administration of quantitative restrictions, a
Member shall use discretionary licensing only when unavoidable and shall phase itout progressively. Appropriate justification shall be provided as to the criteria used to
determine allowable import quantities or values".
Note 1 : "Nothing in this understanding is intended to modify the rights and
obligations of Members under Articles XII or XVIII:B of GATT 1994. The
provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied bythe Dispute Settlement Understanding may be invoked with respect to any matters
arising from the application of restrictive import measures taken for balance-of-
payments purposes ".WT/WGTDF/W/3
Page 27
D. 1979 D ECLARATION ON "TRADE MEASURES TAKEN FOR BALANCE -OF-PAYMENTS
PURPOSES "
1979:2: “If, notwithstanding the principles of this Declaration, a developed contracting
party is compelled to apply restrictive import measures for balance-of-payments
purposes , it shall, in determining the incidence of its measures, take into account the
export interests of the less-developed contracting parties and may exempt from its
measures products of export interest to those contracting parties”.43
E. AGREEMENT ON TRADE -RELATED INVESTMENT MEASURES
Article IV
IV: "A developing country Member shall be free to deviate temporarily from the
provisions of Article 2 to the extent and in such a manner as Article XVIII of GATT 1994,
and the Declaration on Trade Measures Taken for Balance-of-Payments Purposes adopted on28 November 1979 (BISD 26S/205-209) permit the Member to deviate from the provisions of
Article III and XI of GATT 1994".
F. A
GREEMENT ON GOVERNMENT PROCUREMENT
Article V
V:1(a): " Parties shall, in the implementation and administration of this Agreement,
through the provisions set out in this Article, duly take into account the development,
financial and trade needs  of developing countries, in particular least-developed
countries, in their need to:
(a) safeguard their balance-of-payments position  and ensure a level of reserves
adequate for the implementation of programmes of economic development;
………………. "
V. PROVISIONS RELATED TO FINANCIAL SERVICES
A. GENERAL AGREEMENT ON TRADE IN SERVICES
Annex on Financial Services
1(b): "For the purposes of subparagraph 3(b) of Article I of the Agreement.
"services supplied in the exercise of governmental authority" means the following:
(i) activities conducted by a central bank or monetary authority  or by any
other public entity in pursuit of monetary or exchange rate policies;
(ii) activities forming part of a statutory system of social security or public
retirement plans; and
(iii) other activities conducted by a public entity for the account or with the
guarantee or using the financial resources  of the Government".
                                                     
43 26S/206, 207;  for background to this provision see, e.g., Report of the Working Party on “United
States Temporary Import Surcharge”, L/3573, adopted on 16 September 1971, 18S/212, 220-223, paras. 34-38,
40.WT/WGTDF/W/3
Page 28
2(a): "Notwithstanding any other provisions of the Agreement, a Member shall not
be prevented from taking measures for prudential reasons, including for the
protection of investors, depositors, policy holders or persons to whom a fiduciary
duty is owed by a financial service supplier, or to ensure the integrity and  stability
of the financial system.  Where such measures do not conform with the provisions of
the Agreement, they shall not be used as a means of avoiding the Member's
commitments or obligations under the Agreement".
3(a): "A Member may recognize prudential measures  of any other country in
determining how the Member's measures relating to financial services shall be
applied. Such recognition, which may be achieved through harmonization or
otherwise, may be based upon an agreem ent or arrangement with the country
concerned or may be accorded autonomously".
VI. PROVISIONS RELATED TO FINANCIAL ASSISTANCE FOR ECONOMIC
DEVELOPMENT
A. GENERAL AGREEMENT ON TARIFFS AND TRADE
Article XXXVI
XXXVI :6: "Because of the chronic deficiency in the export proceeds and other
foreign exchange earnings  of less-developed contracting parties, there are important
inter-relationships between trade and financial assistance to development. There is,
therefore, need for close and continuing collaboration between the CONTRACTING
PARTIES and the international lending agencies so that they can contribute most
effectively to alleviating the burdens these less-developed contracting parties assumein the interest of their economic development".
Article XXXVIII
XXXVIII:2(c): "  In particular, the CONTRACTING PARTIES shall:
…………..
c) collaborate in analysing the development plans and policies of individual less-
developed contracting parties and in examining trade and aid relationships  with a
view to devising concrete measures to promote the development of export potential
and to facilitate access to export markets for the products of the industries thus
developed and, in this connection, seek appropriate collaboration with governments
and international organizations, and in particular with organizations having
competence in relation to financial assistance  for economic development, in
systematic studies of trade and aid relationships in individual less-developedcontracting parties aimed at obtaining a clear analysis of export potential, market
prospects and any further action that may be required;
…………."WT/WGTDF/W/3
Page 29
B. AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
Article XXVII
XVII:4: "Any developing country Member referred to in paragraph 2(b) shall phase
out its export subsidies within the eight-year period, preferably in a progressive
manner. However, a developing country Member shall not increase the level of itsexport subsidies, and shall eliminate them within a period shorter than that provided
for in this paragraph when the use of such export subsidies is inconsistent with its
development needs. If a developing country Member deems it necessary to apply
such subsidies beyond the 8-year period, it shall not later than one year before the
expiry of this period enter into consultation with the Committee, which will
determine whether an extension of this period is justified, after examining all the
relevant economic, financial and development needs  of the developing country
Member in question. If the Committee determines that the extension is justified, the
developing country Member concerned shall hold annual consultations with the
Committee to determine the necessity of maintaining the subsidies. If no such
determination is made by the Committee, the developing country Member shall phase
out the remaining export subsidies within two years from the end of the lastauthorized period".
C. A
GREEMENT ON TECHNICAL BARRIERS TO TRADE
Article XII
XII:2: "Members shall give particular attention to the provisions of this Agreement
concerning developing country Members' rights and obligations and shall take intoaccount the special development, financial and trade needs of developing country
Members in the implementation of this Agreement, both nationally and in the
operation of this Agreement's institutional arrangements".
XII:3: "Members shall, in the preparation and application of technical regulations,
standards and conformity assessment procedures, take account of the special
development, financial and trade needs of developing country Members , with a
view to ensuring that such technical regu lations, standards and conformity assessment
procedures do not create unnecessary obstacl es to exports from developing country
Members".
XII:4: "Members recognize that, although international standards, guides or
recommendations may exist, in their particular technological and socio-economic
conditions, developing country Members adopt certain technical regulations,standards or conformity assessment procedures aimed at preserving indigenous
technology and production methods and processes compatible with their development
needs. Members therefore recognize that developing country Members should not be
expected to use international standards as a basis for their technical regulations or
standards, including test methods, which are not appropriate to their development,
financial and trade needs. "
XII:9: "During consultations, developed country Members shall bear in mind the
special difficulties experienced by developing country Members in formulating and
implementing standards and technical regulations and conformity assessment
procedures, and in their desire to assist developing country Members with theirWT/WGTDF/W/3
Page 30
efforts in this direction, developed country Members shall take account of the special
needs of the former in regard to financing, trade and development ."
D. AGREEMENT ON IMPORT LICENSING PROCEDURES
Article I
I:2: "Members shall ensure that the administrative procedures used to implement
import licensing regimes are in conformity with the relevant provisions of GATT
1994 including its annexes and protocols, as interpreted by this Agreement, with a
view to preventing trade distortions that may arise from an inappropriate operation of
those procedures, taking into account the economic development purposes and
financial and trade needs of developing country Members ".
Article III
III:5(a): "Members shall provide, upon the request of any Member having an interest
in the trade in the product concerned, all relevant information concerning:
(i) the administration of the restrictions;
(ii) the import licences granted over a recent period;
(iii) the distribution of such licences among supplying countries;
(iv) where practicable, import statistics (i.e. value and/or volume) with respect to the
products subject to import licensing. Developing country Members would not be
expected to take additional administrative or financial burdens  on this account;
(b) ……….. ".
E. AGREEMENT ON GOVERNMENT PROCUREMENT
Article V
V:5: "After entry into force of this Agreement, a developing country Party may
modify its coverage lists in accordance with the provisions for modification of such
lists contained in paragraph 6 of Article XXIV, having regard to its development,
financial and trade needs , or may request the Committee on Government
Procurement (hereinafter referred to as "the Committee") to grant exclusions from therules on national treatment for certain entities, products or services that are included
in its coverage lists, having regard to the particular circumstances of each case and
taking duly into account the provisions of subparagraphs 1(a) through 1(c). After
entry into force of this Agreement, a developing country Party may also request the
Committee to grant exclusions for certain entities, products or services that are
included in its coverage lists in the light of its participation in regional or global
arrangements among developing countries, having regard to the particularcircumstances of each case and taking duly into account the provisions of
subparagraph 1(d). Each request to the Committee by a developing country Party
relating to modification of a list shall be accompanied by documentation relevant to
the request or by such information as may be necessary for consideration of the
matter".WT/WGTDF/W/3
Page 31
V:14:  "The Committee shall review annually the operation and effectiveness of this
Article and, after each three years of its operation on the basis of reports to be
submitted by Parties, shall carry out a major review in order to evaluate its effects. As
part of the three-yearly reviews and with a view to achieving the maximum
implementation of the provisions of this Agreement, including in particular ArticleIII, and having regard to the development, financial and trade situation of the
developing countries concerned,  the Committee shall examine whether exclusions
provided for in accordance with the provisions of paragraphs 4 through 6 of this
Article shall be modified or extended".
F. D
ECISION ON MEASURES CONCERNING THE POSSIBLE NEGATIVE EFFECTS OF THE REFORM
PROGRAMME ON LEAST -DEVELOPED AND NET FOOD-IMPORTING DEVELOPING COUNTRIES
para. 3:  "Ministers accordingly agree  to establish appropriate mechanisms to ensure
that the implementation of the results of the Uruguay Round on trade in agriculture
does not adversely affect the availability of food aid at a level which is sufficient to
continue to provide assistance in meeting the food needs of developing countries,
especially least-developed and net food-importing developing countries. To this end
Ministers agree:
(i)    …………………….
(iii)  to give full consideration in the context of their aid programmes to
requests for the provision of technical and financial assistance to least-developed
and net food-importing developing countries to improve their agricultural
productivity and infrastructure".
para. 5 : "Ministers recognize  that as a result of the Uruguay Round certain
developing countries may experience short-term difficulties in financing normal
levels of commercial imports  and that these countries may be eligible to draw on the
resources of international financial institutions  under existing facilities, or such
facilities as may be established, in the context of adjustment programmes, in order toaddress such financing difficulties ………".
G. D
ECISION OF 28 N OVEMBER 1979: D IFFERENTIAL AND MORE FAVOURABLE TREATMENT
RECIPROCITY AND FULLER PARTICIPATION OF DEVELOPING COUNTRIES
para. 3 : "Any differential and more favourable treatment provided under this clause:
        (a) …………
        (c) shall in the case of such treatment accorded by developed contracting
parties to developing countries be designed and, if necessary, modified, to respondpositively to the development, financial and trade needs of developing countries
shall in the case of such treatment accorded by developed contracting parties to
developing countries be designed and, if necessary, modified, to respond positively to
the development, financial and trade needs of developing countries".
para. 5 : "The developed countries do not expect reciprocity for commitments made
by them in trade negotiations to reduce or remove tariffs and other barriers to the
trade of developing countries, i.e., the developed countries do not expect the
developing countries, in the course of trade negotiations, to make contributions which
are inconsistent with their individual development, financial and trade needs .WT/WGTDF/W/3
Page 32
Developed contracting parties shall therefore not seek, neither shall less-developed
contracting parties be required to make, concessions that are inconsistent with the
latter's development, financial and trade needs ".
para. 6 : "Having regard to the special economic difficulties and the particular
development, financial and trade needs of the least-developed countries , the
developed countries shall exercise the utmost restraint in seeking any concessions or
contributions for commitments made by them to reduce or remove tariffs and other
barriers to the trade of such countries, and the least-developed countries shall not be
expected to make concessions or contributions that are inconsistent with the
recognition of their particular situation and problems".
para. 8 : "Particular account shall be taken of the serious difficulty of the least-
developed countries in making concessions and contributions in view of their special
economic situation and their development, financial and trade needs ".
VII. PROVISIONS RELATED TO FISCAL REVENUE MEASURES
A. GENERAL AGREEMENT ON TARIFFS AND TRADE
Article III
Ad Article III:1: "The application of paragraph 1 to internal taxes imposed by local
governments and authorities with the territor y of a contracting party is subject to the
provisions of the final paragraph of Article XXIV. The term "reasonable measures" in
the last-mentioned paragraph would not require, for example, the repeal of existing
national legislation authorizing local governments to impose internal taxes which,
although technically inconsistent with the letter of Article III, are not in factinconsistent with its spirit, if such repeal would result in a serious financial hardship
for the local governments or authorities concerned. With regard to taxation by local
governments or authorities which is inconsistent with both the letter and spirit of
Article III, the term "reasonable measures" would permit a contracting party to
eliminate the inconsistent taxation gradually over a transition period, if abrupt actionwould create serious administrative and financial difficulties".
Article XXVIII bis
Ad Article XXVIII bis:1: "It is understood that the reference to fiscal needs  would
include the revenues aspect of duties and particularly duties imposed primarily for
revenue purpose, or duties imposed on products which can be substituted for products
subject to revenue duties to prevent the avoidance of such duties."
Article XXXVII
XXXVII:1(c): "The developed contracting parties shall to the fullest extent possible -
that is, except when compelling reasons, which may include legal reasons, make it
impossible - give effect to the following provisions:
a) ……………
c) (i) refrain from imposing new fiscal measures , andWT/WGTDF/W/3
Page 33
(ii) in any adjustments of fiscal policy  accord high priority to the reduction
and elimination of fiscal measures , which would hamper, or which hamper,
significantly the growth of consumption of primary products, in raw or processed
form, wholly or mainly produced in the territories of less-developed contracting
parties, and which are applied specifically to those products".
Analytical Index: Article XXXVII, para. 1
refrain from introducing”;  “refrain from impos ing”;  “products ... of particular export interest to
less-developed contracting parties”   
Trade measures taken for ba lance-of-payments purposes
The Report of the 1971 Working Party on “United St ates Temporary Import Surcharge” includes the
following paragraphs:
“A number of representatives of developing c ountries said that they could not accept the United
States contention that exemption from the surcharg e for exports of devel oping countries could be
construed as discrimination, impermissible under the General Agreement.  Article XXXVII clearly
established that, in the absence of compelling reasons, developed contracting parties must abstain from
introducing or increasing tariff or non-tariff barrier s vis-à-vis developing countries.  They did not
consider that the United States had advanced compelling reasons since there could be no serious
economic effects for the United States in exempting developing countries from the surcharge.  They,
therefore, drew the conclusion that Article XXXVII was not being respected and stressed the
fundamental importance to developi ng countries of this Article - the sole commitment of developed
countries towards developing countries .  In the view of some of these delegations, this Article should be
considered as being parallel in application to othe r Articles in the GATT.  Moreover, they considered
that the surcharge was inconsistent  with current trends in internat ional co-operation, as exemplified by
the Generalized System of Preferences and with  recent developments in other international
organizations.
“The representative of the United States drew attention to the fact that Article XXXVII
provided for a standstill only as regards ‘products’ of  export interest to developing countries and stated
that the United States had endeavoured to exempt such products from the surcharge by the exclusion of
duty-free items.  He further stated that it was neither  possible nor proper to identify those countries that
were ‘responsible’ for the balance-of-payments difficulties and to exclude all others from the operation
of the surcharge.”44
The 1976 Secretariat Note on the application of Part IV states:
“During the review of the application of Part IV in the Committee on Trade and Development in
1968/69, some developing countries have mentioned that import surcharges and import deposit schemes
when introduced or maintained by developed c ountries should not be applied to imports from
developing countries in the light of  the provisions of Part IV.  De veloped countries which had resorted
to such measures for balance-of-payments reasons st ated that they had endeavoured to abide by the
obligations assumed by them under Part IV and had given special consideration to the interests of
developing countries.  For example, some devel oped countries had exempted from import deposit or
surcharge schemes, raw materials and certain semi-finished products which constituted a substantial
share in the exports of developing countries to thei r markets.  It was, however, not possible for them to
consider complete exemption from such schemes of imports from developing countries as this would
weaken the effectiveness of the measures taken and might thus necessitate emergency measures being
                                                     
44 L/3573, adopted on 16 September 1971, 18S/212, 221-222, para. 37-38.WT/WGTDF/W/3
Page 34
continued for a longer period ... It may be men tioned that one country exempted from its import
surcharge imports entering under its Generalized System of Preferences.”45
Fiscal measures
The Conclusions and Resolutions adopt ed by Ministers on 21 May 1963, include, inter alia :
“Industrialized countries shall progressively reduce internal charges and revenue duties
on products wholly or mainly produced in less -developed countries with a view to their
elimination by 31 December 1965.”46
The 1970 Report of the Working Party on “Border Tax Adjustments” notes that
“Members from developing countries drew attent ion to the Ministerial Conclusions of 1963 and
Article XXXVII of the GATT, which stressed that developed contracting parties should endeavour to
suppress taxes on products imported essentially fro m developing countries ... Representatives of
developed countries considered that a distinction shou ld be made between internal charges of a general
application and selective or specific taxes, since ma ny of the taxes imposed such as cumulative turnover
taxes and the tax on value added affected all products and were, in their view, not covered by
Article XXXVII:1(c), which refers to fiscal measures applied specifically to those products in raw or
processed form wholly or mainly produced in th e territories of developing contracting parties.
Representatives of developing count ries pointed out that in the process of change-over to [value-added
taxes], selective excise taxes were replaced by ge neral consumption taxes.  They therefore considered
that the provisions of Article XXXVII:1(c) were applicable.”47
VIII.  PROVISIONS RELATED TO INSTITUTIONAL ISSUES
A. DECLARATION ON THE CONTRIBUTION OF THE WORLD TRADE ORGANIZATION TO
ACHIEVING GREATER COHERENCE IN GLOBAL ECONOMIC POLICY -MAKING
para. 2:  "Successful cooperation in each area of economic policy contributes to
progress in other areas. Greater exchange rate stability,  based on more orderly
underlying economic and financial conditions, should contribute towards the
expansion of trade, sustainable growth and development, and the correction of
external imbalances. There is also a need for an adequate and timely flow of
concessional and non-concessional financial and real investment resources  to
developing countries and for further efforts to address debt problems , to help ensure
economic growth and development. Trade liberalization forms an increasingly
important component in the success of the adjustment programmes that many
countries are undertaking, often involving significant transitional social costs. In this
connection, Ministers note the role of the World Bank and the IMF in supportingadjustment to trade liberalization, including support to net food-importing developing
countries facing short-term costs arising from agricultural trade reforms".
para. 5:  "The interlinkages between the different aspects of economic policy require
that the international institutions with resp onsibilities in each of these areas follow
consistent and mutually supportive policies. The World Trade Organization should
                                                     
45 COM.TD/W/239, p. 14, para. 36 (for exemption of GSP products see the Working Party Report on
“Danish Temporary Import Surcharge”, L/3648, adopt ed on 12 January 1972, 19S/120, 125-126, 129-130,
paras. 18, 22, 41, 42).
46 12S/36, 37, para. (vi).
47 L/3464, adopted on 2 December 1970, 18S/97, 105, paras. 29, 30.WT/WGTDF/W/3
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therefore pursue and develop cooperation with the international organizations
responsible for monetary and financial matters , while respecting the mandate, the
confidentiality requirements and the necessary autonomy in decision-making
procedures of each institution, and avoiding the imposition on governments of cross-
conditionality or additional conditions. Ministers further invite the Director-Generalof the WTO to review with the Managing Director of the International Monetary
Fund and the President of the World Bank, the implications of the WTO's
responsibilities for its cooperation with the Bretton Woods institutions, as well as the
forms such cooperation might take, with a view to achieving greater coherence in
global economic policy-making".
B. D
ECLARATION ON THE RELATIONSHIP OF THE WORLD TRADE ORGANIZATION WITH THE
INTERNATIONAL MONETARY FUND
para. 1:  "Noting the close relationship between the CONTRACTING PARTIES to
the GATT 1947 and the International Monetary Fund , and the provisions of the
GATT 1947 governing that relationship, in particular Article XV of the GATT 1947;"
para. 2:  "Recognizing  the desire of participants to base the relationship of the
World Trade Organization with the International Monetary Fund , with regard to
the areas covered by the Multilateral Trade Agreements in Annex 1A of the WTO
Agreement, on the provisions that have governed the relationship of the
CONTRACTING PARTIES to the GATT 1947 with the International Monetary
Fund;"
para. 3:  "Hereby reaffirm  that, unless otherwise provided for in the Final Act, the
relationship of the WTO with the International Monetary Fund, with regard to the
areas covered by the Multilateral Trade Agreements in Annex 1A of the WTO
Agreement, will be based on the provisions that have governed the relationship of the
CONTRACTING PARTIES to the GATT 1947 with the International Monetary
Fund."
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