The Understanding on the balance of payments provisions of the GATT, 1994 gives the following clarifications for the Balance of Payment Provisions:
Application Measures of GATT, 1994:
1. Members confirm their commitment to announce publicly, as soon as possible, time -schedules for the removal of restrictive import measures taken for balance of payments purposes. 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 thereof.
2. Members confirm their commitment to give preference to those measures which have the least disruptive effect on trade. Such 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.
ADVERTISEMENTS:
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 adequate instrument to deal with the balance of payments situation. 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.
4. Members confirm that restrictive import measures taken for balance of payments purpose 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 minimise any incidental protective effects, a Member shall administer restrictions in a transparent manner by providing adequate justification.
Members may, in the case of certain essential products, exclude or limit the application of surcharges applied across the board or other measures applied for 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. In the administration of quantitative restrictions, a Member shall use discretionary licensing only when unavoidable and shall phase it out progressively.
Procedures for Balance of Payment Consultations:
5. The Committee on Balance of Payments Restrictions shall carry out consultations in order to review all restrictive import measures taken for balance of payments purposes.
ADVERTISEMENTS:
6. A Member applying new restrictions or raising the general level of its existing restrictions by a substantial intensification of the measures shall enter into consultations with the Committee within four months of the adoption of such measures.
7. All restrictions applied for balance of payments purposes shall be subject to periodic review in the Committee subject to the possibility of altering the periodicity of consultations in agreement with the consulting Member.
8. Consultations may be held under the simplified procedures in the case of least-developed country Members or in the case of developing country Members which are pursuing liberalization efforts in confirmity with the Schedule presented to the Committee in previous consultations.
Notification and Documentation:
9. A Members shall notify to the General Council the introduction of or any changes in the application of restrictive import measures taken for balance of payments purposes, as well as any modifications in time- schedule for the removal of such measures. Significant changes shall be notified to the General Council prior to or not later than 30 days after their announcement. On a year basis, each Member shall make available to the Secretariat a consolidated notification, including all changes in laws, regulations, policy statements or public notices, for examination by Members.
ADVERTISEMENTS:
10. At the request of any Member, notifications may be reviewed by the Committee. Such reviews would be limited to the clarification of specific issues raised by a notification.
11. The consulting Member shall prepare a Basic Document for the consultations which, in addition to any other information considered to be relevant. Member shall submit a written statement containing essential relevant information on the elements covered by the Basic Document.
12. The Secretariat shall, with a view to facilitating the consultations in the Committee, prepare a factual background paper dealing with the different aspects of the plan for consultations.
Conclusions of Balance of Payment Consultations:
13. The Committee shall report on its consultations to the General Council. When full consultation procedures have been used, the report should indicate the Committee’s conclusions on the different elements of the plan for consultations, as well as the facts and reasons on which they are based. When simplified consultation procedures have been use, the report shall include a summary of the main elements discussed in the Committee and a decision on whether full consultation procedures are required.