Article 21. Restrictions to safeguard the Balance of Payments. I. Notwithstanding the provisions of paragraph 1 of Article 20, any Member, in order to safeguard its external financial position and balance of payments, may restrict the quantity or value of merchandise permitted to be imported, subject to the provisions of the following paragraphs of this Article. 2. (a) No Member shall institute, maintain or intensify import restrictions under this Article except to the extent 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 Member with very low monetary reserves, to achieve a reasonable rate of increase in its reserves; due regard being paid in either case to any special factors which may be affecting the Member's reserves or 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. (b) Members applying restrictions under sub-paragraph (a) shall progressively relax them as such conditions improve, maintaining them only to the extent 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 sub-paragraph. 3. (a) The Members recognize that in the early years of the Organization all of them will be confronted in varying degrees with problems of economic adjustment resulting from the war. During this period the Organization shall, when required to take decisions under this Article or under Article 23, take full account of the difficulties of post-war adjustment and of the need which a Member may have to use import restrictions as a step towards the restoration of equilibrium in its balance of payments on a sound and lasting basis. (b) The Members recognize that, as a result of domestic policies directed toward the fulfilment of a Member's obligations under Article 3 relating to the achievement and maintenance of full and productive employment and large and steadily growing demand or its obligations under Article 9 relating to the reconstruction or development of industrial and other economic resources and to the raising of standards of productivity, such a Member may experience a high level of demand for imports. Accordingly: (c) (i) notwithstanding the provisions of paragraph 2 of this Article no Member shall be required to withdraw or modify restrictions on the ground that a change in such policies would render unnecessary the restrictions which it is applying under this Article. (ii) any Member applying import restrictions under this Article may determine the incidence of the restrictions 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 such policies. Members undertake, in carrying out their domestic policies: (i) to pay due regard to the need for restoring equilibrium in their balance of payments on a sound and lasting basis and to the desirability of assuring an economic employment of productive resources; (ii) not to apply restrictions so as to prevent unreasonably the importation of any description of goods in minimum commercial quantities, the exclusion of which would impair regular channels of trade, or restrictions which would prevent the importation of commercial samples, or prevent compliance with patent, trademark, copyright, or similar procedures; and (iii) to apply restrictions under this Article in such a way as to avoid unnecessary damage to the commercial or economic interests of any other Member. 4. (a) Any Member which is not applying restrictions under this Article, but is considering the need to do so, shall, before instituting such restrictions (or, in circumstances in which prior consultation is impracticable, immediately after doing so), consult with the Organization as to the nature of its balance-of-payments difficulties, alternative corrective measures which may be available, and the possible effect of such measures on the economies of other Members. No Member shall be required in the course of consultations under this subparagraph to indicate in advance the choice or timing of any particular measure which it may ultimately determine to adopt. (b) The Organization may at any time invite any Member which is applying import restrictions under this Article to enter into such consultations with it, and shall invite any Member substantially intensifying such restrictions to consult within thirty days. A Member thus invited shall participate in such discussions. The Organization may invite any other Member to take part in these discussions. Not later than two years from the day on which this Charter enters into force, the Organization shall review all restrictions existing on that day and still applied under this Article at the time of the review. (c) Any Member may consult with the Organization with a view to obtaining the prior approval of the Organization for restrictions which the Member proposes, uhder this Article, to maintain, intensify or institute, or for the maintenance, intensification or institution of restrictions under specified future conditions. As a result of such consultations, the Organization may approve in advance the maintenance, intensification or institution of restrictions by the Member in question insofar as the general extent, degree of intensity and duration of the restrictions are concerned. To the extent to which such approval has been given, the requirements of sub-paragraph (a) of this paragraph shall be deemed to have been fulfilled, and the action of the Member applying the restrictions shall not be open to challenge under sub-paragraph (d) of this paragraph on the ground that such action is inconsistent with the provisions of paragraph 2 of this Article. (d) Any Member which considers that another Member is applying restrictions under this Article inconsistently with paragraph 2 or 3 of this Article or with Article 22 (subject to the provisions of Article 23) may bring the matter for discussion to the Organization; and the Member applying the restrictions shall participate in the discussion. The Organization, if it is satisfied that there is a prima facie case that the trade of the Member initiating the procedure is adversely affected, shall submit its views to the parties with the aim of achieving a settlement of the matter in question which is satisfactory to the parties and to the Organi zation. If no such settlement is reached and if the Organization determines that the restrictions are being applied inconsistently with paragraph 2 or 3 of this Article or with Article 22 (subject to the provisions of Article 23), the Organization shall recommend the withdrawal or modification of the restrictions. If the restrictions are not withdrawn or modified in accordance with the recommendation of the Organization within sixty days, the Organization may release any Member from specified obligations under this Charter, towards the Member applying the restrictions. (e) It is recognized that premature disclosure of the prospective application, withdrawal or modification of any restriction under this Article might stimulate speculative trade and financial movements which would tend to defeat the purposes of this Article. Accordingly, the Organization shall make provision for the observance of the utmost secrecy in the conduct of any consultation. 5. If there is a persistent and widespread application of import restrictions under this Article, indicating the existence of a general disequilibrium which is restricting international trade, the Organization shall initiate discussions to consider whether other measures might be taken, either by those Members whose balances of payments are under pressure or by those Members whose balances of payments are tending to be exceptionally favourable, or by any appropriate inter-governmental organization, to remove the underlying causes of the disequilibrium. On the invitation of the Organization, Members shall participate in such discussions. Article 22. Non-discriminatory Administration of Quantitative Restrictions. 1. No prohibition or restriction shall be applied by any Member on the importation of any product of any other Member country or on the exportation of any product destined for any other Member country, unless the importation of the like product of all third countries or the exportation of the like product to all third countries is similarly prohibited or restricted. 2. In applying import restrictions to any product, Members shall aim at a distribution of trade in such product approaching as closely as possible to the shares which the various Member countries might be expected to obtain in the absence of such restrictions, and to this end shall observe the following provisions: (a) wherever practicable, quotas represent ing the total amount of permitted. imports (whether allocated among supplying countries or not) shall be fixed, and notice given of their amount in accordance with paragraph 3 (b) of this Article; (b) in cases in which quotas are not practicable, the restrictions may be applied by means of import licences or permits without a quota; (c) Members shall not, except for purposes of operating quotas allocated in accordance with sub-paragraph (d) of this paragraph, require that import licences or permits be utilized for the importation of the product concerned from a particular country or source; (d) in cases in which a quota is allocated among supplying countries, the Member applying the restrictions may seek agreement with respect to the allocation of shares in the quota with all other Members having a substantial interest in supplying the product concerned. In cases in which this method is not reasonably practicable, the Member concerned shall allot to Member countries having a substantial interest in supplying the product, shares based upon the proportions, supplied by such Member countries during a previous representative period, of the total quantity or value of imports of the product, due account being taken of any special factors which may have affected or may be affecting the trade in the product. No conditions or formalities shall be imposed which would prevent any Member from utilizing fully the share of any such total quantity or value which has been allotted to it, subject to importation being made within any prescribed period to which the quota may relate. 3. (a) In cases in which import licences are issued in connection with import restrictions, the Member applying the restriction shall provide, upon the request of any Member having an interest in the trade in the product concerned, all relevant information concerning the administration of the restriction, the import licences granted over a recent period and the distribution of such licences among supplying countries; Provided that there shall be no obligation to supply information as to the names of importing or supplying enterprises. (b) In the case of import restrictions involving the fixing of quotas, the Member applying the restrictions shall give public notice of the total quantity or value of the product or products which will be permitted to be imported during a specified future period and of any change in such quantity or value. Any supplies of the product in question which were en route at the time at which public notice was given shall not be excluded from entry; Provided that they may be counted, so far as practicable, against the quantity permitted to be imported in the period in question, and also, where necessary, against the quantities permitted to be imported in the next following period or periods, and Provided further that if any Member customarily exempts from such restrictions products entered for consumption or withdrawn from warehouse for consumption during a period of thirty days after the day of such public notice, such practice shall be considered full compliance with this subparagraph. (c) In the case of quotas allocated among supplying countries the Member applying the restriction shall promptly inform all other Members having an interest in supplying the product concerned of the shares in the quota currently allocated, by quantity or value, to the various supplying countries and shall give public notice thereof. 4. With regard to restrictions applied in accordance with paragraph 2 (d) of this Article or under paragraph 2 (c) of Article 20, the selection of a representative period for any product and the appraisal of any special factors affecting the trade in the product shall be made initially by the Member applying the restriction; Provided that such Member shall, upon the request of any other Member having a substantial interest in supplying that product or upon the request of the Organization, consult promptly with the other Member or Article 22. Paragraph 2, sub-paragraph (d). The Preparatory Committee omitted the phrase establishing "commercial considerations" as a rule for the allocation of quotas, because it was considered that its application by governmental authorities might not always be practicable. Moreover, in cases where it was practicable, a Member could apply this consideration in the process of seeking agreement, consistently with the general rule laid down in the opening sentence of paragraph 2. Paragraph 3, sub-paragraphs (b) and (c). The Czechoslovak Delegation reserved its position on the requirement of public notice in sub-paragraphs (b) and (c). The Czechoslovak Delegation, while not opposed to the principle of public notice, cannot accept it as an immediate obligation, as long as the countries with whom Czechoslovakia has been conducting the major part of her foreign trade are not following a similar procedure. The obligation of giving public notice of global quotas and of the allocation of shares is, in the particular situation of Czechoslovakia, too rigid a rule and, unless practised generally, liable to have a harmful effect upon the expansion of foreign trade in general, and the economic interests of Czechoslovakia in particular. In the view of the Czechoslovak Delegation it should be sufficient to supply full information to Members substantially interested in the exportation of "the respective commodity. Paragraph 4. See note relating to "special factors" in connection with the last sub-paragraph of paragraph 2 of Article 20 the Organization regarding the need for an adjustment of the proportion determined or of the base period selected or for the reappraisal of the special factors involved, or for the elimination of conditions, formalities or any other provisions established unilaterally upon the allocation of an adequate quota or its unrestricted utilization. 5. The provisions of this Article shall apply to any tariff quota instituted or maintained by any Member and, insofar as applicable, the principles of this Article shall also extend to export restrictions and to any internal regulation or requirements under paragraph 2 of Article 18. Article 23. Exceptions to the Rule of Non-discrimination. 1. (a) The Members recognize that when a substantial and widespread disequilibrium prevails in international trade and payments a Member applying restrictions under Article 21 may be able to increase its imports from certain sources without unduly depleting its monetary reserves, if permitted to depart from the provisions of Article 22. The Members also recognize the need for close limitation of such departures so as not to handicap achievement of multilateral international trade. (b) Accordingly, when a substantial and widespread disequilibrium prevails in international trade and payments a Member applying import restrictions under Article 21 may relax such restrictions in a manner which departs from the provisions of Article 22 to the extent necessary to obtain additional imports above the maximum total of imports which it could afford in the light of the requirements of paragraph 2 of Article 21 if its restrictions were fully consistent with Article 22; Provided that (i) levels of delivered prices for products Article 23. The Delegations of Czechoslovakia, Chile and Norway recorded a reservation. The Belgian Delegation reserved its position pending examination of the Charter as a whole by the Belgian Government. its exports to other Members not party to the arrangement is appreciably reduced below the level it could otherwise have been reasonably expected to attain; (iii) such action does not cause unne cessary damage to the commercial or economic interests of any other Member. (c) Any Member taking action under this paragraph shall observe the principles of subparagraph (b) of this paragraph. A Member shall desist from transactions which prove to be inconsistent with that sub-paragraph but the Member shall not be required to satisfy itself, when it is not practicable to do so, that the requirements of that sub-paragraph arc fulfilled in respect of individual transactions. (d) Members undertake in framing and carrying out any programmes for additional imports under this paragraph to pay due regard to the need to facilitate the termination of any exchange arrangements which deviate from the obligations of Sections 2, 3 and 4 of Article VIII of the Articles of Agreement of the International Monetary Fund and to the need to restore equilibrium in their balances of payments on a sound and lasting basis. 2. Any Member taking action under paragraph 1 of this Article shall keep the Organization regularly informed regarding such action and shall provide such available relevant information as the Organization may request. 3. (a) Not later than I March 1952 (five years after the date on which the International Monetary Fund began operations) and in each year thereafter, any Member maintaining or proposing to institute action under paragraph I of this Article shall seek the approval of the Organization, which shall thereupon determine whether the circumstances of the Member justify the maintenance or institution of action by it under paragraph 1 of this Article. After I March 1952 no Member shall maintain or institute such action without determination by the Organization that the Member's circumstances justify the maintenance or institution of such action, as the case may be, and the subsequent maintenance or institution of such action by the Member shall be subject to any limitations which the Organization may prescribe for the purpose of ensuring compliance with the provisions of paragraph I of this Article; Provided that the Organization shall Paragraph 3. The Preparatory Committee considered the question of whether it was necessary to make express reference in paragraph 3 of Article 23 to the need of the Organization to consult with the International Monetary Fund. It concluded that no such reference was necessary since such consultation in all appropriate cases was already required by virtue of the provisions of paragraph 2 of Article 24. not require that prior approval be obtained for individual transactions. (b) If at any time the Organization finds that import restrictions are being applied by a Member in a discriminatory manner inconsistent with the exceptions provided for under paragraph I of this Article, the Member shall, within sixty days, remove the discrimination or modify it as specified by the Organization; Provided that any action under paragraph I of this Article, to the extent that it has been approved by the Organization under subparagraph (a) of this paragraph or to the extent that it has been approved by the Organization at the request of a Member under a procedure analogous to that of paragraph 4 (c) of Article 21, shall not be open to challenge under this sub-paragraph or under paragraph 4 (d) of Article 21 on the ground that it is inconsistent with Article 22. (c) Not later than 1 March 1950, and in each year thereafter so long as any Members are taking action under paragraph I of this Article, the Organization shall report on the action still taken by Members under that paragraph. On or about 1 March 1952, and in each year thereafter so long as any Members are taking action under paragraph I of this Article, and at such times thereafter as the Organization may decide, the Organization shall review the question of whether there then exists such a substantial and widespread disequilibrium in international trade and payments as to justify resort to paragraph 1 of this Article by Members. If it appears at any date prior to 1 March 1952 that there has been a substantial and general improvement in international trade and payments, the Organization may review the situation at that date. If, as a result of any such review, the Organization determines that no such disequilibrium exists, the provisions of paragraph 1 of this Article shall be suspended, and all actions authorized thereunder shall cease six months after such determination. 4. The provisions of Article 22 shall not preclude restrictions in accordance with Article 21 which either (a) are applied against imports from other countries, but not as among themselves, by a group of territories having a common quota in the International Paragraph 5 (b). The Brazilian Delegation has recorded a reservation., Article 24. The Belgian Delegation reserved its position pending examination of the Charter as a whole by the Belgian Government. Paragraph 2. The Australian Delegation recorded a reservation against this text, proposing the following formulation Monetary Fund on condition that such restrictions are in all other respects consistent with Article 22, or (b) assist, in the period until 31 December 1951, by measures not involving substantial departure from the provisions of Article 22, another country whose economy has been disrupted by war. 5. The provisions of this Section shall not preclude: (a) restrictions with equivalent effect to exchange restrictions authorized under Section 3 (b) of Article VII of the Articles of Agreement, of the International Monetary Fund; or (b) restrictions under the preferential arrangements provided for in Annex A of this Charter, subject to the conditions set forth therein. Article 24. Exchange Arrangements. 1. The Organization shall seek co-operation with the International Monetary Fund to the end that the Organization 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 Organization. 2. In all cases in which the Organization is called upon to consider or deal with problems concerning monetary reserves, balance of payments or foreign exchange arrangements, the Organization shall consult fully with the International Monetary Fund. In such consultation, the Organization shall accept all findings of statistical and other facts presented by the International Monetary Fund relating to foreign exchange, monetary reserves and balance of payments, and shall accept the determination of the Fund as to whether action by a Member in exchange matters is in accordance with the Articles of Agreement of the International Monetary Fund; or with the terms of a special exchange agreement between that Member and the Organization. The Organization, in reaching its final decision in cases involving the criteria set forth in paragraph 2 (a) of Article 21 shall accept the determination of the Inter of the last sentence: "The Organization, in reaching its final decision in cases involving the criteria set forth in paragraph 2 (a) of Article 21 shall give special weight to the opinions of the International Monetary Fund as to what constitutes.... in consultation in such cases" on the ground that since the Organization has a responsibility for action under Article 21, it should also retain the right of final decision as to whether the criteria of paragraph 2 (a) have been met. The New Zealand Delegation also recorded a reservation on the last sentence of paragraph 2. |