Provisions for LDCs in the Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs & Trade 1994

Under the rules of the WTO, any trade restriction taken by a Member must be consistent or in compliance with the rules of the international trading system. Under the provisions of Article XII, XVIII: B and the “Understanding of the Balance-of-Payments Provisions of the GATT 1994,” a Member may apply import restrictions for balance-of-payments reasons.

According to paragraph 8 of the Understanding, LDCs may hold the necessary consultations for the application of restrictions under simplified procedures. Certain other countries may also use simplified consultation procedures, but only LDCs can do so more than twice consecutively:

“Consultations may be held under the simplified procedures approved on 19 December 1972 (BISD 20S/47-49, referred to in this Understanding as “simplified consultation procedures”) in the case of least-developed country Members or in the case of developing country Members which are pursuing liberalization efforts in conformity with the schedule presented to the Committee in previous consultations. Simplified consultation procedures may also be used when the Trade Policy Review of a developing country Member is scheduled for the same calendar year as the date fixed for the consultations. In such cases the decision as to whether full consultation procedures should be used will be made on the basis of the factors enumerated in paragraph 8 of the 1979 Declaration. Except in the case of least-developed country Members, no more than two successive consultations may be held under simplified consultation procedures.”

Sources and further information:

  1. Technical Information on Balance of Payments (WTO)
  2. Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994 (BoP Understanding)
  3. 1979 Declaration on Trade Measures Taken for Balance-of-Payments Purposes