RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BOP/R/63
14 June 2002
(02-3319)
Committee on Balance-of-Payments Restrictions
REPORT OF THE MEETING OF 10 JUNE 2002
1. The Committee on Balance-of-Payments Restrictions met on 10 June 2002, under the
Chairmanship of Ambassador Anda Cristina Filip (Romania), to continue its work on outstanding
implementation issues in accordance with paragraph 12(b) of the Doha Ministerial Declaration.
2. The Chairperson welcomed Members to the third meeting of the Committee in 2002.  The
Agenda for the meeting was contained in the airgram convening the meeting – WTO/AIR/1819 of
31 May – and included (a) continuation of work on  implementation issues under paragraph 12(b) of
the Doha Declaration, and (b) special and differential treatment: the Chairperson’s letter to the
Chairman of the Committee on Trade and Development.
3. Turning to the first item of the agenda, the Chairperson noted that, during its last meeting, the
Committee had continued its exchange of views on Tiret 1 and, to a lesser extent, on Tiret 3 and asked
whether any delegations wished to take the floor.
4. The representative of India said that in light of  comments by some Members at the last
meeting, it would be imprudent to question whether there was a mandate to negotiate under
paragraph 12 of the Doha Declaration.  In his view, Ministers had very clearly agreed to negotiate on
outstanding implementation issues as an integral part of the work programme. He added that his
delegation attached great importance to the timeframe given by Ministers to complete the work on
implementation.  Secondly, with respect to the systemic implications arising from India’s proposal
and mentioned by certain Members with regard to Tiret 1 and the relevant part of Tiret 3, it was
India’s  expectation that solutions on which there could be agreement would be within the principles
and objectives of WTO rules and in keeping with  the multilateral nature of the organization.  Thirdly,some Members had also questioned whether a problem in fact existed, noting perhaps that the
provisions had been functioning quite well.  In this context, India requested the Secretariat to prepare
a background paper to facilitate discussions on these tirets on the factors and elements taken into
account by the IMF in its determination as to what constituted a serious decline in a country's
monetary reserves, a very low level of its monetary reserves or a reasonable rate of increase in itsmonetary reserves, and as to the financial aspects of other matters covered in consultations with the
country by the IMF in such cases.  In particular, it  would be useful to elicit how the determinations by
the IMF, and the criteria used by them for assessing the adequacy of foreign exchange reserves, had
been affected by the financial crises witnessed in the last few years, and by the changing nature of the
external vulnerability of developing countries, in pa rticular the volatility of capital flows, and the
requirements to secure consistency between policies regarding the current and the capital account.  It
would be useful also to elicit how these determinat ions and criteria helped meet the requirements of
the proviso and the Note to Article XVIII:11, which explicitly recognized the greater need for
reserves of developing countries for implementing their programmes of economic development and
that these programmes entailed the financing of infrastructure needs through foreign capital.  Hehoped that the Secretariat could have the paper ready well before the next meeting. His Government
expected  to come back to other issues raised by Members in relation to Tiret 1 and Tiret 3.WT/BOP/R/63
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5. The representative of the United States said it was the first time he had heard of a proposal for
a WTO paper concerning IMF procedures and wondered whether this was a direction in which the
WTO should go.  The WTO relied on IMF advice with respect to balance-of-payments issues.  It
seemed that the IMF had a distinct role here and he wondered whether the WTO had a right to look
over the IMF’s shoulder.  It was clear that there had been a major evolution in the functioning of theworld economy but presumably the IMF was keeping up-to-date with this trend.  The WTO was
interested in the conclusions reached by the IMF, not in how it reached those conclusions.  He did not
see it as the Committee’s role to influence or manage the direction in which the IMF might be
proceeding.
6. The representative of Japan supported the view of the United States
 and considered that this
pursuit might not be fruitful.  The representative of Pakistan viewed India’s proposal as a means to an
end, and that such a background note would facilitate further discussions, and noted that the IMF’s
reports had always been taken into account in the Committee’s work.   The representative of Australia
considered that his delegation would need to consult with capital but asked if the IMF representativecould respond to India’s  proposal.
7. The representative of the European Communities stated that the review of Article XVIII and
the issue of reserve adequacy was a central issue – an issue that required further analysis prior to
further discussion, especially given that positions differed widely.  In order to progress, the EC
wished to initiate a background legal-economic study on the issues suggested by India.  He asked that
the Secretariat provide an outline on the WTO jurisprudence on this issue and that the IMF provide an
analysis.  He referred to the IMF’s "Guidelines on Reserve Management", which introduced new
elements, including the importance of good governance, transparency and accountability.  He addedthat the EC might consider making a formal  submission on this matter at a later stage
8. The representative of the IMF felt the Fund would be able to provide background material to
the WTO Secretariat and expressed the view that this would be a good time to take a fresh look at this
issue. As always, the Fund would be willing to contribute to deliberations in the Committee's meeting.
The representative of the  Secretariat said that it would be able to produce two papers, one on the
jurisprudence and the other, in close collaboration with the IMF, on the issues raised by India.  The
representative of Pakistan raised the issue of the ti me factor and the obligation to report to the Trade
Negotiations Committee by the end of the year.  He also supported the EC’s proposal for a paper on
relevant  DSB  proceedings.
9. The representative of India clarified that they were simply seeking a factual background
paper.  India also supported the EC’s proposal, and hoped that there could be a consensus on the
proposals at this meeting.
10. The representative of the IMF said that they would be happy to submit factual information to
the WTO but that the reserve guidelines, for example, were complex and that it might take time to
make them clear in a background document for the WTO.  The Fund would need adequate time and a
clear understanding from the Membership and the Secretariat of what exactly was needed.
11. The representative of Pakistan wondered if terms of reference would be circulated. The
Secretariat said that, in the interest of time, it woul d be prepared to take responsibility for the terms of
reference and would  try to produce a focused factual paper, in consultation with the IMF, by the end
of July.  The Secretariat would consult with interested delegations on their views as to what exactly
the paper should or should not touch upon.   The representative of the IMF noted that some limitation
of scope would be useful and that its resources were not unlimited.
12. The Chairperson understood that there was agreement in principle on the production of the
two papers as suggested, and that the Secretariat wo uld consult, as necessary, with delegations on theWT/BOP/R/63
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content of the papers.  She considered that an informal consultation by the Committee might be
needed in September or October. Once the papers had been circulated delegations would decide on
whether they needed to meet ahead of the scheduled November meeting.
13. The Chairperson then turned to item (b) of the Agenda.  The representative of  India
suggested that a sentence concerning current use of balance-of-payments provisions be deleted and
that more detail on the work  on implementation issues would be welcome.  The Chairperson
suggested that the relevant Reports of the Committee could be annexed to the letter.  It was so agreed.
14. Under "Other Business", the representative of  the United States mentioned that each
Committee had to provide a report on China’s transitional review mechanism and that the Committee
should give some thought as to how it would integrate this issue into its meeting schedule with a view
to preparing and agreeing on its report to the General Council.
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