Selected Legal Aspects of the Fund’s Mandate on Trade1
1. In addition to creating the Fund and the World Bank, participants in the Bretton Woods Conference of July 1944 envisaged a third international organization that would liberalize trade. This organization was not created, but the General Agreement on Tariffs and Trade (GATT) was adopted in 1947 and World Trade Organization (WTO) was established in 1995. As explained below, although a division of responsibilities between the Fund and the WTO remains, it does not preclude overlaps. Indeed, trade matters have an important role in key areas of Fund activities based on various provisions of the Articles and policies adopted by the Executive Board, including surveillance and conditionality. Moreover, to the extent that such activities have the effect of liberalizing trade they are consistent with one of the stated purposes of the Fund, which is to “facilitate the expansion and balanced growth of international trade….” (Article 1(ii)).2
Respective Jurisdictions over Exchange and Trade Measures
2. The obligation of members to refrain from imposing exchange or trade restrictions is the subject of the jurisdiction of the Fund and the WTO, respectively. Non-compliance with the applicable rules is a violation of an international obligation and can give rise to legal action. This legal principle applies similarly to the Fund’s Articles and the WTO Agreements, although the way obligations are enforced differs in the two organizations.3 The legal aspects of the jurisdictional relationship between the two organizations are complex; a few key points are highlighted here for their implications on the work of the Fund.4
3. As a general rule, Article VIII, Section 2(a) of the Fund’s Articles prohibits members from imposing restrictions on the making of payments and transfers for current international transactions without prior approval.5 Members are not permitted to restrict a resident from making a current “payment” to a non-resident and, in circumstances where this payment is made within the country of the resident, the member may not restrict the non-resident from “transferring” the proceeds of this payment from that country. Article XXX(d) defines payments for current transactions setting forth a non-exclusive list that includes, for example, trade in both goods and services, normal short-term banking and credit facilities, interest on loans and net income from other investments, and other transactions that may be viewed in other contexts as “capital” (i.e., payments of moderate amount for amortization of loans and for depreciation of direct investments).
4. The Fund’s jurisdiction is limited, however, to the payments and transfers related to the current transaction; the underlying transaction is treated as a “trade” measure outside of the scope of Article VIII, although liberalizing the payment has the effect of facilitating this transaction. In 1960, the Executive Board evaluated options for defining exchange restrictions and adopted a test based on “whether it involves a direct governmental limitation on the availability or use of exchange as such.”6 This definition applies a technical criterion that looks at the measure’s specific relation to the member’s exchange system rather than the economic purpose or effect. It was recognized that reliance on this criterion would mean that a country could introduce trade restrictions for purely balance-of-payments purposes without being subject to the Fund’s jurisdiction. The Executive Board contemplated, however, that consideration of the measure’s effect or the authorities’ motivation would necessarily involve evaluation of the member’s trade polices and thus would fail to establish an objective rule and a clear method for distinguishing the jurisdiction of the Fund from the scope of the GATT.7
5. The WTO Agreements cover a range of matters governing trade in goods and services. Compliance with obligations is not regulated via an approval policy as in the Fund; although waivers are legally possible, they are relatively rare. While there are various fora for discussion of members’ trade policies, these meetings do not provide authority to determine whether a member’s trade policies are consistent with its obligations. Rather, obligations in particular cases are enforced through a dispute settlement process among members that is essentially adjudicatory in that it is triggered by an aggrieved member and resolved by a panel of independent adjudicators under the aegis of the WTO. An extensive body of jurisprudence has developed reflecting a sophisticated analysis that is not necessarily driven by the form of the measure, but could take into account the effect of the measure.
6. This delineation of jurisdiction as between the Fund and the WTO does not necessarily separate the functions of the two institutions in this area. One reason is that the different approaches just described could lead to different characterizations of the same measure. Additionally, some measures have both exchange and trade attributes, including import licenses that are based on a foreign currency budget. Moreover, certain provisions in the WTO Agreements specifically cover current payments and transfers. For example, the General Agreement on Trade in Services (GATS) explicitly covers the payments and transfers for services that are the subject of “specific commitments” to allow market access by foreign service providers.8
7. In light of the above, various provisions in the WTO Agreements and the Fund’s Articles require the WTO and the Fund to work together to address overlapping jurisdiction and to avoid imposing conflicting obligations upon a common membership. If a restriction under the GATS involves an exchange measure, for instance, the GATS’ balance-of-payments safeguard requires that the measures imposed thereunder be consistent with the Fund’s Articles.9 More generally, the GATT provides that the WTO shall consult the Fund on specified matters concerning Fund jurisdiction, as well as on assessments of balance of payments, and requires the WTO to accept the Fund’s determinations in these areas.10 On the Fund side, Article X of the Fund’s Articles instructs the Fund to cooperate with other international organizations in related fields, and under the Fund/WTO Cooperation Agreement, the Fund has agreed to cooperate in the areas of requested consultations.11 For example, with regard to exchange measures that are within the jurisdiction of the Fund, the Fund provides determinations on whether the measure is consistent with the Fund’s Articles.12 Also, as discussed in the main paper, other aspects of the WTO Agreements overlap with key areas of the Fund’s work outside its jurisdiction under Article VIII, such as financial services. Application of the balance-of-payments safeguard, in particular, may have implications for members’ need to access Fund financing.13
8. Article IV of the Fund’s Articles governs surveillance, which is mandatory for the Fund and for members. The Fund conducts consultation discussions with members pursuant to Section 3 of that Article requiring the Fund to (i) oversee the international monetary system to ensure its effective operation, and (ii) oversee members’ compliance with the obligations specified under Section 1. While Section 1(i) and (ii) address economic and financial policies, the latter two paragraphs of Section 1 focus specifically on exchange and exchange rate policies.14 In Biennial Surveillance Reviews in 2000 and 2002, the Executive Board discussed the obligations of Section 1 in terms of “core” and “non-core” areas of “surveillance” (SUR/00/32, 3/2/00 and SUR/02/42, April, 10, 2002). Additionally, in practice, consultation discussions with members have evolved to include a range of issues that fall outside the obligations under Article IV and, therefore, do not form a part of “surveillance” within the meaning of Article IV.
9. Trade issues fall within the various aspects of these consultation discussions as follows. First, in the 2000 Biennial Surveillance Review, the Executive Board identified the “core” areas that are to be covered in all Article IV consultations as consisting of exchange rate policies and their consistency with macroeconomic policies, financial sector issues, the balance of payments and capital account flows and stocks, and related cross-country themes. While there is no obligation to liberalize trade per se, the core areas of surveillance include trade matters if the measures represent a sign of exchange rate inadequacy, including the existence of trade restrictions for balance-of-payments reasons.15
10. Second, “non-core” issues are also covered by Article IV when they relate to the obligations under Section 1 concerning the conduct of economic and financial policies (paragraphs (i) and (ii)). This is the case when they involve trade subsides with fiscal impact or have a direct and sizeable influence on macroeconomic development of the member that is the subject of the surveillance discussions. In the 2002 Biennial Surveillance Review, the Executive Board acknowledged further that structural and institutional policies have an impact on macroeconomic conditions. With respect to trade, for example, it was noted that “coverage of trade policies is critical in countries where serious trade distortions hamper macroeconomic prospects….” (SUR/02/42, April, 10, 2002, ¶ 9) As expressed recently in the Executive Board discussion in the context of the 2004 Biennial Surveillance Review, trade policies are also covered by Article IV where they have an important influence on a country’s stability and growth prospects (SUR/04/80, Aug. 2, 2004).
11. Third, discussion of other non-core topics, including certain aspects of trade policy that fall outside the scope of Article IV obligations, may be referred to as “policy advice.”16 The Fund may include areas of “policy advice” in consultation discussions because they are important in the economic policy discussions between the Fund and the member.17 For example, the Board has called for the inclusion in consultation discussions of trade policies which, although they may not have an adverse impact on the member’s own economy, may have global or regional implications, i.e., “where trade policies in the major industrial countries affect market access for developing countries, or where trade policies have a significant impact on countries in that region.” (SUR/02/42, April, 10, 2002, ¶ 9) Since policy advice is voluntary for members, they have no obligation to pursue specific policies in this area or to provide information that is relevant only for purposes of such policy advice.
12. The principal legal basis in the Articles for conditionality is Article V, Section 3, which sets forth the basic conditions for members’ access to the Fund’s general resources. First, the Fund’s resources may only be used to resolve balance-of-payments difficulties, in accordance with the provisions of the Articles, which include the purposes set forth in Article I. Article I(v) states that the Fund’s resources are to be provided “to give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with the opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.” Second, the availability of Fund resources must be “subject to adequate safeguards”; that is, the Fund must be of the view that the member will be in a position to repay the Fund within the relatively short period specified in the Articles.
13. The above considerations necessitate that Fund conditionality embrace policy measures that may be taken in the trade area. For example, a member that follows trade policies that are “destructive of national or international prosperity” is more likely to aggravate economic maladjustments than to correct them; such policies may also increase the likelihood that the use by such member of Fund resources will not be temporary. Indeed, these principles are the basis for the Fund’s decision to include in every stand-by and extended arrangement the performance criterion to avoid imposing import restrictions for balance-of-payments reasons. This “standard” performance criterion does not cover restrictions that may be imposed for other reasons, such as to protect local industries.
14. Given the increased recognition of the structural impact of trade restrictions, practice has evolved to include other performance criteria addressing existing trade policy measures, such as arbitrary tariff exemptions or other import subsidies that impact fiscal revenue or the business environment more generally. The choice to include these reforms in Fund arrangements is governed by the general standards for conditionality set forth in the Guidelines on Conditionality; key aspects of this policy include that the measure be of critical importance for achieving the goals of the member’s program or for monitoring the program.18 Because of the focus on the economic consequences of the intended reform, its technical character as an exchange or trade measure is not the determinant of conditionality (as it is under Fund jurisdiction over exchange measures discussed below). On the contrary, program design should take into account the equivalent economic effect of exchange and trade policy. For example, if an objective of the program concerns exchange rate policy, conditionality may need to take into account whether the arrival at a realistic rate of exchange through a flexible exchange rate policy could be frustrated by resort to a restrictive trade policy.19
15. The Fund takes care in designing trade-related conditionality to ensure that the measures are not inconsistent with WTO rights and obligations. At the same time, however, trade measures should only be incorporated into Fund-supported programs because they are considered necessary for the program’s success. They should not be incorporated for the purpose of enforcing obligations under another international treaty or to expand the scope of commitments under another international agreement (e.g., binding commitments under the WTO Agreements). Such an approach would not only result in the Fund exceeding the authority conferred upon it under the Articles, but the burden would fall unevenly on users of Fund resources.
Staff Guidelines on Trade Policy Advice
Fund policy advice in the trade area was drawn together in a set of operational guidelines in 1999:
Reform should first target the least transparent and most restrictive elements, particularly NTBs.62
The pace of reform should be tailored to individual country circumstances, including the initial degree of restrictiveness, administrative capacity, and likely short-term adjustment costs.
Quantitative restrictions (QRs) should be replaced by temporary tariffs, which should not exceed tariff equivalents of the QRs or WTO bindings.63 Export restrictions should be replaced by policies addressing the intended objectives (such as encouraging domestic processing or stemming illegal exports) directly.
Tariff reform should aim at a simple, transparent regime, with low uniform statutory (and applied) rates, ideally between 5 and 10 percent. Import surcharges should be avoided as a means to address revenue shortfalls or balance of payments problems, though they might be appropriate temporarily.
Customs classification and valuation procedures should be transparent, and standards and regulations should not discriminate against imports.
Trade reform should be accompanied by complementary macroeconomic and other policies. There are strong links between trade reform, an appropriate level for the real exchange rate, and a liberal exchange system. There are also strong links between trade reform and fiscal policy.
Some actions (such as safety nets and fiscal reforms) may be needed to offset the costs of trade reform, such as a transient increase in sectoral unemployment, or a loss of trade-related revenue.
Regarding participation in regional agreements:
Most-favored-nation (MFN) based liberalization is preferable, but the Fund does not advise against regional trade arrangements (RTAs). Regional trade arrangements should, however, be made consistent with WTO obligations.
Liberalization should apply to virtually all trade between RTA members, and include a program of multilateral liberalization. The aim must be for RTAs to lock in reforms while facilitating progress toward nondiscriminatory multilateral liberalization.
Fund advice should not support policies contravening a country’s WTO obligations. At the same time, there should be no cross-conditionality; implementation of WTO agreements should not be made subject to Fund conditionality.
The RTAs should be liberal, transparent, and have clear and consistent rules of origin.
Trade Policy Conditionality in Fund-Supported Programs (SM/01/60, Supplement 3, 2/16/2001); Robert Sharer and others, Trade Liberalization in IMF-Supported Programs, World Economic and Financial Surveys (Washington, DC: International Monetary Fund, 1998); Margaret Kelly and others, Issues and Developments in International Trade Policy, World Economic and Financial Surveys (Washington, DC: International Monetaryf Fund, 1992); and Margaret Kelly and others, Issues and Developments in International Trade Policy, IMF Occasional Paper No. 63 (Washington, International Monetary Fund, 1988).
Annex 1 discusses legal aspects of the Fund’s trade-related surveillance and program work.
The Chairman’s Summing Up, Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision (SUR/04/80, August 2, 2004).
For Board guidance on trade-related priorities, see Concluding Remarks by the Acting Chair, Trade Issues—Role of the Fund (BUFF/01/143, September 20, 2001) and Concluding Remarks by the Acting Chair, Market Access for Developing Country Exports—Selected Issues (BUFF/02/165, September 18, 2002).
Thus, the negotiating agenda under the Doha Round and certain recent bilateral trade agreements cover “behind-the-border” measures such as subsidies, investment policies, intellectual property rights, government procurement, competition policy, services regulation, and other areas.
Trade Conditionality in Fund-Supported Programs 1990-2004 (SM/05/57, Supplement 1); Review of the IMF’s Trade Restrictiveness Index (SM/05/57), and Dealing with the Revenue Consequences of Trade Reforms (SM/05/57, Supplement 2).
For a recent review of the literature, see Berg, A. and A. Krueger, 2003, “Trade, Growth and Poverty: A Selective Survey,” IMF Working Paper 03/30 (Washington: International Monetary Fund).
See also Annex II for the trade policy guidance issued to Fund staff.
A companion paper provides a detailed analysis and a fresh look at policy options (Dealing with the Revenue Consequences of Trade Reforms (SM/05/57, Supplement 2).
An exception is the PRSP for Cambodia, which stresses the need for carefully sequencing the reduction of import tariffs for rice to minimize potential welfare losses by producers.
Commitments in these negotiations (mostly regarding MFN and national treatment) cover cross-border provision, provision through foreign subsidiaries, consumption abroad and temporary movement of persons.
According to Martin and Ng (2004), average tariffs in developing countries were reduced from 33.7 percent in 1983 to 13.6 percent in 2003. For their sample of large developing countries, 27 percent of the 18.6 percentage point decline in MFN tariffs over this period was caused by the Uruguay Round, while 73 percent was due to other sources, such as autonomous decisions to liberalize or participation in World Bank/IMF-supported adjustment programs. (See W. Martin and F. Ng., “Sources of Tariff Reductions,” background paper to the Global Economic Prospects 2005 (Washington, DC: World Bank, 2004).
World Bank, Global Economic Prospects 2005 (Washington, DC: The World Bank, 2004).
More than 250 RTAs have been notified to the GATT/WTO, but many of them are not effectively in force, or have been superseded by redesigned agreements by the same signatories. However, there are also many RTAs that are operational but are not yet notified. It is estimated that the number of operational RTAs may well reach 300 by the end of 2005.
See The Chairman’s Summing Up, Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision (SUR/04/80, August 2, 2004). Earlier guidance is contained in Concluding Remarks by the Acting Chair, Trade Issues—Role of the Fund (BUFF/01/143, September 20, 2001) and Concluding Remarks by the Acting Chair, Market Access for Developing Country Exports—Selected Issues (BUFF/02/165, September 18, 2002).
The legal underpinnings of Fund surveillance and conditionality with respect to trade issues are explained in more detail in Annex I.
The criteria the staff have used include cut-off points of, respectively: (i) an estimated 2 percent or larger decline in export unit values associated with a 40 percent erosion of preferences; (ii) a larger than 20 percent ratio of net food imports over total exports; (iii) a composite measure of vulnerability based on the concentration of textiles exports, quota utilization and capacity for adjustment. See also SM/04/63.
The presumption was that for countries with a rating of 5 or higher on the Fund’s TRI there should be a substantive discussion of reform needs for the merchandise trade regime, whereas for countries with a rating equal to or lower than 4, such a discussion would have to be specifically motivated with reference to growth or stability objectives, or spillover effects. 64 countries rated 5 or higher at the end of 2004.
The expiry of textiles quotas was covered in discussions with 28 countries, including 11 expected to be highly vulnerable to this event.
See Box 6, “Global Impact of the Trade Policies of the Quad” in Biennial Review of the Implementation of the Fund’s Surveillance and of the 1997 Surveillance Decision—Content of Surveillance (SM/04/212, Sup. 2, July 2, 2004).
Since 1980, services exports have grown more rapidly than merchandise exports and now amount to about US$1.5 trillion annually, or one-fifth of total world exports. See A. Lehmann, N. Tamirisa, and J. Wieczorek, “International Trade in Services: Implications for the IMF,” IMF Policy Discussion Paper 03/6 (Washington, DC: International Monetary Fund, 2003).
However, financial sector surveillance—notably through FSAPs—and technical assistance often addresses such trade-related issues as the international competitiveness of a country’s financial sector in advance of opening (cf. Kazakhstan FSAP update); cross-border cooperation in regulation and supervision, which is important for welfare-enhancing trade in banking services (cf. work on European financial integration and on OFCs); and the effects of capital account liberalization. The Fund has done extensive work over the years on the sequencing of financial sector liberalization, which would be more explicitly linked to developments in trade negotiations.
Staff are building an internal reference database—extracting diagnostics and policy priorities from the DTIS—which will help in assessing the trade content of PRSPs for Joint Staff Advisory Notes (JSAN), and more broadly inform Fund trade-related work in LICs.
World Trade Organization, “Final Report of the Evaluation of the Integrated Framework,” WT/IFSC/6, Rev. 2, November 26, 2003 (Geneva).
Fund staff are also engaged in a joint effort with selected donors, the OECD DAC Secretariat, the World Bank and UN agencies, to develop implementation-oriented regional workshops with trade and development officials in developing countries aimed at supporting the “mainstreaming” of trade in PRSPs. A first workshop was hosted by the U.K. DFID in London in December 2003.
A formal approach to Euro Area surveillance was first proposed in 1998 (EMU and Fund Surveillance (SM/98/215, August 26, 1998). The initial emphasis was on monetary and exchange developments, but trade first received individual focus in 2000 (see Monetary and Exchange Rate Policies of the Euro Area, SM/00/212, Sup. 2, October 13, 2000).
Other activities include a communications strategy and the design of a financing policy aimed at mitigating certain concerns about the Round (Trade Integration Mechanism).
The legal basis for the use of trade-related conditionality is discussed in Annex 1.
“Guidelines on Conditionality,” Dec. No. 12864-(02/102), Sept. 25, 2002; see paragraphs 7(a) and 7(b).
It should be noted, however, that the TRI is not a measure of economic distortion (i.e., an outcome) but only a synthetic way to describe the restrictive measures themselves. This and other aspects of the TRI are reviewed in the companion paper Review of the IMF’s Trade Restrictiveness Index (SM/05/57).
Further questions relate to the quality of program design, such as the choice, sequencing and phasing of measures. These are not reviewed in this report. However, see Section V on issues proposed for further analysis.
Across program type, trade conditionality in Stand-By Arrangement- and EFF-supported programs rose through 1997 but declined thereafter. Trade conditionality in SAF/ESAF/PRGF-supported programs rose though 2000 but almost halved in 2001–04.
This statistical exercise does not establish whether, as a result of these developments, the level of trade-related conditionality today is appropriate. That would require a case study approach. More broadly, the statistical trends yield no insight into the quality of trade reforms under Fund-supported programs. See “Issues for Further Consideration” in Section V.
Bank-Fund Collaboration in Assisting Member Countries (SM/89/54, Rev. 1, March 31, 1989).
Bank/Fund Collaboration on Public Expenditures Issues (SM/03/73, Feb. 19, 2003), para. 4.
Report of the Managing Director and the President on Bank-Fund Collaboration (SM/98/228, Rev. 1, Sept. 25, 1998).
Market Access for Developing Country Exports—Selected Issues (SM/02/280, Rev. 1, September 26, 2002).
There may be more duplication in research, but most research is individually authored.
Agreement Between the International Monetary Fund and the World Trade Organization, Dec. No. 11381- (96/105), Nov. 25, 1996, Selected Decisions and Selected Documents of the International Monetary Fund, 28th Issue, December 31, 2003, p. 823.
See, for example, WTO Charter, Article III.5; GATT Articles XV, XII, and XVIII; and GATS Articles XI, XII, and XXVI.
The delineation of the WTO’s and the Fund’s jurisdictions over trade and exchange measures, respectively, is discussed in Annex I. For a more detailed discussion, see The Relationship of the World Trade Organization with the Fund – Legal Aspects, SM/94/303, Dec. 20, 1994; D. Siegel, Legal Aspects of the IMF/WTO Relationship: The Fund’s Articles of Agreement and the WTO Agreements, AJIL, Vol. 96, No. 3, p. 561, July 2002.
A Fund seminar on the FSAP program was held at the WTO in Geneva in June 2002.
The main author of this Appendix is Ms. D. Siegel (LEG).
The term “facilitates” denotes the effect on the growth of international trade that results indirectly from the work of the Fund. As stated by former General Counsel Sir Joseph Gold: “The nuance of the word ‘facilitates’ in [Article IV] and of the word ‘facilitate’ in Article I expresses the idea of encouraging or easing and not controlling.” Gold, Some Legal Aspects of the IMF’s Activities in Relation to International Trade, Oster. Z. Offentl. Recht Und Volkerrecht Vol. 36, pp. 157–217, 1986 at 159.
Under the Fund’s Articles, the Executive Board determines compliance with members’ obligations under the Articles. A noncomplying member may be subject to sanctions under Article XXVI, ranging from ineligibility to use Fund resources to suspension of voting rights and, eventually, compulsory withdrawal. In contrast, the WTO does not itself impose sanctions. Rather, it is the aggrieved member that initiates the dispute resolution procedure and may eventually pursue remedies in the form of countermeasures. This approach reflects the reciprocal nature of the trade concessions that characterized the GATT. The WTO as an organization facilitates the implementation of the agreements in various ways, including providing the mechanism for formal dispute resolution if a complaint is brought by an aggrieved member. The World Trade Organization—Institutional Aspects, SM/94/304, Dec. 20, 1994.
See The Relationship of the World Trade Organization with the Fund—Legal Aspects, SM/94/303, Dec. 20, 1994; D. Siegel, Legal Aspects of the IMF/WTO Relationship: The Fund’s Articles of Agreement and the WTO Agreements, AJIL, Vol. 96, No. 3, p. 561, July 2002.
A limited exception applies for restrictions existing when the country joined the Fund (Article XIV). A special approval procedure exists for restrictions imposed for national security reasons. Dec. No. 144-(52/51), Aug. 14, 1952, Selected Decisions, 28th Issue, p. 503.
Dec. No. 1034-(60/27), June 1, 1960, Selected Decisions, 28th Issue, p. 509.
Legal Aspects of Article VIII and Article XIV, SM/59/73. Nov. 18, 1959.
GATS, Article XI.
GATS, Article XII:2(b). See also, Legal Aspects of Capital Movements Under an Amendment of the Articles—Relationship with Articles XI and XII of the GATS, SM/97/209, Aug. 19, 1997; Multilateral, Regional and Bilateral Agreements and Initiatives in Capital Account Liberalization, EBS/97/02, Feb. 14, 1997.
See, e.g., WTO charter, Article III.5; GATT Articles XV, XII, and XVIII; and GATS Articles XI, XII, XXVI.
Agreement Between the International Monetary Fund and the World Trade Organization, Dec. No. 11381- (96/105), Nov. 25, 1996, Selected Decisions, 28th Issue, p. 823.
Dominican Republic—Request by WTO Dispute Settlement Panel, EBD/04/68, 6/22/04.
S. Hagan, Transfer of Funds, UN Doc. UNCTAD/ITE/ITT/23, UN Sales No. E.00.II.D.38. of Int. and Comp. Law, Vol. 10, No. 2 (2004).
The legal aspects of surveillance under Article IV were recently discussed in “Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision—Modalities of Surveillance,” SM/04/212, Supp. I, Appendix I.
Such restrictions might indicate the need for “special consultations” with the member. Surveillance Over Exchange Rate Policies, Principles of Fund Surveillance over Exchange Rate Policies, ¶ 2(iii), Dec. No. 5392- (77/63), April 29, 1997, as amended, Selected Decisions, 28th Issue, p. 12.
See Role of the Fund in Governance Issues, Guidance Note, Statement by the General Counsel, BUFF/97/75, July 23, 1977.
Article XII, Section 8 of the Fund’s Articles permits the Fund, at any time, “to communicate its views informally to any member on any matter arising” under the Articles. This is consistent with the Fund’s purposes, in particular, as stated in Article I(i) “to promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.”
Guidelines on Conditionality, Dec. No. 12864-(02/102), Sept. 25, 2002, Selected Decisions, 28th Issue, ¶s 7(a) & (b), p. 235–36.
Gold, The Stand-by Arrangements of the International Monetary Fund, 1970, p. 144..
Nontariff barriers include QRs, trade monopolies, restrictive foreign exchange practices that affect trade, quality controls, and customs procedures that act as trade restrictions.
Binding a tariff at the WTO establishes the maximum tariff which can be applied on imports from other WTO members.