accordance with the individual importer's normal import experience. The list included drugs; medical instruments, appliances, and materials; chain belting; gypsum; copper, iron, lead, and tin in crude form; certain iron products; certain types of wire; lubricating oil; turpentine, rosin, and pine tar; dried prunes; ball bearings; and plastic molding powders. An additional 39 items, which before January 1 had been exempt from import licensing regardless of source, were placed under quotas open equally to the United States, Canada, and the nonscheduled (softcurrency) countries. These included patent leather; engines for motor vehicles and tractors; spare parts for tractors; measuring, counting, and testing machines; chain saws; artificers' tools; sausage casings; preserved fish; asbestos fiber; and aluminum, brass, copper, lead, and tin in bars and rods. The quotas for these items, which were based on imports in 1956, ranged from 50 percent for chain saws, artificers' tools, and preserved fish to 100 percent for patent leather, asbestos fiber, and nonferrous metals. Individual import applications were required for most of the other tariff items formerly exempt from licensing, regardless of their origin.

Union of South Africa

In November 1957 South Africa officially announced that it would further relax its import controls during 1958, partly by simplifying its import procedures and partly by adopting a more liberal import policy. In May 1958, however, to arrest the decline in its foreign-exchange reserves, South Africa effected certain changes in its import-control regulations, making them somewhat more restrictive. On the whole, however, South Africa's ability to maintain a liberal and nondiscriminatory import policy depends primarily on its output of gold, which provides it with dollar income. As previously mentioned, South Africa does not participate, as do other sterling-area countries, in the sterling-area dollar pool.37

The further relaxation of import controls for 1958 that South Africa announced late in 1957 included abolition of the restricted list of imports, the combining of other special lists, and the classification of all

38

* Since 170 items had been reported as exempt from licensing regardless of source as of Aug. 2, 1957, the "other tariff items" here referred to presumably would number 65. "See Operation of the Trade Agreements Program (7th report), p. 189.

38 Imports of goods on this list were not prohibited, but were simply held to a level that itself was fairly flexible. Holders of general-merchandise (consumers' goods) import permits had been permitted in 1955 to convert such permits into special permits valid for the importation of smaller quantities of certain restricted goods. Beginning Jan. 1, 1956, importers holding import permits for general merchandise were permitted to exchange them for permits valid for the importation of a similar quantity of restricted goods. With the establishment of equality of treatment between general-merchandise goods and restricted goods, there was no longer any reason for distinguishing between them.

imports into three major groups. The smallest group, which accounts for about 8 percent of all South African imports, includes jute; bananas; rice; juke boxes; books and periodicals; consumers' goods such as canned goods, clothing, and luxury goods; and miscellaneous items. Imports of commodities in this group continued to be limited by quota, as in the past. The second group, which accounts for about 20 percent of total imports, consists of commodities for which no import permit is required. Some of the principal categories of goods in this group are textile piece goods, accessories for the clothing industry, and gasoline and oil. The third and largest group, which accounts for about 72 percent of total imports, embraces commodities imported on a replacement basis. Principal among these are raw materials, motor vehicles, plant and equipment agricultural equipment, pharmaceuticals, and commodities formerly on a priority list.39

The regulations for importing commodities on a replacement basis, as originally promulgated in November 1957, still required import permits. for such commodities. However, licenses were issued freely for these commodities in quantities equal to those sold by importers during a specified preceding period. Because importers found it difficult to comply with the regulations governing applications for replacement permits, the Government in April 1958 announced that it would cease to issue licenses automatically up to the value of current stocks sold or consumed. Instead, it arranged to issue licenses liberally for “reasonable requirements”that is, for quantities that the importer could reasonably be expected to sell in any given period.

South Africa's action of April 1958 prohibited imports of fully assembled motorcars with an f.o.b. value of more than 800 South African pounds-one of the items that had been made subject to the replacement system. Motorcars valued at 800 pounds or less, and parts and equipment for motorcars assembled in South Africa, were not affected by this action.

In past years, import permits for commodities restricted by quota (jute, bananas, rice, and other articles previously mentioned) have been issued in "rounds" of a basic quota expressed as a percentage of imports in 1948. In 1957 the basic quota for such commodities was 60 percent; import licenses for them were issued in three rounds of 33% percent, 20 percent, and 62% percent, respectively. In March 1957 the basic quota was increased for a number of holders of permits for consumers' goods. The first round of permits for 1958, amounting to 40 percent of imports in the base year 1948 (compared with the first round of 33% percent in

"The priority list had included a few consumers' goods the importation of which South Africa had encouraged by permitting the exchange of general-merchandise licenses for licenses that could be used to import a larger quantity of goods on the priority list.

1957), was issued at the beginning of 1958. It was expected that a second round, amounting to 20 percent of imports in 1948, would be issued later. Besides maintaining relatively mild restrictions on imports because of its unsatisfactory foreign-exchange position, South Africa has, by action taken in June 1958, restricted the extension of bank credit for the direct or indirect financing of imports. To accomplish this end, as well as to check inflationary pressures, each commercial bank is required to maintain a supplementary reserve equal to 2 percent of its total liabilities. The required supplementary reserve will later be increased to 4 percent. Beginning June 1, 1958, South Africa also more strictly controlled exchange transactions with countries of the sterling area. After that date, applications for sterling-area currencies for any use became subject to the same restrictions as those for nonsterling currencies.

Burma, Ceylon, Ghana, Pakistan, and Rhodesia-Nyasaland

Burma, the only non-British member of the sterling area except Iceland, followed a relatively liberal import policy for a number of years. Beginning in March 1955, however, it restricted imports in order to arrest the decline in foreign-exchange reserves that had resulted from increased imports and decreased exports. After September 1956 Burma again adopted a more liberal import policy. But a year later, following another decline in exchange reserves, the country tightened its import restrictions; by requiring importers to obtain authorization for opening letters of credit, Burma in effect abolished the system of open general licenses. During 1957-58 Burma prohibited all imports of dollar origin except drugs and medicines and other commodities not obtainable elsewhere. In September 1957 Burma increased its import duties on 55 tariff items, mostly consumers' goods; the increases ranged from 11 percent to 200 percent. Officially, the duties were raised to increase customs revenues and to combat inflation, but the increased duties probably also stimulated domestic production of certain commodities, such as cigarettes.

Ceylon regulates the importation of all commodities, but since imports of many of them are subject to open general license, the restrictions at least for authorized importers-are nominal. For registered Ceylonese importers there are no restrictions on the quantity or value of goods that may be imported from the dollar area. For non-Ceylonese importers, however, such imports are restricted to a level based on their previous imports. The Government has sought to discourage imports of luxury or nonessential goods by increasing the interest rates on money borrowed to finance such imports and by making it more difficult for importers to open letters of credit for imports of goods of this type.

Effective July 5, 1957, Ceylon increased its import duties on a few tariff items, including certain nylon goods, unmanufactured tobacco, gasoline, high-priced automobiles, air conditioners, and preserved and

tinned vegetables. At the same time, it eliminated or reduced the import duties on certain articles required by domestic industries; included were woodworking machinery, turpentine, linseed oil, and a few other items.

Ghana requires individual licenses for commodities imported from dollar countries; 40 most commodities imported from nondollar sources enter under open general license. However, dollar imports into Ghana have been liberalized to the extent that importers that are granted. dollar allocations (or quotas) may now use them to purchase, in the United States and Canada, any commodities except petroleum products, motor vehicles, motion-picture film, explosives, ordnance, and gold. A specific license was formerly required for each class of goods. Importers that have not been granted dollar quotas must apply for specific licenses to cover their purchases. As a rule, such licenses are issued only for items. that are considered essential and that are not available from nondollar sources. Ghana defends its policy of not extending its open-general-license system to commodities imported from the dollar area on the ground that, as a member of the sterling area, it must do its part to conserve dollar exchange by trading as much as possible with sterling-area countries.

Imports into Pakistan are subject to individual licenses; no commodities may be imported under open general licenses. Except for certain commodities that are subject to trade-agreement commitments, the licenses are valid for imports from any country.

Pakistan's import policy was slightly more liberal during the second half of 1957 than it had been during the first half of the year. As a result of increased United States aid to Pakistan, the list of consumers' goods to be licensed for importation was increased from 193 to 214 items. A few items importable during the previous licensing period were deleted from the list. During the second half of 1957 the Government prohibited imports of new automobiles valued at more than a stipulated amount. This action principally affected automobiles imported from the United States.

For the first half of 1958, as a result of its deteriorating foreign-exchange position, Pakistan reduced from 214 to 206 the number of items on its "importable" list. In adopting its budget for the fiscal year beginning. April 1, 1958, Pakistan also increased the import duties on a number of commodities, including provisions and groceries, artificial-silk fabrics, earthenware, hardware and tools, and automobiles. The duties on im

40 Composed of the former British territories of the Gold Coast and Togoland, Ghana attained independence and became a member of the British Commonwealth of Nations on Mar. 6, 1957. On Oct. 17, 1957, Ghana became a contracting party to the General Agreement in its own right.

41 That is, importers that were granted limited dollar quotas in November 1956 to permit the importation of "lesser essential but desirable commodities,"

ports of most industrial machinery, which had been temporarily reduced, were restored to their former level.

For the licensing period July 1-December 31, 1957, the Federation of Rhodesia and Nyasaland made some changes in its system of import controls. These changes had the effect of formally removing certain nominal restrictions on the commodities thus "decontrolled." Specifically, the Federation transferred from specific license to open general license all commodities imported from the nonsterling area,42 except those under quota or on the prohibited list, thereby making it possible for importers to obtain the necessary exchange for any permissible import. Since licenses and dollar exchange had previously been granted freely for goods not on the prohibited list or subject to quota, the principal effect of the new policy, which was continued in force for the first half of 1958, was to simplify administrative procedures. Certain items. including consumers' goods such as cigarettes, fruit juices, soap, linoleum, furniture, and phonograph records, were removed from the dollar-area prohibited list. Under the Federation's system of import controls, only a few commodities are subject to exchange quotas.

NONDOLLAR COUNTRIES OTHER THAN THOSE IN OEEC OR THE STERLING AREA

Certain nondollar countries are not members of either OEEC or the sterling area but, like most of the countries in those two groups, need to conserve their dollar exchange. This group includes six Latin American countries—Argentina, Brazil, Chile, Paraguay, Peru, and Uruguay—and Finland, Indonesia, Iran, and Japan. Argentina, Iran, and Paraguay have bilateral trade agreements with the United States; the other countries are contracting parties to the General Agreement on Tariffs and Trade.

All the above-mentioned countries are members of the International Monetary Fund, which makes its resources available to member countries that require funds to support their exchange rates. The Fund, moreover, encourages the simplification or abolition of multiple-exchange-rate systems, and seeks in other ways to create and maintain orderly exchange procedures. The Fund also advises the Contracting Parties to the General Agreement on Tariffs and Trade as to whether contracting parties that are also members of the Monetary Fund are in a position to relax or remove quantitative import restrictions that they have maintained for balance-of-payments reasons.

Of the 10 countries mentioned above, Argentina, Brazil, Chile, Peru, Uruguay, and Indonesia employ multiple-exchange-rate systems. Finland and Paraguay formerly maintained such systems, but shifted to

42 The Federation of Rhodesia and Nyasaland imposes few restrictions on imports from countries of the sterling area.