Compare the general prohibition of quotas under Article XI of GATT with the exceptions allowed for balance of payments difficulties under Article XII of GATT 1944.

Article XI of GATT generally prohibits the use of quotas on imports and exports, stating that no contracting party shall establish or maintain any prohibition or restriction on the importation or exportation of any product other than duties, taxes, or other charges. This is intended to promote free trade and prevent discrimination against foreign goods.

On the other hand, Article XII of GATT allows for exceptions to this general prohibition in cases of balance of payments difficulties. Under this provision, a contracting party may impose restrictions on imports or exports, including quotas, in order to safeguard its balance of payments. However, these restrictions must be temporary and non-discriminatory, and the party must notify the GATT council of the measures taken and the reasons for them.

In summary, while Article XI of GATT prohibits quotas in general, Article XII allows for exceptions in cases of balance of payments difficulties, provided that certain conditions are met. This reflects the balance between promoting free trade and allowing for temporary measures to address economic challenges.

Article XI: General Prohibition of Quotas

- Prohibits the use of quantitative restrictions on imports and exports between contracting parties.
- Exceptions:
- Protect human, animal, or plant life or health
- Secure compliance with laws or regulations (e.g., quality standards)
- Prevent the spread of disease
- Conserve natural resources
- Raise revenue

Article XII: Exceptions for Balance of Payments Difficulties

- Allows contracting parties to impose quotas on imports to address balance of payments difficulties.
- Conditions:
- Imposed on a non-discriminatory basis
- Only to the extent necessary to improve the balance of payments
- Subject to consultation with the GATT Council

Comparison

| Feature | Article XI | Article XII |
|---|---|---|
| General Rule | Prohibition on quotas | Exception for balance of payments difficulties |
| Purpose | Protect free trade | Address balance of payments problems |
| Scope | Applies to all imports and exports | Limited to imports |
| Conditions | Only specific exceptions allowed | Non-discriminatory, necessary to improve balance of payments |
| Consultation | Not required | Required with the GATT Council |

Key Differences

- Scope: Article XI applies to all imports and exports, while Article XII is limited to imports.
- Conditions: Article XI allows only specific exceptions, while Article XII sets stricter conditions for imposing quotas.
- Consultation: Article XI does not require consultation, while Article XII requires consultation with the GATT Council.

Conclusion

Article XI of GATT establishes a general prohibition on quotas to promote free trade. However, Article XII allows contracting parties to impose quotas as an exception when they face balance of payments difficulties, subject to certain conditions and consultation requirements.