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concerned on the same basis as the balances accumulated during the war) will be freely available for current transactions in any currency area without discrimination with the result that any discrimination arising from the so- called sterling area dollar pool will be entirely removed and that each member of the sterling area will have its current sterling and dollar receipts at its free disposition for current transactions anywhere.
8. Other Exchange Arrangements.
(i) The Government of the United Kingdom agrees that after the effective date of this agreement it will not apply exchange controls in such a manner as to restrict
(a) payments or transfers in respect of products of the United States permitted to be imported into the United Kingdom or other current transactions between the two countries or
(b) the use of sterling balances to the credit of residents of the United
States arising out of current transactions. Nothing in this paragraph (i) shall affect the provisions of Article VII of the Articles of Agreement of the International Monetary Fund when those Articles have come into force.
(ii) The Governments of the United States and the United Kingdom agree that not later than one year after the effective date of this agreement, unless in exceptional cases a later date is agreed upon after consultation, they will impose no restrictions on payments and transfers for current transactions. The obligations of this paragraph (ii) shall not apply
(a) to balances of third countries and their nationals accumulated before
this paragraph (ii) becomes effective; or
(b) to restrictions imposed in conformity with the Articles of Agreement of the International Monetary Fund, provided that the Governments of the United Kingdom and the United States will not continue to invoke the provisions of Article XIV Section z of those Articles after this paragraph (ii) becomes effective unless in exceptional cases after consultation they agree otherwise;
ΟΙ
(c) to restrictions imposed in connection with measures designed to
uncover and dispose of assets of Germany and Japan.
(iii) This Section and Section 9 which are in anticipation of more com- prehensive arrangements by multilateral agreement shall operate until 31st December, 1951.
9. Import Arrangements.
If either the Government of the United States or the Government of the United Kingdom imposes or maintains quantitative import restrictions, such restrictions shall be administered on a basis which does not discriminate against imports from the other country in respect of any product; provided that this undertaking shall not apply in cases in which
(a) its application would have the effect of preventing the country imposing such restrictions from utilizing, for the purchase of needed imports, inconvertible currencies accumulated up to 31st December, 1946; or
(b) there may be special necessity for the country imposing such restric- tions to assist, by measures not involving a substantial departure from the general rule of non-discrimination, a country whose economy has been disrupted by war; or
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(c) either Government imposes quantitative restrictions having equivalent effect to any exchange restrictions which that Government is authorised to impose in conformity with Article VII of the Articles of Agreement of the International Monetary Fund. The provisions of this Section shall become effective as soon as practicable, but not later than 31st December, 1946.
10. Accumulated Sterling Balances.
(i) The Government of the United Kingdom intends to make agreements with the countries concerned, varying according to the circumstances of each case, for an early settlement covering the sterling balances accumulated by sterling area and other countries prior to such settlement (together with any future receipts arising out of military expenditure by the Government of the United Kingdom to the extent to which they are treated on the same basis by agreement with the countries concerned). The settlements with the sterling area countries will be on the basis of dividing these accumulated balances into three categories:
(a) balances to be released at once and convertible into any currency for
current transactions;
(b) balances to be similarly released by instalments over a period of
years beginning in 1951; and
(c) balances to be adjusted as a contribution to the settlement of war and post-war indebtedness and in recognition of the benefits which the countries concerned might be expected to gain from such a settlement.
The Government of the United Kingdom will make every endeavour to secure the early completion of these arrangements.
(ii) In consideration of the fact that an important purpose of the present line of credit is to promote the development of multilateral trade and facilitate its early resumption on a non-discriminatory basis, the Government of the United Kingdom agrees that any sterling balances released or otherwise available for current payments will, not later than one year after the effective date of this agreement, unless in special cases a later date is agreed upon after consultation, be freely available for current transactions in any currency area without discrimination.
II. Definitions.
For the purposes of this agreement :
"
"
(i) The term current transactions shall have the meaning prescribed in article XIX (i) of the Articles of Agreement of the International Monetary Fund.
*
(ii) The term sterling area means the United Kingdom and the other territories declared by the Defence (Finance) (Definition of Sterling Area) (No. 2) Order, 1944, to be included in the sterling area, namely " the following Territories excluding Canada and Newfoundland, that is to say;
(a) any Dominion,
(b) any other part of His Majesty's dominions,
(c) any territory in respect of which a mandate on behalf of the League of Nations has been accepted by His Majesty and is being exercised by his Majesty's Government in the United Kingdom, or in any Dominion,
(d) any British Protectorate or Protected State,
(e) Egypt, the Anglo-Egyptian Sudan and Iraq,
(f) Iceland and the Faroe Islands."
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