Commentary of GATS Article XI: Payments and Transfers

Abstract

Art. XI GATS prohibits any restrictions on current (payments and transfers) and capital transactions, made in connection with a GATS specific commitment, but permits exceptions in five sets of circumstances (Art. VII GATS, Art. XIV and XIVbis, prudential measures according to GATS Annex on Financial Services, IMF agreement and at the request of the IMF). These exceptions, basically function as a conflict rule delineating the IMFs jurisdiction from the one of the GATS over international monetary transactions. The IMF permits to temporarily restrict current transactions, if such measures are necessary to preserve global financial stability. In such cases, IMF takes precedence over GATS Art. XI. Both IMF and GATS Art. XI prohibit bans on capital transactions; however, at the express request of the IMF, such transactions can be restricted in exceptional circumstances.

Keywords: payments, transfers, capital transactions, current transactions, IMF, GATS, prudential measures, international monetary system, financial stability

JEL Classification: F 31, F 32, F33, F34