dollar reserves and have thereby placed themselves in a position to relax restrictions on imports from the dollar area. Some countries, however, have been slow to relax import restrictions on dollar goods as their dollar reserves have increased. As a result of representations from the United States, Canada, other dollar countries, and the International Monetary Fund, and of an awareness of their obligations under the General Agreement on Tariffs and Trade, most OEEC countries have made some progress in removing the network of quantitative restrictions that they had imposed for balance-of-payments reasons. Some have taken such actions in their own self-interest, with a view to expanding their trade. Fear by European countries of the adverse effects of a "recession" in the United States on their trade-and-payments balances and on their reserves was widespread in 1952–53, but less so in 1953-54. This uncertainty has been advanced by some governments as a reason for not relaxing their restrictions on dollar imports even though their dollar position was constantly improving-in some instances substantially. For each of the OEEC countries with which the United States has trade agreements, the principal recent developments with respect to balances, reserves, plans for general currency convertibility, and relaxation of quantitative restrictions on dollar imports are discussed later in this section of the report. The following discussion presents statistical information for the OEEC countries as a group. The data relate to “OEEC countries" rather than to "EPU countries," since attention is directed to their external relations as a group rather than to their operations with each other within the Payments Union. In considering the external relations of the OEEC countries as a group, transactions between them are excluded. Thus it is possible to observe trends in the balance-of-payments position of these countries as it is affected by their trade and financial relations with the rest of the world-particularly with the dollar countries, as represented by the United States and Canada. As it is also important to show the balance-of-payments trends of individual OEEC countries so that comparisons may be made in their relative positions, a later section of this report discusses that phase of their operations. Balances for OEEC countries as a group Table 1 shows the balance of payments of the OEEC countries with the United States and Canada, and with other non-OEEC countries, for the period 1951-53. The data show that the deficit in the combined trade balance of the OEEC group with the rest of the world declined from 3 billion dollars in 1951 to 700 million dollars in 1952, and to 400 million dollars in 1953." Inasmuch as United States military expenditures and 11 Except in a few instances, the total merchandise imports of each of the OEEC countries exceeded total exports in every year of the period 1950-54. The exceptions were as follows: France in 1950; Belgium-Luxembourg and Sweden in 1951; Germany in 1952; Germany and Switzerland in 1953; and Germany and Austria in 1954. 353690-55-10 TABLE 1.-OEEC countries: Balance of payments with the United States and Canada, and with other non-OEEC countries, 1951-531 [In billions of United States dollars] 1 Absence of sign indicates credit; minus sign indicates debit. 3 Excludes imports of military goods and services, which are shown Source: International Monetary Fund, Balance of Payments Yearbook, Note. Transactions between OEEC countries are not reported in the table; also, net transactions between OEEC countries and EPU (the latter is treated as a member of OEEC) are excluded, except for gold and earnings on invisible services show a surplus for the years given in the table, the total balance for goods and services appears much more favorable. Thus the balance for goods and services combined shows a deficit for OEEC with the rest of the world of 2.1 billion dollars in 1951, a surplus of 500 million dollars in 1952, and a surplus of 1.3 billion dollars in 1953. These figures indicate mainly the effect of United States military expenditures (not including military goods and services received under aid), which increased from 300 million dollars in 1951 to 700 million dollars in 1952, and to 1.2 billion dollars in 1953. In 1952 these expenditures exactly offset the deficit in merchandise trade, and in 1953 they were three times as great as the deficit in trade. The balance-of-payments position of the OEEC countries (group G of table 1) shows that the overall position of the area greatly improved between 1951 and 1953. In 1951, there was a balance-of-payments deficit with the rest of the world of 3.2 billion dollars; the deficit declined to 100 million dollars in 1952, and in 1953 there was a surplus of 800 million dollars. The deficit with the dollar area (represented by the United States and Canada) was 3 billion dollars in 1951 and 1.2 billion dollars in 1952; in 1953 there was a surplus of 1 billion dollars with the dollar area. Items H and I in table 1 (economic aid and monetary movements) indicate the way in which cumulative balances were settled. Entries under these headings cover official economic grants and loans extended or received, and official monetary movements; the latter include reserves and similar transactions. The totals under these headings are, therefore, equal to the cumulative balances. A concise and longer range summary of the transactions shown in table 1 is given in table 2. TABLE 2.-OEEC countries: Cumulative balances and financing, 1947-53 1 1 Absence of sign indicates credit; minus sign indicates debit. Source: International Monetary Fund, Balance of Payments Yearbook, vol. 5, 1947-53 (Washington, 1954). Table 2 shows the overall balances of the OEEC countries from 1947 to 1953, as well as the economic aid and monetary movements by which the balances were financed. The debit balance of the OEEC area de clined in each year from 1947 to 1952, except in 1951, and a surplus position was reached in 1953. During most of this period, economic aid received from the United States was the principal means by which the OEEC countries were able to balance their external-payments deficits; this aid declined from 5.8 billion dollars in 1947 to 900 million dollars in 1953. Monetary movements representing changes in reserves (mostly gold and dollar and similar sterling transactions) changed from a deficit of 2.5 billion dollars in 1947 to a surplus of 1.7 billion dollars in 1953. In 1953, for the first time, monetary reserves exceeded economic aid.12 12 The data shown in tables 1 and 2 give some indication of the success of the OEEC countries as a group in building up their reserves and in reducing their dependence on economic aid from the United States and other sources. These trends are particularly significant for the OEEC countries, since it is in this area that the balance-of-payments problem— particularly with the dollar countries—has been concentrated. Balances of individual OEEC countries Changes in the payments balances of individual OEEC countries for the period 1951-53, shown in table 3, indicate the position of these countries in relation to each other in their transactions with their own group (the OEEC) and with all non-OEEC countries (i. e., with the rest of the world), as well as the overall balances. 12 The International Monetary Fund, which supplied these figures, points out that the balances represent only an approximation of the structural deficit of the OEEC countries, and should not be taken as a precise measure of the dollar-payments problem of these countries. The transactions contributing to the balances and those financing the balances cannot be precisely separated and placed on one side or the other. Some of the transactions included in the balances were themselves balancing items, and a number of transactions excluded from the balances were taken independently of balance-of-payments considerations. Transactions of a balancing nature included in the balances—rather than counted as balancing items-include certain United States military expenditures that were made abroad rather than in the United States (off-shore purchases), primarily in order to relieve the dollar shortage. Transactions excluded from the balances because they were undertaken independently of balance-of-payments considerations include such transactions as development loans made by the International Bank for Reconstruction and Development and the Export-Import Bank of Washington, and relief grants of various kinds. Moreover, the balances take no account of newly mined gold that may have been added to the reserves. For the world's gold reserves as a whole, the addition of newly mined gold is estimated to have been equivalent to about 500 million dollars a year. Lack of data on the international transactions of the entire dollar area is another obstacle to presenting a complete survey of the magnitude of the "dollar problem" and the way in which it was handled. Data are available on the transactions of the United States and Canada, but not for other dollar countries as a group. While the transactions of the latter are relatively small, their inclusion with the data on the United States and Canada (which would thus reflect the position of the dollar area) would increase somewhat the OEEC balances shown in table 1 for the "United States and Canada," and proportionately decrease the OEEC balances for "Other non-OEEC countries." |