A note on some possible implications of sequential world monetary and trade reform

Abstract

Notwithstanding the separate and uncoordinated reform in the two areas, the rules governing international monetary affairs (especially exchange arrangements) and those relating to international trade have an important effect on each other (exchange regulations affect trade while barriers on trade influence the balance-of-payments adjustment process). In the present circumstances, fluctuating exchange rates may tend to diminish the importance of tariffs as a tool of commercial policy relative to non-tariff barriers while, for fluctuating rates to function efficiently, it is important to reduce these very non-tariff barriers. The results of the on-going trade negotiations and the future course of exchange rates will determine the practical importance of this apparent dilemma.