Present Foreign Payments Practices in the United States

Abstract

OREIGN PAYMENTS PRACTICES in the United States do not differ, except in technical details, from those in other countries which are active in international trade and finance. In contrast to most other countries, however, they are not affected by domestic governmental restrictions' since residents of the United States are entirely free to make or accept foreign payments and to contract debts or accumulate assets in foreign countries. As a result of its favorable trading position and large gold reserves, the United States has not been faced with the problems which, in many other countries, have been regarded as a justification for exchange control, and at present it has only one direct restriction on foreign payments-i.e., that affecting Chinese and North Korean interests-and various restrictions on merchandise exports and imports. All of the existing restrictions, however, are generally motivated by strategic or protective considerations and (with the exception of those affecting China and North Korea) involve no direct restrictions on the making or receiving of foreign payments. Most foreign payments in the United States are, therefore, effected along traditional lines in whatever manner experience has proven to be most practical for the type of merchandise or financial transaction involved. A number of nontraditional practices, however, have developed in recent years as the result of trade and payments restrictions established by foreign Governments. While these nontraditional practices apply to only a small part of foreign payments, they have acquired some importance and will be discussed in some detail in a separate section of this paper.