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preferences to Portuguese products transported in Portuguese vessels shall not be less than 50 per cent. This is now the preference in Portuguese India, and in Portuguese Guinea, and on many articles in Mozambique, but in the other colonies the old differentials of 80 and 90 per cent generally prevail. Macao is a free port, and in that part of Angola which lies within the conventional basin of the Congo the open door is maintained. A peculiar feature of the Portuguese system is that foreign goods "reexported" from Portugal receive in the colonies a 20 per cent reduction in the colonial duties. These reexported goods pay in Portugal certain fees, but not the Portuguese tariff, and this is frequently the most convenient way of getting articles into the colonial market.
France.--France adopted in 1892 tariff assimilation as its prevailing policy. This régime is applied to Algeria, Indo-China, Tunis, Madagascar, and five less important colonies, though the tariff of Tunis is not fully assimilated to that of France. These assimilated colonies enjoy free trade with France, except that colonial sugar and pepper pay duties, though at a much lower rate than similar foreign products, and except that the colonies 1 have certain additional duties not called customs duties, which are collected on imports from France as well as on those from foreign countries. This assimilation of the tariff rates, however, is not absolute, and each colony has a list of exceptions based on the local needs. The articles listed come in free or at lower duties than the French tariff rate.92 In some of the nonassimilated colonies-for instance, West Africa and Oceania-there are special tariffs, lower than the French, giving preferences to French goods; and in other colonies the open door is maintained either by treaty, as in Morocco, Dahomey, and the Ivory Coast, or by policy, as in French Somaliland and French India. In Morocco, however, the open door is guaranteed by treaty only in the seaports, and imports and exports overland from and to Algeria and the Spanish city of Melilla are dutiable at much smaller rates than in the seaports. The general tendency is to develop closer and closer relations with the nonassimilated colonies by granting increased preferences to their products on entry into France. Intercolonial free trade is the rule for all the French colonies, with the exception of Tunis.
Japan. In 1909 Japan applied the policy of tariff assimilation to her colonial possessions, which were at that time Formosa, the Pescadores, and Saghalin. In the following year, when Korea was annexed, the open door was pledged therein for 10 years, and the assimilation of its tariff followed immediately upon the expiration of this period-August, 1920. A few items of Japan's tariff had earlier been changed to give a preference to products of Korea. Overland trade between Korea and Manchuria, if carried by rail, enjoys special reductions in the import and export tariffs of China. In the territories leased from China-Kiaochow and Kwangtungthe Chinese maritime customs are in force, except that a part of the port in Kiaochow and the whole of Kwangtung constitute free areas, so that in the latter only merchandise in transit through the territory
90 Trade between France and Tunis is not entirely free.
91 France also has a few consumption duties which fall equally on goods of all origins. 92 A very few have higher rates.
93 See p. 210.
is dutiable. Products of these territories are subject in Japan to the minimum tariff rates; that is, those of the conventional tariff. In a word, Japan's policy is entire tariff assimilation of her colonial possessions, except that free admission to Japan is not granted to the products of the leased territories in which Japan's tariff can not be enforced because of treaty obligations.
United States.-The United States pursues the policy of preferential trade relations with its colonies. American products enter free in all the insular possessions, except only Samoa, where the indefinite maintenance of the open door is guaranteed by treaty. Likewise, from all the insular possessions 4 local products enter the United States free. The rates of the United States tariff are in force in Porto Rico, but the Philippines, Virgin Islands, Guam, and Samoa have individual tariffs. The rates are fairly high for the Philippine Islands. In the Virgin Islands the tariff of the Danish régime is temporarily continued in force. No export duties are levied in the insular possessions other than the Virgin Islands, and there they are uniform regardless of the destination of the products.
REASONS FOR EXCEPTIONS TO NATIONAL POLICIES.
The countries which pursue a general policy either of assimilation or of preference make various exceptions to their general practice. Some of these have not been traced to their causes, but the reasons for most of them are sufficiently obvious. These reasons may be classified under four headings: International relations, geographical influence, fiscal demands, and the interest of the consumer. In the first two of these are found the explanations of the widest variations from policy, namely, in the cases of the open-door and special tariff colonies among the powers which pursue a more restrictive policy. In reference to the larger areas, the explanation lies usually in the requirements of treaty or similar obligations; 95 in the smaller areas, geographical and communication features are usually the determining factors. 96 If national goods obtain a monopoly, more or less complete, of a colonial market by reason of free entry there, it is obvious that little or no revenue will be derived from customs. Accordingly, fiscal needs have led to the imposition of uniform consumption duties upon imports into the French assimilated colonies, and in other cases the needs of the treasury have made impossible reductions in the duties on national goods in colonial markets 97 or on colonial products in the home market.98
Policies of assimilation naturally tend to the prevalence of comparatively high import duties. But the interest of the consumer and the need for developing the colonial resources have forced exceptions by way of lower rates or by extensions of the free list in all the colonies in which any degree whatever of "tariff personality" is allowed.
04 According to the agreement of 1904 with Panama the United States levies no customs duties in the Canal Zone, and according to an opinion of the Attorney General the Canal Zone is not an American possession within the meaning of the tariff act of 1909. Therefore, its products when imported into the United States are dutiable as foreign products. 95 For instance, in the conventional basin of the Congo. Morocco, Dahomey, the Ivory Coast, Samoa. Korea, 1910-1920, and the Philippines, 1899-1909.
96 For instance, in French India, Timor, St. Pierre and Miquelon, French Oceania. For instance, Somalia.
08 For instance, France.
These lower rates mean smaller preferences if the products of the mother country enter free or at fixed percentage of the usual duty, while the placing of an article on the free list abolishes the preference entirely. With the establishing of specific duties or of different preferences on different articles the differential is sometimes increased even though the duty be lowered.
VII. RATES AND PREFERENCES IN COLONIAL IMPORT DUTIES-COMPARATIVE SUMMARY.
Enumerated above, the different features of colonial tariff policyimport duties in colonies, export duties in colonies, treatment of colonial products in the home markets, intercolonial trade, navigation restrictions, and finally discriminations by means other than tariff preferences-may now be referred to in succession, with the object of instituting comparisons between the different colonial tariff systems.
METHODS OF COMPARISON.
Comparisons of the amount of discrimination involved in the preferential features of colonial tariff systems can be made only with difficulty. Four methods of comparison may be used: (1) In some cases the average rate of duty collected upon all imports or upon dutiable merchandise from the mother country and from foreign countries can be derived from the trade and customs statistics; (2) for all preferential tariff schedules (except for the relatively few cases in which both specific and ad valorem rates are levied upon the same article) the amount of the preference upon each classification can be expressed as a fraction or percentage of the full duty, and a summary statement can be made of the fractions most frequently found in the tariff schedules; (3) to the extent to which ad valorem rates prevail in the schedules of various colonies the amount of each preference can be expressed as a percentage of the value of the merchandise, and these preferences may be summarized in general statements; (4) where specific rates prevail (and in other cases after the labor of converting ad valorem to specific rates on the basis of the average prices for a certain period) the preferences on particular items may be expressed in dollars or cents per pound, yard, gallon, or other unit of measurement, but generalizations from these specific preferences are difficult.
The first three of the above methods are seriously defective, and the fourth is suited to detailed studies of particular articles rather than to general comparisons of the tariff systems of a hundred colonies. The first method is useful in comparing revenue tariffs, but misleading in comparing preferential or protective tariffs. The highest rates, resulting in the general exclusion of foreign goods, may show the lowest average rates of duty upon those foreign products which actually enter a country or colony. The second method
9 Difficulties arise from the complexity and diversity of schedules, from the use of both specific and ad valorem rates, and from the necessity of coordinating the tariff rates, both with the trade figures to determine the relative importance of different items and with production figures to determine the extent to which they are protective rather than revenue duties. And see the next paragraph for the effect of duties so high as to exclude the trade of foreign countries.
of comparison is defective, since it is obvious that a fraction of a high duty may be as effective a differential as the remission of the whole of a lower duty. For instance, in the Philippine Islands American printing paper enjoys a remission of the whole duty of 10 per cent ad valorem; in Australia British paper enjoys preferences (according to the subdivisions of the classification) of one-half of 10 per cent (or 5 per cent ad valorem), two-thirds of 15 per cent (or 10 per cent ad valorem), and two-fifths of 25 per cent (or 10 per cent ad valorem). Evidently in this case the preference expressed by the fraction twofifths is greater than that expressed by the fraction one-half; evidently also on an ad valorem basis both the preferences expressed by the fractions two-thirds and two-fifths are as great as the preferential remission of the whole of the duty in the Philippine Islands.100
While this method of comparison thus yields only very general results, it has the advantage that it can be used both for specific and ad valorem rates, and by a study of the tariff schedules alone; it has been used, accordingly, in the following paragraphs. The third method of comparison is less defective, but is useless for a direct comparison between, for instance, typical British and French colonial tariffs. Further, no statement of the amount of a preference, whether expressed by a fraction of the full rate or on an ad valorem basis, or as a specific rate, is of more than relative significance without an examination of the ability of the mother country to compete in the article or articles in question. Especially in the case of ad valorem preferences whose amount changes with changes of price, a given rate may exclude foreign trade at one time and not at another; it may be prohibitive on some articles and in some colonies and prove a negligible barrier to the trade of foreign countries in other articles or in other colonies. A differential consisting of one-third of a low rate may be almost negligible; of a higher rate may be prohibitive; and of a still higher rate may be superfluous-even the preferential rate may be a prohibitive protective tariff, as is sometimes the case in the British Dominions.
These general observations upon methods of comparison are intended to warn the reader against attaching an unwarranted significance to the comparisons which follow.
OPEN-DOOR COLONIES-NETHERLANDS, BELGIAN, GERMAN, MOST BRITISH CROWN COLONIES.
In reference to rates and preferences in import duties, the tariffs of the open-door colonies require little attention. They contain no preferences and the variations in their rates are not important. The rates are, as a rule, not protective,101 but are adjusted to bring in revenue.
100 The equivalence is not exact, because the valuation in the Philippine Islands is that at the port of origin, while in Australia it is that of the port of origin increased by 10 per cent. The Australian rates cited are those of 1920.
101 There are some exceptions, for instance, the recent Indian import duty on cottons and the export duty on raw hides and skins. British Guiana, Jamaica. Trinidad, the Windward and the Leeward Islands levied duties on coffee, cocoa, and sugar even before the war had increased the demand for revenue, and in some of them the protective force of these duties was reenforced by export duties on the raw product. All of them, however, imported refined sugar, and only Barbados and St. Vincent exported it. The rates on coffee and cocoa were as high as 6 cents a pound, and on sugar 3 cents a pound for refined and 13 for raw (British Honduras), but usually they were much less. It will be observed that these protective duties preceded the grant of preferential_rates to Canada and Great Britain, so that these were at that time open-door colonies. But see p. 321 in reference to Jamaican coffee.
Social and fiscal considerations determine what articles shall be left free and which shall be most highly taxed. Usually alcoholic liquors (if admitted) are subjected to high duties, while agricultural, industrial, and mining equipment, necessary for the development of the country, is left free; and the general mass of consumption goods is subjected to rates ranging between 7 and 15 per cent ad valorem. There are not infrequently found, even in colonies where the home government is meeting annually a deficit in the colonial budget, rates of duty not exceeding 10 per cent. The high rates on liquors are offset by excise duties; the low rates on other commodities offer little protection for the encouragement of local industries. The rates are not high enough to interfere seriously with consumption and the maintenance of the open door renders the tariff without influence on the direction of trade.
ASSIMILATED AND PREFERENTIAL COLONIES.
The assimilated and preferential colonies have tariff's designed to affect the course of trade, and the rates and the amount of the preference in their tariffs are matters of importance. The amount of the preferences may be described either relatively or absolutely-that is, a statement may either give the fraction or percentage of reduction of duty enjoyed by national products or may name the amount (specific or ad valorem) of the two charges respectively or of the differential, i. e., of the difference between them. Employing first the relative method, that of fractions or percentages, the situation may be taken account of briefly as follows:
United States and Japan-The colonies 102 of the United States and Japan give to national products a preference to the full extent of the duties levied in the colonies. In Porto Rico and the Japanese colonies the rates are those of the metropolitan tariff. In the Philippines they are lower, and in Guam and the Virgin Islands still lower.
France. In the assimilated colonies of France there are found by exception some import duties lower than those of the metropolitan tariff, and there are moreover additional duties-under other nameswhich fall on French and on foreign goods alike, so that the differential in some cases falls considerably below 100 per cent of the total charges paid. To illustrate: If an article pays a customs duty of 10 francs and an octroi of 2.5 francs, the total paid on the foreign product amounts to 12.5 franes while that paid on the French product is 2.5 francs. The preference on this article is therefore an 80 per cent differential. If the additional duty were 10 francs, the total payments would amount to 20 franes and 10 francs, respectively, and the preference would be a 50 per cent differential. These additional duties differ widely in the different colonies, falling in some on only a few articles, in others on more, and in still others on nearly all. The rates vary widely, sometimes exceeding the amount of the customs duty, though more frequently they are much less. Taking all the import charges together, the differential in favor of French goods probably runs from 50 to 80 per cent, and even higher, in the different assimilated colonies.
10 Excluding Samoa and Japan's leased territories.