This Document is the Property of His Britannic Majesty's Government.]
CHINA TRADE.
CONFIDENTIAL.
No. 1.
[April 7.]
SECTION 1.
75
(No. 93.) Sir,
The Marquess of Lansdowne to Mr. Townley.
Foreign Office, April 7, 1903.
I HAVE received your despatch No. 24 of the 15th January last referring, for my decision, certain points raised by the Acting British Consul at Yunnan-fu, relative to the interpretation that should be placed on some of the provisions of Article VIII of the new Commercial Treaty dealing with the removal of internal taxation on trade in China.
1. In regard to Mr. Litton's first inquiry, I do not consider it necessary at present for His Majesty's Government to take any action in respect of the future charges on land-borne goods. I agree that this question is likely to be brought forward at a later stage by the French and Russian Governments with a view to obtaining better terms than those stipulated for in the British Treaty; but, in the meantime, it should be sufficient to insist on the right of British goods entering China by way of Burmah to have applied to them, in virtue of the most-favoured-nation treatment to which they are entitled, the same rate of duty as is charged on French goods imported from French Indo-China.
2, 5, and 6. I concur in your opinion that the taxes known as "Prefect's tax" and "Sheng Shui," as well as those exacted under various names by the gentry on foreign goods, will be illegal, as soon as Article VIII comes into force.
4. Such a case as the levying of consumption tax on cloth woven in China (though not by machinery) from yarn imported from India is not specifically provided for in the Treaty, but I am of opinion that the foreign yarn would not, by undergoing the process of manufacture, lose its character of a foreign import in the sense in which that term is used in our Treaty arrangements with China. It should therefore be exempt from all internal taxation, including consumption tax.
No advantage would accrue to British trade from raising this question now, but a protest should be made eventually, if it be found, when Article VIII comes into operation, that the consumption tax is levied on such cloth.
5. I concur in Mr. Litton's view that pack animals might with advantage have been included in the exemption contained in section 3 of Article VIII, under which boats, junks, and carts are exempted from all taxation other than "a small and reasonable charge paid periodically at a fixed annual rate;" but I consider that the question may safely be left in abeyance for the present. At the same time, Mr. Litton's suggestion under this head should be brought up again for consideration if, and when, the surtax provisions, either as fixed by the Treaty, or as modified by Treaties between China and other Powers, shall be generally accepted.
I request that you will bear in mind these considerations, and that you will communicate to Mr. Litton the substance of this despatch, for his information and guidance.
I am, &c.
(Signed)
LANSDOWNE.
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