This Document is the Property of His Britannic Majesty's Government 10.
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# CHINA TRADE.
## CONFIDENTIAL.
## No. 1.
[September 20 JAN 041]
## SECTION 1.
Sir,
Foreign Office to Board of Trade.
Foreign Office, September 8, 1903.
I AM directed by the Marquess of Lansdowne to transmit to you, to be laid before the Board of Trade, a copy of a despatch from His Majesty's Chargé d'Affaires at Peking, respecting the refusal by the Viceroy of Nanking to permit the China Flour Mills Company of Shanghae to export 100,000 piculs of flour to Japan or Vladivostock. His Excellency bases his action on section 3 of Rule 5 attached to the Treaty of Tien-tsin, under which the export of rice and all other grain whatsoever to any foreign port is prohibited; he evidently considers that flour should be classed under the latter category. Mr. Townley is of opinion that flour is exportable duty free under Rule 11, which states that flour, with certain other commodities, pays no import or export duty, and the Inspector-General of Customs concurs in this view.
It appears, however, somewhat doubtful from the character of the articles enumerated in addition to flour in Rule 11, to what extent they are to be regarded as other than imports; the Chinese contention as to prohibition of export under Rule 5 (3) appears, moreover, to have been acquiesced in by this country and by Germany.
On the other hand, his Lordship is of opinion that the development of trade in China is likely to suffer from too rigid adherence to the provisions of Rule 5 (3), and considers, therefore, in view of Mr. Townley's and Sir Robert Hart's opinions, that it might be possible for His Majesty's Government to claim, with some chance of success, the right to export flour on payment of duty. Mr. Townley suggests that, although under Rule 11 flour is entitled to free export, it might be advisable to come to an arrangement for the payment of a reasonable duty.
Lord Lansdowne therefore proposes, if the Board of Trade concur, to instruct His Majesty's Minister at Peking to claim the right for British and Chinese subjects of exporting flour abroad on the payment of a specific duty equivalent to 5 per cent. ad valorem (the actual figure to be settled by mutual agreement), without being called upon to produce a permit from the local authorities to do so.
I am, &c. (Signed) F. A. CAMPBELL.
* Mr. Townley, No. 267, July 16, 1903.
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