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Again, on the 20th August, in accordance with the instructions of His Majesty's Secretary of State for Foreign Affairs, Mr. Carnegie addressed a note to your High- ness pointing out that the levy of tariff duties on imports and exports at Newchwang, while similar goods were allowed to enter Manchuria at other ports or by railway free of impost, was an unfair discrimination against a long-established Treaty port, and that so long as there were no customs at other ports in Manchuria, Newchwang should also be a free port. Your Highness replied on the 30th August that the Wai-wu Pu were engaged in negotiations with Japan and Russia for the establishment of custom-houses at Dalny, Mandchourie, and Pogramtehnaya, and that under the circumstances you were unable to see your way to making Newchwang a free port.
Since my arrival in Peking the establishment of custom-houses at the frontier in North and South Manchuria, and at the other ports and marts opened to international trade, and the unfair discrimination against the foreign trade passing through New- chwang, have been the subject of many interviews between the Ministers of the Wai-wu Pu and myself. Their Excellencies have informed me from time to time that agreements have been come to in principle with the Russian and Japanese Representatives for the establishment of the custom-houses in North and South Manchuria, but the carrying out of these agreements is apparently delayed. The approach of spring and of the opening of navigation oblige me to press upon your Highness' attention the urgent necessity of immediate steps in this matter, in order to prevent a recurrence of the serious injustice which has been done to the British sea-borne trade in the past.
There is auother matter which I am compelled to bring to your Highness' notice, and which also requires immediate attention. Last month, in consequence of tele- graphie instructions received from His Majesty's Government, Mr. Coales, an assistant in His Majesty's Consulate at Newchwang, was dispatched to Antung to investigate a complaint made by the British-American Tobacco Company that duties were levied by Chinese authorities on their goods which were not levied on Japanese cigarettes. Mr. Coales now reports that while the Japanese Consul at Antung refuses to allow his subjects to pay duty or li-kin, on the ground that there is no proper custom-house, Chinese traders are compelled to pay these taxes on whatever they import, and the result is an unfair discrimination against the British-American Tobacco Company's cigarettes, which are imported by Chinese dealers.
The plain remedy for this state of affairs is the establishment, before the opening of navigation in March, at Antung and Ta-tung-kou, of Imperial maritime custom- houses for the lery of the Treaty tariff duties, impartially and without distinction of nationality; and i shall be glad to learn that your Highness has made arrangements for this to be done at as early a date as possible.
I avail, &c.
(Signed)
Inclosure 2 in No. 1.
J. N. JORDAN.
Report by Mr. Coales on the British-American Tobacco Company's Complaint of Discrimi nation in favour of Japanese in the levy of Taxes on Cigarettes at Antung,
IN accordance with instructions from His Majesty's Consul-General at Mukden, I left Newchwang for Antung on the 22nd December, 1906, to inquire into the complaint of the Chefoo agent of the British-American Tobacco Company that there was a discrimination in the levy of taxes at that port against the Company's goods, and arrived there on the 26th December. Mr Walsh, the Chefoo agent, arrived on the 29th December, and I have the honour to submit the following Report, as the result of my inquiries prosecuted during my stay at Antung:-
I obtained the following details from Mr. Walsh-In September 1906 Mr. Walsh became aware that Chinese firms importing the cigorettes of the British-American Tobacco Company into Antung were made to pay taxes to the Chinese Government which were not enforced on Japanese firms; he accordingly came over to Antung to make inquiries, and brought with him three cases of the Company's cigarettes (viz., two of Rooster" and one of "Pirate" brand). On his arrival he called on the Native Customs authorities, and was informed that the duty on cigarettes imported by Chinese dealers was 3 per cent., and there was also an additional tax or tribute of 12 per cent. ad valorem. On his calling attention to the fact that Japanese cigarettes were being imported free of duty and tax, he was told that this was true, but that the Japanese produced a "paper" from the (Japanese) military stating that the importations were
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for the use of the troops. The Customs authorities refused Mr. Walsh's request to allow Chinese dealers to import cigarettes duty and tax-free. Nevertheless, neither duty nor tax was charged on the three cases brought by Mr. Walsh, on the ground, as I afterwards learnt from the Chinese authorities, that Mr. Walsh said that duty had already been paid at another open port.
In November 1906, Mr. Walsh sent an employé of the Company, Mr. Huddy, to Antung, and shortly afterwards consigned two cases of the Company's "Peacock" cigarettes to him. On these no duty or tax was paid. During the same month Mr. Walsh paid another visit to Antung and arranged with a Chinese firm, Te Shông Ch'ang, to become agents at that port for the Company. The manager of this firm was absent from Antung during my stay there. Mr. Walsh subsequently returned to Chefoo and consigned fifteen cases of "Peacock" and other cigarettes to this firm through Mr. Huddy, hoping to avoid payment of duty and tax as in previous cases. Before the steamer arrived, the Yalu River had closed for the winter, and I learnt from the Chinese authorities that the cigarettes, being unable to enter at Antang or Tatungkou, had come in by Takushan, an unopen port to the west of Tatungkou, and had to pay duty and other expenses there to the amount of 150 tae's. Mr. Huddy had complained to the Customs authorities on this matter, but as he had left Antung before my arrival, and Mr. Walsh knew nothing of the circumstances, I was unable to obtain any further information regarding this affair. I should state that Mr. Walsh's complaint, to his authorities in Shanghae was made after his first visit to Antung.
The above details give all that the Company has done in direct business with Antung. In the usual course the cigarettes are purchased among consignments of general goods by the agents of native dealers of Antung in Chefoo from native dealers there; they do not purchase directly from the Company in Chefoo, and Mr. Walsh said that he had no record of what quantity of cigarettes was sent to Antung. In the absence of any foreign maritime custom-bouse at Antung, merchandize leaving Chefoo for Antung is passed through the native custom-house at Chefoo, and on arrival at Antung is charged import duty according to the native Customs Tariff of that port and li-kin.
It should be noted that of the Company's cigarettes sold in Antung the "Pirate" brand is manufactured abroad. "Peacock," "Rooster.” “Pinhead," and other brands are manufactured in China, and are classed by the Maritime Customs as native goods,
In the absence of the Customs Tantai, his Excellency Chang Hsi-lan, and the Director of Native Cust ms, Taotai Chien Jung, I called on Mr. Chu Shu-hsin, Secretary (Ti-liao) of the Treaty Port Department, to inquire regarding the taxation question. He corroborated the statement that nativo dealers importing merchandize, native or foreign, including cigarettes, had to pay native customs duty thereon and also Hi-kin. In the Customs Tariff he gave me the duty on miscellaneous goods is stated to be 3 per cent., which differs from Mr. Walsh's figure, but I found on inquiry from several independent Chinese firms, that the duty actually levied is 34375 per cent. Mr. Walsh's tributary tax," it appeared, was the special tax or li-kin levied on cigarettes throughout Manchuria, and his figure is again incorrect. Up to the 15th November, 1906, this tax was levied by the local Li-kin Office or
"Tou Ch'eng Chu," and it amounted to 60 tiao a case of 50,000 cigarettes, or 1 cash per cigarette, which is approximately 5 per cent. ad valorem on the better-class brands. I can only account for Mr. Walsh's incorrect figures by the fact that he employed a Chinese interpreter in conversing with the Customs authorities. The above ti-kin was authorized by instructions from the Revenue Office (Ts'ai Chêng Chu), Mukden, shown to me dated the 3rd March, 1906. The same tax is still levied under special regulations in connection with the newly-inaugurated system of production and consumption
taxation.
Mr. Chu Shu-hsin also corroborated the statement that the Japanese importers were not paying either import duty or li-kin, on the ground that there was no foreign maritime custom-house at Antung.
Mr. Okabe, the Japanese Consul, said that on the opening of the port to trade, and his assuming charge as Consul, on the 1st May, 1996, he had informed the Chinese authorities that he would not permit his subjects to pay import duties except to a foreign maritime custom-house, and that, Antung being an open port, li-kin was not leviable upon foreign goods therein. Before he took over charge Japanese firms had evaded payment of these taxes, by importing merchandize, nominally for the use of the military. Chang Tajên, the Customs Tantai, had told him that a record of Japanese imports would nevertheless be kept, but Mr. Okabe in no way agreed to any payment of such arrears of duty being made whenever a foreign custom-house should be established.
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