R
15403
SIR,
No. 156.
(AUSTRALIA.)
LAW OFFICERS to FOREIGN OFFICE.
[Panama Canal Tolls.]
Law Officers' Department,
Royal Courts of Justice, March 19, 1912. We were honoured with your commands signified in Sir Eyre A. Crowe's letter of the 12th January last with reference to the question of advantages which might be accorded by the United States Government to American shipping using the Panamá Canal, and the compatibility of any of the schemes which had been proposed with this end in view with the obligations of the United States Government ûnder the treaty between the United States and the United Kingdom of the 18th November, 1901, commonly known as the Hay-Pauncefote Treaty.
We have taken the papers into our consideration, and, in obedience to your commands, have the honour to
Report-
1. That with reference to the suggestion that all American vessels should be allowed free passage of the Panamá Canal and to the alternative suggestion that the tolls paid by them should be repaid by the Government, we consider that there is no difference in principle between charging tolls only to refund them and remitting tolls altogether. The result is the same in either case, and the only object of adopting the first method of freeing the ships in question from the tolls in preference to the second, must be to attempt to comply with the letter of the treaty whilst contravening its spirit. In our opinion, the argument which seeks to justify a refund of tolls by saying that it amounts merely to a subsidy and that there is nothing in the Hay- Pauncefote Treaty which limits the right of the United States to subsidise its ship- ping, is unsound. It is true that there is nothing in the treaty to prevent the United States Government from subsidising its shipping, and if it chose to grant a subsidy His Majesty's Government, would not be in a position to complain. But there is a great distinction between a general subsidy, either to shipping at large or to shipping engaged in any given trade, and a subsidy calculated particularly with reference to the amount of user of the canal by the subsidised lines or vessels. If such a subsidy were granted it would, in our opinion, stand self-confessed as a colourable attempt to avoid the obligations of the treaty. It follows that either of the suggestions in question, if adopted, would involve an infraction of the treaty.
2. As to the proposal that exemption should be given to vessels engaged in the coastwise trade, we think a more difficult question arises. If the trade could be so regulated as to make it certain that only traffic which under the United States law is reserved for United States vessels would be benefited by the exemption, it is not easy to see upon what ground objection could be taken. But it appears to us that this proposal may be combated on the ground that it would be impossible to frame regula- tions which would prevent the exemption from resulting, in fact, in a preference to United States shipping, and consequently in an infraction of the treaty.
3. As to the suggested intention of the United States Government to declare ports in the Canal Zone American ports for the purpose of the rule as to coastwise traffic, a distinction is to be drawn between ports in the canal and those which, whilst in the Canal Zone, are not in the canal, As to the latter, although actual sovereignty is not vested in the United States, yet the treaty with Panamá gives them all the rights and powers which actual sovereignty would confer, and it cannot be said that the United States would not be justified in declaring that these should be considered Ports in the canal itself, how- American ports for the purpose of coastwise trade. ever, would come within the stipulations of Article 4 of the Hay-Pauncefote Treaty, and could not be declared to be American ports.
We have, &c.,
RUFUS D. ISAACS. JOHN SIMON.
The Right Honourable
Sir Edward Grey, Bart., K.G., M.P.,
&c.,
&c.,
(24687-2.) Wt 91-594. 25, 6/12, D & S.
&c.
PUBLIC RECORD OFFICE
C.O.885
Reference :-
16 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- | COPYRIGHT PHOTOGRAPH-NOT TOPage 631
R
15403
SIR,
No. 156.
(AUSTRALIA.)
LAW OFFICERS to FOREIGN OFFICE.
[Panama Canal Tolls.]
Law Officers' Department,
Royal Courts of Justice, March 19, 1912. We were honoured with your commands signified in Sir Eyre A. Crowe's letter of the 12th January last with reference to the question of advantages which might be accorded by the United States Government to American shipping using the Panamá Canal, and the compatibility of any of the schemes which had been proposed with this end in view with the obligations of the United States Government under the treaty between the United States and the United Kingdom of the 18th November, 1901, commonly known as the Hay-Pauncefote Treaty.
We have taken the papers into our consideration, and, in obedience to your commands, have the honour to
Report-
1. That with reference to the suggestion that all American vessels should be allowed free passage of the Panamá Canal and to the alternative suggestion that the tolls paid by them should be repaid by the Government, we consider that there is no difference in principle between charging tolls only to refund them and remitting tolls altogether. The result is the same in either case, and the only object of adopting the first method of freeing the ships in question from the tolls in preference to the second, must be to attempt to comply with the letter of the treaty whilst contravening its spirit. In our opinion, the argument which seeks to justify a refund of tolls by saying that it amounts merely to a subsidy and that there is nothing in the Hay- Pauncefote Treaty which limits the right of the United States to subsidise its ship- ping, is unsound. It is true that there is nothing in the treaty to prevent the United States Government from subsidising its shipping, and if it chose to grant a subsidy His Majesty's Government would not be in a position to complain. But there is a great distinction between a general subsidy, either to shipping at large or to shipping engaged in any given trade, and a subsidy calculated particularly with reference to the amount of user of the canal by the subsidised lines or vessels. If such a subsidy were granted it would, in our opinion, stand self-confessed as a colourable attempt to avoid the obligations of the treaty. It follows that either of the suggestions in question, if adopted, would involve an infraction of the treaty.
2. As to the proposal that exemption should be given to vessels engaged in the If the trade could be so coastwise trade, we think a more difficult question arises. regulated as to make it certain that only traffic which under the United States law is reserved for United States vessels would be benefited by the exemption, it is not easy to see upon what ground objection could be taken. But it appears to us that this proposal may be combated on the ground that it would be impossible to frame regula- tions which would prevent the exemption from resulting, in fact, in a preference to United States shipping, and consequently in an infraction of the treaty.
3. As to the suggested intention of the United States Government to declare ports in the Canal Zone American ports for the purpose of the rule as to coastwise traffic, a distinction is to be drawn between ports in the canal and those which, whilst in the Canal Zone, are not in the canal, As to the latter, although actual sovereignty is not vested in the United States, yet the treaty with Panamá gives them all the rights and powers which actual sovereignty would confer, and it cannot be said that the United States would not be justified in declaring that these should be considered American ports for the purpose of coastwise trade. Ports in the canal itself, how- ever, would come within the stipulations of Article 4 of the Hay-Pauncefote Treaty, and could not be declared to be American ports.
We have, &c.,
RUFUS D. ISAACS. JOHN SIMON.
The Right Honourable
Sir Edward Grey, Bart., K.G., M.P.,
&c.,
&c.,
(24687-9.) Wt 91-594. 25. 6/12. D&B.