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35327.

No. 1598.

(MAURITIUS.)

LAW OFFICERS to FOREIGN OFFICE.

[Indian Act increasing Customs Duties on Sugar from countries where a surtax of 6 frs. per 100 kilos. exists.]

MY LORD,

Royal Courts of Justice, July 19, 1902. WE were honoured with your Lordship's commands signified in Sir Martin Gosselin's letter of the 8th instant, stating that he was directed by your Lordship to transmit to us the accompanying papers relative to an Act recently passed in India for. imposing on sugar imported from Germany and Austria-Hungary certain duties aditional to the countervailing duties provided for by the Indian Act of 1899.

That the Act remained in force only until the 1st September, 1903-the date fixed for the Brussels Sugar Bounty Convention to come into operation-and was thus intended merely to tide over the interval.

That it should be explained that at the Conference for the suppression of sugar bounties, the British, Belgian, and French Delegates maintained that bounties additional to direct bounties arose on exportation from some countries owing to the operations of trusts or cartels. That those trusts or cartels were a combination of sugar-producing and refining interests which took advantage of the protection afforded by the surtax, or excess of import duty over excise, to raise the price to the home consumer so as to enable sugar to be exportel at a price considerably below the price of the world's market: the large profits gained at home amply compensating for the losses incurred by selling below cost price abroad. That the result was a bounty upon all sugar exported abroad.

That, after prolonged discussion, it was ultimately agreed at the Conference and laid down in the Convention (Article IV.) that the bounty derived from any given surtax should be taken as amounting to half the excess of such surtax beyond 6 fr. per 100 kilog. That the recent Indian Act, in assessing the additional duties, adopted the same basis of calculation.

That as we should perceive, the Austro-Hungarian Ambassador at this Court had made a formal protest against the imposition. of the additional duties as being incon- sistent with the terms of the Treaty of Commerce between the United Kingdom and Austria-Hungary of 1876, and contrary to the spirit of the arrangements come to by the recent Conference at Brussels.

That it was proposed to reply to his Excellency in the terms of the accompanying draft, and that your Lordship would be glad to be informed whether we concurred in its terms, or whether we had any suggestions to offer by way of amendment.

We have taken the matter into our consideration, and, in obedience to your Lord- ship's commands, have the honour to-

Report-

The only

That we concur in the terms of the proposed draft initialled by us. suggestion we have to make is that a paragraph should be added on page 9 of the draft just before the last paragraph pointing out that it was never suggested that the Indian Act of 1899 was an infraction of the most-favoured-nation clause, and that the present Act is merely the application of the same principle to another form of bounty.

We have, &c.,

R. B. FINLAY. EDWARD CARSON.

(Draft.)

The MARQUESS OF LANSDOWNE to COUNT DEYM.

YOUR EXCELLENCY,

Foreign Office, July

1902.

J

I HAVE the honour to state that His Majesty's Government have considered with the most serious attention your Excellency's note of the 3rd ultimo, on the subject of the

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