CO885-6 — Page 472

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

6 PUBLIC RECORD OFFICE, LONDON

| ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

SIR,

No. 300.)

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Enclosure in No. 21.

Hong Kong, May 9, 1904. WITH reference to your letter of 28th April, 1904, No. 3273/1904/C.O.D., I regret to inform you that in my letter of 28th April, 1904, No. 267, I have made a mistake, and that not all the stipulations of the Brussels Convention are in force in Netherlands-India.

The Government of the Netherlands by the signature of the Brussels Conven- tion and Protocol, dated 5th March, 1902, engaged herself to prevent that bounty fed sugars will be transported in transitu over the territory of her Colonies, and by this way might enjoy the profits of the Convention on the market of destination.

But the Government engaged herself only on behalf of the Kingdom in Europe, and not on behalf of the Colonies (i.e., Netherlands-India) to levy countervailing duties on importation of bounty fed sugars.

I have, &c.,

DROEZE.

To the Honourable

21561

A. M. Thomson,

Colonial Secretary, Hong Kong.

No. 22.

THE BOARD OF CUSTOMS to COLONIAL OFFICE.

(Recelved June 18, 1904.)

[Answered by No. 28.]

Custom House, London, June 17, 1904.

SIR,

I AM desired by the Board of Customs to acknowledge the receipt of Mr. Lucas's letter of the 24th ultimo, No. 17736/1904, and to state that they have given careful consideration to the draft Bill and Regulations enclosed therein for giving effect in Hong Kong to the provisions of the Sugar Convention, so far as they are applicable to British Crown Colonies.

The Board observe that whilst Clause 2 of the Bill empowers the Governor of Hong Kong either to prohibit altogether the importation into the Colony of bounty- fed sugar or to impose special (or countervailing) duties on any such sugar imported. it is only proposed at the present time, according to the draft Regulations, to adopt the latter course. The position which will thereby be created on the export from Hong Kong of sugar refined in the Colony from bounty-fed raw sugar which was duly countervailed on its importation into the Colony, is one requiring careful con- sideration.

Hong Kong not being a party to the Convention, all sugars refined or prepared therein which are exported to a country which is a party to the Convention would apparently be subject to Article 6 of the rules laid down by the Permanent Commis- sion as to certificates of origin (see page 12 of Command Paper 1632, of 1903),† that is to say, the certificate of origin relating to such sugar would be required to show that the sugar was derived from a factory which did not work bounty-fed sugar. In effect, therefore, the admission into a contracting State of sugar refined in Hong Kong from bounty-fed raw sugar imported into that Colony would be prohibited, notwithstanding the act of countervailing which had taken place on the importation of the raw sugar into Hong Kong,

Whilst, in strictness, this might be held to be the correct application of the rules in question to the case of sugar refined in Hong Kong, the Board are of opinion that Article 6 as above referred to was designed by the Permanent Commission to meet the case of a non-contracting State, such as Switzerland (that country being in fact, especially in view), which had not countervailed bounty-fed raw sugar intro- duced for refining. The case of a non-contracting country, such as Hong Kong, which might actually countervail such bounty-fed sugar is substantially different, and constituted a new point when it was dealt with by Sir Henry Bergne at the 26th sitting of the Commission on the 14th March last, and the Board are inclined to

• No. 16.

† A translation of the Articles relating to certificates of origin is printed as Appendix I. to this Paper.

See Appendix II.

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think that though under its findings at the 12th sitting the Commission decided to go back to the origin of sugar refined in a non-contracting country, no Convention country would be likely to maintain prohibition against sugars emanating from the refineries of a non-Convention country which voluntarily countervailed the bounties on imported raw sugar.

At the same time it would be difficult to contest the claim of a country to prohibit the importation of sugar refined in Hong Kong from bounty-fed raw sugar, notwithstanding the fact that the bounty had been countervailed in the Colony, and the action of French Indo-China in prohibiting the importation of all sugar from Hong Kong could only, perhaps, be successfully disputed so far as that portion of the sugar which was not originally bounty-fed is concerned.

In the Board's opinion the simplest solution of the difficulties would appear to lie in the formal adherence of the Crown Colonies to the Convention, but if, for other reasons, that course is not advisable, they are disposed to agree with the Secre- tary of State that effect might most easily be given in Hong Kong to Article VIII. of the Convention by prohibiting the importation of all foreign bounty-fed sugar into that Colony.

With reference to paragraph 2 of Mr. Lucas's letter, the Board direct me to observe that they see some objection to refunding the duty paid on bounty-fed sugar, whether exported in its original state or after being refined. The Convention never contemplated the admission of bounty-fed sugar except in transit (within Customs control), and there would be an infraction of its rules in returning the special import duty after the sugar had once been admitted into "free circulation" in that Colony. Furthermore, the Revenue would be exposed to the risk of fraud by such a practice, seeing that it would be difficult to identify satisfactorily any export of refined sugar with the raw sugar originally imported, and if the sugar were not admitted into free circulation," a system of refining in bond would have to be established at the expense of the Government of the Colony.

L

I am to add, with reference to the draft Regulations as to Certificates of Origin, that the Board consider that Certificates issued by "shippers or other persons" should not be accepted as provided in Regulation No. III., that No. IV. should not be leleted, but that it should be re-drafted on the lines of Article VI. of the provisions suggested by the Permanent Commission to give effect to Article VIII. of the Con- vention, and that No. IX. should be amended by the addition of the words "the country of destination of the sugar "after the word "origin" in Clause (C). The Regulations, if revised in this sense, would accord with the Rules laid down by the Permanent Commission.

I am to return the draft Bill and Regulations, together with the copy of the Jamaica Law, and the Procés-verbaux, which were furnished by Mr. Pearson to the Deputy Chairman of this Board.

I am, &c.,

R. HENDERSON.

Appendix I. to No. 22.

RULES laid down by the Permanent Commission as to Certificates of Origin.

(Translation.)

(TRANSLATION.)—“ Article 1. In order to insure the application of the Con- vention, all foreign sugar coming into a Contracting State to be there consumed, refined or transformed shall be accompanied by a Certificate of Origin. Sugar not accompanied by such a Certificate shall not be admitted, or shall only be admitted on payment of the highest of the special duties fixed by the Permanent Commission.

Article 2.-Bounty-fed sugar shall be admitted in transit.

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Article 3.-The transit contemplated in Article 2 shall only be effected under the control of the Customs, either directly, or including transfer or storage in a bonded warehouse.

"Article 4.-The Certificate shall be delivered in the country of production, of despatch, or of transformation of the sugar by the fiscal authority to be appointed by the Government of that State.

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• Printed as enclosure in No. 25.

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