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I'am to point out that the statement made in the note handed by His Excellency to Mr. Secretary Taft, to the effect that parties to the Brussels Sugar Convention are bound to penalise or prohibit sugar from countries having an excessive surtax is contrary to the view held by His Majesty's Government, and expressed in a despatch to His Majesty's Chargé d'Affaires at Brussels of the 18th of March last,* to the effect that Contracting States are only required by the Convention to apply countervailing duties to sugar from countries which give bounties, or in the alter- native to prohibit the entry of bounty-fed sugar, and that any calculation by the Permanent Commission of the rates of countervailing duty applicable to the bounty eventually resulting from a given surtax can impose no obligation to apply that duty or the alternative prohibition, until the bounty has actually arisen therefrom.

I am,

&C..

37418

SIR,

No. 67.

COLONIAL OFFICE to FOREIGN OFFICE.

[Answered by No. 68.]

E. GORST.

-55

of Mr. W. H. Taft, United States Secretary for War, on the subject of the import duty on raw sugar in the Philippine Islands,

2. Copies of your despatch and its enclosures have been communicated to the Foreign Office, but I have to point out to you two inaccuracies which occur in the note which you handed to Mr. Taft :-

(1) Article IV. of the Brussels Convention, in calculating the amount of the advantages eventually derived from an excessive surtax, suggests the half, not the whole, of the excess, as stated in your note, and this only for the guidance of the Permanent Commission, with whom it rests to determine the existence of a bounty and the countervailing duty to be. imposed in such a case..

(2) I would further remind you that, as you were informed in my despatch, No. 28, of the 10th of February* last, His Majesty's Government hold the view, which they are prepared to maintain, that it is not sufficient to establish the existence of a surtax in excess of the limits fixed by the Convention, but that it is also necessary that the Permanent Com- mission should be satisfied that such surtax had resulted in, or was likely to result in, a bounty; and I may add that His Majesty's Govern- ment have since intimated to the other Contracting Powers that, in their view, it must be shown that a bounty has actually arisen from an excessive surtax before the imposition of a countervailing duty, and that this view of the meaning of the Convention they are prepared to uphold.

PUBLIC RECORD OFFICE

Reference :-

TILLIC.O. 882

זזות

6PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

Downing Street, October 23, 1905. In reply to your letter of the 20th instant, † I am directed by Mr. Secretary Lyttelton to transmit to you the accompanying draft of a despatch, which, with tho concurrence of the Marquess of Lansdowne, he proposes to address to the Governor

Colonial Office to Foreign Office, Feb. 3.

of Hong Kong, calling his attention to the error in the statement which he reports having given Foreign Office to Colonial Office, Feb. 8.

to Mr. Secretary Taft, which you print out in your letter, †, and to a further error which also occurs in the statement, Mr. Lyttelton's despatch, No. 28, of the 10th of February,§ to which reference is made, formed the subject of the correspondence || noted in the margin.

38297

No. 68.

42481

No. 70.

I have, &c.,

ALFRED LYTTELTON.

GOVERNOR SIR M. NATHAN to MR. LYTTELTON. (Received November 30, 1905.)

I am, &c.,

H. BERTRAM COX.

(No. 261.)

SIR,

FOREIGN OFFICE to COLONIAL OFFICE.

(Received October 28, 1905.)

Foreign Office, October 27, 1905.

SIR,

I as directed by the Marquess of Lansdowne to acknowledge the receipt of your letter, No. 37418/1905, of the 23rd instant,¶ on the subject of the import duty on raw sugar in the Philippine Islands.

I am to state that Lord Lansdowne concurs in the terms of the draft despatch to the Governor of Hong Kong, and that His Lordship proposes to send a copy to His Majesty's Ambassador at Washington for His Excellency's information.

37418

SIR.

No. 69.

I am, &c.,

E. GORST.

MR. LYTTELTON to GOVERNOR SIR M. NATHAN.

(Confidential.)

Downing Street, October 31, 1905.

I HAVE the honour to acknowledge the receipt of your confidential despatch of hth of September,**enclosing a copy of a note which you had placed in the hands

* No. 12 in [('d, 2531].

† No. 6ti,

* See No. 69.

§ No. 40.

Nos. 38 and 39.

No. 67.

** No. 61.

[Answered by No. 51.]

Government House, Hong Kong, October 26, 1905. REFERRING to the concluding paragraph of your despatch, No. 180, of the 12th ultimo, † enquiring whether I had issued any prohibition orders under the Sugar Convention Ordinance (No. 14 of 1904), I have the honour to transmit, for your information, six copies of Government Notifications, Nos. 835 and 880, of 1904, and No. 436, of 1905, respectively.

2. The order declaring Russia, Denmark, and the Argentine Republic to be bounty-giving countries was published in pursuance of the 3rd paragraph of the General Order (No. 57/1903), issued by the Customs House on the 22nd August, 1903, of which order copies were enclosed in Mr. Chamberlain's circular despatch of the 28th August, 1903.‡

3.

Your telegram of the 8th December, 1904,§ in reply to an enquiry I had made on the 2nd of that month, named certain additional countries as giving bounties, and at the same time suggested that it was unnecessary to issue orders prohibiting importation from countries which never sent sugar to Hong Kong. Your further telegram of the 19th December informed me that the cases of these named countries, with the exception of Brazil, were being reconsidered. The order declaring Brazil to be a bounty-giving country was then gazetted.

4.

This order was subsequently cancelled upon receipt of the statement enclosed in your circular despatch of the 24th May last, which showed that the Permanent Commission had suspended pending a further decision, the imposition of the penal clause of the Convention against Brazil.

5. As there were no importations of sugar into Hong Kong from the foreign countries which, in addition to Russia, Denmark, and the Argentine Republic, have been adjudged by the Permanent Commission to be bounty-giving, viz., Roumania,

No. 33.

• No. 40.

† No. 55.

‡ Not printed. § No. 30. ! No. 20.