CO129-205 - Public Offices - 1882 — Page 308

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The wording of different Treaties was different. Under the British Treaties, as I had been used to read them, the British merchant, when he had paid the Tariff duty upon his imports, had a right to expect that, until these imports passed the barriers inland of the port of entry (such barriers, that is, as had existed when the separate Article of 1843 was agreed to by the Representatives of our respective Governments), the said imports, no matter whether belonging to foreign importer or to native purchaser, should be no farther taxed. When the imports passed any such barrier on their way to any place inland, it was at the option of the party interested either to pay upon the goods sent forward whatever dues might be demanded as transit dues at the barrier stations, or to clear them of all charges in transitu by exhibition of a transit-duty certificate, as voucher for the payment of an additional half Tariff duty. The imports having reached the inland market indicated in the transit-duty certificate, became, in my opinion, liable to further taxation when once they were separated from this certificate, but not before.

This was my construction of the transit-duty clauses of the British Treaty of 1858; but there were other Treaties, for instance those of France and Germany, which were read as providing a larger measure of exemption from taxation inland. Under these, in a word, it was held that imports that had paid the half-Tariff duty were thenceforth free from all farther imposts whatever, whether at an inland centre or elsewhere.

By many foreigners, merchants, and officials, the British Treaty was held to concede no less; my construction of it was deemed far too limited. Be this view correct or the reverse, so long as the Treaties of France and Germany were held to concede the more liberal measure of exemption, it was vain to expect those Powers to surrender their Treaty riglit without an equivalent; and so long as this right was asserted the British merchant would be, of course, entitled to whatever advantages might thence accruc to the merchants of France and Germany.

The Chinese authorities meanwhile continued to multiply li-kin Collectorates round the ports. In some cases, indeed, these Collectorates were established within the foreign settlement of the port itself, so that imports came to be taxed by them the moment that they had passed into the hands of the native purchaser. Imports en route to inland markets, even when covered by transit certificates, were, on occasion, detained by the li-kin Collectorates inland, the plea of their detention being, it might be, that foreigners alone were entitled to clear imports inwards by transit-duty certificate, and that the imports arrested were the property of Chinese purchasers.

It was in the hope of terminating the bickerings that were but the natural con- sequence of interpretations of Treaty rights so widely at variance with each other, that I undertook to move Her Majesty's Government to adopt the arrangements set forth in section 3 of the Chefoo Agreement. I undertook, if the Chinese Government would open certain new ports and places of call to British trade, to recommend that the area within which Tariff-paid goods were entitled to exemption from li-kin or other taxation at any port should not exceed the area of the foreign settlement at such port; that at ports at which no settlement area had been defined, the settlement limits were to be fixed by the foreign Consuls and the local authorities. This arrangement would, of necessity, involve the exclusion of the li-kin Collectorates from within the limits of the settlements so defined; but beyond these the Chinese Government would be free to levy li-kin on all imports not covered by a transit-duty certificate.

Such was, in general terms, the rule that I proposed.

There was to be one exception to it. Opium was an import on which the importer had to pay a Tariff duty, and was free then to house it and sell it. But once the drug had passed into Chinese hands, the Chinese Government was free to impose what taxation it pleased upon it. This constituted the essential difference between opium and all other imports, and my complaint had been that all other imports were in many places taxed just as if they were opium. A li-kiu was levied on them the moment that they became Chinese property. On the other part, I had always admitted the right of the Chinese Government to lay what taxation it pleased upon opium, and, from the nature of the commodity, it might be foreseen that the disappearance of the li-kin Collectorates front the foreign settlements would be attended at some ports by a considerable loss of revenue. But, again, the action of the -kin Collectorates within the settlements had in some instances seriously interfered with trade, which should properly have been free of li-kin.

To remedy both evils-loss of revenue to China and interference with the general trade by the li-kin Executive--I engaged to move Her Majesty's Government to sanction an arrangement by which opium brought into port by a British merchant should be deposited in bond, under direct surveillance of the Maritime Customs, until sold, and that, when sold, the importer should pay the Tariff duty upon it, the purchaser paying the h-kin.

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The amount of li-kin levied in 1876, when the Agreement in the above sense was signed, differed at different ports. I was prepared to recommend the adoption of a uniform rate, but, as the Grand Secretary Li and myself were not of one mind as to the amount of this rate, it was agreed that, as had been hitherto the custom, the several Provincial Governments should levy li-kin according to the circumstances of each,

As the assent of the other Treaty Powers would be required to make all the above conditions operative, I called upon your Imperial Highness to invite the foreign Legations to consider them. A Circular was addressed to the foreign Legations by the Tsung-li Yamên, but the Chefoo Agreement has remained unratified because, while the Representa- tives of the Powers objected to my proposed limitation of the area of exemption_from li-kin as insufficient, so far as the general trade was concerned, the Government of India, believing that its interests were gravely compromised, demurred equally to the provisions of the Agreement. The great increase in the cost of opium which it apprehended from these could not fail, in its opinion, to cause a serious diminution of revenue.

It should not be overlooked that, even if the Government of India had not objected to what I agreed to recommend regarding opium, it was always open to almost every other of the Treaty Powers to object to my proposition; for, although the opium imported into China comes principally from British India, the drug none the less figures in the Tariff of other Powers; and it was not to be expected that any Power with commercial grievances unredressed, and in particular grievances arising out of the undue taxation of imports, would consent to a modification of Treaty which would gratuitously extinguish the right of its national to land, house, and sell the drug as his Treaty allowed. British importers of the drug did in fact immediately propose to place their opium under other flags if the British Government were, without reserve, to ratify the Chefoo Agreement.

Meanwhile, the Chinese Government had performed its promise regarding the opening of the places enumerated in the Agreement, but the difficulties presented by the clauses affecting the general trade, against which other Powers protested, and those affecting opium taxation, which had alarmed the Indian Government, as I have stated, deterred the Government of Her Majesty from ratifying the Agreement; and towards the end of 1878, with the permission of the Marquis of Salisbury, then Secretary of State for Foreign Affairs, I proceeded to India for the purpose of obtaining such information as might guide me in the framing of fresh propositions. My observations led me to the conclusion that the object of Indian statesmen was not so much the extension of the opium trade as security against a falling-off of the opium revenue.

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Shortly after my return to China I was invited by Herr von Brandt, the Minister of Germany, to join in an attempt to place taxation of the general trade upon a better footing. The Representatives of the Treaty Powers assembled in Peking for this purpose in the autumn of 1879, and this question has formed the subject of various Conferences through- out the last two years.

The taxation of the export trade having been, by common consent, committed to the care of the Minister of Germany, the import trade was placed in my hands. The object of my colleague and myself alike has been to arrive at some understanding with the Tsung-li Yamen, which, being accepted by all the Governments, as calculated to secure foreign trade against loss, might, at the same time, put an end once and for ever to angry discussion.

On the taxation of the general trade, import or export, I shall here add, but one word. As I have stated from the first, in my conferences with the Tsung-li Yamên, a definite agreement regarding opium taxation, to be securely operative, must be accompanied by a definite agreement regarding the taxation of trade in general; because, until the latter question be disposed of in terms to which other Powers agree, it is in their power to render nugatory any arrangement specially regarding opium which Her Majesty's Govern- ment may separately have consented to adopt. And we are still some distance from a definite agreement that will be deemed satisfactory,

For the moment, however, I confine myself to the opium question, pure and simple. Shortly after the recommencement of the discussion, it was proposed by the Tsung-li Yamên that the arrangement affecting opinn taxation, which I had promised in the Chefoo Agreement to recommend, should be tried for five years at Shanghae. I reported this proposal to my Government, but I could not give it more than a qualified support; for, from the information within my reach, it appeared to me probable that, without a clearer understanding than I could arrive at, li-kin collectorates would be multiplied round the port, to the derangement, not only of the opiums trade, but of other branches of commerce. The taxation of opium, therefore, bas continued under the conditions formerly obtaining, except that at one or more ports the rate of li-kin has been raised by the local authorities.

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