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Inclosure 2 in No. 1.
Memorandum by Mr. Jordan on Draft of Commercial Treaty between China and Japan.
THIS Treaty seems chiefly designed to remove the judicial and commercial disabilities under which Japan laboured by her Treaty and Trade Regulations of 1871, and to substitute therefor such provisions of the other foreign Treaties with China as seemed most calculated to attain that end.
It is modelled largely upon the British Treaty of 1858, but the German Supple- mentary Convention of 1880 has also been utilized in its preparation. Articles VIII, XXI, and XXIV, with regard to the duration of passports, the establishment of bonded warehouses, and the exemption from tonnage dues of injured merchant- vessels have been drawn from the latter instrument.
Article XVIII also has a German origin. It revives the promise given to Herr von Brandt, by which the Chinese Government undertook to furnish a list of li-kin stations throughout the Empire, and the rates of li-kin levied at them. It remains to be seen whether the undertaking will lead to any better result now than it did on that occasion.
The great interest of the Treaty, so far as British interests are concerned, centres in Articlos XV and XVII, and in the attempt to make raw cotton an export duty free.
Article XV opens up a very wide question, and one that has formed the subject of frequent consideration since and before 1869, in which year the principle of the payment of the import duty and transit due simultaneously ou certain classes of British goods was embodied in the Convention negotiated by Sir R. Alcock. The combined payment of 7 per cent. was to exempt the goods from all other taxes and charges whatsoever in Treaty port provinces. This Treaty was refused ratification by the British Government, and the Yamêu, annoyed at its rejection, declined for years to entertain the question.
In 1879--80 long negotiations, conducted by Sir T. Wade and Herr von Brandt, had for their object the commutation of the inland dues. The Yamên long held out for 10 per cent, as the lowest figure for which they would guarantee general freedom from inland taxation, then offered to revive the Alcock Convention, and in the end the negotiations proved abortive.
The present proposal resolves itself into this: is it advisable to pay an additional rth of the import duty in order to secure for our goods entire exemption from taxation? It is to be hoped that the exemption is meant to be applicable to the numerous charges, frequently of a differential nature, levied upon foreign goods after they pass into Chinese hands at the place of consumption otherwise the provision would prove illusory. The wording of the clause, "commutation of transit tax," is very suspicious, and looks unfortunately as if it was only intended to refer to exemption from mere charges en route to à given destination.
Its
Assuming that this is not the case, the proposal seems well worthy of consideration, especially if it were coupled with the opening of some new centres of trade. political value would be very considerable, as the increase in the Customs receipts would facilitate China's borrowing in the open market. In considering the suggestion, many points have to be borne in mind. In favour of it is the prospect of certainty of taxation which it offers, and the removal of the endless troubles connected with the present inland fiscal system, especially in South China. On the other hand, it must not be forgotten that in many provinces the internal taxes are lighter than the 23 per cent. transit duty, and, were the new arrangement adopted, it would probably be necessary to retain side by side with it, for optional use, the existing system of transit passes.
At any rate it should, like the Opium Additional Article of 1885, he made terminable after a fixed period on twelve months' notice being given on either side.
Article XVII seems at first sight extremely important, and if accepted by China would give a great impetus to the large coast trade between the Treaty ports.
Under the arrangement made by Sir F. Bruce in 1861, native produce carried coastwise pays full export duty at port of shipment, and half import duty at port of entry-altogether 74 per cent. The wording of the present Article would appear to indicate that only one duty of 21 per cent. is to be levied in future. In the absence of the full text it is, however, perhaps safer to conclude that the Article is only meant to
confer upon Japan a participation in the coast trade on the same terms as are enjoyed by other Powers.
The attempt to have raw cotton, silk cocoons, &c., declared to be duty-free goods is evidently a sop to the owners of mills in Japan, who will be greatly handicapped in their competition with the products of similar establishments in China, enjoying, as they will, all the privileges of foreign imports, and the additional advantage of exemption from import duty. The duty upon raw cotton is taels 0 3.5 per 100 catties. That China will yield such a demand without a severe struggle is scarcely conceivable. She is far more likely, if she gets her own way, to throw difficulties in the way even of the foreign mills on her own soil procuring a free supply of the raw material.
Article XIV confers a further boon upon goods manufactured in China by enabling them to go free of taxation to any other Treaty port, in the same way, I presume, as foreign imports can be re-exported to another port.
The Tariff upon imports and exports, especially upon cotton goods, will require to be carefully studied, but for that expert opinion would be desirable.
(Signed) J. N. JORDAN.
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