[This Document is the Property of His Britannic Majesty's Government.]
CHINA TRADE.
CONFIDENTIAL,
C A
124
18214
[April 20.]
BEC2 SECTION 22 MAY 07
[12734]
No. 1.
Sir J. Jordan to Sir Edward Grey-(Received April 20.)
(No. 103. Confidential.) Sir,
Peking, March 1, 1907. IN a despatch, copy of which I have the honour to inclose, His Majesty's Consul-General at Mukden recently requested my instructions as to the taxation în the open ports of Manchuria of cigarettes manufactured in Shanghae by the British- American Tobacco Company. Mr. Fulford pointed out that these cigarettes are classed and taxed at Shanghae as "native goods," and that ordinary native produce, when conveyed from one Treaty port to another by foreigners, is not entitled to exemption from taxation in the port of destination when it has passed into the hands of Chinese.
The question being an intricate one, on which it seemed desirable to have the fullest information, I forwarded a copy of the Consul-General's despatch to the Acting Commercial Attaché at Shanghae, and requested him to furnish me with a report on the subject.
In his reply, copy of which is likewise inclosed, Mr. Hosie entered into an exhaustive account of the taxation of these cigarettes, and gave reasons for holding that, under the circumstances stated by Mr. Fulford, they should be exempted from further taxation.
The point at issue, as will be seen from a perusal of Mr. Hosie's despatch, turns largely upon the interpretation to be placed upon the understanding arrived at between the Wai-wu Pu and Sir E. Satow in 1904, and as this Arrangement was the work of the Inspector-General of Customs I turned to Sir R. Hart for further enlightenment on the subject.
In a private letter, copy of which I have the honour to transmit herewith, Sir Robert has set forth his views at considerable length, and incidentally shown the very unsettled state in which questions of this kind rest in China.
While considering it impossible at present to formulate any definite rule for the treatment of these cigarettes, he thought that if full particulars could be ascertained of their taxation in any specific instance, the terms of the settlement might afford a basis for arriving at an arrangement or modus operandi.
Without, therefore, feeling myself able to adopt in its entirety Mr. Hosie's view that the cigarettes are entitled to be treated, as regards inland taxation, on the same footing as foreign imports, I have, in my instructions to Mr. Fulford (copy inclosed) informed him that he can fairly claim that the cigarettes, which are not in reality ordinary native goods, having paid export and coast-trade duties under special arrangement made with the Wai-wu Pu, have a legitimate right to exemption from further levies in the Treaty port.
Should the Chinese authorities refuse to recognize the claim, it would, I explained, assist me materially if he could submit a specific case in full detail in which the goods could be proved to have paid an additional levy within the port area.
My view, as I have already indicated, is that, under the arrangement made with Prince Ching, these cigarettes were treated as native produce for certain specified purposes of taxation only, and that the levy of taxes other than those prescribed therein would constitute a breach of that arrangement.
I have not considered it necessary to deal for the present with the further point raised by Mr. Fulford as to the transit taxation between the Treaty ports connected by railway, as that is subordinate to the main question, and the revision of the Customs procedure in force for goods passing to Newchwang via Ching Wan Tao, to which he makes special reference, is now under consideration between the Wai-wu Pu and the Foreign Representatives.
[2448 u-)
-2]
I have, &c.
(Signed)
J. N. JORDAN.
B
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