CO129-344 - Public Offices & Foreign Office - 1907 — Page 458

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Chargé d'Affaires on that day, but would appear not to have been transmitted to the Foreign Office.

On passing through Hankow on the 20th March, on my return to Peking, I discussed with His Majesty's Consul-General there the subject of coast-trade duty on brick-tea, and Mr. Fraser agreed with me that, although Chinese steamers were not specifically mentioned in the Commercial Treaty of Shanghao of 1902, there could be no doubt that section 3 of Article VIII was intended to cover Chinese steamers as well as junks and sailing-vessels trading to or from open ports. We resolved, however, to make a very careful search of the Treaties, and discovered that the first paragraph of Article III of the Supplementary Treaty between the United States and China of the 17th November, 1880, lays down that, in the coast trade of China, cargoes carried in United States' vessels shall not pay higher duties than cargoes carried in Chinese vessels. This discovery I communicated to His Majesty's Minister on my return to Peking on the 24th ultimo.

Peking, May 6, 1907.

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(Signed)

ALEX. HOSIE.

In a Memorandum on the formation and development of the China Merchants' Steam-ship Company, transmitted to the Foreign Office in No. 39 of the 17th February, 1877, it is stated that in the second Annual Report of the Company for the twelve months ending the 31st July, 1875, the Business Managers, in referring to certain disabilities under which the Company labours vis-à-vis foreign Companies, said: "The steamers of the Company are placed on the same footing as foreign-owned vessels, under the Regulations issued (in 1868) by the Yamên of Foreign Affairs, with the following exceptions." As the exceptions do not concern the question now at issue they need not be repeated here. What the Managers undoubtedly meant was that the steamers of this Chinese Company were equally with foreign-owned steamers under the control of the Imperial Maritime Customs, and that the goods carried by the Company's steamers were liable to the same duties as goods carried by foreign-owned steamiers. To this day the practice holds good, and all steamers, whether Chinese or foreign-owned, and all vessels having a foreign element about them, are under the control of the Imperial Maritime Customs. The fact that Li Hung-Chang, as Superintendent of Trade for the Northern Ports, memorialized the Throne praying that brick-tea brought to Tien tsin in steamers of the China Merchants' Company should be exempt from coast-trade duty, proves that the practice was a rule from which he wished the Chinese Company to be excepted. His Excellency's prayer was granted, and the exemption from coast-trade duty, so far as the Company is concerned, enables the Chinese Company to offer better terms to shippers of brick-tea than any foreign shipping Company, and not unnaturally the shippers prefer to ship by the Chinese Company's

steamers.

As regards the taxation of brick-tea between Tien-tsin and Kalgan, the note from the Wai-wu Pu of the 26th May, 1906, gives the following quotation from the Tien-tsin authorities:---

"It has been the practice of the Company's (China Merchants) branch office at Hankow to contract to carry it (the brick-tea) to Tungchow and Fengt'ai, where it is handed over to the tea merchants to convey it themselves to Kalgan for sale. As regards the customs dues and li-kin payable at Tien-tsin, the established Regulations are always conformed to, the native customs duty on brick-tea being calculated at 12 candareens per picul, li-kin at 4 candareens, and industrial contribution at 32 candareens.'

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If these are the established Regulations governing the taxation of brick-tea, why was the brick-tea carried to Tien-tsin in Messrs. Butterfield and Swire's steamer charged 30 and 15 candareens duty and li-kin per picul respectively? The reason, no doubt, why the Chinese Company contracts to carry the tea to T'ungchow and Fengtai is that the owners of the tea are able to take delivery of it after it has paid, through the Company, native customs duty and li-kin on the above favourable

terms.

But what chiefly concerns the British Shipping Company (Messrs. Butterfield and Swire) is the sea-carriage from Hankow and Foochow to Tien-tsin, and the question is,

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have we the right to say to the Chinese Government that native produce carried coast- (wise in Chinese steamers shall pay coast-trade duty, which by the Regulations of 1861 and Treaties subsequently made between China and other Powers was fixed at half the export duty? We have already made arrangements with China in regard to duties and fi-kin on goods carried in native bottoms. Article III of the Shanghae Treaty of 1902 says:

"China agrees that the duties and li-kin combined levied on goods carried by junks from Hong Kong to the Treaty ports in the Canton province and vice versá shall together not be less than the duties charged by the Imperial Maritime Customis on similar goods carried by steamers."

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It may be said, however, that this is not coast-trade; but section of Article VIII. contains the following paragraph :-

“Goods carried by junks or sailing vessels trading to or from open ports shall not pay lower duties than the combined duties and surtax on similar cargo carried by

steamers.

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The inference from this surely is that certain fixed duties are payable on goods carried by steamers irrespective of nationality, and that it was quite unnecessary to specially include Chinese steamers with juuks or sailing vessels in arranging the duties to be paid by the latter.

The aim of this section of the Treaty was evidently to establish a uniform Tariff on goods, whether carried in foreign or Chinese bottoms, steam or sail.

(Signed)

ALEX. HOSIE. July 19, 1906.

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