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of opium shall have been effectively applied to native opium, then such orders shall also be applied to Indian opium.
ARTICLE 5.-Effective Restrictions on the Import of Indian Opium.
(a.) The British Government undertake that from the year 1911 the Government of India will issue an export permit with a consecutive number for each chest of Indian opium declared for shipment to or for consumption in China. During 1911, the number of permits so issued shall not exceed 30,600, and subsequently, during the period of import, shall be progressively reduced annually by 5,100.
(6.) During the period of import of Indian opium, the Chinese Government may dispatch one or more officers to India to watch the opium sales, and, further, to be present at the packing of opium.
(c.) A copy of each permit so issued shall, before shipment of opium declared for shipment to or for consumption in China, be handed to the Chinese officer concerned, for transmission to his Government or the Custom authorities in China.
(d.) Each chest of opium, for which such permit has been granted, shall be sealed by the officer deputed by the Indian Government. The Chinese officer concerned may attend personally to watch the operation, and may affix his seal (on the official sealing strip).
(e.) Chests of opium so sealed and accompanied by such permits may, if such two seals remain unbroken, be imported into any treaty port of China.
(f) On the expiry of
days from the date of publication of the new regulations, chests of opium unsealed (ie., without both seals), and chests sealed but unaccompanied by permits, shall be refused entry into any of the treaty ports of China.
This article cannot become effective until all the treaty Powers have signified their acceptance of the engagement set forth therein as binding on their nationals. Prior to the introduction of the new regulations, the two Governments shall continue to act in accordance with the arrangement at present in force.
ARTICLE 6.-Increase of Duty.
The British Government should consent, during the period of the import of Indian opium, to assess the consolidated import duty on the basis of per cent. of the present market price of foreign opium. The Chinese Government will adopt this basis, in fixing the duty to be levied on native opium, in order to preserve equality of treatment.
ARTICLE 7-Supplementary.
This arrangement, drawn up between the British and Chinese Governments, must be carried out. But should the Powers at some future date, when dealing with the prohibition of opium question, agree to adopt some other policy or to take adminis- trative measures to control opium, then, in that case, the fact that this arrangement exists should not be allowed to stand in the way of the two countries participating in an equal degree in the universal advantages to be derived from such new policy.
Peking, February 11, 1911.
Enclosure 3 in No 1.
Chinese Memorandum: Re-draft of Articles 4 and 7. (Handed in by Dr. Yen on February 21, 1911.)
ARTICLE 4.-Anti-Opium Laws and Regulations.
During the period of importation of Indian opium, the laws and regulations. instituted by the Imperial Chinese Government or by their executive officers, for the suppression of opium, and effectively enforced on native opium, shall also, after suitable negotiation with and with the consent of the British Government, be applied to Indian
opium.
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ARTICLE 7.-Additional Article.
577
The arrangement concluded this time between the Chinese and British Govern- ments shall, upon signing of the agreement, be immediately put into force. It is understood, however, that in the suppression of opium, if circumstances should change, or superior arrangements should be discovered, amendments to the present agreement may be proposed and considered.
Counter-Draft to above. (Handed to Dr. Yen February 21, 1911.) Should it be found necessary during the unexpired period of seven years to modify this agreement, it may be revised by mutual agreement between the two High Contracting Parties.
Enclosure 4 in No. 1.
British Memorandum: Re-draft of Clause 1, Sections (d), (e), (f), and (g). (Handed to Dr. Yen on February 21, 1911.)
Clause 1, Sections (d), (e), (f), and (g).
ON confirmation of this agreement, China will at once cause to be withdrawn all restrictions placed by the provincial authorities on the wholesale trade in Indian opium such as those recently imposed in Canton and elsewhere, and also all taxation on the wholesale trade other than the consolidated import duty, and no such restrictions or taxation shall be again imposed so long as the additional article to the Chefoo agreement remains as at present in force.
On a breach of any of the conditions contained in this article, His Majesty's Government shall be at liberty to suspend or withdraw the restrictions on the export of opium from India.
Enclosure 5 in No. 1.
Memorandum to show that an ad valorem Import Duty on Opium is feasible and presents few difficulties. (Handed in by Dr. Yen on February 21, 1911.)
(Translation.)
THE question has two aspects :—
1. Can an increase of the present duty to a considerable extent be fairly expected?
And,
2. Will there be any serious difficulty in providing for the collection of duty on the ad valorem principle?
Regarding the first question, the following considerations present them- selves: -
1. When the present consolidated opium tax (duty plus li-kin) was fixed at 110 taels per chest, opium was worth from 350 to 400 taels a chest, and the duty therefore represented about 30 per cout. ad valorem on the selling price in China.
2. During the ten years from 1880 to 1889, both included, the value of opium as deduced from the Customs published figures for the year 1889, was in round numbers 400 Haikwan taels, and the relation of cluty to value was 274 per cent.
3. During the succeeding ten years from 1890 to 1899, both included, the value of opium had risen till in 1899 it was worth 600 taels a picul, as shown by the figures
of the last year; the relation of duty to value had fallen to about 18 per cent.
4. In the ten years from 1900 to 1909 (the last year for which full Customs figures are available), the value had risen in round numbers to 730 taels a picul, and duty assessed on it would have been just about 15 per cent.
5. The Customs figures for 1910 are not yet published, but it is understood that values have risen enormously, possibly for reasons which need not be stated. The
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