299
2
of article 3 and of the second paragraph of article 6 of the treaty relating to the Chinese customs tariff, signed at Washington on the 6th February, 1922, by representatives of the Powers assembled at this conference, to wit:
hereby agree that, beginning three months from the
day of 1926 (date of signature of the present agreement), the Chinese Government shall impose and collect surtaxes on dutiable imports as follows:
On all commodities listed in the schedule hereto annexed, a surtax equal to the amount of the regular duty prescribed in the revised import tariff for trade of China at the time being in force, that is, either the specific duty or the 3 per cent, ad calorem duty provided in that schedule, and on all other dutiable commodities a surtax equal to one-half the amount of the regular duty prescribed in the revised import tariff for the trade of China at the time being in force; and that these surtaxes shall be levied uniformly at all land and maritime frontiers;
--
And do hereby agree that these surtaxes shall be collected by the Maritime Customs Administration, and that until this agreement shall have been superseded or modified by the provisions of a later treaty, treaties or agreements, the additional customs revenue which will accrue from their levying shall be applied as follows:-
"1. As an immediate measure in preparation of the way for the speedy abolition of li-kin the collections taken in payment of transit passes, which passes shall continue to be issued as heretofore at the same rates, shall be distributed proportionally through the Maritime Customs Administration to the provincial authorities, taking as a basis the amount of the transit dues collected on merchandise destined for or passing through or originating in the various provinces respectively under cover of transit passes.
**For the loss occasioned by this action, there shall be taken from the surtax collections the sum of 5 million dollars per annum, and this sum shall be credited by way of compensation to the ordinary customs revenue.
2. As a further measure in preparation of the way to the speedy abolition of li-kin and as a step looking towards the abolition of export duties both on foreign and on domestic trade, China will within three months after the going into effect of the above-mentioned surtaxes abolish the tax known coast trade duty, that is, the half duty at present charged on re-importation of goods of domestic origin which. after having been exported from one Chinese port, are imported into another Chinese port.
as
For the loss occasioned by this action, there shall be taken from the surtax collections the sum of 4 million dollars per annum, and this sum shall be credited by way of compensation to the ordinary customs revenues.
3. From the surtax collections, there shall be remitted monthly through the Maritime Customs Administration to the Ministry of Finance the sum 750,000 dollars to be used solely for the current and/or administrative expenses of the Chinese Government.
4. After the purposes specified above shall have been served, the remaining portion of proceeds from the collection of the surtaxes shall be held by the Maritime Customs Administration free from all encumbrances as a accumulative fund to be applied in due course to the liquidation of the unsecured and inadequately secured debts of the Chinese Government.
"Disbursements shall be made from this fund in accordance with the provisions of the treaty, treaties or agreements concluded at this conference. or if such treaty, treaties or agreements or any treaty or agreement which may have been negotiated otherwise for this purpose shall not have come into effect within two years after the date of signature of the present agreement, in accordance with principles which may at that time be agreed upon.
"5. The proceeds from the collection of the surtaxes shall be deposited in such banks in such manner and in such proportions as are specified in the resolution hereto annexed.
6. It is understood that the foregoing arrangements for the disposal of the additional customs revenue which will accrue from the levying of these surtaxes are adopted in the expectation that there will be concluded a treaty, treaties or agreements as indicated above in which provision shall be made for a further increase of customs revenue with a view to serving purposes to he agreed upon, and that these arrangements will be superseded by the provisions of such treaty, treaties or agreements.
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3
'It is furthermore understood that in view of the essential importance of Chinese railways in the promotion of China's prosperity and the rehabilitation of her credit, which are the fundamental purposes of this conference, China will take the earliest possible steps to restore the commercial efficiency of her railways and to ensure that the financial obligations of the railways be adequately served from railway revenues.
68. The proceeds of the Washington surtaxes are generally estimated at about 30 million dollars per annum. Under the foregoing agreement they would therefore be disposed of as follows:-
To compensate Central Government for allocation of transit
pass dues to provinces
To compensate Central Government for abolition of coastal
trade duty
To Central Government for administrative expenses To Central Government for debt consolidation
Dollars. 5,000,000
4,000,000
9,000,000
12.000.000
30.000.000
69. On the 19th May Sir R. Macleay's action in accepting this draft agreement was approved, on the assumption that it would be used as a basis for discussion and would not be presented to the Chinese delegation to be accepted as it stands. The Foreign Office nevertheless consider article 4 open to some objection in that the vesting of the accumulative fund in the Customs Administration may make them the object of international intrigue and bring them into conflict with the Chinese Government; and also in that the second paragraph of that article leaves an opening for the incorporation of a detailed debt consolidation scheme in the treaty itself. a course to which His Majesty's Government are opposed. Sir R. Macleay has therefore been instructed that, if the Chinese delegation raise objection to the draft on these grounds, any reasonable alternative proposal which they may put forward should receive his support.
Démarche by the United States Government.
70. On the 8th May the United States Chargé d'Affaires delivered to the Foreign Office a message from his Government, to the effect that the United States delegation had reported that the British delegation appeared reluctant to continue further negotiations at Peking; that the United States delegation considered that such an adjournment would be extremely dangerous; that the Japanese delegation were already authorised to continue negotiations, even without British collaboration, for implementing the Washington Treaty and for concluding a treaty providing for the interim surtaxes; that the French and Netherlands Ministers also personally favoured such action; and that the United States delegation accordingly proposed to proceed with the conference so far as political conditions would permit, despite the refusal of other foreign delegations to participate. The United States Government considered that the Powers should exhaust every effort to fulfil the promises made to the Chinese Government at Washington, and sincerely hoped His Majesty's Government would be able to continue their co-operation and to conclude the task begun last October.
71. The following is the purport of the reply which, after consultation with the British delegation, was returned on the 28th May to the United States Government through their Embassy in London :-
The information received by the United States Government as to the attitude of the British delegation must be based on a misunderstanding, for although His Majesty's Government have been considering the desirability of a brief adjournment of the conference they have no intention of breaking it up. They realise, however, that in existing political circumstances such adjournment might prove more prolonged than was intended; and in order to prevent the possibility of a misunderstanding as to the sincerity of the Powers, they considered it of the greatest importance that before even such a brief suspension there should be complete liquidation of the promises made at Washington. It is possible that the misunderstanding referred to has arisen out of the attitude adopted by the British delegation with regard to debt consolidation. His Majesty's Government only reluctantly agreed that the Tariff Conference should
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