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TRADE AND COMMERCE WITH FOREIGN NATIONS-FOREIGN

TARIFFS.

FORTY-EIGHTH CONGRESS, FIRST SESSION.

May 14, 1884.

[Senate Report No. 551.]

Mr. MILLER, of California, from the Committee on Foreign Relations, submitted the following report:

The Committee on Foreign Relations, to whom was referred the resolution of the Senate, adopted January 22, 1884, which is as follows—

Resolved, That the Committee on Foreign Relations be instructed to inquire into and report to the Senate such legislation as shall protect our interests against those Governments which have prohibited or restrained the importation of meats from the United States; and the committee is further instructed to report what discriminations are made against exports from the United States by the tariff laws of the principal countries of Europe and America, especially France, Germany, Mexico, and Brazil, by reason of commercial or other special treaties or agreements with more favored nations, and to report the causes which led to such discriminations, the efforts, if any, that have been made to remove them, and what legislation, if any, is necessary to place the United States on an equal footing with the most favored nations. This investigation is not, however, to delay the action of the committee on the first branch of this resolution

having made report on the 19th of March last (Senate Report No. 345, Forty-eighth Congress) upon the first clause of the foregoing resolution, beg leave to submit now the following report upon the second branch of the same:

The documents hereto appended, and made a part hereof, which have been furnished the committee by the Secretary of State, with his letter of transmittal, under date of March 4, 1884, which are the tariff laws, import and export of the principal countries of the world, and comments thereon by various officers of the United States, contain much, it is believed, which will serve to answer the several questions propounded by the above resolution.

In answer to the question embraced in the resolution as to "what discriminations are made against exports from the United States by the tariff laws of the principal countries of Europe," &c., it may be stated, generally, that none of the tariffs of the countries of Europe or America contain specific discriminations against merchandise imported from the United States, but the discriminations found in the tariff systems of some of the countries whose laws are hereto appended, particularly France and Austria-Hungary, against merchandise imported from nontreaty countries, necessarily result in placing importations from the United States at serious disadvantage. For example, on account of the great difference between the rates of duty imposed upon American goods by the general tariff, and the rates imposed upon like goods imported from treaty countries under the conventional tariff, much of our merchandise cannot reach the French markets, except through those coun. tries having commercial treaties with France, such as Great Britain,

Italy, &c. In illustration, it may be stated that alcohol, if imported directly from the United States into France, pays a duty of 30 francs per hectolitre, while the same article if imported from England is subject to 15 francs per hectolitre. Cotton tissues imported from the United States into France pay nearly three times the duty which the same article pays if imported from Great Britain, and so of other articles.

In the Austro-Hungarian tariff is found the following provision: Goods coming from countries which treat Austrian and Hungarian vessels or goods of Austrian and Hungarian origin with less favor than the vessels or goods of other nations are subject on entering to an additional payment of 30 per cent. and if the tariff declares them to be free, then a special ad valorem duty will be levied upon them.

This provision is far-reaching and announces a principle which seems to go farther than that which underlies the French discriminations in favor of the countries whose importations come within the conventional tariffs. By this provision Austria-Hungary makes declaration of the right to inquire not only whether there is a treaty with the country of origin of the goods, but also whether, even if there is a treaty, any other country enjoys any favor which is not granted by an existing treaty to Austria-Hungary. If this principle be admitted, a nation without commercial treaties, or which has unsatisfactory commercial relations with other countries, may, by the simple expedient which Austria-Hungary has adopted, impose discriminations against the commerce of those nations who have not or do not place her upon an equal footing of the most favored nations.

Our Government has never regarded a reciprocity treaty, or a treaty which accords reciprocal advantages in the matter of tariff rates to the parties making the treaty under peculiar conditions, as any discrimination against other nations in respect of whom such conditions do not exist, and who may not enter into like arrangements. It has been held uniformly by our Government that the most favored nation clause does not apply to such arrangements. The right to purchase by just reciprocity from other nations privileges equivalent to those we give has been asserted and thus far successfully maintained without admitting to the same privileges all those nations with whom we have treaties containing the most favored nation clause.

On the other hand, where other nations have among themselves reciprocal commercial arrangements, the United States cannot claim to share in the benefits or privileges of such arrangements, which are acquired only by purchase or reciprocal compensations. It would seem that the only method by which the United States may consistently or practically be made to share in the benefits of the conventional tariff's of other countries is by diplomatic negotiation, and it is in such case simply a question of expediency or commercial policy. A resort to discrimination against the countries who apply general tariff rates to importations from ths United States and a conventional tariff to the merchandise of countries who by reciprocal commercial arrangements have purchased the benefits of the lower rate of the conventional tariff cannot be justified. In view of the conditions under which the discriminations by the several countries who have conventional tariff's against importations from the United States are made, it is not easy to conceive of any legislation that Congress can enact in respect to the same which would prove beneficial to the United States.

The case of the prohibition against the importation of American salted meats into Germany and France is different from the class of discriminations above referred to. In that case the discrimination is not in a

tariff law, but it is an absolute prohibition of a specific American product as an American product, and the prohibition is declared to be based upon a sanitary regulation and enforced for sanitary reasons. The same may be said in respect of the discrimination practiced in Great Britain against American cattle. If these discriminations are causeless and founded upon a misconception of facts or arise from groundless fears of danger to public health, the United States has reason for complaint, and after using every meaus to remove the reason (if there be any reason) for the prohibition, they may with perfect propriety resort to discrimination as against the importations from the countries which practice these causeless and unjust prohibitions against American products. This committee in its former report has submitted a bill (Senate bill 1876) which is regarded as proper and sufficient legislation for such cases, and all other unreasonable or unjust discriminations against the products of the United States.

Brazil and Mexico are mentioned in the resolution as countries who may have practiced discriminations against the United States. Considering the state of trade between the United States and those countries, the export duties levied upon their own products which are exported to the United States and elsewhere have been sometimes characterized as discriminations against this country. In the case of Brazil, the United States is a large purchaser of the chief products of that country, and Brazil is. but a limited purchaser of American products. The value of imports into the United States from Brazil was, during 1883, $44,488,459, and the value of American exports to Brazil for the same period was $9,252,094, the value of imports being nearly five times the value of exports. The export duty on coffee from Brazil, for which the United States is the best customer, is 7 per cent. ad valorem national duty, and 4 per cent. for the province of production, making 11 per cent. total export duty, and this duty has been maintained, not withstanding the fact that the United States has placed coffee upon the free list. Export duties are levied for varied reasons, which depend upon the condition of the country of production and the nature of the product. Sometimes they are levied to prevent a drain upon the resources of the country or to prevent the loss of an article which is nec essary for the sustenance of the people or the defense of the nation; but in general export duties are levied for purposes of revenue, and this latter is undoubtedly the purpose of the Brazilian export duty on coffee. An export duty upon a product sent to a particular country, and levied only upon exportations to that country, would be an unfriendly discrimination, for which it would be reasonable to retaliate; but a general export duty without regard to destination cannot be regarded strictly as a discrimination, although the practical effect may be to seriously discriminate to the injury of those countries which furnish the principal markets for the product so taxed. Whether in such case it is better for the country injuriously affected to resort to discriminations as against the imports of the offending country, or to strive by negotiation to obtain reciprocity, is a question which must depend for answer upon the commercial and other conditions which surround or exist in the two nations. It is clearly a mistake for the United States under ordinary conditions to place any given imports of considerable consequence upon the free list without a careful consideration of the conditions under which such products leave the country of production, and the commercial relations which exist between such country and the United States, or without at least suggesting that a reciprocal advantage be given to products of the United States which may find a market

in such country. We have in the case of Brazil conferred upon that country an immense benefit by placing coffee on the free list, and obtained no equitable reciprocal advantage. We possessed the power to purchase by that act valuable privileges for American commerce with Brazil, and that power was surrendered without condition, and Brazil, so far from appreciating the liberality of the proceeding on our part, has not only maintained its high export duty on coffee, but increased its duties on imports ten per centum ad valorem. In a recent letter to this committee, the Secretary of State remarks that "If for example our legislation had authorized the placing of coffee on the free list when coming from any country which by treaty or special legislation gave to us a compensatory privilege not extending to all other nations, the domestic object of freeing a necessity of life from taxation would be doubly secured, and its price to the consumer cheapened beyond our power to cheapen it by the mere removal of a duty. Had such consideration been in view, for instance Brazilian coffee might now flow to our shores unburdened by either export tax or home duty, and we might be in a position to offer to Porto Rico, Java, and other coffee-producing districts a free market for their products in return for a corresponding benefit to be yielded by their Governments to us."

When in this connection we recall the fact that immediately upon the reduction and final remission of the duty upon coffee by the United States, the precise amount of the duty remitted was added to the price of coffee in Brazil, the value of the foregoing observations in their relation to future legislation in respect of either a reduction of duties upon imports of prime necessity which are not produced in this country, or of placing such articles on the free list becomes manifest. The extension of our commerce into new fields, the creation of foreign markets for American manufactures, may be effected largely by a sagacious adaptation of our tariff legislation in specific cases to the state of our commerce with the particular countries which supply us with necessary articles not produced by ourselves. Diplomacy may be in many cases. most efficient in creating new conditions under which reciprocal advantages to American commerce may result in the countries from which we buy largely and sell but little, and it is submitted that it may be wise generally, before extending our free list to importations of conse quence, to try, at least, the efficacy of negotiation for equitable and reciprocal benefits to ourselves.

As above indicated, the committee do not perceive that the duty of suggesting any further legislation than it has proposed "to place the United States on an equal footing with the most favored nations" devolves upon it at this time. The documents submitted herewith furnish information from which all who study them may draw conclusions of their own in respect of the questions embraced in the resolution. It is manifest that our commercial relations with the American countries south of us can be improved very greatly by intelligent diplomacy, and the requisite legislation by Congress which should follow. It is not deemed either necessary or expedient to further outline or elaborate the views of the committee in respect to what that diplomacy and legislation should be.

NOTE. The committee desire to acknowledge its obligation to the Secretary of State and to the chief of the customs division of the Treasury (Mr. James) for important documents, data, and memoranda furnished by them.

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