Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 6, 1880

No. 166.
Mr. Seward to Mr. Evarts.

Legation of the United States,
Peking, May 1, 1880. (Received June 14.)

No. 673.]

Sir: Referring to my dispatch No. 665, in which I stated that Mr. von Brandt had been charged by the diplomatic body with the duty of preparing a scheme for the control of transit trade outwards, I have now the honor to hand you herewith a copy of his memorandum and of the transit-pass (outward) rules proposed by him and revised by the foreign representatives in conference.

Mr. von Brandt is to place this scheme before the Tsung-li Yamên on the part of the diplomatic body.

I have, &c.,

GEOEGE F. SEWAED.

Inclosure 1 in No. 673.]

Mr. von Brandt’s memorandum.

transit trade outwards.

The Chinese Government has respectfully proposed measures to obviate the abuses which, according to their statements, were occurring in the transport of foreign-owned native produce from the interior to an open port for exportation.

These proposals not having been entertained by the treaty powers, the Chinese Government has of late proceeded to introduce restrictive measures altering the treaty stipulations, without seeking or obtaining the consent of the treaty powers, by refusing, in the first instance, to issue transit-passes for produce under the treaty regulations, and thereby attempting to force, and in some of the open ports forcing, the foreign merchant to submit to rules contrary to treaty and devoid of the approval of his own authorities.

Such rules were introduced at Chinkiang in 1877, and since then at Wunu, another set in 1878 at Pakhoi and Hoikow, and an attempt was made in 1879 to introduce the Chinkiang rules at Shanghai.

All these rules, taken as a whole, are highly objectionable, not only on account of the way in which they were put in force, ignoring the rights of the treaty powers, but especially because, not satisfied with remedying such abuses as the Chinese Government may perhaps rightly complain of, they are evidently aimed at removing the cognizance of and division in cases of fines and confiscations from the authorities in which they are vested by treaty and placing them under the exclusive jurisdiction of the Chinese authorities.

A comparison between the different sets of rules will further prove the existence, of a desire on the part of those who framed them of placing unnecessary restrictions on the transport of produce from the interior, even leaving the question of treaty rights aside.

rules in force at wuhu and chinkiang since 1877.	rules in force at pakhoi and hoikow since 1878.
In both sets of rules the principal condition under which alone transit-passes are issued is the signing of a bond by the merchant, in which he declares his adherence to the regulations at Chinkiang; this bond is to be signed by the merchant alone, at Pakhoi, with or without securities, at the option of the customs authorities. At the same time a lien is to be given upon the produce.

Penalty for non-fulfillment of the clauses.

chinkiang.	pakhoi.
Six times the export duty payable.	Ten to twenty times the export duty payable.

Time within which the transit-pass is to be used.

chinkiang.	pakhoi.
First draft, one year. Second draft, six months.	Kiung Chow, three months. Pakhoi, six months.

Time within which produce purchased under transit-pass must reach the last barrier.

chinkiang.	pakhoi.
Six months.	Kiung Chow, three months. Pakhoi, six months.

Time within which produce has to be exported.

chinkiang.	pakhoi.
Six months.	Three months.

Time within which produce has to be exported when transshipped to another port.

chinkiang.	pakhoi.
Twelve months.	Not mentioned.

Payment to he made in case of non-exportation of produce damaged in port.

chinkiang.	pakhoi.
Twice and a half the diminished export duty.	Payment of duty and like leviable at the barrier stations it has passed.

Transit-passes available for.

chinkiang.	pakhoi.
All produce.	At Kiung Chow, for sugars only. At Pakhoi, for sugars and cassia only.

Enforcement of penalties.

chinkiang.	pakhoi.
While payment is being enforced by the consul according to law, no new transit-passes to be issued, and all passes already taken to be canceled.	So long as such penalties remain unpaid no new transit-passes to be issued, and all passes already taken to be canceled.

The last rule is especially significant. While in the rules issued in 1877 the consu is at least to be applied to to enforce the payment of the bond, he is quietly but completely set aside in those of 1878; the Chinese authorities trusting to their refusal of granting new transit-passes to enforce obedience to their regulations.

It will be seen from the above how very desirable it is to put an end to the arbitrary proceedings of the Chinese authorities, and to have the rules now in force at some ports so remodeled as to suit the convenience of trade and the stipulations of the treaties, while at the same time protecting the fiscal interests of the Chinese Government.

The necessity of doing this without delay suggests the idea of proposing to the Chinese Government the adoption of a temporary set of rules to be in force on trial while the negotiations on the question of inland taxation continue, such rules being based as much as possible on the rules in force at Chinkiang and comprising those questions of coast trade duty to be levied on produce, duty free, carried coastwise, and of goods brought or manufactured in the open ports.

His colleagues having in principle agreed to such a proposal, Mr. von Brandt has the honor to submit to them inclosed a set of rules drawn up in accordance with the above-mentioned views.

Peking, April 22, 1880.

[Inclosure No. 2 in No. 673.]

provisional rules.

I.

For the issue and surrender of transit-passes (outwards).

Rule I. All outward transit-passes which have been issued before the________, 1880, and which shall not have been availed of for the purchase of produce and exchanged for a transit certificate before the 31st day of December, 1880, will be forthwith canceled by the superintendent of customs, and the corresponding transit certificates recalled, and all goods which the holders of such canceled passes may attempt to bring down under them will be confiscated.

Similarly, all transit-passes issued subsequently to the ____, 1880, and not used within one year from the date of issue, will be canceled at the expiration of such year.

Rule II. Henceforward all transit-passes which may not have been availed of for the purchase of produce as above within one year from the above time will be forthwith canceled by the superintendent of customs, and the corresponding transit certificate recalled, and all goods which the holders of such canceled passes may attempt to bring down under them will be confiscated.

In any cases of loss of a transit-pass by theft or otherwise, the merchant to whom it was issued must report the loss at once to the customs of the port, that the pass may be canceled and the corresponding transit certificate recalled.

In case of unlawful use of such cancelled transit-pass after its loss has been reported, the original holder shall not be held responsible.

Rule III. Produce purchased under transit-pass must arrive at the barrier nearest the port within six months (one year for Tientsin) from the date of the exchange of the transit-pass for a transit certificate; in default of so doing the goods will be liable to confiscation.

Should, however, produce be detained en route, either by the action of barrier or other officials, by force majeure, or by unforeseen accident, such as floods, rebels, or the like, and be unable in consequence to arrive within the time allowed, the circumstance of such detention must be reported at once to the authorities on the spot, and to the superintendent of customs at the port, who will grant such an extension of time as the circumstances of the case may require. The goods meanwhile will not be liable to confiscation, unless they fail to arrive at the port within the extended time allowed.

Rule IV. On the arrival of the produce at the barrier nearest the port, an application giving the full particulars of the packages and their contents must he sent in to the commissioner of customs, who will issue a permit to allow the goods declared to pass the next harrier. The produce on arriving at the port must he brought direct to the customs officer for examination and payment of transit dues, which being done, the goods may be stored in the merchants’godown.

Any merchant failing to comply with this rule the goods will be liable-to confiscation.

Rule V. Produce brought from the interior under transit-pass must be exported to a foreign port or to another treaty port for reshipment to a foreign port within six months from the date of its arrival at the port, except goods for the northern ports, for which the customs authorities will grant the necessary extension of time. If the produce be not exported within the said period, the merchant shall pay to the customs a sum equal to two and a half times the export duty, and be released from the obligation to export.

When the produce is shipped to another treaty port for subsequent reshipment to a foreign country, the merchant must produce a certificate from the customs at the other port to the effect that the goods have been shipped to a foreign country within twelve months of their arrival in that port, or in default, in addition to forfeiting the half duty deposited, he shall pay to the customs a sum equal to an additional export duty, and be released from the obligation to export.

Rule VI. A merchant desiring to repack prior to shipment the native produce which he has brought down under transit-pass, must first make application to the customs, who, having verified the identity of the goods, will issue a “permit to repack,” and will depute an officer to repair to the godown and superintend the repacking.

Any unauthorized repacking of goods, or willful alteration of their contents by the substitution or addition of other goods, will render them liable to confiscation.

Rule VII. In cases of alleged damage and deterioration in intrinsic value sustained, by goods while at the port, the customs, on the application of the merchant, will depute an officer to examine the goods and appraise the actual amount of damage sustained. A deduction in the amount of export duty payable will be made in proportion to the ascertained damage: and should the merchant desire to be released from his obligations to export such damaged goods, his obligation will be canceled on his paying to the customs a sum equal to two and a half times the diminished export duty.

Rule VIII. Should a merchant be about to give up his business and leave the port, he may return through his consul for immediate cancellation all transit-passes which have been taken out by him and not yet used. Should there be at the time of his closing business any goods which have been already bought in the interior under transit-pass or passes taken out by him, but which have not yet arrived at the port, or which are awaiting shipment to a foreign country, at this or another treaty port, the person to whom such goods or the disposition thereof may be transferred will be held responsible for the observance of these rules.

Rule IX. In the event of its becoming necessary under these passes to recover from a merchant a fine, the Chinese customs authorities shall be at liberty either to seize the goods or to exact a bond for the amount claimed. In case the goods are of a perishable nature a bond shall always be taken.

In all cases of fine or confiscation arising under these rules the same procedure will be followed which is laid down in the rules for joint investigation in cases of confiscation and fine by the customs authorities of 1888.

If a fine awarded remains unpaid, no new transit-passes will be issued to the merchant, and all passes already taken out by him may be canceled by the superintendent, and the corresponding transit certificates recalled.

II.

For the shipment coastwise of duty-free native produce.

Rule. Duty-free native produce carried coastwise pays no export duty at the port of shipment; and at the port of entry, coast-trade duty, the mount of which is declared to be 2½ per cent, ad valorem.

III.

For the exportation of goods bought or manufactured in the port.

Rule I. Produce bought at the port pays on exportation no other duty than the export duty.

As bought at the port, all produce is to be considered not brought by a foreigner under transit pass from the interior.

Rule II. Goods manufactured at the port from native produce brought from the interior under transit-passes, or otherwise, shall pay no other duty on exportation than the export duty. To be amended, if necessary, by the following addition, plus the difference, if any, between the transit duty paid on the raw material and the transit duty which would have had to be paid had the produce been brought from the interior in its manufactured form.

All the rules under heads I-III to be provisional ones, and to remain in force until the 31st of December, 1831. Should, however, no objections be raised against them, they may remain in force from year to year unless having been denounced by one of the contracting parties before the 1st of July of the preceding year.