No. 317.
Mr. Bayard to Señor Volio.

Sir: I have the honor to acknowledge the receipt of your note of the 19th instant, in which you advert to the statement published in the newspapers of this capital that, in view of the fact that various lines of foreign and Costa Rican vessels enjoy in the ports of Costa Rica a rebate of 5 per cent, in customs duties and certain other exemptions not granted to vessels of the United States in those ports, the Secretary of the Treasury has instructed collectors of customs in the United States to levy upon the cargoes of Costa Rican vessels entering ports of the United States the discriminating duties provided for in section 2501 of the Revised Statutes, as incorporated in the act of March 3, 1883, in respect to cargoes imported in the vessels of countries that discriminate against vessels of the United States. Assuming this report to be correct, you question the justice of the instructions upon the following grounds:

It is admitted that certain navigation companies, by virtue of a special concession, enjoy in the ports of Costa Rica a reduction of 5 per cent, in the payment of customs duties on goods imported in their vessels.

But this is justified as not being a discrimination against vessels of [Page 471] the United States, because the vessels above mentioned agree, in consideration of the reduction, to enter the ports of the Republic a certain number of times each month, to carry the mails of Costa Rica to and from foreign countries and to be at the disposal of the Government of Costa Rica, all of which together constitute a compensation for the privileges and exemptions; thus giving to the arrangement a reciprocal character, which places it outside of any treaty stipulations based upon favor. And it is further stated that the Executive of Costa Rica is authorized by law to conclude similar contracts with any company that may desire it, and that may be willing to take upon itself the same obligations as have been assumed by the companies with which arrangements have already been made.

While fully appreciating the ingenuity and force of the argument set forth in your note, I am compelled to say that this Department is not persuaded that the privileges and exemptions accorded to the lines of vessels in question do not constitute a real and substantial discrimination against vessels of the United States. Even upon the assumption, which I do not think it now necessary to discuss, that those privileges and exemptions do not violate the most favored nation clause in the treaty of commerce between the United States and Costa Rica, the discrimination is yet thought to be obnoxious to the treaties between the two countries, as well as to the act of Congress to which you have referred.

By Article VI of the treaty concluded between the United States and Costa Rica on the 10th of July, 1851, provision is made for an absolute equality of duties on any article being the growth, produce, or manufacture of the one country imported into the territories of the other country, whether the importation be in the vessels of the latter or of the exporting country. It is obvious that, by reason of the privileges and exemptions above stated, such an equality does not at present exist in the ports of Costa Rica.

It does not appear to the Department to be any answer to this objection, to say that the vessels of the United States may secure similar or the same privileges by assuming the same obligations. The stipulations of Article YI are not conditional. It could not have been contemplated by the contracting parties, in employing the unqualified language adopted by them, that either side would be at liberty at any time to suspend the operation of the convention in its own territories by exacting the assumption of such obligations as it might see fit to impose upon the citizens of the other party as a condition precedent to their further enjoyment of the guarantied equality. Still less could the contracting parties have contemplated that, in order to secure such equality, the citizens of either party could be required to agree, as is done in the arrangements now under consideration, that their vessels should be at the disposal of the other party. This is a condition which may not be regarded as onerous to the citizens of the country which exacts it; but it is not a condition to which other governments are likely to agree in order that their vessels may receive equality of treatment.

This Government is always glad to witness the prosperity of the Republics of Central America, and has sought in certain ways to ameliorate the conditions of commerce between its own and their territories; and it is regretted that it should be compelled to regard any of the means deemed by any of those Republics to be conducive to the development of its commerce and strength as a discrimination against vessels of the United Plates.

Accept, sir, etc.,

T. F. Bayard.