Mr. Wharton to Mr. Reid.
Washington, September 22, 1890.
Sir: Your dispatch No. 225 of the 21st ultimo, in relation to the proposed increase of French import duties on petroleum oils, has been read with regret.[Page 293]
The increase, while comparatively small, amounting to but 3 francs on crude oils and 1 franc on refined oils for each 100 kilogrammes imported, involves a positive and direct discrimination against the United States and in favor of Belgian products until January 1, 1892, in conformity with the treaty between France and Belgium which fixes the current rates of duty, and, indirectly, a like discrimination in favor of all countries having the most-favored-nation clause in their commercial treaties with France, under which they may claim the exemption accorded to Belgium. This favored-nation treatment inures, in particular, to the benefit of Russia.
This increase of duties appears to have been proposed with full knowledge of the fact that it would discriminate against the United States alone of all the petroleum-producing countries. It is sought to be palliated by Mr. Ribot’s statement that it is merely a temporary discrimination, and that, after all, it will not seriously affect commerce between the United States and France, because France does not import crude oils from Russia, they being unsuitable for illuminating purposes, and because the discrimination of 1 franc for each 100 kilogrammes against the United States on refined oils is but a slight disadvantage. He leaves out of sight the fact that the crude oils furnish lubricants and other products largely used in industry, as also that the additional charge of 4 per centum of the present duty on the refined oils represents, in the close competition of freightage rates, a large proportion of the narrow margin of commercial profit. The refined oils of the United States go to their European markets under an initial disadvantage of 3,000 miles of ocean transportation as compared with the products of refineries close at hand; and, while their superior quality and low price may overcome the natural impediment of distance, a positive surtax, however small in appearance and temporary in application, is, in fact, onerous.
Experience shows that it is no easy matter to restore to its normal channels a trade which has suffered even a brief derangement. The object in view in more nearly equalizing the import duties on crude and refined oils, which, as stated by Mr. Ribot, is “to check the fraud which consists in importing, under the name of crude petroleum, mineral oils almost completely refined, which need only a simple distillation to be used for lighting purposes,” is doubtless legitimate from the domestic point of view; but the statement is in itself unjust, because ignoring the remarkable purity of the natural product of many American oil wells, which, by facilitating the refining process, gives to the exported products of the United States a singular commercial value. But, however expedient the change may be deemed in protection of the domestic revenues and industry of France, it is none the less regrettable that the means adopted by way of remedy should not only strike directly and solely at the imported production of a country allied to France by so many ties of friendship and intercourse, but should in some degree be based upon an imputation of fraud on the part of our exporters. In the natural course of trade it is to be expected that the French refiners will purchase in foreign markets those crude natural oils which most readily and cheaply adapt themselves to distillation.
I am, etc.,