Mr. Hengelmüller to Mr. Sherman.

[Translation.]

Mr. Secretary of State: Pursuant to instructions, I have the honor to invite your attention to the provisions of the tariff bill now before the Senate of the United States which relates to the duty on sugar, and conflict, on the one hand, with our right of the most favored nation treatment, and on the other threatens to heavily damage Austro-Hungarian exports.

The above-mentioned bill provides, namely, in Schedule E, No. 206, that sugar exported from such countries which grant a direct or indirect bounty shall pay, apart from the actual duty upon entrance set forth in No. 206, an additional duty to the amount of the bounty granted, so far as this bounty shall be in excess of any internal tax collected upon such sugars or upon the raw materials (beet or cane) used in their manufacture.

The question of the discriminating tariff treatment against our sugar has already been the subject of negotiation between the Imperial and Royal Government and the Government of the United States. The Imperial and Royal Government had looked upon the additional duty of one-tenth per pound upon sugar coming from Austro-Hungary provided for in the tariff act of August 28, 1894, as a violation of the right of the most favored nation granted to her by Article V of the treaty of 1829, and instructed me on that occasion to protest against it.

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This instruction I had the honor to carry out in a note of January 3, 1895, to Secretary Gresham, and I therefore consider it unnecessary to repeat here the views advanced therein which my Government entertains to-day in their entirety. On the other hand, I beg to call attention to the fact that the Government of the United States has recognized our right to protest against any additional duty upon our sugar which is based upon our export bounty, as it will appear from the report of Secretary Gresham to the President, of October 12, 1894, and that the President in his annual message of December, 1894, recommended to Congress the repeal of the additional duty in question.

The bill now pending in Congress has in view a much greater increase of the discriminating additional duty on sugar, and threatens, therefore, our trade with the United States with new injury. In view thereof the Imperial and Royal Government has instructed me to call the attention of the Federal Government to the disposition of these proposed provision; to infringe upon treaty obligations, and in connection therewith to express the hope that it will lend its assistance in order to enlighten Congress upon the existing treaty obligations between our countries, and to prevent that the proposed increase of the additional duty upon our sugar, against which the Imperial and Royal Government must further protest, should become a law.

Accept, etc.,

Hengelmüller.