File No. 18659/58.
The Secretary of State to the French Ambassador.
Washington, November 18, 1909.
Excellency: Referring to the embassy’s note of August 28, 1909, containing the request that the Government of France be assured in the continuous enjoyment of the administrative provisions indicated in the diplomatic note which accompanied the American commercial agreement with Germany of June, 1907—which administrative provisions were gratuitously extended so far as applicable to [Page 256] all other nations, including France, importing goods into the United States—the department, animated by a sincere desire to encourage to the utmost friendly commercial intercourse between the United States and other powers, so far as may be found proper and possible under the existing laws of the United States and be consistent with the traditional commercial policy of this Government, has given this question the most serious and painstaking consideration and has submitted the questions involved to the Treasury Department for investigation and determination, since that department is the particular division of the executive branch of this Government which, under our laws, is primarily charged with the administration of customs acts.
As the result of this careful consideration by both departments, this department is able to make the following assurances regarding the administrative interpretations to be applied for the present to certain provisions of the new tariff law. However, it should, at the same time, be observed that in giving to the Government of France the assurances hereinafter set forth—assurances which this Government is most happy to be able to extend—it must not be overlooked that such assurances are in their nature entirely voluntary and gratuitous, and that the privileges thereunder are extended not because of any feeling upon the part of this Government that it is under any obligation to make such assurances, but solely because of the deep desire of this Government to give to the Government of France and to every other Government concerned every courtesy, consideration, and advantage which a due and proper regard for its own policies and laws permits it to bestow; and, further, it should not pass without notice that this Government is not intending to confer, and does not confer, either by the making of these assurances or by the actual application of the administrative provisions themselves, any such right or interest in such provisions as may not, when and as soon as the exigencies of the situation may seem to this Government to demand it, be freely changed and altered or abolished without thereby giving to your Government or to other Governments, in whose favor naturally these provisions, being general, will also be extended, any just ground for objection or complaint.
Concerning these provisions of the diplomatic note which were not general in their nature, but specific—that is, points E and F of the note—and which, as to point F, the department was pleased, upon the special request of the French Government, to extend to France, the department begs to state that it is of opinion that the American customs officials may continue for the present to extend to France the privileges provided in those sections, and that for the present the certificates of value as issued by the French chambers of commerce will, pursuant to the understanding above referred to and as specified in point F, be received by American customs appraisers as competent evidence of the value of the imported goods wherever such evidence is relevant to the question under investigation.
Concerning the other provisions contained in the German note, it was, as Your Excellency is aware, made clear by this department, at the time the provisions were extended to France and other nations, that points A to D, inclusive, were general in their character; that is, that they were merely administrative statements as to modifications to be thereafter uniformly and generally applied in the administrative [Page 257] interpretation of the customs laws of the United States at that time in force. Moreover, as Your Excellency is also doubtless aware, those provisions were, as a matter of fact, thereafter uniformly applied by American customs officials to imports from all nations, without reference to the existence or nonexistence of any specific conventional agreement to this effect between any of such nations and the United States, and, indeed, were actually applied to the imports of all countries without any such conventional agreement, except in the case of Germany and the Netherlands. In other words, these provisions were mere administrative rulings upon the meaning of an existing law, and, while they were made part of the commercial agreement with Germany, they were applied independently of it. It should also be recalled, as was fully understood at the time, that the extension of these privileges by this Government to other nations than Germany was not made because of any belief or feeling upon the part of this Government that such other nations could claim those privileges as matters of treaty or other right, but solely because this Government, considering that the privileges resulted from mere interpretations of an existing law and were not therefore necessarily a matter of treaty stipulation and bargain, was sincerely desirous of treating, so far as the law and our commercial policy would permit, all nations upon a basis of exact commercial equality.
But, inasmuch as these privileges were thus, in their essence, the result of mere interpretations of law, obviously they must, so far as a strict legal and logical aspect of the case is concerned, fall when the law to which they appertain ceases longer to have any force or effect. Therefore, the Dingley Tariff Law having been repealed, it is impossible for the Government of the United States to continue the administrative interpretations of that law.
However, this department, anxious to encourage a friendly commercial intercourse between itself and the Government of France, is of opinion that it will be possible for the Government of France still to receive for the present, as administrative interpretations of the new tariff law, the advantage of all those general provisions which were set forth in points B to D, inclusive, since there have been incorporated into the new tariff law provisions either identical with or substantially similar to those provisions of the old law to which these particular points relate.
In accordance with this view, it would seem that, inasmuch as section 8 of the old customs administrative act has been reenacted as subsection 8 of section 28 of the new tariff law, there would appear to be no reason why the interpretation placed upon the language of the old act, as provided in point B of the diplomatic note, should not be for the present continued as the interpretation of the provisions of the new law.
As to point C, which provides that in reappraisement cases the hearings shall be open and in the presence of the importer, it will be observed that the substance of this provision of the note has been incorporated in the new tariff law as part of subsection 13 of section 28, which in terms provides that in reappraisement cases “hearings may, in the discretion of the general appraiser or Board of General Appraisers, before whom the case is pending, be open and in the presence of the importer or his attorney.” For this reason it would [Page 258] seem that there could not be any serious difficulty concerning this point.
Finally, as to point B, there appears to be nothing in the new law which would prevent for the present the continued enforcement, as to matters involved therein, of the consular regulations provided for in that section as they have been heretofore administered.
It therefore appears that the substance of all the provisions of the diplomatic note above referred to, from B to F, inclusive, can for the present at least be continued in practically an unmodified form.
The new law does not, however, seem to permit the continuation of an unmodified and mandatory application of point A, since the law defines, so far as its own provisions are concerned, the meaning of “market value” in cases contemplated in that point in a way which may not at times be in harmony with the definition given to that term in point A of the diplomatic note.
You will understand in this connection, as has been already pointed out, that while the Executive authority of this Government may, and indeed must, interpret the meaning of the law relating to customs duties, yet this authority can but interpret; and therefore wherever the law itself specifically defines the meaning of a term it is not possible for the Executive to change or alter such definition. Since in this matter therefore the law has by its very terms and clear intention nullified at least in part the administrative provisions of section A of the German agreement, and while as to Germany and the Netherlands those provsions are nevertheless continued for a limited time under their specific agreements in accordance with the express provisions of the new tariff law as to the date of expiration of these and other agreements, the voluntary extension similar benefits to other nations with whom no specific agreements has been negotiated must (where, as here, inconsistent with the terms of the new law) cease and determine from the moment the old law falls and the new law goes into effect; and however willing the Executive of this Government might be to continue to extend to all countries the full benefits of all portions of the administrative features of the German commercial agreement, and however much the department may regret its inability to give assurances to this effect as desired by the Government of France, the express provisions of the new law are of such a clear and direct character as to render such a course impossible.
It may, however, be observed that while subsection 11 of section 28 of the new tariff act provides that in no case shall the market value “as defined by law” with reference to goods imported into the United States under circumstances contemplated by the provisions of point A of the agreement be less than the American wholesale price, yet, as you are well aware, the same subsection also provides that in determining the dutiable value which shall be placed upon such goods there shall be deducted from the American wholesale price, when so applied, certain necessary expenditures and commissions incurred in connection with the importations of such goods, and it would appear that wherever the question of the real value of the goods and the amount to be deducted as provided in this section is under discussion and investigation “the market value” as defined by point A of the diplomatic note might still be pertinent and admissible evidence upon the question of the real value of the goods [Page 259] and would receive consideration by the Treasury officials in their determination of the amount that should be deducted from the American wholesale price as an allowance for the necessary expenditures contemplated by the statute. Although, as is obvious, such evidence could not under any view be regarded as conclusive upon the questions involved in the determination of this dutiable value, it would certainly appear to be strongly persuasive now as formerly upon the point of the market value in the producing country. Concerning this point, it may be remarked that if the new law operates as did the old one it will doubtless be found that the certificates of the chambers of commerce contemplated in point F will be of particular value in connection with the determination of the foreign “market value” under this provision of the new law as just discussed, and in this connection I beg to suggest for your consideration the fact that as the old law and the administrative provisions applying thereto were administered these certificates were not considered decisive upon the question of the “market value” as defined by point A, and that they were not, as a general rule, introduced as evidence unless a reasonable doubt had arisen as to the correctness of stated values and upon the demand of consular or appraising officers, or at the request of shippers or importers who desired to verify invoice values and to corroborate their evidence. It would seem that this might, in considerable part, be the position and value of such certificates under the new law.
The department desires that in connection with this whole matter it should not be overlooked that questions regarding importations formerly affected by the provisions of point A of the German agreement and now and hereafter by the stipulations of subsection 11 of the new tariff law are relatively unimportant, since it would seem, from the records of the United States customs service, that heretofore such importations have been all but negligible, and, if this be true, it would appear that the questions now under discussion ought not to, and could not, under any fair and reasonable attitude, appreciably affect the commercial relations of the two Governments. It would therefore seem that all apprehension that the new law will inflict upon the commerce between the United States and France any substantial injury by reason of its effect upon importations falling within the purview of point A of the German agreement should be removed, and this view finds emphasis in a consideration of the fact that the general provisions regarding the determination of the market value of imports into the United States are, under the new law, substantially similar to those under the old law, as will be seen by reference to the provisions of subsection 18 of section 28 of the new law, which provides that under the circumstances named in that section the actual market value of an article shall be held to be the price at which such merchandise is freely offered for sale to all purchasers in the foreign markets in the usual wholesale quantities, such being the price which the manufacturer or owner would have received and was willing to receive for such merchandise when sold in the ordinary course of trade in the usual wholesale quantities.
Since these assurances as to the essential portion of the administrative provisions included in the German agreement appear to be of a character to meet substantially the requests made by Your Excellency’s [Page 260] Government, it would seem that nothing remains but to express to Your Excellency the satisfaction it affords me to be able thus to comply with the desires of your Government.
Accept, etc.,