File No. 11274/3.
The Secretary of State to the Spanish Minister.
Washington, January 4, 1909.
Sir: I have the honor to acknowledge the receipt of your note of December 19 inquiring whether this Government is disposed to grant the extension of the benefits which accrued to Spain by Article IV of the treaty of Paris, as requested in Señor Pastor’s note of October 30, 1908.
Circumstances prevented earlier response to Señor Pastor’s note. He refers therein to the early termination (on Apr. 11 next) of the 10-year period accorded to Spain by the treaty of Paris for equality of treatment with the United States for ships and merchandise entering the islands, and he inquires whether the Federal Government is willing to extend this term for a reasonable period and continue the duties of section 311 of the present Philippine tariff in favor of Spanish [Page 548] exportations to the islands, and suggests an amendment of section 310 of that tariff in the sense of a reciprocal arrangement applicable to the trade in still wines exported by Spain to the Philippine Islands, and offering to return a minimum rate of tariff for Philippine merchandise entering Spain.
The provisional military administration of the islands was formerly charged with the raising of revenues for the insular government. The present tariff was framed by the Philippine Commission and enacted by Congress. It is local and special, bearing no relation to the tariff of the United States proper. For obvious reasons, and particularly to avert intricate international questions under the most-favored-nation clause of foreign treaties, the tariff was framed on a single basis, not containing or contemplating differential treatment of the United States, or of any other nation. The merchandise entering the Philippines from the United States pays the same duties as are paid upon entries from any and every country. In this way Spanish merchandise has enjoyed the benefit of the stipulation expressed in Article IV of the treaty of Paris of December 15, 1898—being admitted to the ports of the Philippine Islands on the same terms as merchandise and ships of the United States.
Although the treaty stipulates for the continuance of that equal treatment for 10 years from the date of the exchange of ratifications—that is, until April 11, 1909—it does not follow that such equality is to cease after that date. Under existing circumstances, equality of treatment continues as long as a single tariff applies in the Philippine Islands; and until a new tariff system shall be framed for the islands with the approval of the Congress, there is no occasion for any formal extension of the 10-years’ privilege stipulated by the treaty. On the contrary, formal extension by conventional arrangement for any certain period would be, as matters now stand, inexpedient, because tending to limit the freedom of the national Congress in considering and establishing future customs relations between the United States and the Philippine dependencies.
The determination of those relations, besides being necessarily a part of the organic legislation to fix the status of the Philippine Islands and provide for their administration, is closely allied with the pending problem of recasting the Federal tariff. It will be for the Congress to decide whether the islands shall come within the general system, or have a distinct customs tariff, framed to meet their local needs and providing for differential treatment of commercial interchanges between the islands and the United States proper. The Philippine Commission could not deal with such a question on a reciprocal basis—that is, it could not grant special favor to imports from the United States in exchange for favor to the products of the Philippines entering the United States. It could deal with only one of the dual phases of the problem and it could not well deaf with that single phase without prejudice to the larger action of the Congress.
Hence, while it is not practicable or expedient to covenant with Spain for the extension, for a specific—or as the note of October 30 styles it, a reasonable period, of the equal treatment now accorded to Spanish merchandise in the Philippine ports of entry, it is seen that this treatment continues after the 11th of April until such time as a new tariff system sanctioned by the Congress may be established [Page 549] in the islands whereby differential treatment of the products of the United States may be accorded.
Your Government’s second proposition invites a reciprocal agreement whereby the favored specific duties scheduled in section 3 of the current tariff act shall be assessed in the Philippine Islands upon the fine still wines now classified under section 310 of the insular tariff, in return for the extension by Spain of the benefits of her minimum tariff to products of the islands entering peninsular ports.
Without any disposition to question the desirability of some such reciprocal understanding, beneficial alike to Spain and to the Philippine Islands, the Government of the United States is without authority, under section 3 of the current tariff act, to consider such an arrangement. That section applies only to certain enumerated articles when dutiable under the existing Federal tariff, and the permitted reduction from the general tariff rate bears precise relation thereto. This Government could not find under section 3 authority for the arbitrary substitution of other specific differential rates than those provided by the insular tariff. I am therefore, with some reluctance, constrained to pass by the friendly proposal of the Spanish Government in this regard. It is proper, however, to express this Government’s high appreciation of the spirit in which this mutually beneficial suggestion is made, and I am not without hope that the pending consideration by Congress of the administrative and revenue questions involved alike in framing an organic law for the Philippines and in revising the Federal tariffs, may result in the bestowal upon the Executive of authority to enter into larger reciprocal relations of trade with friendly countries.
Be pleased, etc.,