693.003/477: Telegram

The Chairman of the American Delegation ( Arnold ) to the Secretary of State

Japanese delegation trying to secure recognition of Shanghai customs valuations for years 1912–1916 inclusive as basis of valuations for a national debt [tariff] revision allowing for correction of inaccuracies in these valuations. American delegation unqualifiedly opposed to accept customs valuations on principle as customs admit they abound in discrepancies having been taken from importers’ application[s] without proper checking to serve for statistical purpose and not for assessment purposes and not for duty. If accepted as basis of valuation burden [of] proof of inaccuracies remain[s] with those protesting them; moreover, acceptance would embarrass those on Commission intent upon securing just consideration for all, including Chinese. Furthermore, their acceptance would create vicious precedent for future revision, penalizing honest declarations and forcing customs [to] create elaborate checking machinery, difficult [Page 652] under extraterritorial conditions and which might better be used for outright 5 per cent ad valorem tariff. American delegation strongly urges [Shanghai] market valuations as basis with customs valuations as guide rather than forced basis. It appears Allied Ministers agreed to support Japanese recommendation but apparently not thoroughly informed regarding true significance [of] customs valuations, difficulties attending corrections of these valuations and embarrassment which their acceptance would cause other members of Commission, nor do they seem to appreciate dangerous precedent which will be established by acceptance of customs valuations.