The Minister in the Dominican Republic ( Russell ) to the Secretary of State

No. 492

Sir: Referring to your No. 288 of May 27 (File No. 639.003/5350), and to my reply thereto, No. 477 of July 6, I now have the honor [Page 166] to enclose herewith a copy of the Preliminary Report and Recommendations of the Tariff Commission,51 and a copy of the final instructions from the Military Governor to the Commission.

I have [etc.]

William W. Russell

The Military Governor of Santo Domingo ( Snowden ) to the Dominican Tariff Commission

1562–19 S–FF
Receipt is acknowledged of the preliminary report and recommendations submitted by the Commission under date of July 21, 1919.
After due consideration of the information contained therein, and of the recommendations submitted, the following final instructions are issued for your guidance; pertinent comment and observations are made on certain points which do not require instructions to the Commission.
Effective Date of Revised Tariff. The revised tariff will be promulgated to take effect January 1, 1920.
Import Tariff Rates. In the revision of the tariff on imports, the Commission will be guided by the following considerations, bearing in mind however, that these instructions are not intended to be so binding as to interfere with the judgment of the Commission in respect to different treatment that may appear necessary in the light of its experience and further study. The latitude here given appears especially necessary in view of the recognized difficulty of making precise adjustment of rates to 1920 or subsequent values due to the uncertain market conditions throughout the world.
Tariff Structure. The Commission will adhere to the present tariff scheme and structure, making only such changes as are necessary to harmonize the tariff with the instructions which follow, clear up obscurity of meaning, and include or specifically provide for certain articles or products which are at present assessed under “catch-all” paragraphs.
Basis of Assessment. It appears advisable that specific rates of duty should be made the basis of assessment whenever practicable; the continuance is desired, however, of advalorem, conditional ad-valorem, and compound specific and advalorem rates in the proportion and degree that may be found advisable in the judgment of the Commission.
Minimum and Maximum Yield of Revised Tariff. The recommendation for conditional abolition of export duties is approved. [Page 167] The Commission will therefore draft an import tariff designed to yield not less than $2,700,000 and not more than $2,900,000 per annum, making due allowance for probable increase in importations as a result of reduced rates, and basing the estimate of yield on the average volume of imports during the years 1917 and 1918.
Equalization and Reduction of Rates. First consideration should be given to the correction of absurd or prohibitive rates which result in unnecessary curtailment of imports and sacrifice of revenue. Taking as a basis the values prevailing during 1918, as nearly as they can be ascertained, it is desired that the new tariff be framed so that the highest import duties applied to any group or class of articles will be on a basis that will not exceed the equivalent of 30% of such average values, and that this maximum be restricted so far as possible to what are generally considered articles of luxury. From this maximum equivalent it is desirable that the rates be graduated downward for articles of comfort, utility or necessity in somewhat the following sequence: wearing apparel, textiles, household goods, pharmaceutical and chemical products, hardware, foodstuffs, means of transportation, building materials, etc., etc. Obviously, for reasons of expediency, variations are to be made from this order in the discretion of the Commission, particularly having in mind that no horizontal reduction in rates is desired but that it is preferable to allocate the gross amount of the contemplated reduction to a selected list of articles on which such reduction actually will accrue to the benefit of the consumer. The Commission further is authorized to maintain or merely equalize the existing rates on certain articles, whatever their class may be, which normally produce the greater portion of the total revenue, in the proportion and degree as may be found necessary to make up the total required revenue from customs duties on imports.
Free List. Bearing in mind the required revenue yield it is desired to include in the free list as many as possible of the following groups or classes of articles: machinery, machine parts, tools, containers and packing materials for national products, transportation media, building materials, products and appliances for the promotion of hygiene, and generally articles which contribute to the agricultural, industrial and social development of the country, and specifically as many as possible of those articles which are now imported in insignificant quantities on which it is found that the total duty collected during the year 1918 did not amount to $300.00.
Protection of Dominican Industries. It is desired to continue, moderately and equitably, protective rates for the benefit of Dominican industries; moderately and equitably should be understood to mean that no such rates should be fixed to the extent of placing an unwarranted burden on consumers or to wholly exclude [Page 168] from competition in this market of the same class of articles manufactured abroad.
Drawback Privilege. It is desired that appropriate provision be made in the tariff law for the refund of duties paid on imported products or articles which subsequently enter into completed articles of local manufacture and re-exported. Such provision should be conservatively and carefully worded and adequate safeguards provided against frauds and abuses.
Provision for Future Reduction of Rates. It is desired that an appropriate provision be incorporated in the tariff law so that the rates on certain specified articles or classes or groups of articles shall be automatically reduced effective on future specified dates in the event that the gross customs collections on imports in any calendar year shall exceed $3,000,000, and in the event that the total gross receipts under the new property tax law in any calendar year shall exceed $1,200,000.
Internal Revenue Tax on Imports. The recommendation that the Internal Revenue tax on imports be abolished is approved and the Commission is directed to include in the customs import rates such proportion as may be necessary to equalize them with the rates of excise taxation, the principle being that imported goods should not bear total taxes less than those imposed on the same class of goods produced locally.
Abolition of Other Taxes. Due note has been taken of the Commission’s recommendation that the stamp tax on customs, documents, tonnage dues, and certain export duties levied by Municipalities be abolished, and that wharfage dues be placed on a service-cost basis, that is to say a charge for services rendered instead of a tax for revenue. Those recommendations are approved, in principle. The reforms can be made effective January 1, 1920, if the amount of the income from the new property tax law is sufficient to offset the loss of revenue, and if assurance can be had that transportation companies will reduce freight rates correspondingly so that consumers may receive the benefit.
With its final report submitting the revised tariff law, the Commission is requested to submit:
The demonstration of probable yield of the new tariff which must be submitted to the government at Washington for approval in compliance with the terms of the American–Dominican Convention of 1907.
A draft of administrative regulations governing the inspection and certification of goods accorded the exemption from export duties.
A draft of such Executive Orders as may be necessary to cover the abolition of the Internal Revenue Tax on imports; [Page 169] and, for future consideration, the abolition of the stamp tax on customs documents, tonnage dues, Municipal Export duties, and placing the wharfage dues on a service-cost basis.
A draft of administrative regulations governing the application of the drawback feature of the new tariff.
Careful consideration will be given the recommendations of the Commission relating to: The possibility of obtaining preferential tariff treatment by the United States on importations of Dominican products; the adjustment of maritime and inland freight rates; the provision for bonded warehouse.
8 [9].
In concluding, the Military Governor desires to here express his sincere appreciation of the high service rendered to the government and to the Dominican people by the earnest and patriotic efforts of the members of the Commission to revise the customs tariff, which while supplying the necessary funds for the carrying out of the government’s activities, will enable a reduction to be made in the cost of articles of necessity to the poorer classes of our people.
Thomas Snowden
  1. Incorrect reference; should read 639.003/55.
  2. Not printed.