693.003/730
The Secretary of State to the Tobacco Merchants Association of the United States
Gentlemen: The Department has received your letter of May 8, 1923, reporting the levying by the authorities of the Province of Chekiang of a tax of 20% ad valorem upon cigarettes and requesting that steps be taken to effect the abrogation of this tax, which is alleged to be contrary to the treaties between China and the United States. You state that this tax is levied in treaty ports as well as in other parts of the Province.
The existing treaties provide for a tariff of 5% ad valorem on American goods imported into China from the United States, or upon goods imported into China by American citizens. If such goods are shipped beyond the treaty ports into the interior of the country, the local transit taxes, known as “likin” may be commuted by the payment of a further half duty, or 2½% ad valorem. The Chinese Government is not considered to be legally entitled to assess any greater or other duties thereon.
The contravention of treaty rights of which you complain has already been brought to the attention of the Minister in Peking, who, in his despatch No. 1457 of April 4, 1923,4 has reported that the authorities of Chekiang Province during the past winter proposed [Page 590] to levy a tax of 20% ad valorem on all cigarettes and cigars sold in that province. Upon the receipt of this information from the Consul-General at Shanghai, the Minister addressed a communication to the Chinese Foreign Office, protesting against these regulations as being in violation of the treaty rights enjoyed by American merchants in conveying their products into the interior under transit pass. On March 25, 1923, the Minister received a telegram from the Consul-General at Shanghai, stating that the tax had become effective; whereupon the Minister addressed a further note to the Foreign Office, requesting that immediate steps be taken to secure the cancellation of these regulations. Although the Department has not as yet been informed of the result of these representations, it believes that both the Minister and the Consul-General at Shanghai are making every effort to obtain the early abrogation of these regulations. At the same time, the fact must be recognized that, in many parts of China, including the Province of Chekiang, the authority of the Peking Government is not paramount and an increase of interference by the provinces with the treaty arrangements in regard to the taxation of foreign goods must be borne in mind as a possible contingency.
A copy of your letter is being forwarded to the Legation at Peking for such further comment as the Minister may be able to make on the subject.
I am [etc.]
Chief, Division of Far Eastern Affairs
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