Papers Relating to the Foreign Relations of the United States, 1925, Volume I

500.A 4 e/449: Telegram

The Minister in China (MacMurray) to the Secretary of State⁷⁹

Peking, November 4, 1925.
[Received November 4—8 p.m.⁸⁰]

Conference summary number 4. Committee on tariff autonomy held its second [session] November 3d, all members being present.

The British delegate made the following statement:

“The British delegation, recognizing the inherent right of all independent and sovereign states to tariff autonomy, and considering that the fulfilment of the provisions of the treaty of Washington of February 6th, 1922, will constitute a step towards the attainment by China of such autonomy, formally declare that, in addition to the carrying out of the terms of that treaty, they are willing to submit to the ratification of their Government such further measures as may be devised and agreed upon at this conference, with a view to ensuring within a reasonable period the full realization of China’s claim to complete liberty of action in matters relating to her tariff.”

The Swedish delegate declared himself in accord with the British delegate’s statement.

Mr. Hioki, the Japanese delegate, presented the following proposal on behalf of the Japanese delegation:

• “1. The contracting powers, other than China, hereby solemnly declare their recognition of the principle that, as an inherent right of a sovereign state, China is to enjoy full autonomy with respect to customs tariff.
• 2. China shall recover the exercise of her tariff autonomy in the manner indicated in the following paragraphs.
• 3. China shall establish immediately a national tariff law with a schedule appertaining thereto, to be put into force within a period of three years and upon the abolition of likin by China, as declared by her.
• 4. During the interim period mentioned in the preceding paragraph, China may levy on articles of import a surtax as authorized in paragraph 2 of article 3 of the Washington treaty.
• 5. During the same interim period, China, on the one hand, and the other contracting powers, on the other, shall conclude severally treaties, which may incorporate reciprocal conventional tariffs to be applied on certain special articles if so desired by both parties. The new treaties so concluded shall continue in force for a certain definite period.
• 6. The national tariff law mentioned in paragraph 3 shall become operative, so far as the treaty powers are concerned, simultaneously with the enforcement of the treaties above mentioned.
• 7. The new treaties to be concluded shall supersede the existing treaties between China and the other contracting powers in matters relating to customs tariff.”

Following this presentation Mr. MacMurray, on behalf of the American delegation, proposed the following plan:

“The Chinese delegation have asked, in Dr. Wang’s speech at the opening session of this conference, on October 26, that the powers declare their respect for the principle of China’s tariff autonomy and agree to the removal of tariff restrictions contained in existing treaties. They have affirmed that it is the intention of the Chinese Government to abolish likin. They have asked that interim surtaxes be levied and that agreements which may be concluded at this conference shall be made effective at an early date.

Desiring to follow out as closely and as far as possible the programme which has been proposed by the Chinese delegation, and hoping that this conference may arrive at agreements which will make possible the realization of China’s aspirations and at the same time properly safeguard the legitimate interests of all powers and people who will be affected:

We are prepared, in accordance with the provisions of the Washington treaty, to authorize at once the levying of the surtax of 2½% and, as soon as the requisite schedules can be prepared, to authorize the levying of a surtax of 5% on luxuries.

We are prepared to proceed at once with the negotiation of such an agreement or agreements as may be necessary for making effective other provisions of the Washington treaties of February 6, 1922.

We affirm the principle of respect for China’s tariff autonomy and are prepared to negotiate a new treaty that shall give effect to that principle and which shall make provision for the abolition of likin, for the removal of tariff restrictions contained in treaties and for putting into effect of the Chinese national tariff law.

To carry out the provisions of the Washington treaty and at the same time proceed with the larger programme contemplated, we suggest:

I. That the powers, other than China, authorize the levying of a surtax of 2½% on all goods to be effective on February 1, 1926, and that there be prepared immediately a schedule of luxuries upon which a rate of 5% shall be authorized to be effective not later than July 1, 1926. The increased revenues thus derived shall be held by the Customs Administration subject to such disposition as may be agreed upon by this conference.

II. That provision shall be made for the levying of the full amount of these surtaxes at the land frontiers.

III. That a new treaty be made which shall provide:

1. Three months after the treaty here concluded shall come into force the Chinese shall be at liberty, as an interim measure, and until tariff autonomy shall become effective, to impose a new and uniformly enforced schedule of duties at rates from 5% (the present rate) to 12½% on imports and from 5% (the present rate) to 7½% on exports.

2. That from the same date, the rates of duty levied at all land frontiers shall be the same as those levied at the maritime frontiers.

3. That the increase of the customs revenues derived from putting into effect these provisions shall be accumulated by the Customs Administration and applied for the purposes hereinafter specified.

4. That likin and related internal taxes which may be agreed upon shall be abolished.

5. That for the purpose of abolishing likin, funds from the customs revenues’ shall be apportioned among the provinces in lieu of likin.

6. That if likin be collected anywhere in violation of agreements entered into for its abolition, the taxpayer shall be entitled to a refund from the Customs Administration of the full amount which he paid as likin.

7. That the increase in the customs revenues derived from the increase in rates of duty shall be devoted to the following purposes:

(a) Compensation to the provinces in lieu of likin;

(b) Payment of rebate charges;

(c) Refunding of the unsecured debts;

(d) Administrative expenses of the Central Government.

8. That, subject to the fulfillment of the provisions of articles 4, 5, 6, and 7 above, the present treaty restrictions on the Chinese tariff shall cease to be effective and the Chinese national tariff law shall come into force January 1, 1929, as suggested by the Chinese delegation.

9. That an effort be made to devise a plan whereby it may be reasonably expected that this treaty will go into force at an early date after signature.

10. If requested by a majority of the contracting powers before January 1, 1928, China shall convene on May 1, 1928, a conference of representatives of the contracting powers, for the purpose of declaring whether likin has been abolished and of negotiating any further agreements that may need to be arrived at with regard to the subject matter of this treaty.”

[Apparent omission. The quotation which follows is the declaration of the Chinese Government regarding the abolition of the likin system read by the chairman of the committee:]

“There is no greater detriment to the economic development of China than the likin system, since it constitutes a great obstacle to the wide distribution of goods and the expansion of commerce, and results in diminishing the productive power of the country and impoverishing the people. The sources of revenue and the purchasing power of a nation are both dependent upon the productiveness of its people. In China, this productiveness is now so seriously affected by this obnoxious likin tax that her sources of revenue are exhausted, her revenue decreased, her purchasing power weakened, and her international trade crippled.

In the history of economics, development began with the family and passed on to the community; then it extended to the nation and thence to the entire world. Today this development has reached the national stage and it is gradually approaching the international phase. Unfortunately in China, owing to the existence of this obnoxious tax, the output of raw materials and manufactured articles is insufficient to meet the demands of the nation and of the world—a state of things which is much to be deplored.

The Chinese people have for years been clamouring for the abolition of this tax, and the Central Government has created a Financial Rehabilitation Commission composed of representatives of the military and civil authorities of the whole country. It is fully recognized that no half-way measures would meet the situation and that, if the problem is not thoroughly dealt with, there would be no possibility of improving the welfare of the nation.

After mature consideration it has been decided to abolish the likin system, so that the economic welfare of the people as well as foreign commerce may alike be benefited, the foundations of national finance firmly established, and the international relations of the country likewise strengthened.

The Chinese Government hereby declares that the abolition of likin will be completely carried out not later than the first day of the first month of the 18th year of the Republic (1929).”

The committee then adjourned subject to the call of the chairman. The committee on provincial [provisional] measures will meet on Friday, November 6.

MacMurray

79. This telegram was received badly garbled. The quotations as here printed have been corrected, without indicating changes, on the basis of the minutes of the committee as published in The Special Conference on the Chinese Customs Tariff, pp. 87 ff.
80. Telegram in four sections.