The Minister in China (MacMurray) to the Secretary of State
[Received May 12—2:37 p.m.]
[Conference] 37. British, Japanese and our advisers have agreed upon draft of protocol implementing Washington Treaty which is being distributed among the advisers of other delegations today with a request for meeting of advisers of all delegations tomorrow morning to consider the subject. Following is the draft of protocol:65a
[Agreement.] “In the exercise of authority vested in them by their respective Governments, and for the purpose of giving effect to the provisions of article 3 and the second paragraph of article 6 of the treaty relating to the Chinese customs tariff, signed at Washington on February 6, 1922, the representatives of the powers assembled at this Conference, to wit (blank) hereby agree that, beginning 3 months from the (blank) day of (blank) 1926 (the date of signature of the present agreement) the Chinese Government shall impose and collect surtaxes on dutiable imports as follows: On all commodities listed in the schedule hereto annexed a schedule [surtax] equal to the amount of the regular duty prescribed in the revised import tariff for the trade of China at the time being in force (that is, either the specific duty or the 5 percent ad valorem provided in that schedule), and on all other dutiable commodities a surtax equal to one-half of the regular duty prescribed in the revised import tariff for the trade of China at the time being in force; and that these surtaxes shall be levied uniformly at all land and maritime frontiers;
And do hereby agree that these surtaxes shall be collected by the Maritime Customs Administration and that, until this agreement shall have been superseded or modified by provisions of a later treaty [, treaties,] or agreements, such as have [been] and are under consideration at this Conference, the additional customs revenue which will accrue from their levying shall be applied as follows:
1. As an immediate measure in preparation of the way for the speedy abolition of likin, the collections taken in payment for transit passes (which passes shall continue to be issued as heretofore at the same rates) shall be distributed through the Maritime Customs Administration to the provincial authorities in proportion to the amount of the transit duties collected on the merchandise destined to, or passing through, or originating in the various provinces, respectively, under the cover of the transit passes.[Page 751]
For the loss occasioned by this action there shall be taken from the surtax collections the sum of $5,000,000 per annum, and this sum shall be credited, by way of compensation, to the ordinary customs revenue.
2. As a further measure in preparation of the way for the speedy abolition of likin and as a step looking toward the abolition of export duties, both on foreign and on domestic trade, China will, simultaneously with the going into effect of the above-mentioned surtaxes, abolish the tax known as the ‘coast-trade duty’, that is, the half duty at present charged on the reimport of goods of domestic origin which, after having been exported from one Chinese port, are imported into another Chinese port.
For the loss occasioned by this action there shall be taken from the surtax collections [collection] the sum of $4,000,000 per annum, and this sum shall be credited, by way of compensation, to the ordinary customs revenue.
3. From the surtax collection there shall be remitted monthly through the Maritime Customs Administration to the Ministry of Finance the sum of $750,000 to be used solely for the current administrative expenses of the Government.
4. After the purposes specified above shall have been served, the remaining portion of the proceeds from the collecting [collection] of the surtaxes shall be held by the Maritime Customs Administration, free from all encumbrances, as an accumulated fund to be applied later to the liquidation of the unsecured and inadequately secured debts of the Chinese Government. Disbursements shall be made from this fund in accordance with the provisions of the treaty, treaties or agreements concluded at this Conference, or, if such treaties [treaty], treaties, or agreements shall not have come into effect within 2 years after the date of the signature of the present agreement, in accordance with the principles which may at that time be agreed upon.
5. The proceeds from the collection of the surtaxes shall be deposited in such banks, in such manner, and in such proportions, as are specified in the resolution hereto annexed.
It is understood that the foregoing agreements for the disposal of the additional customs revenue which will accrue from the levying of the surtaxes are adopted in the expectation that there will be concluded a new treaty, treaties or agreements, as indicated above, in which provision shall be made for the levying of such graduated import duties as will yield a further increase in the customs revenue with a view to serving purposes under discussion, and that these arrangements will be superseded by the provisions of such treaty, treaties or agreements.
It is furthermore understood that, in view of the essential importance of the Chinese railways in the promotion of China’s prosperity hence [and the] rehabilitation of her credit which are fundamental purposes of this Conference, China will take the earliest possible steps to restore the commercial efficiency of her railways and to ensure that the financial obligations of the railways be adequately served from railway revenues.”
- Corrected on the basis of despatch No. 5117, Nov. 1, 1940, from the Ambassador in Japan (file No. 026 Foreign Relations/1511).↩