The Commercial Attaché in China (Arnold) to the Legation in China57

The China Tariff Valuations Commission was instituted by an agreement between the Chinese Government and the treaty powers concerned.
The special expenses for the work of the Chinese members of this Commission were defrayed by allotments, from the Custom’s funds.
The Chinese members of the Commission assembled in Shanghai in August, 1926, prepared to draft a schedule of valuations to supersede those in the present tariff which have been in force since January the seventeenth, 1923,58 and which represented the work of [Page 373] a similar Commission which met for the purpose April to October, 1922.59
Probably as much as eighty per cent of the revenues derived from the import tariff are from a five per cent tax on commodities bearing a fixed value basis, the remainder being from a five per cent assessment on an open ad valorem basis.
Twelve treaty powers60 appointed delegates to confer with the Chinese members of the Commission in regard to the drafting of the proposed new schedule of valuations. Subsequently two of these treaty powers61 were obliged to withdraw their delegates upon notice being served upon them by the Chinese Government that their treaties with China had expired.
The sessions of the Commission were convened early in September, 1926. At the first meeting, the Chinese announced having decided upon the wholesale Shanghai market values for the year 1925, as forming the basis for the valuations for the proposed revised import schedules.
The American and French delegates, as also those of certain of the other powers, agreed to the acceptance of the Chinese proposal. The Japanese and British delegates offered counter-proposals involving the use of other periods than the year 1925.
Several informal meetings were held after the meeting in September, but it was not until March the ninth, 1927, that the Japanese and British delegates finally accepted the Chinese original proposal.
Following the acceptance by all the delegates of the Chinese proposal, re the basis of values, the Commission proceeded to a drafting of schedules of valuations. This work was in progress when on March the twenty-fourth, the Nationalists took possession of Shanghai, thereby making it necessary for the Chinese members of the Commission, who were functioning under the Peking Government, to return to Peking.
The Commission resumed its labors in Peking, sending the proposed schedules of values as they were completed, to the foreign delegates at Shanghai, with a request that within certain designated periods of time, the delegates send to the Commission any suggested counter-proposals re values.
June the tenth was fixed by the Chairman as the latest date upon which all counter-proposals should be mailed to the Commission at Peking, after which all the foreign delegates would be invited [Page 374] to come to Peking and discuss the proposed schedules of valuations and the counter-proposals.
At the request of the delegates of one or two of the foreign powers, the time for submitting counter-proposals was extended to July the tenth, and later to August the first.
The diplomatic representatives of the treaty powers concerned, agreed to the resumption of the sessions of the Commission at Peking, and upon the request of Japan, the date for the convening of the Commission at Peking was postponed until December the first.
On December the first, the Tariff Valuation Commission, reconvened at Peking, headed by Ch’an Lun, the chairman originally appointed to this position.
On December the sixth, the Commission held its first actual business meeting in Peking. The schedule of valuations submitted for discussion at this meeting, covered the metals group in the tariff. There are thirty-six schedules covering the six hundred items of the Chinese tariff.
Although the Japanese delegate stated some months ago in Shanghai that he had but few counter-proposals to offer, yet since coming to Peking he has stated that his counter-proposals on valuations will aggregate upwards of a hundred. The British is probably next in line in the number of counter-proposals, and the French third. The American delegate has no more than fifteen or twenty to offer, of which but a very few are of real importance.
The American delegate suggested at the meeting of December the sixth, that the foreign delegates waive the consideration of such counter-proposals as fall within a certain percentage of the values as proposed by the Chinese. Whether this margin be ten, fifteen or twenty per cent could, he suggested, be agreed upon by the Commission. The Japanese delegate objected, contending that his country’s goods are cheap and inferior, hence each item must be considered on the basis of the counter-proposals made.
As many of the Japanese counter-proposals differ as much as from thirty to fifty per cent from the values as proposed by the Chinese, there appears to be very remote chances for an agreement on some of these. The Chinese claim the prerogative of putting an item upon which they cannot reach an agreement as to value, upon an open five per cent ad valorem basis. The Japanese delegate appears to be disinclined to admit this prerogative, on the part of the Chinese.
The American delegate, supported by his foreign colleagues, protested against the ruling of the Chairman that re-classifications be not permitted during this revision. The American delegate contended that a proper revision of valuations could not be effected without in some cases making alterations in classifications. The Chairman agreed to reconsider his ruling.
It is patent that the statements of importers regarding valuations of import commodities are being given more consideration, and are being made the basis of counter-proposals by certain of the delegates to a greater extent than is in the interest of an equitable revision of the tariff schedule valuations.
Julean Arnold
  1. Copy transmitted to the Department by the Minister in China in his despatch No. 1312, Dec. 14, 1927; received Jan. 23, 1928.
  2. For the schedules as revised by the Tariff Valuations Revision Commission in 1922, see China Year Book, 1923, pp. 525 ff.
  3. See Foreign Relations, 1922, vol. i, pp. 816821.
  4. Belgium, Denmark, France, Great Britain, Italy, Japan, the Netherlands, Norway, Portugal, Spain, Sweden, and the United States.
  5. Belgium and Spain.