611.003/1854
The Assistant Secretary of State (Castle) to Senator Reed Smoot
My Dear Senator: Your letter of August 27 regarding certain provisions of the pending tariff bill deemed contrary to existing treaties of the United States has been received.
There appear to have been no formal protests by foreign governments respecting the particular contingent duty provisos tentatively retained by the majority members of the Senate Finance Committee in paragraphs 1402, 1641, 1650 and 1687 of the pending bill. However, the inconsistency of provisos of this character and the most-favored-nation clause of treaties has on several occasions been informally commented upon by representatives of foreign governments.
May I suggest that the absence of formal protests would not, of course, relieve this Government of the obligation faithfully to execute the provisions of its treaties. Moreover, there is no assurance that if these provisos are reenacted and discriminating duties are applied thereunder to products of countries entitled by treaty to most-favored-nation treatment, formal protests would not later be received.
No protests appear to have been received regarding the provisions of 812 of the pending bill.
With reference to contingent duty provisos of the kind above referred to there are certain aspects of the matter to which you may wish to give further consideration. The policy represented by such provisos tends to place this Government in an inconsistent position in its relations with foreign countries on tariff matters. The provisos [Page 1004] in question do not apparently have in view protecting the domestic producers of the products affected from foreign competition in the American market but are apparently designed to facilitate the exportation of such products by bringing pressure to bear on foreign governments to reduce their duties thereon.
Our success in protecting American foreign trade from discriminatory treatment abroad depends on the extent to which we succeed in making precisely the opposite tariff principle prevail, namely, that the tariff being solely a domestic matter a country may impose whatever level of non-discriminatory duties it deems necessary for the protection of domestic producers and standards of living, without affording foreign countries any ground for complaint or justification for discriminations against its trade.
Opposing tariff theories are gaining considerable support abroad and departures from our declared policy on tariff matters thus assume particular importance at this time. The principle embodied in the provisos in question has recently received considerable attention abroad and was recently given prominence in the French and German press.
You may wish to consider whether the gains to American producers of the products covered by the provisos in question are sufficient to offset the disadvantages arising from the inconsistent position in which they tend to place this Government and their tendency to hamper this Department’s efforts on behalf of American exporters generally.
Sincerely yours,