693.9431/29

The Consul at Mukden (Myers) to the Minister in China (MacMurray)42

No. 192

Sir: As of possible interest, I have the honor to report upon the Japanese attitude toward the application of the new import tariff and export surtaxes at Antung and the provisional arrangements which have been made for the collection of duties from Japanese subjects at that port.

In the Sino-Japanese “Agreement concerning special duty reduction treatment of goods imported into Manchuria from or through Chosen, and exported from Manchuria to or through Chosen, by rail via Antung”, of May 29, 1913,43 it was provided that both export and import duties shall be levied at two-thirds of the Maritime Customs duty rates. It has been learned that when the new import tariff went into effect at Antung on February 1, 1929, the Commissioner of Customs at that port, a Japanese, was verbally informed by the Japanese Consul that under instructions from his Government the cancellation of the special duty reduction would be resisted and that the branch Customs Examination shed at the South Manchuria Railway station, Antung, would be closed if an attempt were made to collect the full duty. This attitude on the part of the Japanese Government elicited an instruction from the Inspector General at Shanghai allowing, for the time being, the special reduction on the old tariff rates but ordering the collection of the additional duties in full, an arrangement which apparently was acceptable to the Japanese Government. A similar instruction was also sent to the Customs Houses along the northern frontier of Korea, namely Lungchingtsun and Hunchun.

On February 25th in accordance with instructions from the Inspectorate General a notification was issued by the Custom House at Antung cancelling the reduction as from February 26th but the Japanese protests, and possibly threats, that followed had the desired effect. The Manchuria Daily News of March 1st reported that Commissioner of Customs Fukumoto called on Consul Okada this morning to inform him that a telegram had been received from the Inspectorate General again postponing the withdrawal of the special duty reduction.

According to The Manchuria Daily News of February 26, 1929, the Japanese protest which was filed at the Mukden Foreign Office by Consul General Hayashi is based on the ground that the proposed cancellation of the duty reduction is in violation of the agreement [Page 803] of May 29, 1913, mentioned above, and of the official memorandum exchanged between Japan and China relative to the one-third Customs duty reduction on the Chientao frontier, signed on May 3, 1919. It was also reported in this issue that the reduction was abolished on February 25th at the ports on the Chientao frontier, namely, Lungchingtsun and Hunchun, but no confirmation of this has been seen.

In view of the recognition of the principle of uniform customs duties on all land and maritime frontiers by Japan in the Treaty between the United States of America, Belgium, the British Empire, China, France, Italy, Japan, the Netherlands and Portugal relating to the Chinese Customs Tariff, signed at Washington on February 6, 1922,44 the Japanese appear to be endeavoring to force the Chinese to negotiate for the abolition of existing agreements providing for the special tariff reduction before giving effect to the above. In fact, the Japanese press of Japan have warned Japanese exporters that the preferential tariff is bound to be abolished “after reasonable negotiations in accordance with the Washington Conference.”

The cancellation of this reduction will probably greatly decrease shipments of Japanese cotton goods to central and northern Manchuria via the Chosen rail route unless, of course, the Chosen Government railways reduce freight rates proportionately. The Manchuria Daily News recently reported that for cotton goods from Osaka destined to Mukden the rail route with the duty reduction was about Yen 1.10 per bale cheaper than the sea route via Dairen but that the tables would be turned were the reduction abolished. It was pointed out that the loss of this freight would mean a reduction in freight receipts of the Chosen Government railways between Yen 400,000 and 500,000. The trade most affected by the abolition of the special tariff treatment would be exports of millet to Chosen which annually amount to about U.S. $20,000,000. Millet, it may be added, is imported into Chosen for food purposes, as a result of which large quantities of rice are released for exportation to Japan. In passing, it may be mentioned that the Japanese Chambers of Commerce at all the principal cities in Manchuria have filed strong petitions with their Government protesting against the proposed cancellation of this special duty reduction.

The following export surtaxes were to have been put into effect at Antung on February 16th:

Classes of Duty Amount of Surtax
Export Duty 2.5 %
Coast Trade Dues 1.25%
Duty on Foreign-style machine made goods 2.5 %

[Page 804]

At Dairen these surtaxes were to have been imposed on and after February 4, 1929, but due to the opposition of the Japanese Government they were withdrawn. Their imposition at Antung was also opposed under instructions from Tokyo, the nature of which according to The Manchuria Daily News (issue of February 13th) was as follows:—

“The Tokyo Government has regarded from the outset the new Export Surtaxes as an unlawful levy, and is, under such conviction, negotiating with the Nanking Government.

“The Northeastern Four Provinces being peculiarly related to Japan the new surtaxes shall be resisted by force if necessary.”

It was reported that the Japanese Consul at Antung informed the Chinese Authorities that Japanese exporters of Chinese produce would not pay these surtaxes on rail borne cargo and threatened to send such cargo through without Customs examination if necessary. Under the arrangement eventually arrived at, bona fide Japanese and Korean merchants do not pay these surtaxes on rail borne cargo, the regular export tariff duties (less the special deduction) being accepted by the Customs under protest. This arrangement does not apply to other nationalities nor to cargo exported by steamer. It has been learned that the export documents covering such cargo are chopped by the Bank of Chosen, possibly as a guarantee of the bona fide character of the exporter. It may be added that the export trade with Korea is almost entirely in the hands of Japanese and Korean merchants.

In this connection it may be mentioned that the Japanese merchants at Newchwang have also petitioned their Government to permit Japanese owned exports to be shipped from that port without payment of the surtaxes, in accordance with the precedent established at Antung. This port, now ice bound, will not be open before about the end of March and apparently no action on the petition has thus far been taken.

I have [etc.]

M. S. Myers
  1. Copy transmitted to the Department without covering despatch; received March 30, 1929.
  2. China, Imperial Maritime Customs, Treaties, Conventions, etc., Between China and Foreign States (Shanghai, 1917), vol. ii, p. 775.
  3. Foreign Relations, 1922, vol. i, p. 282.