693.11245 Foster-McClellan Co./1

The Minister in China ( MacMurray ) to the Consul General at Shanghai ( Cunningham )95

Sir: I beg leave to acknowledge the receipt of your despatch No. 6015, of June 20, 1929,96 regarding the seizure of merchandise belonging to the Foster-McClellan Company by the Revenue Stamp Bureau. Your despatch reads in part as follows:

“… it is not clear whether the old procedure governing the shipment of merchandise from treaty ports existing prior to the granting of tariff autonomy is also a matter over which the Chinese authorities now have complete control without reference to the foreign powers concerned. In other words, have the Chinese authorities autonomy not only as regards tariff rates but also as regards the procedure governing the shipment of such merchandise to the interior, after the import duties have been paid?”

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In view of the fact that in Article I of the Tariff Treaty of July 25, 1928,97 it was agreed that

“All provisions … relating to rates of duty on imports and exports of merchandise, drawbacks, transit dues and tonnage dues in China shall be annulled and become inoperative, and the principle of complete national tariff autonomy shall apply …” (Note: Underscoring is mine.),

the treaty provision quoted appears clearly to apply to the goods in transit seized by the Stamp Tax Office. In the absence of definite discrimination against the American firm, you should accordingly refrain from any protest in reference to the imposition of the tax or the seizure of the goods.

In your letter of June 20, 1929, to the Foster-McClellan Company at Shanghai,98 you state in part that

“It is evident, therefore, that unless you secure either an Exemption Certificate or an Inward Transit Pass there will exist no grounds upon which this Consulate General or the Legation can base a protest to the Chinese authorities for levying such additional taxes as they may see fit. The fact that you cannot secure either an Inward Transit Pass or an Exemption Certificate because the quantities of toilet articles contained in the shipments in question are small (i. e. in broken cases), would not, in the opinion of this office, constitute adequate grounds upon which to base a protest.”

In this regard I desire to point out that, since the new treaty provides inter alia that “transit dues … shall be annulled and become inoperative …”, the issuance of either transit passes or exemption certificates for any shipment appears to rest with the National Government, and its refusal to issue such documents does not constitute a ground for protest. As you have pointed out in your letter to the Foster-McClellan Company, in the present case, even were the old rules in full effect, the firm would have no ground for protest, since the shipments are broken ones.

In general reference to the matter of the issuance of transit passes by the customs authorities, I would observe for your preliminary information that I am disposed to consider that protest may properly be made when goods covered by transit pass are subjected to further taxation while en route to destination. This view is based on the fact that, although transit passes are not provided for under the new tariff treaty, yet if the National Government sees fit to continue the acceptance from merchants of payment for extra-treaty documents purporting to insure goods against further inland taxation, then the Government is bound to carry out its part of the implied contract, and failure to do so may properly be made the basis of a protest by the [Page 276] Consular office concerned. I am submitting this opinion to the Department and requesting instructions, upon receipt of which I shall promptly communicate with you.

From the penultimate paragraph of your letter of June 20th to the Foster-McClellan Company, the Legation is gratified to note that the company was able at that time to effect smaller shipments by parcel post without difficulty, and that you had accordingly suggested the continuance of this practice.

I am [etc.]

J. V. A. MacMurray
  1. Copy transmitted to the Department by the Minister in China in his despatch No. 2217, July 19, 1929; received August 16.
  2. Not printed.
  3. Foreign Relations, 1928, vol. ii, p. 475.
  4. Not printed.