893.512/1053
The Secretary of State to the Minister in China ( Johnson )
Sir: The Department refers to the Legation’s despatch No. 363 of July 31, 1930,33 asking the Department’s approval of the Legation’s instruction of July 31, 1930, to the American Consul at Swatow,34 in reference to the question of protests by him against the taxation of goods, in one instance of Japanese origin, imported into China by American citizens.
In regard to the second paragraph of the Legation’s instruction to the American Consul at Swatow, the Department would observe that the Legation appears to have summarized therein in a general manner the right of the Chinese authorities to tax goods imported by American citizens into China and those subsequently shipped by them into the interior. Since, however, the American Consul at Swatow, in his despatch of June 20, 1930,33 stated that the cotton piece goods he referred to were of Japanese origin, the Legation might appropriately have pointed out that the treaty on tariff relations of July 25, 1928, and the notes exchanged on February 6, 1929,35 interpreting Article I of the treaty, provide that neither American citizens nor American merchandise shall be subject to discriminatory taxation, and that, in view of this circumstance, the Japanese origin of the cotton piece goods imported by American citizens need have occasioned the Consul no perplexity. The text of the exchange of notes of February 6, 1929, [Page 290] was sent to American consular offices in China with the Legation’s Circular No. 310 of February 16, 1929. The last sentence of the Legation’s instruction of July 31, 1930, under discussion, referred to the Department’s instruction to the Legation No. 1463 of January 30, 1930, but failed to convey the intent of that instruction with exactness; the Department’s instruction stated “when goods covered by a transit pass are subjected to further taxation while en route to their destination, a protest may properly be made at the request of the American interest concerned”. It is the Department’s impression that a transit pass does not, unless specially modified, exempt the goods covered by it from such taxes as the “sale or consumption tax” described by the American Consul at Swatow in his despatch. An instance of the modification of a transit pass was reported to the Legation by the American Consul General at Tientsin in his despatch of June 19, 1930, a copy of which was sent to the Department in the Legation’s despatch No. 307 of July 8, 1930.37 In this case the Consul General reported that transit passes issued gratis by the Chinese Customs covering kerosene and gasoline shipments en route to interior points bore special endorsements as follows:
“This document has been issued by the . . . . . . . . Superintendent of Customs, under authority from the National Government, and likin barriers and all other tax offices en route and at destination are requested to pass the goods without further taxation after verification”.
Very truly yours,