The Secretary of State to the Minister in China (Johnson)

No. 297

Sir: The Department acknowledges the receipt of the Legation’s despatch No. 446 of September 5, 1930,41 transmitting a copy of the Legation’s instruction to the American Consul at Tsingtao dated May 29, 1930.42 That instruction authorized the American Consul to protest to the Chinese authorities against discrimination in the assessment of an advertising tax. The Legation stated that the correct interpretation of Article I of the Treaty between the United States and China of 1928 regulating tariff relations is that goods of American nationals shall not be subject to higher taxation in China than are the goods of the nationals of China, and that on this account a protest against the discriminatory taxation of advertising would seem to be in order.

The Department does not believe that it is necessary that the Legation revise its instruction of May 29, referred to above, or its similar instruction addressed to the American Consul General at Shanghai of May 21,43 a copy of which was enclosed with the Legation’s despatch No. 216 of the same date.44 Nevertheless, the Department desires to observe, for the future guidance of the Legation, that in so far as the position taken by the Legation was based upon the assumption that the Treaty of July 25, 1928, undertakes to provide that imported goods shall be taxed in no other or higher way than native goods, the Legation’s position would seem to be untenable. The Department’s understanding is that the second paragraph of Article I of the treaty in question relates only to duties, internal charges or taxes on “importations and exportations”, and that the treaty does not undertake to provide for equality of treatment as between native goods and imported goods. The Legation will recall that the Department transmitted with its instruction No. 1430 of December 20, 1929, dealing with a tax on flour, a copy of its letter of September [December] 20, 1930 [1929], to the Honorable John W. Summers,45 in which letter the Department expressed the view that equality of treatment could not be [Page 293] claimed, under the Treaty of July 25, 1928, for flour imported directly from a foreign port as compared with flour produced in China and shipped from one Chinese port to another.

The Legation will observe that the present instruction relates to the interpretation of the Treaty of July 25, 1928, and does not deal with the possibility that there may be grounds, aside from that Treaty, for protesting against discrimination in the matter of taxes on advertising.

Very truly yours,

For the Secretary of State:
W. R. Castle, Jr.
  1. Not printed.
  2. Ante, p. 279.
  3. Ante, p. 278.
  4. Despatch not printed.
  5. Neither printed.