The Minister in Portugal ( South ) to the Secretary of State

No. 459

Sir: With reference to the Legation’s despatch No. 408 of July 10, 1931,5 and to previous correspondence on the subject of flag discrimination, [Page 967] I have the honor to enclose herewith a copy of the Diário do Govêrno of September 12, 1931, Series I, No. 211, containing the text of Decree No. 20,304 of September 12, 1931, whereby the Portuguese Government professes to abandon in principle the position it has maintained since 1921 in respect of flag discrimination and undertakes by means of successive reductions to do away with the rebate of ten per cent on import duties granted during the past ten years to all goods imported into national ports, including those of the adjacent islands, in Portuguese bottoms. The new decree provides for an initial reduction of from ten per cent to eight per cent in the aforesaid rebate, effective from October 15, 1931, to June 30, 1932, inclusive. However, care has been taken to avoid committing the Government in respect of the amounts of the subsequent reductions of which assurance has been given—this question having been left open for subsequent determination. A translation of the decree is also herewith enclosed.

Respectfully yours,

J. G. South

Decree No. 20,304 of the Portuguese Government

The customs differential system established by Decree No. 7,822, of November 21, 1927, (sic)6 affords protection to the national merchant marine, through the natural incentive which the consignee of the shipment has and which induces him to constrain the shipper, at the origin, to give preference to Portuguese vessels.

However, there have resulted therefrom substantial decreases in the public revenue, which the Government began to attenuate by Decrees Nos. 17,062 (tobacco), of June 3, 1929, and No. 17,823, of December 31, 1929 (corrected in the Diário do Govêrno No. 103, of May 6, 1930), as well as difficulties of external commercial policy, possibly accentuated by the present world crisis, which enhances the importance of the competition of national vessels, although in fact there is as yet question of a slight influence upon the volume of imports interesting to our Country. However, the Government does not wish, in the interest of a just balance in public administration, to maintain and permit to continue a cause for protests over inequalities in respect of navigation, which everywhere leads toward equal treatment, when such cause may, through reaction, prejudice other very important national economic interests.

And, in consideration of the foregoing, it abolishes in principle the aforesaid customs bonus on cargo transported in national vessels. [Page 968] However, it must be borne in mind that an abrupt change of system might affect in an unanticipated manner a branch of activity in which thousands of Portuguese find a means of living and thus justly give rise to a reaction in internal politics, that which everyone, here and abroad, is in duty bound to understand and avoid, especially during the uncertain and difficult period through which the world is passing. Therefore, the elimination of the bonus must be gradual, possibly attending the creation of better means of work, which likewise cannot be attained immediately, in view of the circumstances of credit which temporarily render difficult the quick mobilization of the capital indispensable to the renovation of our long distance merchant fleet.

Under the authority which No. 2 of Article 2 of Decree No. 12,740 of November 26, 1926, confers upon me, by virtue of the provisions of Article 1 of Decree No. 15,331 of April 9, 1928, and in accordance with the recommendations of all the Ministers of State:

I deem fit to decree, with the force of law, the following:

Article 1. Beginning with the fiscal year 1931–1932, there shall be successively reduced, until abolished, the customs bonus established by No. 1 of Article 1 of Decree No. 7822, of November 22, 1921, in so far as it has not yet been revoked, the Government fixing each year the taxes which shall be levied.

Provided, however, that, during the present fiscal year, the bonus to which this article refers shall be fixed at 8 per cent on imports and at 16 per cent on exports to foreign ports. These new percentages shall be applied to merchandise shipped from October 15, 1931, inclusive.

Article 2. The increase in revenue accruing from the application of the foregoing article shall be devoted to subsidies for the reconstruction of the long distance merchant fleet.

Article 3. The provisions contained in this act shall apply exclusively to the continent and to the adjacent islands.

Article 4. Conflicting legislation is hereby revoked.

In consequence, let all the authorities concerned in the knowledge and execution of the present decree with the force of law comply therewith and cause it to be complied with and observed in its entirety.

Let all the Ministers of State cause this decree to be printed, published and distributed.

  1. Not printed.
  2. Decree No. 7,822 is dated November 22, 1921.