693.113 Tobacco Products/43: Telegram

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

316. Your 430, September 27, noon.25 Although appreciating the unfortunate effects which the proposed tax schedule may have on the [Page 567] consumption in China of American leaf tobacco, the Department, based on such information as is now available, fails to perceive legal grounds upon which protest to the Chinese Government may appropriately be made.

You are authorized, however, to discuss the situation orally and informally with the appropriate Chinese authorities during the course of which conversation you may wish to emphasize the fact that, as recently as last July, China revised its import tariff in such manner as to place upon American trade in particular a severe handicap; that apparently legislation is now proposed which, if made operative, would create an additional handicap which would again fall most heavily upon an important item of American trade, namely, the leaf tobacco trade; that the cumulative effects of such acts, coupled with the collection in various parts of China of illegal and discriminatory taxes, are matters of concern to the Department and to the American interests affected thereby; and that in consequence it is hoped that the Chinese Government will not further complicate the situation by the imposition of additional taxation upon cigarettes, which action would not only seriously affect American interests but might also, in the long run, decrease rather than increase Chinese Government revenues.

Please keep the Department fully informed.

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