611.426 Lumber/502
The Canadian Minister (Marler) to the Secretary of State
My Dear Mr. Secretary: The Secretary of State for External Affairs of Canada has telegraphed to inform me of the great concern with which he has viewed proposals which appear in the Revenue Bill of 19389 (H. R. 9682), and in the Bill10 amending certain administrative provisions of the Tariff Act of 1930.
The Canadian Government, after carefully considering the probable effects upon commercial relations between Canada and the United States of America of the enactment of these measures in their present form, have decided that I should immediately inform you that any worsening by legislative or administrative action of the treatment now accorded to Canadian lumber on importation into the United States would make it extremely difficult for the Canadian Government to consent to modification of the importation preferences now guaranteed Canadian lumber by the Government of the United Kingdom.
In particular, I am directed to point out that the amendments to section 601 (c) (6) of the Revenue Act of 1932 contained in section 704 (a) and (b) of the Revenue Bill of 1938 would appear to jeopardize such advantage as the importation of Canadian lumber, under the [Page 168] provisions of the Canada–United States Trade Agreement of 1935, has derived since December 23, 1936, from the assessment of the United States import excise tax on lumber on the net measurement of the imported lumber. In this connection, I am further directed to inform you that the Canadian Government proposes, during the forthcoming treaty negotiations, to ask the Government of the United States to confirm, for the term of a new agreement, the applicability of United States Treasury Decision, 48640, of November 2, 1936 which upheld the decision of a lower court that the import excise tax should only be collected on the lumber actually imported.
In the second place, I am to bring to your attention the consequences that might be expected to follow from the enactment, in its present form, of section 3 of the Bill to be entitled the “Customs Administrative Act of 1938.” In this section which amends section 304 of the Tariff Act of 1930 relating to the marking of imported articles and containers, “sawed lumber and timbers, telephone, trolley, electric-light and telegraph poles of wood, and bundles of shingles” are expressly excluded from the scope of subsection (j) under which the Secretary of the Treasury would be empowered to authorize the exception of any article from the requirements of marking if “such article is of a class or kind with respect to which the Secretary of the Treasury has given notice by publication in the weekly Treasury Decisions within two years after July 1, 1937, that articles of such class or kind were imported in substantial quantities during the five-year period immediately preceding January 1, 1937, and were not required during such period to be marked to indicate their origin.”
The Canadian Government hope that sub-section (j) of section 304 may become law without the offending proviso and that the Secretary of the Treasury may see his way clear to exercise at the first opportunity the discretion which he would then have acquired to authorize the exception of lumber from the requirements of marking.
In acquainting you with the views of the Canadian Government on these questions I have been instructed to explain that the extent of the concession in favour of United States lumber in the United Kingdom market to which the Canadian Government can consent will have to be determined in large part by the treatment accorded Canadian lumber on importation into the United States.
In these circumstances I venture to enquire whether the proper congressional authorities might be moved to refrain from the enactment of the proposals hereinbefore mentioned.
Believe me [etc.]