611.426 Lumber/528
Memorandum of Conversation, by Mr. Constant Southworth of the Division of Trade Agreements
| Participants: | Mr. Norman Robertson, First Secretary of Canadian Department of External Affairs; |
| Mr. Dana Wilgress, Director of Commercial Intelligence, Canadian Department of Trade and Commerce; | |
| Mr. Hector McKinnon, Commissioner of Tariffs, Canadian Department of Finance; | |
| Mr. Hawkins, Mr. Bonbright, Mr. Alger Hiss, and Mr. Southworth. |
Messrs. Robertson, Wilgress, and McKinnon came to Mr. Hawkins’ office by invitation the afternoon of March 30, 1938. The questions relative to classification of timber for import-tax purposes, board measure, and marking of lumber, which formed the subject of Sir Herbert Marler’s letter of March 17, 1938, were reviewed. It was pointed out to the Canadians, as had been done to Mr. Mahoney previously, that the pending legislation relative to timber and board measure was merely designed to correct an obvious oversight in the wording of the Revenue Act of 1932, while fully protecting Canada’s rights under the present trade agreement, that the proposal relative to marking involved no change in substantive law, and that even the elimination of the provision for exempting lumber from the purview of Section J of revised Section 304 of the Tariff Act would not guarantee that the Treasury would continue to exempt lumber from marking.
The Canadians replied that independent of what might be the technical and juridical status of these matters, what concerned them most was that Canadian lumber, whether by legislative or administrative action or both, was now threatened with a worsening of treatment on importation into the United States, that their lumber interests, which are just as pertinacious as ours, did not and could hardly be expected to understand the fine points of law and administrative procedure involved, and that if such worsening should actually be put into effect, the Canadian Government would probably find it harder to assent to improved treatment for American lumber in the British market as compared with Canadian lumber.
They summed up their two present primary desiderata relative to lumber in the new trade agreement as follows: [Page 170]
- (1)
- Bind Treasury Decision 48640, in which the Court of Customs and Patent Appeals ruled that for purposes of the import tax lumber is measurable at its net dimensions as imported. They asked that detailed information be obtained for them as to the origin and status of the pending customs court case in which the issues on which a decision was rendered in T. D. 48640 appear to have been reopened.
- (2)
- Bind present practice of not requiring the marking of origin on imported lumber.
Since no worsening of present customs treatment is contemplated in the amendment relative to timber Mr. Robertson said that the Canadians are not now actively opposing that amendment.
In connection with the amendment exempting lumber of certain species from the import tax, Mr. Robertson referred to the following sentence in the Canadian memorandum of March 17, 1938: “In fact, the immediate political effects of the removal of import excise tax from certain species of lumber produced in quite well defined parts of Canada and of the retention of the tax on lumber of other species which make up the bulk of Canadian exports to the United Kingdom is likely to accentuate rather than allay the misgivings with which Canadian lumbermen contemplate any modification of the preferences now effective in the United Kingdom”. He said that contrary to what Mr. Hiss and Mr. Southworth said had been their understanding of the significance of this sentence, it did not mean to nullify or more than nullify the previous characterization in the same memorandum of the proposed exemption from import tax as “welcome in itself”. The proposed exemption, he said, is definitely welcome to the extent that it is divorced from any question of an offsetting worsening of treatment.
Later Supplementary Conversations
The Pending Board-Measurement Case.
Mr. Hiss telephoned Mr. Robertson on March 31 that he had ascertained from the Department of Justice that the case in question might well be a protest (similar to that involved in T. D. 48640) which had been suspended pending the ultimate judicial disposition of T. D. 48640. There were clearly established precedents for such a procedure which would in effect permit a reconsideration of the principles adopted by the Court of Customs and Patent Appeals in T. D. 48640. He added that definitive information as to the case referred to was being secured by the Department of Justice from its New York office in charge of customs matters.
Later in the day Mr. Robertson telephoned Mr. Hiss that he had ascertained from the Canadian trade commissioner in New York that the pending case was Protest No. 625,764G filed December 5, 1932. [Page 171] It has been suspended during the litigation which was terminated by T. D. 48640, came up for trial on June 11, 1937, the arguments were completed on December 23, 1937, and the case is now awaiting decision. It was evident, he said, that the case was a bona fide one, and there could be no suspicion that a United States governmental agency was trying to revive a dead issue in order to provide ammunition for new trade-agreement negotiations.
Later Mr. Southworth asked Mr. W. R. Johnson, Chief Counsel of the Customs Bureau, by telephone, for his informal views as to our authority for and the propriety of binding T. D. 48640 while Protest 625,764G remains undisposed of. On April 15 Mr. Johnson telephoned that in his opinion, since the Treasury Department is now actually following the ruling set forth in T. D. 48640, we have legal authority to do so, but that in view of what the lumber people have been told they would probably regard it as skulduggery to do so.
Lumber Marking.
Mr. Southworth ascertained by telephone on March 31 from Mr. W. R. Johnson that in the latter’s opinion it was clearly within our authority to bind existing marking practice if the proviso to Section J. “that this subdivision (j) shall not apply to sawed lumber, etc.” is eliminated by Congress. Even if this proviso remains in the amendment Mr. Johnson thinks we technically possess the authority to bind present marking practice, but points out that with circumstances as they now are this would probably constitute a direct ignoring of the wishes of Congress.