611.4131/1661
The British Embassy to the Department of State
The United States requests for concessions on specified types of softwood have given rise to the question whether it would be justifiable to differentiate for duty purposes between the species normally imported into the United Kingdom from the United States and the species which are commonly imported from other sources. Consideration has been given to this question and to the memorandum on tariff specialisation which Mr. Hawkins handed to Mr. Overton on the 13th [14th] June. The decision has been reached that it is impossible, in view of the United Kingdom Government’s most-favoured-nation undertakings, to give a concession on Douglas fir without extending it to Baltic and Scandinavian softwoods. There is, further, no possibility that Scandinavian and Baltic countries would agree to waive their rights and to allow United States timber to be given a preference over their own.
In view of the importance which the United States Government are understood to attach to this matter, the United Kingdom Government [Page 36] desire their Delegation to explain the principles upon which this decision has been reached.
It is agreed that, as stated in Mr. Hawkins’ memorandum, it is impossible to lay down any single criterion which may be used in determining whether goods are sufficiently similar to warrant identical Customs treatment. Nevertheless, it is clear that what matters for purposes of commercial agreements is not whether goods can be distinguished by some scientific or other means, but whether the goods are different for commercial purposes in the market of the importing country. For example, white cows can be distinguished from brown cows with ease and certainty, but a customs differentiation on this basis would be indefensible unless in some country—perhaps in connection with religious ceremonies—brown cows and white cows were used for different purposes. This case seems to border almost exactly on the case of lumber.
On the other hand, it cannot be agreed that distinctions by value or weight are necessarily less easily justified than other distinctions. The grounds upon which distinction by value can be defended are clearly set out in Mr. Hawkins’ memorandum; the question is whether any particular distinction by value is justified broadly by a corresponding distinction between the goods, particularly as regards competition one with the other. The fact that border line cases arise does not affect the general principle, but it does set limits to the amount of subdivision which is justifiable.
It is essential also to consider what answer the United Kingdom Government would have returned at the time when they were making most-favoured-nation agreements with Scandinavian and Baltic countries if they had asked whether most-favoured-nation rights were intended to give their softwoods equality of treatment with similar woods from the United States. The answer would certainly have been in the affirmative. If now the United Kingdom Government were to make this differentiation there could be no doubt that the countries concerned would justifiably accuse them of having broken faith and would be able with every hope of success to take them to the Hague Court. Moreover, if a similar infraction of the rights of the United Kingdom Government were to take place, they would certainly consider taking the same action.
The United States Government will recognise that a very important question of principle is involved and that the present attitude of the United Kingdom Government is that which they have consistently adopted over a long period of time. The United Kingdom Government feel sure that nothing could be further from the desire of the United States Government than to press them to commit a breach [Page 37] of what they regard as their most-favoured-nation obligations and thus to cast still further doubt upon the sanctity of international obligations.