The Secretary of State to the Secretary of the Interior (Ickes)

My Dear Mr. Secretary: Reference is made to the Department of the Interior’s letter of August 12, 1939,25 in which the views of the Department of State were requested on Bill No. 958 of the Second National Assembly of the Philippines, First Session. In as much as this measure amends certain sections of the Philippine Tariff Act of 1909,26 as amended, it therefore affects imports and exports, and approval of the President of the United States is necessary before it may become effective, in accordance with Section 2 (a) (9) of the Independence Act of March 24, 1934.

In view of the fact that President Quezon, pursuant to the power vested in him by Article VI, Section 11 (3) of the Constitution of the Philippines, vetoed Section 3 of Bill No. 958, relating to the refund of duties collected on fuel oils imported into the Philippines and subsequently used for certain specified purposes, the President of the [Page 469] United States is not concerned with this section of the proposed legislation.

Paragraph 349 of Section 11 of the Philippine Tariff Act of 1909, providing for the duty-free entry of all articles and materials used in the construction, equipment or repair of vessels within the Philippine Islands, when imported in accordance with regulations, is repealed by Section 1. With respect to this provision, the Department has no information which would be of any assistance to the President.

Section 2 amends Section 14 of the Philippine Tariff Act which imposes a wharfage charge on the exportation or shipment from the Philippines of all articles other than those specifically exempted and other than those exported or shipped for the use of the Government of the United States or of the Commonwealth Government. Under the terms of existing law all “forest products” are exempted and the modification proposed would remove this exemption and insert in lieu thereof “lumber, creosoted, and other pressure treated materials as well as other minor forest products”. Whereas the wharfage charge is fixed generally at one dollar per gross ton of one thousand kilos, the amendment fixes the charge on “logs or flitches twelve inches square or equivalent cross-sectional area, or over” at thirty cents per cubic meter.

While the ostensible purpose of this section, as indicated in the title of the Bill and as is stated in the memorandum of the Secretary of Finance to the President of the Philippines, dated May 29, 1939, a copy of which was enclosed with the letter under reference, is to increase the revenue, the explanatory note which accompanied this bill, drafted apparently by the Committee on Ways and Means of the Philippine National Assembly, a copy of which was also enclosed in the letter under reference, makes no mention of the revenue feature of this section. On the contrary, this note points out that the exemption of all forest products from the wharfage charge has resulted in Philippine lumber companies exporting logs rather than sawn lumber to the detriment of laborers who would otherwise have been employed in the fabrication of such logs. Hence, it would appear that one of its ultimate objectives is to restrict the exportation of logs from the Philippines.

While this Department has consistently opposed Congressional proposals to restrict exports from the United States to foreign countries for the reason, among others, that such action encourages reciprocal restriction abroad and in this manner acts as a deterrent to the free flow of world trade, in view of the fact that Bill No. 958 is a proposal of the Commonwealth Government in which Congress has vested a large degree of autonomy and of the further fact that the bill, with [Page 470] Section 3 deleted, does not violate any of the international obligations of the United States, the Department does not recommend that the President withhold his approval.

For the information of the President, however, it should be stated that the Japanese Embassy has filed an informal protest with reference to Section 2 of the bill. As the Japanese are the principal purchasers of Philippine logs and flitches, the Japanese Embassy is apprehensive that the wharfage charge will cause an increase in prices and thus result in a decrease in the volume of sales, with “inconvenience” to both Japan and the Philippines. It was requested that these views be brought to the attention of the President and the Embassy expressed the hope that the President would “see his way to withhold approval …27 because of the importance of the economic relations between Japan and the Philippines”.

The Commonwealth authorities have been notified of this protest and the President of the Philippines has replied that “the protest of the Japanese Government will not affect their desire that the bill be approved by the President of the United States”. In as much as the wharfage charge is not discriminatory, the Department feels that the Japanese protest is lacking in justification.28

Sincerely yours,

For the Secretary of State:
Henry F. Grady

Assistant Secretary
  1. Not printed.
  2. Signed August 5, 1909; 36 Stat. 130.
  3. Omission indicated in the original.
  4. See President Roosevelt’s proclamation No. 2377, of December 12, 54 Stat. 2675.