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Subject Area: Economics
Topic: Free Trade

CHAPTER II: TAXES ON EXTRA EUROPEAN GOODS IMPORTED FROM A EUROPEAN COUNTRY - Yves Guyot, The Comedy of Protection [1906]

Edition used:

The Comedy of Protection, trans. M.A. Hamilton (London: Hodder and Stoughton, 1906).

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CHAPTER II

TAXES ON EXTRA EUROPEAN GOODS IMPORTED FROM A EUROPEAN COUNTRY

Clause 2 of the Act of January 11, 1892—Inequality—Retention of differential duties—As impediments to trade—Effects on raw materials—Transit dues on Colonial produce—Delay and inaccurate appraisement of goods—Duty on oranges—The English Chamber of Commerce in Paris—Exceptions to the duties—Advantages of abolishing the duties—“Abolition of duties on extra European goods imported from a European country in return for a reduction by England of the duties on wines.”

Clause 2 of the law of January 2, 1902, establishing a general Customs tariff, runs as follows: “The surtaxes in Schedule C of this Bill apply to goods of extra-European origin imported from a European country. The surtaxes in Schedule D of this Bill apply to goods of European origin imported from a country other than that of origin.”

The first schedule comprises surtaxes d’entrepôt, the second surtaxes d’origine. As a matter of fact, the word “surtax” is quite inapplicable, since these duties, being levied on free goods, as well as on dutiable goods, are not surtaxes, but special taxes.

When a sack of coffee from Brazil touches at London or Hamburg, instead of going straight to Havre, it pays 4s. per cwt. over and above the Customs; cocoa nibs pay 10s., pepper and spice 16s., tea 24s., isinglass 2s., silk textiles 40s., furniture 12s., and other goods 1s. 4d. But this surtax is not a Customs duty; it is not proportional to value. Thus, as M. Pallain observes in his “Treatise on Customs,” “it puts the same tax on copper at 5d. a lb. and attar of roses at £15; it bears no necessary relation to the Customs duties, being levied on free and dutiable goods alike; it is not taken into account in the collection of the Customs.”

Surtaxes d’origine only apply to raw materials: raw skin and leather goods, 1s. 3d. per cwt.; raw wool, 1s. 4d.; raw and prepared hair goods, 1s. 4d.; natural fats (exc. fish), 10d.; raw cotton, 1s. 3d.; mineral essences and oils, 2s.; potash, 11d.; wax, 10d.; bones, horns, and wooden shoes, 10d.; ground dye nitrates, 1s.; plain woods, 5d.; worked woods, 5d.

The surtax d’entrepôt is a survival of the old differential duties, its object being to assure for French ships the carrying trade in certain goods. But there are some goods which French ships will not carry. The following instance is taken from the 1900 Minutes of the French Chamber of Commerce in London:—

“A dealer in Calcutta telegraphs to his London correspondent that he has two hundred tons of desiccated blood, to be sold at £6 10s. per ton c.f.i. in Havre and transmitted by a ship sailing directly to Hamburg—the total freightage from Calcutta to Havre being 30s. to 32s. The French consignee refuses to accept the goods sent by this route, since he would incur a surtax on goods d’entrepôt of 36s. a ton. There is no steamboat service between Calcutta and Havre; the packet service, which would refuse such goods on account of their odour, goes to Marseilles, and the cost of freightage from there to Havre, much higher than that from a North European port, would in itself prevent importation to France, although the goods are an ingredient in the manure needed for our agriculture. The same difficulty is found in the case of other goods of a similar class coming from Australia and Japan. The only French service from these places is the packet-boats, primarily for the use of passengers, which are obliged to refuse all odoriferous goods.”

The transit dues raise the price of raw materials needed by French agriculture, and they hamper industry by raising the prices of its materials. Like the majority of the existing protective and revenue taxes, they act as a bounty to the great manufacturers and traders at the expense of the small men; they fall heavily on our imports from our colonies, since London is their principal market. Burdensome in themselves, they are very difficult to collect and a disturbing element in commercial transactions.

Yet the Protectionist fever is such that two or three years ago transit duty was imposed on oranges, at 1s. 4d., in order to give a monopoly to a firm at Boulogne and one at Dunkirk, although the total turnover involved was very small. England imports £2,000,000 worth and sends us £500 worth.

Mr. Pollock, of the English Chamber of Commerce in Paris, got the Associated English Chambers to pass the two following resolutions in 1898:—

1. That the Foreign Office make representations to the French Government in view of obtaining that goods coming viâ an English port with a bill of lading from an English colony possessing no direct service with France, be considered as coming directly and admitted without the surtaxes on the goods in course of transit which are imposed on commodities of extra-European origin not coming through a French port.

2. That the Foreign Office arrive at an agreement with the French Government with regard to the value of certificates of origin delivered in England for France.

These propositions were certainly modest enough: the partial abolition of “surtaxes” d’entrepôt, in so far as they affected English colonies, would have been of advantage to France, since from them she gets the raw materials of her industry. Indeed, the duties had proved so inconvenient and difficult to apply that exceptions had already been made to them—e.g., in the case of Persian carpets coming through Constantinople, and goods from beyond the Caspian Sea. On Schedule D. Russian products coming through Königsberg pay no surtax; nor does Russian wood imported from Dantzig, nor Bulgarian products coming from Amsterdam and Rotterdam. And there are many other exceptions.

Why, then, keep the surtaxes at all? From the revenue point of view they hinder commercial transactions, and therefore cannot be productive. Between 1900-1904 their average yield was £62,080. There is no reason for their maintenance, every reason for their abolition. The future of free zones is bound up with their abolition. Their abolition would mean increased facility in the importation of the raw materials of industry. Finally, since they hamper the shipping industry and carrying trade of Great Britain, their abolition would enable us to negotiate with Great Britain for the reduction of the duties on wines which were raised at the time of the Transvaal war. This is my modest programme of reform. It need not alarm the terrible metal manufacturers, the even more terrible cotton kings; it does not affect the agrarians. I have no longer to face the serried ranks of the sugar-makers, masters since 1869 of a political industry; and all wine-growers ought to be on my side, since it is to their interest to extend the English market for their wines.

Summing it up in two words it is this: “After Mr. Chamberlain’s defeat at the coming election to obtain from the Liberal Government a remission of the duties on wines, or at least a reduction to what they were before the war, in return for the abolition in France of the surtaxes on extra European goods imported from a European country, and of the surtaxes on goods of European origin imported from a country other than that of origin.”