In view of the recent immense progress of state socialism in certain important countries, the question whether a practice of the sort described is a discrimination, within the meaning of Section 317, seems of great potential moment. 66 Brief reference has already been made to the definition of "foreign country" contained in subdivision (i) of Section 317, and its connection with existing systems of intraimperial preference has been pointed out. As the possible basis of an attack upon these systems its importance can hardly be over-estimated. As a statement clearly pointing out the political groups and geographical areas that may be adjudged to "discriminate" within the meaning of Section 317, it forms a necessary part of the law. According to this definition any areas "within which separate tariff rates or separate regulations of commerce are enforced" is a country, foreign to every other, within the meaning of subdivision (a) and other portions of Section 317. Political sovereignty and political dependence are alike ruled out of consideration and two or more sovereign states united into a customs union would become a single country so far as Section 317 is concerned. Such would seem inevitably to be the implication of defining "foreign country" as any empire, country, dominion, colony, or protectorate" where there are rates or regulations not shared with other areas. "The United States and its possessions" are specifically excepted from the definition, thus emphasizing its application to every other portion of the world. If, therefore, any such area discriminates against the products of the United States, the additional duties provided for by Section 317 become applicable to its products entering the United States. 66 Directivo de la Comisión Exportadora de Yucatán por Tomas Castellanos Acevedo, como apoderado de dicha Institución y con motivo de la terminación del primer año de la existencia de ésta. Imp. y Lit. Gamboa Guzmán 58-503. Mérida, Yuc. Méx., 1922. The Philippines, Guam, American Samoa and the Virgin Islands of the United States, each having its own customs laws, are separate and distinct countries within the meaning of "country" which the Congress has accepted for use in connection with the policy of the United States pursuant to Section 317. The fact that American possessions are expressly excepted out of the definition of foreign country, and so exempted from the possible application of the additional duties of Section 317, does not alter this fact. The immediate purpose of the inclusive definition of foreign country was, as has already been intimated, to render the provisions of Section 317 available against the comprehensive systems of colonial or, more broadly, intra-imperial preferences that have developed not only in the British Empire, but, to greater or less extent, among most of the colonial powers of the world. The United States itself, so far as its few colonies are concerned, is an extreme example. France, Italy, Japan, Spain and Portugal all present instances of favoritism. Not only between colony and the mother country, but between colony and colony, preferences have grown up, sometimes by mutual consent or by free gift on the part of the enacting parliaments, sometimes as a result of formal agreement between contracting portions of the empire. The practice is condemned by many publicists as out of accord with modern conceptions of fairness, as expressed in the ideal of equal rights for all under the operation of any given tariff law. Tariff autonomy, they argue, should carry with it the full implications and responsibilities of tariff sovereignty. Other commentators are equally ardent in their defense of a system which maintains equality against all outside nations, but are ready to justify any practice. 'For further discussion of American colonial tariffs, see ch. vi. within an empire that is satisfactory to the empire itself, holding it to be of no concern to the rest of the world. The Congress of the United States has, in the enactment of subdivision (i), placed the seal of its approval upon the former contention.1 6. SCOPE OF PRESIDENTIAL POWERS The wide range of action accorded to the President under Section 317 is noteworthy. He may take a certain kind of goods coming from a discriminating country off the free list and subject it to a fifty per centum ad valorem duty and, if the discrimination is persisted in, he may exclude such goods from entry into the United States. This is not only true of any one tariff item but it is true of all classes of commodities. If he finds a ten per centum duty, or any other duty not exceeding fifty per centum, to be sufficient for his purpose, he may proclaim such duty and make it effective in addition to any duty that may already be imposed by law. He may levy different additional duties upon the various commodities from the offending country. He may, under certain circumstances, confine these additional duties to products of a part of a country. Thus, if one of the States of Brazil should levy a discriminating export duty on coffee going to the United States, the defensive duty could be confined to coffee or other products coming from that state and need not apply to exports from the whole of Brazil. Or, if Prussia, under a régime such as obtained before the lines were taken over by the Reich," should impose a discriminating freight rate on American goods in transit over its state railways, the President could make the defensive duty applicable to one or more Prussian products and permit like products from the remainder of Germany to come in as before. 'The Congress has not, however, repealed the statutes providing for American intra-imperial preferences. 'See Commerce Reports, March 3, 1924, p. 596. The President must, however, before imposing an additional duty, ascertain as a fact that an unreasonable discrimination exists, he must find that the public interest will be served by the added duty, he must undertake to measure the amount of additional duty necessary to offset the burden of the discrimination and he must give thirty days' notice before making the additional duty effective. Excepting the last, these limitations upon the exercise of the functions of the President, made mandatory by the terms of Section 317, are such as really to enlarge his powers. They dissolve the command of the Congress into an authorization to impose defensive duties; for such indefinite terms as unreasonable" and "public interest" simply make the administration of the Section a matter of Presidential discretion. 7. ADDITIONAL DUTIES AND THE PUBLIC INTEREST The question as to whether, in the event of a particular discrimination against American commerce, the public interest will be served" by the imposition of the additional duties is one that involves several considerations. An additional duty would not only discourage such trade as may have existed with the offending country, with consequent loss to American exporters, but it would be likely also, if the discriminating country was an important source of supply, to increase the cost of the commodities affected to the American consumer. Changes in tariff rates inevitably disturb business conditions; the laudable purpose of defending the nation against foreign discriminations would not alter this fact. Moreover the country against which the defensive duties were directed would almost certainly consider them unjustifiable; their use would consequently complicate international relations. In some instances, indeed, their imposition might violate treaties. It is, of course, unthink 'For further discussion see ch. iii. able that any honorable person could deem as in the public interest an act in violation of a solemn national agreement, and the possibility of such a result brings into strong relief the importance of the requirement that the defensive duties, when levied at all, must be in the public interest. On the other hand the considerations just adverted to ought not to be allowed to obscure the interest of the entire country in obtaining equality of treatment for exports of American products. 8. PROHIBITIONS AND THE PUBLIC INTEREST An exceedingly nice question, and one closely connected with the general interests of the United States, seems likely to arise in the event of a prohibition of importations under Section 317. Exclusion, it must be remembered, is not to take place unless the imposition of additional duties fails to bring about the removal of the discrimination at which it is aimed. A duty of fifty per centum is a high duty. It might easily be prohibitive in itself. But unless imposed upon articles on the free list, it would be a high duty added to a duty already presumably considered protective.1 There would seem to be, therefore, no great opportunity for the invocation of absolute prohibition. However, it is possible that a discriminating country may produce so cheaply a commodity which is of importance in its export trade to the United States as to be able to sell it at a profit notwithstanding a fifty per centum additional duty. A country having a monopoly in the production of such an article would, of course, irrespective of cost of production, be in a 'The Tariff Act of 1922 is, as everyone knows, framed to achieve a policy of high protection. Of course there may be isolated instances of non-protective duties. 'The anti-dumping provisions of Title II of the Emergency Tariff Act of May 27, 1921 (not repealed by Tariff Act of 1922-see Sec. 643) would probably cover most such cases. |