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Relief from arbitrary valutions.--As a result of commitments made by Canada in the 1936 trade agreement with the United States, a large measure of relief was secured from the arbitrary valuations" placed on imports from the United States. Before 1936 arbitrary valuations were imposed on a large number of American commodities. Not only were the regular ad valorem rates of Canadian duty assessed on the arbitrary valuation, rather than on the invoice value, but a "dumping” duty: (determined by value) was also assessed.
This situation was in large part remedied either by direct provisions of the 1936 agreement, or by subsequent Canadian legislation resulting from the Negotiations. The arbitrary valuations and dumping duties were reduced on a large group of fresh fruits and vegetables and they were eliminated on many other commodities. Further relief from arbitrary valuations on United States fruits and vegetables was secured in the second Canadian trade agreement.
Other trade-agreement concessions.—The United States has long accorded its residents returning from abroad the privilege of entering free of duty articles for their personal use up to a value of $100. Before 1936, Canadians had no corresponding privilege. ' Canadian legislation of 1936, enacted as the result of the 1936 trade agreement, introduced a practice substantially similar to that of the United States. In 1938, such purchases by Canadian tourists amounted to over $8,000,000.
As a result of the most-favored-nation status obtained by the United States in the first trade agreement with Canada, American commercial travelers have been able to take samples into Canada, under bond or deposit assuring their export from Canada, whereas previously such samples were subject to full duty without refund. In addition, the products of any non-British country shipped to Canada in transit through United States ports have since 1936 received as favorable treatment by the Canadian customs as if the products entered a Canadian port directly, a change which has benefited American transportation agencies. These advantages continue under the most-favored-nation provisions of the second trade agreement with Canada.
UNITED KINGDOM British tarifss prior to 1932.- The British customs duties in effect prior to the World War (1914-18) were principally revenue duties applicable to such products as sugar, tobacco, and dried fruits. During the period 1915-31 the list of dutiable articles was extended on several occasions, but until the adoption of temporary protective measures late in 1931 the value of dutiable imports was small in relation to total imports. Duties were first imposed on motor cars and certain other "luxury" products in 1915, on goods essential to “key industries" in 1921, on silk and artificial silk in 1925, and on a number of other products during the years 1925–29. Preferential treatment was first accorded to imports from Empire areas in 1919.
Import Duties Act, 1932.--The United Kingdom inaugurated a general system of protection by the enactment of the Import Duties Act. Under this act (effective March 1, 1932), an ad valorem duty of 10 percent was imposed on all imports except the following: Those already dutiable, those entered from British Empire areas, and certain foodstuffs and raw materials from all sources. The act also provided for the imposition of "additional” duties (i. e., additional to the general ad valorem rate of 10 percent), by Treasury order upon the recommendation of the Import Duties Advisory Committee. Since the Import Duties Act became effective, additional duties have been imposed on a wide range of products.
Ottawa Agreements Ad, 1932.- This measure made effective, as from November 17, 1932, certain provisions of the agreements negotiated between the United Kingdom and Australia, Canada, New Zealand, the Union of South Africa, Newfoundland, India, and Southern Rhodesia, respectively. Under the act the United Kingdom continued the duty-free status which had been accorded imports from these Empire areas by the Import Duties Act; it increased the margin of Empire preference by applying new or revised duties on imports from non-British areas of approximately 30 commodities or groups of commodities; it bound the general 10-percent ad valorem rate of duty on about 55 commodities; and it increased or bound the preferential treatment accorded to certain other products from Empire areas. The latter group included tobacco, on which the margin of preference was guaranteed for a 10-year period.
A detailed account of this system and of the various measures of relief secured in 1936 is given in the pamphlet, The Trade Agreement with Canada, issued by the U. S. Tariff Commission (Rept. No. 111, second series).
Quota system established.-A system of quantitative import regulation was inaugurated in 1932 under which quotas have been applied to imports of beef, veal," mutton, lamb, pork, bacon, and hams from non-British countries, and, more recently, to imports of certain meats from Empire areas, to imports of potatoes and processed milk and cream from non-British countries, and, temporarily, to imports
British trade agreements with foreign countries other than the United States.Reductions were made by the United Kingdom in a number of duties under trade agreements negotiated since the early part of 1933, and the benefits of these reductions have been extended to the United States under most-favored-nation treatment.
United States United Kingdom trade agreement, January 1, 1939.-In this agreement the United States obtained concessions with respect to the customs treatment accorded commodities, imports of which into the United Kingdom from the United States in 1937 were valued at about $322,000,000. Improved customs treatment was obtained for imports of American products by reductions in 143 rates of duty, the removal of 6 rates of duty, and an increase in the quota of imports of hams from the United States. Existing customs treatment was guaranteed against unfavorable change by the binding of 118 rates of duty and of duty-free entry for 25 tariff classifications. In addition, the margin of Empire preference was bound with respect to imports of unmanufactured tobacco, and the continuance of existing parity of treatment was guaranteed for certain American goods.
Concessions were also obtained on a wide range of American products imported into Newfoundland and the non-self-governing British colonies.
Most of the duty concessions granted by the United Kingdom involved reductions in or bindings of the rates of duty imposed under the Import Duties Act. Reductions were also made in a number of British rates which were first imposed or increased under the Ottawa Agreements Act of 1932; and the margin of preference on Empire tobacco, guaranteed until 1942 under the Ottawa Agreements Act, was bound against increase. Where free entry is accorded imports from Empire areas, the rates of duty applicable to imports from the United States are, under the terms of the trade agreement, the equivalent of a limitation of the margin of preference accorded Empire goods.
Although British tariff rates were in general relatively low, the trend toward higher duties in the thirties emphasizes the importance not only of the reductions in duties obtained in the trade agreement but also of the provisions against increases in rates and other changes unfavorable to United States exports to the United Kingdom.
FRANCE French tariffs.—The French Tariff Act of 1892 provided for maximum and minimum rates for each import classification. Although trade between the United States and France was not then governed by a most-favored-nation treaty, France assessed the minimum rates on most of its major imports from the United States; it imposed the maximum rates, however, on a large number of its less important imports from the United States. In 1910 France increased its maximum rates but by an agreement with the United States in that year, the increases did not apply to American products--they were subject to intermediate rates rather than to maximum rates.
Prior to the negotiation of the trade agreement with France, French treatment of American products was not regarded as satisfactory by American export interests for they were handicapped in competing in the French market with other foreign suppliers whose products were dutiable at the minimum French rates. From the French point of view, however, there was no basis for granting American products minimum rates, because French-United States trade was not governed by a most-favored-nation treaty and because the United States, having a one-column tariff, was not in a position to offer any tariff inducement to obtain such a treaty. The conflicts in basic tariff policies almost resulted in a trade war between France and the United States in 1920. The modus vivendi of that year maintained the status quo but not until the trade agreement of 1936 provided for most-favored-nation treatment was the fundamental difficulty removed.
Quotas.-France instituted the quota system in 1931 and greatly increased the number of products subject to quota in 1934. The quotas were frequently more • Duties were imposed on certain beef and veal products in 1936.
restrictive of imports than were the tariff duties, as most French tariff rates were comparatively moderate. In practice, France generally accorded to American products quotas proportionate to the trade in them in a previous representative period, but it was not until the trade agreement in 1936 that the United States was guaranteed that the most-favored-nation principle would be applied in respect of all quotas then in force or subsequently established.
Import turn-over tazes.-Since 1932 France has imposed import turn-over taxes which correspond in character (but not in rates) to the general sales taxes imposed on domestic goods. Most goods imported from the United States were subject to a 6-percent tax if finished manufactures or a 4-percent tax if semifinished. Imports from a number of other countries as well as domestic competitive goods were subject to a 2-percent tax. The trade agreement with the United States in 1936 reduced the import tax on all American goods to 2 percent.
United States-France trade agreement.-Under the trade agreement with France, effective June 15, 1936, French imports of all American products (except a small specified list) were guaranteed most-favored-nation treatment. In consequence, many American products formerly dutiable at the intermediate or maximum rates now enter at the minimum rates. The value of the trade affected by this change on the basis of 1934 statistics was about 90,000,000 francs (about $6,000,000), but this figure does not indicate the full importance of the change as the higher rates of duty than assessed on American products operated to curtail French imports of these goods.
The specific quota concessions obtained in the agreement were substantial. Moreover, the guarantee written into the general provisions insures that on all products now or hereafter subject to country quotas, the allotment for the United States will be such as to permit importations relatively as large as those which entered during a base period prior to the imposition of the quota.
The trade agreement reduced the import turn-over tax applied to American goods to 2 percent where it had been higher-as it had been on about one-third of the value of French imports from the United States. Thus American materials were placed on the lowest tax basis applied either to imports from other countries or on goods produced in France.
BELGIUM-LUXEMBURG More than one-third of the value of United States exports to Belgium benefited from the following concessions obtained in the trade agreement with that country (effective May 1, 1935):
(1) Belgian duties were reduced on 22 classes of products, or 54 tariff items. Tariff reductions of 50 percent applied to nearly one-half of the value of Belgian imports of these products from the United States; tariff reductions of less than 25 percent applied to only 5 tariff items.
(2) Belgian duties on 12 tariff items were bound against increase. (3) Liberalized quota treatment was accorded nine important imports from the
(a) Substantial increases were made in the quotas allotted to 6 classes of imports from the United States.
(6) Assurance was given that two quota allotments would not be made less favorable.
(c) The quota applicable to one class of imports from the United States was eliminated, and the license tax imposed on the commodity involved
was reduced. (4) The luxury taxes on two products were eliminated.
În addition to the specific concessions enumerated above, Belgium agreed to accord unconditional most-favored nation treatment on all imports of American products.
Before the depression years, import tariff rates in the Netherlands were low. Many important articles entered free of duty and an extensive list of other articles entered at rates not in excess of 12-percent ad valorem. However, under the emergency conditions prevailing during the depression years, a very complicated system of import control had been developed. Some of the restrictive devices were crisis taxes, monopoly fees, central purchasing control through both semiprivate and government organizations, and extremely complicated import quotas.
Because of the complicated nature of the Netherlands import-control system, the specific concessions obtained by the United States in the trade agreement effective February 1, 1936, were provided for in three separate schedules: Schedule I: Bindings of tariff rates were obtained on 37 classifications (excluding
subdivisions) of which 14 applied to commodities on the free list. Concessions applicable to imports of American products into the Netherlands Indies applied to 18 classifications (excluding subdivisions). In various instances the monopoly import fee was reduced, bound, or eliminated, and the exemption or refund pro
visions of crisis taxes were consolidted. Schedule II: The Netherlands Government, through its central control system,
agreed to purchase a quantity of American wheat or wheat flour equivalent to not less than 5 percent of Netherlands domestic consumption, under price
conditions set forth in the agreement. Schedule III: Minimum quota allotments were increased by the Netherlands
for 28 import classes of commodities from the United States, and certain existing quota conditions were clarified.
The agreement applies both to the Netherlands and to all its colonial possessions. As indicated above, specific concessions were obtained on American products entering the Netherlands and the Netherlands Indies. Although no specific concessions were obtained for imports into the Netherlands West Indies and Netherlands Guiana, the tariff rates of both of these areas were very moderate. In the case of the Netherlands West Indies, many articles of interest to American exporters were dutiable at 3-percent ad valorem, and in neither of these colonies were quantitative limitations placed upon imports. Trade with these colonies and the Netherlands Indies is governed by the general provisions of the agreement applicable to the Netherlands itself.
SWITZERLAND The Swiss Government is largely dependent for revenue upon customs receipts which, at the time of the trade agreement with the United States (effective February 15, 1936), provided approximately 70 percent of its total revenue. Switzerland has no free list, collecting nominal duties even on products of primary necessity. Most Swiss duties have been imposed for revenue rather than for protection, but, during the early 1930's, with the view of protecting the currency and home industries, Switzerland adopted such additional means of controlling imports as quotas, import licenses, license taxes, and short-term agreements with foreign countries regarding exchange clearances. The import permits and quotas were used by Switzerland for the purpose of maintaining or developing its export trade by allotting larger orders of necessary imports to countries which were buyers of large amounts of Swiss products or with which Switzerland had clearing agreements.
A severe decline had occurred in Swiss imports from the United States as a result of the restrictions set forth above. Limitations had been placed on imports which normally comprised more than 50 percent of the total value of Swiss imports from the United States. In the agreement with Switzerland, therefore, the specific concessions that were obtained were designed primarily to obtain relaxation of the limitation of imports (by means other than the tariff). However, a number of duty reductions were also obtained and an important series of low-duty rates were bound to insure a continued market for representative American products. About 65 percent of the value of Swiss imports from the United States (which entered under more than 50 Swiss tariff classifications) were affected by tariff concessions and liberalized quota treatment. Among the major commodities which have benefited from these concessions are wheat, cotton, lard, fruits, canned vegetables, rice, lumber, office machines, automobiles and automobile tires, petroleum products, and leather.
FINLAND The trade agreement with Finland, effective November 2, 1936, guaranteed for imports from the United States the continuance of most-favored-nation tariff treatment, and equality of treatment as regards quotas, exchange control, Government monopoly purchases, and internal taxes. It also safeguards against adverse changes in methods of determining dutiable value and of converting currencies. Provision was made that no quota could be established by Finland on articles on which concessions were granted to the United States, except under special conditions subject to the right of the United States to terminate the agreement. This provision and the numerous bindings of low Finnish duties were of considerable importance, as the Finnish tariff is revised annually by the Diet, and many provisions in it are subject to change by executive action.
Finnish duties, under the agreement, were reduced on nine tariff classifications, were bound on 18 classifications, and 2 classifications were bound on the free list. The concessions applied to over 60 percent of the value of Finland's imports from the United States.
SWEDEN Sweden's tariff policy has traditioninally provided for only moderate protection. Even before the negotiation of the trade agreement with the United States (effective August 5, 1935), many of Sweden's most important imports from the United States entered free of duty or were subject to comparatively low tariffs. The trade agreement provided for reductions in duty on 21 tariff classes of imports from the United States, for bindings of duties on 27 classifications, and for bindings on the free list for 16 classifications. Also, continuation of most-favorednation treatment for American products was guaranteed.
Turkish tariff of 1929.— The post-war peace treaties prohibited Turkey from altering its tariff duties until 1929. When turkey regained tariff autonomy, it enacted a law on October 1, 1929, which increased greatly many of its tariff rates.
Exchange control inaugurated. ---In December 1929, in order to protect the stability of its currency, Turkey adopted a form of exchange control as a temporary expedient. The current difficulty arose from an excess of imports brought about by the fall in prices of Turkish agricultural exports and by abnormal imports in anticipation of higher tariff rates. The exchange control was greatly strengthened in February 1930 and has been extended steadily since then, with the result that in the last 5 years practically every form of foreign exchange transaction has been controlled in detail by the government.
Quota system adopted.-In November 1931, Turkey adopted a rigid system of import quotas applicable to imports from all countries. The exchange control, operated in conjunction with tariff increase, enabled Turkey to balance its merchandise exports with imports in 1930 and 1931 but the export surplus was still inadequate to enable Turkey to meet its foreign noncommercial obligations (interest on Turkish bonds held abroad, etc.). For this reason, the quota system was adopted, supposedly as a temporary expedient.
Quota system modified by clearing agreements.-Turkey's experience with quotas indicated that they were effective for restricting imports but when Turkey began to require increased imports (machinery, steel, gasoline, etc.) to carry out its internal industrialization program, the need for expanding exports became apparent. This led to a modification of the quota system in favor of clearing agreements.
Most of the Turkish clearing agreements were concluded on the principle that Turkey's exports to a particular country would exceed its imports from that country so as to provide an export surplus of 20 percent or more of free foreign exchange (e. g., exports, 100; imports 80 or less) in return for which Turkey would eliminate its quota restrictions on specified imports from that particular country: The first Turkish clearing was with Spain in October 1932 (to liquidate blocked Turkish balances in Spain )followed by clearings with France and Germany in the summer of 1933. "By the end of 1934 Turkey had clearing agreements with nearly every country, except the United States, which was a large market for Turkish exports. Most of these clearing agreements (approximately 20 in all) remain in force although modifications have usually been made in them every year.
Although Turkey las ro clearing agreement with the United States, Turkey abolished quota restrictions with respect to its imports from the United States after January 1933.
Quotas abolished and new clearing regime established.— The import quota system was abolished in July 1937. Turkey's clearing agreements had already removed quota restrictions on the bulk of imports from clearing countries. The quota system was replaced by an arrangement which provided that:
(a) Imports from counties having clearing agreen ents which gave Turkey a margin of 20 percent or more of free foreign exchange were not subject to quantitative or exchange restrictions. The United Kingdom, France, Germany, Switzerland, Belgium, and the Netherlands fell in this category.
(6) Ímports from countries not having clearing agreements with Turkey but which normally bought Turkish products in excess of their exports to Turkey were not subject to quantitative or exchange restrictions. This category included only the United States, Egypt, Palestine, Syria, and Malta.