NOTE II. TO CHAPTER VII.

THE DYESTUFFS ACT OF 1920.

TOWARDS the very end of the legislative session of 1920, the Government announced its intention of introducing legislation with the view of carrying out its pledge to afford assistance to the dye-making industry. As a result there was passed, in the teeth of powerful but unavailing resistance, the Dyestuffs (Import Regulation) Act, 1920 (10 and II Geo. V., ch. 77).

This Act prohibits the importation, for a period of ten years, except under licence, of "all organic dyestuffs, colours, and colouring matters, and all organic intermediate products used in the manufacture of any such dyestuffs, colours, or colouring matters shall be prohibited."

The prohibition shall not extend to the importation of such goods when wholly produced or manufactured in some part of the Empire, but this must be proven to the satisfaction of the committee set up under the Act.

To assist the Board of Trade in the grant of licences, there is set up an advisory committee of eleven persons. Of these eleven, five are to be persons "concerned in the trades in which goods of the class prohibited to be imported by this Act are used," three are to be representative of the manufacturers of such goods, and the last three are to be persons "not directly concerned as aforesaid." One of the impartial persons is to be chairman of the committee. Any applicant for a licence (which is to be non-transferable, and for the grant of which a fee not exceeding five pounds may be charged), may demand the withdrawal of a member of the committee whilst his application is being discussed, on the ground" that he is prejudiced, owing to the fact that such member

is

a trade competitor." In addition to the Advisory Committee on Licences, the Act contemplates the appointment of a second committee for the purpose of advising the Board "with respect to the efficient and economical development of the dye-making industry." 1

1 See also B.T.J., 9/12/20, pp. 682-3.

CHAPTER VIII.

RETALIATION, RECIPROCITY, AND COLONIAL
PREFERENCES, ETC.

§ 1. Retaliatory and Reciprocal Duties.-The first point which requires discussion is the meaning to be assigned to these terms and their logical relationship. The policy of retaliation in its widest sense refers to any act of tariff policy (used in a broad sense) by which a nation counters a tariff policy of which it disapproves. The policy of reciprocity in its wider sense refers to any act by which a nation responds to a tariff,

policy of which it approves. Retaliation and reciprocity then alike refer to returning "like for like," only in the first case what is returned are unfriendly, under the second case, friendly acts.

In the history of the tariff controversy in this country in the last thirty years, the power to apply retaliatory tariffs has frequently been asked for-and as the ensuing discussion will show not inconsistently-even by those who in general maintained the free trade position. The essential point here is to ask in what sense we are to understand the meaning of this demand. There are two ways in which it may be interpreted which we must now analyse. Since retaliation is in all cases a policy of revenge for "unfriendly" actions, the two meanings of the term in this second and more technical use of the phrase turn upon the definition we choose to give of an "unfriendly" action.

Let us ask what are the possible acts against which retaliation is to be practised? For our purposes they divide into two classes (1) Acts which on the part of the country which initiates them are intended in principle to affect all countries. (2) Acts which in principle are intended to affect only one country. Of course an act nominally general may, in fact, be aimed at a particular country, as we have previously | seen in the case of differentiation. Nevertheless a broad

line of distinction can be drawn between these two cases: the importance of the distinction lying in the very different retaliatory measures which become possible. In the first case the only retaliatory measure which can be applied is to raise duties where they have been in existence previously or to impose duties on articles hitherto free, with a view to a subsequent bargain, for, so long as the general relations. between all the parties remain unchanged, no specifically unfriendly act can be alleged.

1

Let us take a case. Suppose that the view of the impending determination of tariff treaties a country passes a new tariff law by which duties are increased by 20 per cent. What reply can be made? All the countries most concerned will tend to raise their tariffs in order to maintain the same relative positions, but so long as all the countries generalise their tariffs the only countries which will suffer relatively are those which do not impose duties for protective purposes, and which do not have sufficient power in other ways to cause the grant to them of most-favoured-nation treaties by which they obtain subsequently any reductions agreed upon. It is only when, on the basis of these general retaliatory measures, an alteration in the relative position begins to take placei.e., when reductions are made to some, but not to all, that specific retaliation takes place or at all justified. The aggrieved parties may then argue that they are being treated less favourably than other countries, and are entitled to enforce specifically hostile Acts. Such specific Acts generally follow the failure to arrive at some definite agreement on the future commercial relations of two countries,2 and constitute the formal aspect of a "tariff war."

When the position is examined, de facto, complications at once arise:

the following

(1) The first point concerns bi-linear tariffs. The question arises whether the mere failure to grant the lower rates to a given power, constitutes such a specifically unfriendly act as to justify the taking of special retaliatory measures. Let us suppose a country with a bi-linear tariff. With countries A, B, C it maintains treaties by which the lower rates are granted, with countries D, E, F no such treaties exist. Now

1 Even then they may suffer through inconvenient differentiations.

2 I have used this phrase to remove the impression that an increase of duties

is the sole ground for retaliation.

suppose that, on the determination of the existing treaty, C fails to come to an agreement with regard to a new treaty. The general tariff is thereupon applied to its products. Does this constitute a specifically hostile act, entitling C to special retaliation? It is certainly being treated less favourably than A and B, but not less favourably than D, E, and F. The argument that such a position as we have outlined constituted treatment less favourable than that accorded to other countries," is logically not unassailable, but it seemsto be the result to which historical experience points.

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This question must, of course, be held apart from the further and entirely different question as to why an agreement is not arrived at. With regard to this second question the details of the negotiations which ended without result must be studied.

(2) Though the failure. the failure to conclude agreements may justify specific retaliatory acts, it does not in the least follow that it is desirable to enforce such acts-that is to say, no other consequences may follow but the enforcement on both sides of the higher rates of duty which in other cases have been reduced. A survey of the practice followed in recent tariff wars may, therefore, be of interest.

(a) In the Franco-Italian tariff disputes, apart from shipping discriminations, Italy maintained surtaxes between 1888-1889: France between 1888-1892. Thereafter, until February, 1899, both sides maintained their maximum or general tariff against the products of the other.

2

(b) In the Franco-Swiss tariff war, the Swiss imposed differential duties as from January 1, 1893 refused to pass. the pending Convention as to Literary Property, refused to pass the additional article as to frontier regulations of the treaty of 23rd October, 1882, and raised difficulties as to commercial travellers, the enclave of Gex, and diverted their transit trade by railway regulations. The French only applied their maximum tariff, which has been assigned by Franke as the cause of their unsuccess. An agreement was concluded in July, 1895.

1 On this dispute, see Cd. 1938, " Tariff Wars, etc.," pp. 6-38; Franke, “ Der Ausbau des heutigen Schutzzollsystems in Frankreich,” pp. 16-23; Ashley, “Modern Tariff History," pp. 394-7;

The Swiss differential rates are given in Bajkic, "Die Französische Handelspolitik," 1892-1902. See also Franke, op. cit., pp. 46-58; Ashley, op. cit., pp. 408-10, and Cd. 1938, pp. 1-6 and p. 78, et seq.

(c) German-Russian Dispute.-Germany applied §6 of Tariff Law of 1879 on August 1, 1893: Russia increased the duties of her maximum tariff by 50 per cent. differentially, and raised tonnage dues.1 A new agreement was signed in February, 1894.

(d) German-Spanish Dispute.2—-In May, 1894, both sides applied their maximum tariff. On May 25, 1894, Germany applied a 50 per cent. surtax on Spanish goods in June, 1895 (in virtue of the law of 18th May, 1895), it imposed surtaxes of 100 per cent. on dutiable and 20 per cent. on free goods. From 1896-1899 a new modus vivendi on the basis of lowest autonomous rates regulated the commercial relations of the two countries; in February, 1899, new most-favourednation arrangements were concluded.

(e) German-Canadian Dispute.-Canada, in virtue of §5 of Ed. VII., c. 15 (Canadian Statutes), imposed a surtax of 33 per cent. upon German goods from November 28, 1903, to March 1, 1910. Germany imposed general tariff rates.

(f) Roumanian-Austro-Hungarian Dispute. The Austrian Tariff Act of 1882 gave power to impose surtaxes of 100 per cent. plus 15 per cent. on free goods. In June, 1886, in consequence of fruitless negotiations, Roumania applied her general tariff, Austria-Hungary retorted with surtaxes, which were not withdrawn until Roumania denounced all her treaties in 1890, as this removed the differentiation against AustriaHungary. A new agreement resulted in December, 1893.

§ 2. When we turn to reciprocity we again find that the word has a general and a specific use.

In its widest use, it is applied in contradistinction to a policy of complete autonomy as implying any process by which tariff advantages are offset against one another. Thus, the

1 Cd. 1938 (pp. 38-76). Ashley, op. cit., pp. 92-99. The German surtaxes amounted to 50 per cent.

2 Zimmerman, "Die Handelspolitik des Deutschen Reiches," 1871-1900, pp. 308-9; Ashley, op. cit., p. 100.

3 Ashley, op. cit., p. 101; Porritt, "Sixty Years of Protection in Canada," pp. 413-416. For the causes of this dispute, which turned upon the question of the grant of the British preferential tariff rates in return for German conventional tariff, whilst Canada took the line that "this is a matter of purely domestic policy as distinct from foreign policy," and, therefore, would offer only most-favourednation treatment exclusive of these rates. See in addition Cd. 1,781 of 1904, Copy of Canadian Sessional Paper containing Correspondence in Connection with the German Tariff."

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Grunzel," Handelspolitik," p. 432.