The fair and market traffic is separately regulated by § 112 of the Act, which lays it down that

"In order to encourage the use of foreign fairs and markets, the duty-free importation of goods of Federal origin which have remained unsold, may be permitted.

"There may also be allowed to foreign merchants and industrials, who frequent domestic fairs and markets, the import duty on their unsold goods on their re-export."

It is laid down by the Federal decision of 5th July, 1888, that re-imported goods, which have been exported abroad against drawback, may be re-imported free of duty on the repayment of the drawback given.

"Goods of foreign origin which have undergone an improvement process in the interior under reservation of customs duty may be re-imported as return goods (§ 113) on resumption of the customs obligation noted at the time of entry for improvement."

CHAPTER XI.

COMMERCIAL AND TARIFF TREATIES.1

§ 1. WE may define a commercial treaty as an instrument regulating for a period of time (which may be fixed by the instrument or may be indefinite, as depending on the will of the parties themselves), the commercial relations of two or more States. This instrument must be assented to by the Executives of the States in question, with or without the further assent of the legislatures. Such an instrument differs from an autonomous regulation of such relationship-for two States may accord each other privileges by the device of legislative enactments or executive decree without the conclusion of a treaty by the fact that a treaty is always bi-lateral in origin; there is always a co-contractant, whether the benefits are reciprocal or not, whereas this is not the case with a domestic law or regulation.

For our purposes we are more particularly concerned with those aspects of commercial treaties which deal with importation and exportation, and, in still narrower definition, with the tariff treatment of imports and exports, together with those formalities and processes which attend import and export as commercial and fiscal phenomena. The growing importance of these aspects of commercial intercourse between States has led to the emergence of that particular class of commercial treaties which is, somewhat loosely, known as the Tariff Treaty. No rigid line of distinction can be drawn between the genus and the species, but to the older technical terms of "Treaties of Commerce and Navigation," or "Friendship, Commerce, and Navigation," or Friendship and Alliance,' there must now be added" Treaty of Commerce, Customs, and Navigation." This is not to imply that tariff treaties, in the sense of treaties regulating and fixing customs duties are a

1 In this chapter, the letters M.F.N. will be used as a convenient abbreviation of Most-Favoured-Nation.

new invention of the recent past it is only an indication of the fact that such matters are now of such importance as to lead to inclusion among the technical titles of the instrument employed. In truth, however, the phrase tariff treaty is an expression of economic rather than diplomatic importance, and the connotation of the phrase being loose, it is descriptive rather than logical in import.

§ 2. The objects with which commercial and tariff treaties are concluded are, of course, very numerous. But the detailed content is capable of subsumption under very much less complicated categories as soon as we ask what the detailed regulations are in every case intended to effect. Here we meet with two aims: the contracting States may attempt

to

(1) Make the position as between themselves at least as favourable as it is between one of them and any other State.

(2) Make the position of the States as between themselves better than it is between one of them and any other State.

Here we are looking at the matter from the standpoint of advantage:, in the first case the States attempt to obtain a condition of equality with that of other or more favoured States in the second case they attempt to obtain a position of preference as compared to other States.

The technical problem which presents the greatest logical interest is whether these two positions are capable of being reconciled. It looks at first sight as if they were totally opposed, but this is not the case. Two contracting States may quite logically agree to treat one another at least as well as either of them treats any third State, and may at the same time agree to give one another concessions which they have not given to any other third State with which they have been concluding treaties in the past. The problem really becomes difficult when States enter into a series of agreements, because then they have to reconcile the different treaties into which they have entered with each other. If State A enters into a series of agreements with States B, C, and D, in each of which it promises to treat the contractant at least as well as any other

1 Compare the classification in Grunzel," Handelspolitik."

State, and at the same time gives special advantages to each of its co-contractants, are the others entitled to demand those concessions, or are they not? To this question we can give no definite answer at this stage, for the facts of international intercourse yield two divergent interpretations. All that we need do is to indicate the problem which we have thus raised it is the problem of "Most-Favoured-Nation" treatment, in many ways the most important of all the problems which commercial treaties raise. Its detailed consideration must for the moment be postponed.

A moment's reflection will show that the promise of mostfavoured-nation treatment, however we may define this, is not necessarily the best standard when we are dealing only with the position of two States inter se. The standard of comparison may be shifted from the concessions granted to any third State to the rights of the citizens of the grantee State. In this way we obtain a second standard of comparison, that which is usually known as "National Treatment," or "Inland Parity as compared to "Foreign Parity." In this

the two contracting States promise one another that as concerns certain subjects, they will treat the citizens or goods of the other at least as well as the goods and the persons of their own citizens.

Though these two standards are distinct, yet they are connected by the network of treaties, for the simple reason that if two States promise one another national treatment, and then promise other States most-favoured-nation treatment, then these latter States may quite legitimately claim that they are also entitled to be treated on a national basis, for otherwise they are not being treated as favourably as the mostfavoured-nation, assuming that there is a material difference in treatment as a result of the different promises made.

Of course, such a claim could only be preferred if the promise of most-favoured-nation treatment in the one case and national treatment in the other covered the same ground. The simplest way of avoiding difficulties on this ground is to adhere to a uniform practice-that is, to separate the matters in which national treatment is given from those in which most-favoured-nation treatment is given, and at the same time never to give one State national treatment in matters in which other States have only been given favoured nation status. To some extent such a division of the field arises.

"naturally." National treatment is extended in those cases in which, granted a desire to extend most favourable treatment in the absolute sense of the word, the standard of estimating V what is most favourable treatment is afforded by the rights of the nationals of the contracting States. Thus, as regards the rights of settlement, the acquisition of property, the treatment before the courts of law, and so forth, the national standard is obviously the best basis. But in other cases, also assuming an equal desire for the most favourable treatment absolutely, no national standard is possible. Such a case is presented for instance by the treatment of consular officers.

But though the practical problem of discrimination between two nations may be avoided by uniformity of practice, it must not be overlooked that the national standard and the most

favoured standard may be conflicting standards. That is the cases in which one or the other can be adopted are by no means small in number, and it must not be assumed that in practice, where choice is possible, the national standard is the one adopted, where that would lead to the greater rights being obtained by the foreigner. It is true that in some cases where differentiation could easily be practised between the national and the foreigner, no differentiation is in fact practised, as, for instance, discrimination between imports on the ground of the nationality of the importer; though discrimination on the ground of the nationality of the ship is by no means so frowned upon. The choice between the two standards is in fact very largely a matter of feeling at different times, and a period of anti-foreign feeling will reduce the number of matters in which national treatment is granted, whilst periods of more "cosmopolitan" sentiment will increase them. The tendency at the moment is distinctly in the direction of restriction, whilst in the 19th century the most usual matter in which national treatment might have been possible, and was in fact not granted, was the reservation of the coasting trade.1

1 For an easy method of comparison of these two grants, see Cd. 3395, “ Return of Most-Favoured-Nation Clauses," and Cd. 3396, “ Return of National Treatment Clauses," both referring to the Treaties between the U.K. and Foreign Powers in force on the 1st January, 1907. For exclusion of the coasting trade, see, e.g., Treaties with Austria-Hungary, 30/4/68, Art. 2; Colombia, 16/2/66, Art. 9; Egypt, 29/10/89, Art. 5; Roumania, 31/11/05, Art. 10; Uruguay, 13/11/85, Art. 3; on the other hand, the coasting trade is specifically included in the category of