The United States assimilate trade to and from Porto Rico with coastwise trade, but owing to lack of shipping this rule has never been applied to the Philippine Islands, and by the merchant marine act of 1920 such application was postponed until Feb. 1, 1922.135

Japan restricts her trade with Formosa to Japanese vessels, but the coastwise trade of Korea and its trade with Japan have been left open to all comers.

136

Spain restricts the trade between the mother country and the colonies to Spanish vessels, and in addition grants preferential tariff rates upon imports made directly from the colonies in Spanish vessels, i. e., the tariff reduction is used to build up direct connections with the colonies and is not granted to colonial products brought to Spain in Spanish vessels unless the voyage is direct within the meaning of the laws and regulations upon that subject.

In the Portuguese colonial trade a great variety of regulations are in force. Foreign vessels have been allowed to participate since 1877 in the coasting trade of Mozambique; since 1880 in the trade between Macao, Timor, Portuguese India, and Mozambique; and since 1881 in the trade between Portugal and these four colonies east of the Cape of Good Hope.137 Except for the routes just enumerated, foreign vessels are excluded from the intra-imperial trade of Portugal; that is, from the routes between Portugal or a colony west of the Cape 138 and other Portuguese territory of the same region, to which may be added the coastwise trade of Angola 139 and the interisland trade of the Cape Verde Islands. But while foreign vessels are admitted to certain trade routes within the Portuguese Empire, as well as to the trade between the ports of the empire and non-Portuguese territories, the use of Portuguese vessels in these routes is encouraged by differ

185 Section 21 of the merchant marine act reads as follows: "That from and after February 1, 1922, the coastwise laws of the United States shall extend to the island Territories and possessions of the United States not now covered thereby, and the [shipping] board is directed prior to the expiration of such year to have established adequate steamship service at reasonable rates to accommodate the commerce and the passenger travel of said islands and to maintain and operate such service until it can be taken over and operated and maintained upon satisfactory terms by private capital and enterprise: Provided, That if adequate shipping service is not established by February 1, 1922, the President shall extend the period herein allowed for the establishment of such service in the case of any island Territory or possession for such time as may be necessary for the establishment of adequate shipping facilities therefor: Provided further, That until Congress shall have authorized the registry as vessels of the United States of vessels owned In the Philippine Islands, the government of the Philippine Islands is hereby authorized to adopt, from time to time, and enforce regulations governing the transportation of merchandise and passengers between ports or places in the Philippine Archipelago: And provided further, That the foregoing provisions of this section shall not take effect with reference to the Philippine Islands until the President of the United States, after a full investigation of the local needs and conditions, shall, by proclamation, declare that an adequate shipping service has been established as herein provided and fix a date for the going into effect of the same.' (Statutes at Large, 1919-1920, p. 997.)

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128 This was in accordance with the pledge made at the time of the annexation of Korea (1910) to maintain the status quo for ten years. This period has expired but no information is available to show that the Korean coastwise trade and the Korea-Japan trade has been closed to foreign vessels.

137 The law of 1881 opened all trade between Portugal and her colonies, but in 1885 the intra-imperial trade west of the Cape was again closed to foreign vessels. Strictly the trade between Portuguese India and Mozambique was not opened until 1881.

185 West African timber, however, which enters free, need not come in Portuguese vessels, and since April 28, 1919, the same rule applies to the maize admitted free from the colonies. Cotton, which likewise receives greater favors than the usual 50 per cent differential, must be transported in vessels making regular trips between Portugal and the colonies. This last distinction is found also in application of the differential tonnage duties of the Cape Verde Islands and Portuguese Guinea. If all the regular lines connecting Portugal and the colonies are Portuguese, this discriminates against Portuguese and other tramp vessels.

139 Foreign vessels generally have the right by treaty to discharge part of their cargo in one port and carry the remainder to other ports. A cargo transshipped for the coastwise trade of Angola may be transferred only to a Portanese vessel and there are required of foreign vessels formalities which are not required from Portuguese vessels making such transshipment. Foreign vessels are subject to differential shipping dues in Timor and the African colonies; the differentials were increased in August, 1921 (decree

ential tariffs. Thus the 50 per cent differential in the import duties levied in Portugal on colonial products is limited to those transported in Portuguese vessels. The duties levied upon exports from the colonies, particularly those imposed in 1916 or later, not only limit the differentials on exports to Portugal to shipments made in Portuguese vessels, but also grant a smaller differential to exports to foreign countries in Portuguese vessels. Preferences of this kind are found in the export duties of Mozambique, Sao Thomé, and Principé, and in the coffee duty of Angola.140 The maize of Angola pays an export duty whose only differential is in favor of Portuguese ships regardless of their destination. It will be seen that the favors to Portuguese vessels affect chiefly the trade from the colonies to Portugal, being found both in the import duties of Portugal and in the export duties of the colonies. There are few shipping restrictions in the import duties of the colonies.

In the French system "direct" importation from the country or colony of origin rather than transportation in French vessels is the characteristic requirement for all imports which pay rates lower than those of the general (maximum) tariff. This requirement is enforced both in France and in the assimilated colonies, and is not limited to intra-imperial trade but is part of the general commercial policy of France.141 Colonial products, other than industrial raw materials, are dutiable at high rates under the French general tariff and the rule which restricts lower rates to merchandise imported directly, effectively prevents these products from being imported from French colonies through European entrepôts. The same object is sought in regard to imports of raw materials, with a few exceptions, from all non-European sources by means of special surtaxes on the importation of non-European products through European ports.142 This latter provision, especially, is a counter measure to the Spanish and Portuguese preferential tariffs, which are designed to make the ports of those countries entrepôts for the products of their colonies. The rule of direct importation operates in favor of French shipping (see p. 159) and it is replaced by a legal prohibition upon foreign shipping only in two cases: In the Franco-Algerian trade,143 which is considered part of the coastwise traffic of France, and in the importation of those products of Tunis, which receive tariff favors in France. Except in the Algerian trade, therefore, the French shipping restrictions are found exclusively in connection with tariff favors.

Foreign vessels engage freely in the trade between France and the colonies other than Algeria and in intercolonial trade, and, except on certain importations from Tunis, if they ply" directly" between the

140 Exports from Mozambique in Portuguese vessels receive a reduction of 50 per cent of the export duties if the destination is Portugal and of 10 per cent for any other destination. Coffee and cocoa from Sao Thomé and Principé pay about one-third of the full duty if shipped to Portugal in Portuguese vessels, but if shipped elsewhere in the same vessels they pay about two-thirds of the duty.

14 The minimum" tariff rates (i. e.. the rates of the second column of the tariff, not the special reductions granted to products of French colonies) have been granted to many countries by treaty, but always with the limitation that these rates are to be enjoyed only by merchandise transported directly from the country of origin to France. "Directly

has received both in the foreign trade and in colonial trade various modifications-e. g., importation through another country also entitled to the minimum tariff rates is allowed. Specific exceptions are also made-e. g., transshipment at San Francisco for French Oceania is permitted.

142 Products of the Cape Verde Islands imported through Funchal, Madeira, are au exception.

14This restriction was suspended in 1915, and remained suspended until Oct. 25, 1921.

ports-practically confining themselves to this trade-the merchandise which they carry is admitted on payment of the same duties as that carried in French vessels. However, many colonial products in France receive no tariff favors, either because they are on the free list regardless of origin or because they are listed with a single rate of duty, which is paid alike by the products of the nonassimilated colonies and those of foreign countries. These goods may be imported into France in foreign vessels either directly or indirectly without a tariff penalty;144 and actually the participation of foreign vessels in the trade between France and her colonies is confined almost wholly to these articles. As all products of France enter her colonies free, and as the general free lists of these colonies are limited, foreign vessels are practically excluded from the trade in that direction.

Canada, Australia, and the British West Indies limit preferential rates to products transported "directly" from some other British country. The exemptions of the United States-Philippine trade are similarly limited. But the United States and Canada consider shipments in bond through contiguous countries as "direct."

Port and tonnage dues and fees for various services, such as pilotage, sanitary inspection, and measurements, are sometimes levied on a differential basis. Differentials in these dues, however, are rare outside of the Portuguese colonies, which generally discriminate either between national and foreign ships or, regardless of nationality, between tramp vessels and those which give regular services between the colony and Portugal.

XII. DISCRIMINATIONS IN MINOR DUTIES AND IN METHODS OF VALUATION AND PAYMENT; CONCEALED PREFERENCES-SUMMARY.

While this study is directed primarily toward the preferences explicitly set forth in the laws and exhibited in the schedules of the customs tariffs, numerous other methods and instruments of discrimination against foreign trade have necessarily received some attention. These may be classified as (a) open discriminations either in the minor duties and fees collected at the ports of entry or in the requirements for the valuation of goods and for the payment of duties or in the formalities required in the transactions, and as (b) concealed preferences or "jokers" of various sorts, such as discrimi natory classifications and preferential selection of dutiable articles. An open discrimination may be defined as one in which some such word as foreign" or national" is used, so that the text of the law or regulation reveals the existence of the differential treatment; but where the name of a particular foreign country or city is used in connection with specific articles it will generally be found that the name has come to indicate a type of article, and is used in the tariff schedule as a trade name, and not as a geographical term, e. g., Mocha coffee, Panama hats, Italian cloths, Brussels carpets, Nottingham lace, and China ware. And even where the place name has not become a trade name, and where the whole of the product

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144 Except that if imported indirectly nearly all products pay the surtax of indirect. importation. The most common rate of this surtax is 3.60 francs per 100 kilos. (At normal exchange about 33 cents per 100 pounds.)

comes from one country, the separate designation may be defensible if the product has distinct characteristics and differs noticeably in quality and value from similar products of other countries. A concealed discrimination is one which results from the actual application of rules and tariff schedules whose phraseology and construction give no appearance of partiality, i. e., which use no terms denoting nationality or location. These concealed discriminations are revealed usually only by a comparison of the tariff schedules with the exist ing trade. For instance, it is found that the French limitation of tariff favors to colonial products transported "directly" differs in no great degree in its results from the provision found elsewhere that the transportation must be in national vessels.

Classifications may conceal discriminatory treatment.145 For instance, the division of wines into those valued at 6 shillings and more, and those valued at less than 6 shillings, may constitute an effective method of discrimination in favor of Australian wines, but it is not an open preference, such as naming Australian wines specifically and separately in the tariff schedules and granting them a rate lower than that on other wines. Accordingly, a knowledge of the nature, value, and origin of the various products at least as intimate as that implied in the details of the tariff classification is necessary to render it possible to recognize which of these classifications are discriminatory and which of the discriminations are really warranted by differences in the character or value of the classes of commodities differentiated. Thus a duty upon mineral oils levied upon oil imported in containers, at a rate per gallon twice as great as that upon oil imported in bulk, discriminates against the former only in case the container is worth less than the oil contained, and in case importation in bulk is the method characteristic of national firms, and importation in cans is the method used by their foreign rivals.146

Less effective as a discrimination in favor of national goods is the effect produced by selecting articles imported mainly from foreign countries or exports to foreign countries for taxation, or higher taxation, and leaving the chief products exchanged between the colony and the mother country free or at lower rates. In so far as distinct classes of articles compete with each other, this discrimination may be of advantage to national trade. For instance, if beer is dutiable at 29 per cent and brandy at 185 per cent (as it was in German Southwest Africa) the consumption of French brandy is likely to be curtailed in favor of German beer. Where there is a greater difference in the character of the articles, as, for instance, between cereals and meats, or silks and cottons, or cement and iron, the competition is, as a rule, not sufficiently direct to render this form of preferential classification effective.

In both these cases, moreover, the mere presence of a discrimination does not prove any intent to discriminate, neither does it prove

145 Discriminatory treatment means, in this instance, treatment which distinguishes national or colonial products for the purpose of assigning to them separate rates in the tariff schedules. The extent to which it may be considered legitimate to classify cheaper wines separately and give them a lower tariff rate is suggested in the discussion on p. 359. 148 The illustration is suggested by the Mesopotamian duty upon oils, which, it is alleged, discriminates against oils imported in containers, but which is, so the British assert, simply the result of the reduction of the ad valorem rate of 11 per cent to specific terms. It is evident, however, that any changes in the relative value of the oil and the container will affect in one direction or the other the equal operation of the specific rates as previously fixed and nullify in practice the impartiality asserted to have been observed in imposing the duty.

unfair discrimination. The discrimination may be justifiable on wellestablished economic or moral grounds. The articles taxed may be those generally recognized as most suitable for taxation either for fiscal or for social ends, or the taxation certain exports and the exemption of others may depend upon the relative prosperity of the industries and their capacity for paying taxes. It might be found, for instance, that the new industries being established in a colony were in the hands of nationals and were sending their products to the mother country, while the well-established industries, whose products could afford to pay taxes, were those in which the natives or foreigners were chiefly interested The Algerian export duty on phosphates, which are exported chiefly to countries other than France,

y represent an effort to secure a revenue at the expense of the foreign consumer, but it should be noted that the taxation of phosphates seems to be generally recognized as desirable by the exporting countries. 147

In quoting certain cases, therefore, where classifications of these kinds appear to discriminate against the foreigner, no judgment is intended as to the fairness of the practice. That can only be determined by a detailed trade study, such as has not yet been undertaken, and by the establishment of standards of fairness which do not yet exist.

Minor fees.-Minor fees on goods imported or exported, as distinct from shipping dues, are frequently found under a considerable variety of names--octrois, consumption duties, municipal taxes, port improvement duties, commercial and industrial contributions, statitical duties, landing duties, etc. The comparatively important octrois and consumption duties have been discussed in connection with tariff rates. The designations of the other taxes call for no special explanation except perhaps the statistical duties. These are generally levied in French, Italian, and Portuguese colonies on goods otherwise free, for the purpose of more easily enforcing the regulations for the declaration and recording of the statistics of merchandise imported and exported. Their rates are low, not exceeding 1 per cent, or they are levied at so much per package, ton, etc., regardless of value. Certain of the Italian preferences include exemption from this statistical duty, and there is a differential rate of 0.1 per cent and 0.2 per cent on cereals and meat, etc., exported from Loanda, Benguela, and Mossamedes. Differentials in these minor taxes are characteristic of the Portuguese colonies and are not generally found elsewhere. Thus, the municipal tax in Lourenço Marques is 25 per cent of the duty, which, of course, increases the total amount of the differential. The commercial and industrial taxes in Mozambique do not generally exceed 5 per cent and these all contain small differentials. A further discrimination is found here in that for this taxation (though not for the customs duties) foreign goods nationalized and reexported from Portugal are still classed as foreign. In Angola the industrial tax is 13 per cent ad valorem on foreign goods as compared with 1 per cent on national products, and the fee for transferring goods to the customhouse is likewise differential-1 real per kilogram against 1 real.149 In

147 Except the United Stat which has no constitutional power to levy export der outside of the " 'unincorporated possessions. 14 One real per kilo equals, roughly, 5 cents per 100 pounds.