CHAPTER X.

The general clause of the most favored nation does not comprehend special engagements of reciprocity. It sometimes happens that States owing to propinquity, or to some exceptional condition in their international commercial relations, enter into special arrangements founded upon mutual concession.1 The essence of these special

1 The provisions in the treaty of friendship, commerce and navigation with the King of Denmark, concluded April 26, 1826, and revived by the Convention of April 11, 1857, do not, by their own operation, authorize the importation, duty free, from Danish dominions, of articles made duty free, by the Convention of January 30, 1875, with the King of the Hawaiian Islands, but otherwise subject to duty by a law of Congress, the King of Denmark not having allowed to the United States the compensation for the concession which was allowed by the King of the Hawaiian Islands. Opinion:

Treaty by article 1, declares any particular favor to other nations shall immediately become common to the other party, who shall enjoy the same freely if freely made and upon allowing the same compensation if conditional. Article 4 declares "No other or higher duties (British clause).

"These stipulations, even if conceded to be self executed by the way of a proviso or exception to the general law imposing the duties, do not cover concessions like those made to the Hawaiian Islands for a valuable consideration. They were pledges of the two contracting parties, the United States and the King of Denmark, to each other, that in the imposition of duties on goods, imported into one of the countries which were the produce or manufacture of the other, there should be no discrimination against them in favor of goods of like character imported from any other country. They imposed an obligation upon both countries to avoid hostile legislation in that respect. But they were not intended to interfere with special arrangements with other countries founded upon a concession of special privileges. The stipulations were mutual, for reciprocal advantages. No higher or other duties' were to be imposed by either upon goods specified; but if any particular favor should be granted by either to other countries in respect to commerce and navigation, the concession was to become common

treaties of reciprocity, and the reason that the favors extended by them cannot be enjoyed under the most favored nation clause, is that the equivalents given for the privileges secured are exceptional,-the like of which no other State can offer. If the equivalent or its like can be, and is offered by another State, then the engagement loses its character as special, and the favor for which the equivalent was given, must be extended upon equal terms to other nations entitled to favored nation treatment. It is not sufficient that one State says to another, "if you grant me an advantage over all other nations in your market I will give you a corresponding advantage in mine," for this is just what the favored nation clause is intended to prevent, namely, unfair discrimination. On the other hand, where these treaties incorporate a number of mutual concessions, it is not fair to say that a concession on one particular point was in consideration of an advantage in one particular subject granted by the other party. The sum of the concessions granted on one side must be taken as the consideration for the total of the favors obtained from the other. It will be difficult to prove the special character of a treaty of reciprocity involving only mutual concessions in matters of commerce and navigation unless the contracting States are closely allied either geographically or politically. Where a State has by special treaty of reciprocity granted favors in matters in commerce and navigation, it should in justice grant to every other power with which it has treaty relations, an opportunity by negotiation to arrive at what would be a fair equivalent for the favors extended by the special treaty.

duty to the other party upon like consideration, that is, it was to be enjoyed freely if the concession were freely made or on allowing the same compensation if the concession were conditional." Bartram v. Roberts, 122 U. S. p. 116.

The first offer to enter into special engagements of reciprocity received by the United States was tendered by Denmark on behalf of her possessions in the West Indies. The proposition included a plan for mutual concessions in the matters of duties on imports and was refused by the United States because "the course of policy which has been invariably pursued by the United States in their commercial intercourse with foreign nations, and for a departure from which their Government can, at this time, discover no adequate cause, even if existing and imperative obligations did not put it out of their power to do so, has been to extend equal privileges to all nations who consent to reciprocate them with the United States; and their legislation has been uniformly predicated on that principle."

The negotiations which terminated in the reciprocity treaty between Great Britain and the United States of June 5, 1854, providing for mutual concessions in the trade between the United States and Canada, disclose an understanding on the part of Great Britain, that such special engagements are permissible. Mr. Crampton,

1 "These motives have their source in the treaties now in force between the United States and other nations, by virtue of which the productions of all of them, without distinction, are admitted into our ports upon the payment of equal duties, and, in all other respects, upon equal conditions. These stipulations put it out of the power of this Government to make any exception in that regard, in favor of the possessions of His Danish Majesty." Mr. Van Buren, Sec. of State, to General Von Scholten, November, 29, 1830 (a reply to Denmark's proposal for an extension of article 6, of treaty of 1826). Ho. Ex. Doc. 21st Con. p. 10, 2d Sess.

(It is questionable if more stress is not laid on uniformity of duties, as shown below.)

"The course of policy which has been invariably pursued by the United States, in their commercial intercourse with foreign nations, and for a departure from which their Government can, at this time, discover no adequate cause, even if existing and imperative obligations did not put it out of their power to do so, has been to extend equal privileges to all nations who consent to reciprocate them with the United States; and their legislation has been uniformly predicated upon that principle." Ibid.

the British Chargé d' Affaires at Washington, under instructions from his Government, addressed the American Secretary of State as follows: "It has been objected that, if certain agricultural articles (more particularly wheat) the productions of Canada, were admitted free of duty into the United States, under a convention with the British Government, for a reciprocal free trade between that province and the United States in such productions, the like productions of other nations having "reciprocity treaties" of commerce with the United States, must be admitted on the same terms. Had any other nation, a colony similarly situated, she might then be borne out in claiming that such colony should be equally favored; otherwise not." He also called attention to the fact

1 Mr. Crampton, British Chargé d'Affaires at Washington, under instructions from his Government, proposed, in a note to Mr. Clayton, March 22, 1849, a scheme for reciprocal free trade in natural products between the United States and Canada. Mr. Crampton's memorandum accompanying his notes reads as follows: 'It has been objected that, if certain agricultural articles (more particularly wheat), the productions of Canada, were admitted free of duty into the United States, under a convention with the British Government, for a reciprocal free trade between that province and the United States in such productions, the like productions of other nations having 'reciprocity treaties' of commerce with the United States must be admitted on the same terms.

"To this it may be replied, that no nation could claim for itself an advantage, under a convention between Great Britain and the United States, which Great Britain had not obtained under that convention. Had any other nation a colony similarly situated, she might then be borne out in claiming that such colony should be equally favored; otherwise not.

"A precedent has already been established which involves this principle, and makes a distinction between an inland colony and an independent State. An Act passed in the British Parliament in 1825 (the 6th George IV, chapter 13, clause 32), enacts that the same tonnage duties shall be paid on American vessels importing goods into either province of Canada, by the inland waters, as are or may be for the time being payable in the United States on British vessels. In the year 1831, the United States passed 'an act to regulate foreign trade on the Northeast and Northwest Boundary,' (chapter 98, March, 1831), remitting all fees on British vessels entering their ports on that boundary; consequently, up to the present moment, no fees are exacted there on either side, whereas they still exist in the Atlantic ports on all foreign vessels." Ho. Ex. Doc. 64, 31st Con., 1st Sess.

that a precedent involving this principle had been established, namely, Act of Parliament, 6 George IV, chapter 13, clause 32, which, upon terms of reciprocity, gave special concessions to American vessels in the inland waters of Canada.

The next treaty of reciprocity entered into by the United States was that with Hawaii, dated January 30, 1875. It was founded upon mutual concessions in duties on imports, the productions of the respective countries-and raised a perplexing question involving the commercial relations between Hawaii and Great Britain. In consideration of the admission duty free in ports of the United States of her natural products, Hawaii agreed to admit duty free in her own ports certain articles, the produce and manufacture of the United States, and stipulated further that the like articles, the productions or manufacture of any other nation, should not be duty free, and that she would not lease or otherwise dispose of or create any lien upon any port, harbor, or other territory in her dominions, or grant any special privilege or rights of use therein to any other power. It will be seen by an examination of this treaty, that no other power could offer to the United States the equivalent granted her by Hawaii, which included not only freedom for her products and manufactures, but the leasing of a port in the Hawaiian Islands. Hawaii on the other hand had gained as a con

Ibid.

Mr. Merritt, Canadian Commissioner, gave the same views. In a note from Mr. Clayton to Mr. Crampton, the Secretary of State quoted the necessity of referring the question to Parliament, and said the United States Executive likewise feels that as tariff is a prerogative of Congress, it had best be left to the legislative branch of the Government, and that no treaty or convention regulating tariff will be considered by the Executive. Ibid.

Sir Henry Bulwer to Mr. Webster, June 24, 1851, offered to the United States the free navigation of the waters of the St. Lawrence, the canals and trade with all British North American Colonies on basis of reciprocity. Sen. Ex. Doc. 1, 32d Con. 1st Sess.