Australia. During the first six years of its existence as a Commonwealth, Australia treated British goods precisely like all others. In 1907 and 1908 preferences to the mother country, averaging about five per centum ad valorem, were established on about half of the dutiable items in the tariff. About three-fifths of the imports from the United Kingdom were affected. Considerable additions to the preferred list were made in 1911, in 1914 and in 1920. Both the amount of the preference and the proportion of preferred to total tariff items were increased. Australia does not extend preferential treatment to the crown colonies. Reciprocal preferences are exchanged with South Africa and New Zealand' and provision is made in the tariff laws for concessional arrangements with reciprocating countries, whether British or foreign.

Australia has always taken care that the granting of preferentials should not interfere with its protective policy. Almost invariably the preferences have been granted not in the form of reductions from general rates but by increasing the rates on goods from non-preferred sources.

Ireland. By Article II of the treaty concluded between Great Britain and Ireland on December 6, 1921, it is agreed that

the position of the Irish Free State in relation to the Imperial Parliament, the Government and otherwise, shall be that of the Dominion of Canada, and the law, practice and consitutional usage governing the relationship of the Crown or representative of the Crown and the Imperial Parliament to the Dominion of Canada shall govern their relationship to the Irish Free State.2

This provision automatically accorded to the Irish Free

1Ibid.

2 Text of treaty: Current History, Jan., 1922, pp. 568 et seq.

1

State full fiscal independence. On April 1, 1923, its government took over from the imperial authorities the customs service operating within the boundaries of the Free State, which thereupon became, for customs purposes a separate entity. The tariff laws inherited from the United Kingdom have been retained with few alterations; preferences are extended to Great Britain and other portions of the British Empire. Several of the other Dominions have extended their preferences to Ireland.

(b) France

The ascendent policy in France, with respect to customs treatment within its empire, has been, since 1892, one of tariff assimilation. That is to say, France appears to be gradually incorporating its colonial empire into one great customs union. The more important colonies generally, and some of the lesser ones, are already governed by the customs laws of the mother country, though not without numerous special provisions designed to meet local conditions. Sugar and pepper from assimilated colonies are not, moreover, given free entry into France; but generous preferential treatment is accorded. Likewise there are instances of taxes upon French goods entering the colonial markets. Of the non-assimilated colonies some must, under treaty guarantees, maintain equality of treatment; others are required to maintain it out of considerations of policy; in the remainder the preferential system is well developed. Among the colonies free trade is the general but not the invariable rule.

(c) Italy

The preferential system in the Italian colonies is uneven and apparently not as yet well worked out. There are

1Commercial Intelligence Journal (official Canadian publication), April 28, 1923, p. 691.

present certain rather insidious preferences, such as the practice in Libia of favoring Italian goods by a process of undervaluation, with the result of making the duty about half that on foreign goods. Italian products enter Eritrea almost dutiless and effective preferences, especially upon cotton goods, are accorded by Somalia. The reciprocal preferences granted by the mother country were rather ungenerous prior to 1921, when a law was enacted under which most colonial products now enter free of duty. Apparently the only example of intercolonial preference is in the tariff of Somalia, which grants special rates to four products of Eritrea.

(d) Japan

Like France, Japan is manifestly pursuing a policy of tariff assimilation within its colonial empire. This process has been accomplished in Formosa, Saghalin and the Pescadores. At the time of the annexation of Korea (1910) an open-door policy was pledged for ten years, at the close of which period assimilation promptly began and may now be regarded as complete. To goods from Japanese leased territory in China, however, where treaty obligations prevent the extension of the Japanese tariff, the minimum or conventional rates, not free trade, are extended. This partial favor partakes of some of the aspects of intra-imperial preference. There is no reciprocal treatment of Japanese goods.

(e) Portugal

The Portuguese preferential system is widespread; indeed, aside from the portion of Angola which lies within the conventional basin of the Congo,' few places under the flag of Portugal are exempt from its application. The rates of preference are, however, uneven and generalization is

1 See infra, subdivision 73 (a).

difficult. An interesting feature of the system undertakes to encourage shipments of foreign goods to the colonies by way of Portuguese ports. Such goods, when re-exported from Portugal, though not altogether exempt from certain fees there, are not liable to Portuguese customs charges and receive the substantial reduction of twenty per centum in the colonial duties.1

(f) Spain

The colonial policy of Spain, both traditionally and in theory, is definitely preferential. In actual fact, however, the Spanish system makes a measurable approach toward an open-door regime. Thus the Open Door prevails in Morocco by treaty; and in the Canary Islands, Spain's commercially most important possession, equality of treatment is accorded to the products of all countries except for preferences in favor of sugar from Spain and of certain products from the island of Fernando Po. In contrast with the British preferential system, Spain's treatment of colonial products is more generally preferential than is the treatment accorded by the colonies to the mother country.

51. OPEN-DOOR COLONIAL EMPIRES

Belgium and the Netherlands, as was the case with Germany before the Treaty of Versailles took away its colonies, do not maintain intra-imperial favors in customs matters. Belgium is forbidden to do so under international agreements governing the Congo country, a requirement not infrequently evaded in the past.

The present open-door policy has been maintained by the Netherlands without alteration since 1874.

1 This favor is, in some cases, confined to goods arriving in national vessels.

52. THE PROBLEM IN REGARD TO ASSIMILATING DISTANT COLONIES

In considering examples of imperial preference as obstacles to American commercial policy under Section 317, the definition of "foreign country' foreign country" as an area governed by a distinct set of customs laws and regulations should be kept in mind. Where assimilation of colonies has become so complete as practically to eliminate local laws and regulations, the tariff of the mother country has simply extended its sway over an enlarged area which thereafter becomes a customs unit. From one point of view there is no discrimination involved any more than there is discrimination growing out of free trade between the "sovereign" states of the American Union. On the other hand a convincing argument can be made to the effect that customs unions, to be valid from the standpoint of Section 317, must embrace only continuous or, at least, economically related territories, and that political connection is of itself no excuse for economic differentiation.1 Customs assimilation by France may thus be permissible with respect to Algeria, but not with respect to Indo-China or Guadeloupe. One of the exceedingly nice problems in connection with the development of the present American commercial policy is thus presented for solution.

However, it is only when a colony certainly falls within the definition of a foreign country that differential treatment can be said with assurance to cut athwart the purpose and policy of Section 317 and hence to become an obstacle to the new commercial policy of the United States.

1See also infra, subdivision 75 (c).