duties are to be applicable whenever a different and larger burden is placed on American as compared with any other external commerce. "In fact" doubtless possesses, however, its familiar connotation of "material", "real" or "actual", as distinguished from "theoretical" or "as a matter of law". The use of the words suggests the intention of the framers of the Section to confine its application to the service of practical utility, that is, to obtain for American exporters substantial equality of treatment, omitting action in regard to practices that, though discriminatory on paper, do not interfere with the practical flow of trade. Somewhat similar is the purpose of stipulating that a discriminatory practice is not to be actionable unless it is "unreasonable ".1 There are certain practices which, though clearly discriminatory, are commonly accepted as justifiable because of the existence of peculiar or unusual circumstances. A good example in point is the freedom of trade until recently permitted between the corner of Switzerland in which Geneva is located and the adjoining districts of France. The arrangement for this overleaping of political frontiers originated in the time of Napoleon and, in eliminating the arbitrary political boundaries that divide a single economic area, appears to have proved very acceptable to both French and Swiss inhabitants. No one would contend that, because of it, Switzerland and France have unreasonably discriminated against the United States in favor of each other."

'In the Payne-Aldrich Act occurred the similar qualifying word "unduly" (sec. 2).

'A proposal to terminate this arrangement, insisted upon by France, received an emphatic negative in a recent Swiss referendum. However, it was, in fact terminated by France, giving rise to a serious dispute that may be submitted to arbitration.

'As will be shown in ch. xi, border trade is commonly excepted from the application of the most-favored-nation clause in European commercial treaties.

Inequalities that would otherwise be unreasonable may be considered permissible for reasons such as the requirements of sanitation or public safety.

The expression "unequal imposition or discrimination" occurs several times in Section 317, however, obviously with intent ordinarily to use the terms synonymously and to make any "unequal imposition" a "discrimination". That an exact interpretation of "discrimination" is the intention of the Section is suggested, moreover, by the abandonment in its favor of provisions contained in the original House Bill authorizing practices which would themselves have been discriminatory in operation. The House Managers, continuing the passage quoted above, said:

Sections 301 and 303 of the House bill provide for special negotiations whereby exclusive concessions may be given in the American tariff in return for special concessions from foreign countries. Section 302 of the House bill places in the hands of the President power to penalize the commerce of any foreign country which imposes on its imports, including those coming from the United States, duties which he deems to be "higher and reciprocally unequal and unreasonable." Under the Senate amendment, however, the United States offers, under its tariff, equality of treatment to all nations, and at the same time insists that foreign nations grant to our external commerce equality of treatment; and the House recedes with an amendment rewriting subdivisions (e) and (f) and making further clerical changes.1

Finally the breadth of meaning of discrimination is established by the definition of "foreign country" as any empire, country, dominion, colony, or protectorate, or any subdivision... thereof..., within which separate tariff rates

1Congressional Record, vol. 62, pt. xii, p. 12490, 67th Congress, 2d Session. The sections of the House Bill referred to are discussed in subdivision 18(e). Text, Appendix 7.

or separate regulations of commerce are enforced." The language of this definition seems to leave no doubt that an unequal imposition upon the commerce of the United States when compared with impositions upon the commerce of a country's own colonies, if such colonies possess separate tariff laws or regulations of commerce, is a discrimination within the terms of Section 317.

4. EXAMPLES OF DISCRIMINATORY PRACTICES AND POLICIES An examination of the present world commercial situation reveals numerous and varied discriminations, many of which seriously interfere with the commerce of the United States.

First, there is the existence, just referred to, of preferences between parts of an Empire. For instance, Canada accords to Great Britain and Great Britain accords to Canada treatment in respect to import duties that is more favorable than the corresponding treatment which either gives to the United States. Each of these two countries has its wholly separate customs laws and, although they are the best customers of the United States and the United States is one of the best customers of each of them, each imposes upon imports from the United States duties that are unequal to and heavier than the duties which it places upon similar goods imported from the other. As already indicated, such treatment constitutes a discrimination against the United States. The same is true in the case of the preferential export duties which certain colonies grant to the mother country.1

Second, there are countries, notably France, which have enacted double-column schedules of import duties. The lower schedule commonly represents the rates which the tariff policy and budgetary needs of the country really require. The higher schedule is commonly expected to be

'See ch. vii for further discussion of the subjects of this and the two following paragraphs.

used for bargaining purposes and as a defense or threat against countries which do not grant their lowest rates. Such is the case with France, which, notwithstanding the fact that its products receive equality of treatment in the American market, imposes maximum rates upon numerous products from this country. There is no question as to the liability of France to the imposition of additional duties under Section 317. Countries having this so-called maximum-minimum tariff system commonly bind themselves by treaty to accord all or portions of their minimum rates.

Third, there are countries, notably Switzerland and prewar Germany,' which have developed double-schedule tariff systems upon a plan substantially different from that just described. Their tariff laws as enacted by their legislatures contain one uniform schedule of rates; but, by entering into treaties providing on the one hand for lower rates and on the other hand for most-favored-nation treatment, they have gradually constructed what is in effect a system not dissimilar, with reference to the present discussion, to the maximum-minimum arrangement. The "general-conventional" system may be just as discriminatory under the terms of Section 317 as is the French practice. In either case the lowest duties could be granted to another country either freely or in return for reciprocal favors or concessions. There appears to be nothing in the language of Section 317 which forms the basis of any distinction as to its application between free favors and favors accorded for a consideration. Presumably, therefore, its defensive duties are applicable to discriminations against the United States resulting from either sort of preference to third countries.2

'Neither the German nor Swiss system discriminates against the United States. The situation in certain countries which came into existence as a result of the World War could, however, be appropriately examined in this connection.

"In this connection the debate in the Senate on Section 317 should,

Fourth, there are countries which have entered into one or more reciprocity treaties with other countries for the exchange of favors or concessions which are not generalized, that is, are not accorded to countries other than the two between which the particular reciprocity treaty is in force. An interesting example is Haiti, which has a single reciprocity treaty with France-under the terms of which, in return for French minimum duties for certain of its products, it accords substantial special reductions to numerous goods of French origin and heavy reductions to French liquors.1 American goods which compete with those of France in the market of Haiti are undoubtedly placed at a disadvantage by the existence of this arrangement, which must be assumed to constitute a discrimination against the United States and so to render Haiti liable to the enforcement of the defensive duty provision of Section 317.

be carefully read. See infra, ch. ii. While not unthinkable, it appears hardly possible under the language of the Act that an exchange of exclusive favors under a reciprocity treaty could be regarded as a not unreasonable discrimination. Such an interpretation would be largely nullifying. But the traditional policy of the United States has been to regard exclusive favors granted in exchange for reciprocal concessions as in a different category from such favors when granted freely. This subject and its bearing upon the policy expressed in Section 317 are treated in ch. v. See, however, ch. viii.

An editorial entitled “Tariff Folly" in the New York Journal of Commerce, June 29, 1923, contains the following paragraph:

"Outgivings from Washington continue to dwell at length upon the question of alleged tariff discrimination against this country. It will be recalled that the framers of the present Tariff act, probably anticipating that that measure would stimulate retaliatory action on the part of foreign countries, inserted provisions to the effect that if any country granted a third nation more favorable tariff treatment than it does us our rates on the products of such country should be greatly enhanced. Apparently the fact never occurred to these tariff-mad solons that such an offending nation might be receiving much more favorable treatment from another country than from this."

1 Convention of January 30, 1907. Text: British and Foreign State Papers, vol. 100, pp. 911 et seq. In regard to the Haitian preference for American rope, see infra, subdivision 47.