Equality of Treatment Among Nations and a Bargaining Tariff

• Author: William S. Culbertson
• DOI: 10.1177/000271622109400132
• Published date: 01 March 1921
• Date: 01 March 1921
• Subject Matter: Articles

Equality of Treatment Among Nations and a
Bargaining Tariff
By WILLIAM S. CULBERTSON
Washington, D. C.
TWO general policies are distin- an exclusive reduction in customs du-
i- guishable in the commercial bar-
ties to another nation in return for a
gaining of nations. The first is the
concession which is deemed satisfac-
policy of negotiating for special and
tory. At first glance this seems fair.
exclusive concessions which are not
It appeals strongly to the mind famil-
shared by third nations; the other aims
iar with the doctrine of consideration
at the establishment and maintenance
in the Anglo-Saxon law of contracts.
of equality of treatment. The first
We
offer the advantages of our markets
proceeds on the idea that a nation may
in return for definite concessions, and
grant and seek favors to its own advan-
we refuse the advantages except in
tage regardless of the effect on its
those cases where reciprocal conces-
neighbors; the other is based on the
sions are extended to us. This policy
proposition that every nation is en-
has made it possible for us to enter in
titled to equal treatment and that
good faith into reciprocity agreements,
none is entitled to anything more. So
many of which have resulted from un-
basic is the distinction between these
usual circumstances, such as geograph-
two policies, and so confused have been
ical propinquity or peculiar political
discussions of commercial policy in-
relations. Our negotiation of reciproc-
volving them, that a discussion and
ity treaties, however, has been essen-
illustration of them at some length
tially an opportunist procedure, and
seems desirable.
warns us what to avoid in the future.
It leaves out of account the interests
RECIPROCITY IN THE UNITED STATES-
of third nations which, under such a
A FORM OF SPECIAL BARGAINING
system of special bargaining, may be
We can find no better examples of
placed at a disadvantage. It opens up
special bargaining for preferential and
the necessity for an endless series of
exclusive advantages than those fur-
negotiations, and even retaliations,
nished by our own history, although
which are clearly objectionable in the
cases among other nations are not in-
complex commercial relationships of
frequent. The term &dquo;reciprocity,&dquo;
the world. Claims are made by ex-
particularly in the United States, has
cluded states which, if granted, defeat
acquired a special meaning. When we
the purpose of the treaty and which, if
speak of a &dquo;reciprocity agreement&dquo;
not granted, are likely to invite pro-
we mean a national exchange of con-
tests and hostility.
cessions with the understanding that
these concessions
RECIPROCITY AND THE TARIFF ACT
are not to be extended
generally and freely to
OF 1890
any other nation
(in some cases the foreign power has
The United States attempted some-
generalized its concessions).
thing in the nature of a general &dquo;reci-
The United States, let us say, offers
procity&dquo; policy under the tariff acts
160

---

161
of 1890 and 189’~.1 It will be recalled
President concluded agreements with
that in the tariff act of 1890 there was
Brazil, with Spain for Cuba and Porto
a provision, the purpose of which was
Rico, with the Dominican Republic,
to secure for the products of the United
with Salvador, with the German Em-
States special concessions in certain
pire, with Great Britain for her West
foreign markets.
India Colonies, and with Nicaragua,
Under the regular tariff we admitted
Honduras, Austria-Hungary and Gua-
free of duty sugar, molasses, coffee, tea
temala. We secured by these agree-
and hides. The President was then
ments all or part of the rates in the
authorized to proclaim without further
newly established conventional sched-
action by Congress special penalty
ules of Germany and Austria-Hungary;
duties on these products when imported
that is, we were granted the rates which
from any country that imposed, on the
were also extended to all most-favored-
products of the United States, duties or
nation countries. We
secured also from
other exactions which he deemed to be
the Latin-American republics certain
&dquo;reciprocally unequal and unreason-
special rates which were not generally
able.&dquo; The offense here penalized, it
granted to third countries; and from
should be noted, was not discrimina-
the Spanish and British West Indies,
tion against the United States, not the
concessions which were shared only by
levying of higher duties on our goods
the mother countries. All these agree-
than on similar goods from other coun-
ments were terminated by the tariff
tries, but the levying of duties on Amer-
act of August ~5, 1894.
ican goods higher than were regarded
UNDER
by
THE TARIFF ACT OF 1897
us as fair, in view of the free ad-
mission or the lower duties on food and
In the tariff act of 1897 there were
raw materials which our domestic
three bargaining provisions, all based
needs had led us to enact. 2
on the principle of special bargaining.
The President was thus given power
One provided penalty duties and was,
to place the goods of one nation on a
therefore, similar in method to the
.less favorable basis in our market than
provision of the tariff act of 1890, but
similar goods imported from other
the commodities affected were changed.
countries in case of the refusal of that
Under the regular tariff, free admission
nation to grant concessions to the
was granted to coffee, tea, tonka beans
United States.
Under this law the
and vanilla beans. The President was
1
For a full discussion, see United States Tariff
given power to proclaim, without fur-
Commission, Reciprocity and Commercial Treaties
ther action of Congress, penalty duties
(1919). Before 1890 the United States had en-
on these products when imported from
tered into a reciprocity treaty with Canada
any nation which imposed duties or
(1854-1866), and with Hawaii (1875-1900). In
1902 we
other exactions on American
negotiated a reciprocity agreement with
goods
Cuba, which is still in force. In 1910-11 an at-
which he might deem &dquo;to be recipro-
tempt was made to establish reciprocity with
cally unequal and unreasonable.&dquo; No
Canada by concurrent legislation. The neces-
agreements were negotiated under this
sary legislation was passed by the United States
Congress but failed of enactment in Canada.
provision, but it was a factor, as will
Each one of these
be
reciprocity agreements was a
pointed out later, in securing for the
product of peculiar geographic and political re-
IJnited States preferential treatment in
lationships and was not a part of a general reci-
the Brazilian market in 1904.
procity policy.
2

Another of the
When
France has used an
bargaining methods
argument similar to
this against our high duties on peculiarly French
provided for in the act of 1897 au-
products we have rejected it.
thorized the President, in return for

---

162
&dquo;reciprocal and equivalent conces-
ing satisfactory concessions. Treaties
sions,&dquo; to grant special reductions from
known as the &dquo;Kasson Treaties&dquo; were
the duties on argols, brandies, sparkling
negotiated under this provision, but
and still wines, and paintings and stat-
they failed of ratification in the Senate
uary.
In this case, instead of using
and, therefore, never became effective.
penalty duties, the principle was in-
OUR PRESENT RECIPROCAL ARRANGE-
troduced of making special reductions
MENT WITH BRAZIL
in the regular tariff rates on certain
articles in return for reciprocal reduc-
Our arrangement with Brazil-not a
tions in the tariff rates of other coun-
formal treaty at all-is the only surviv-
tries.
Here again, any agreements
ing remnant of this reciprocity period.
concluded under this provision required
Under section 3 of the tariff act of 1897
neither the ratification of the Senate
the President was authorized to impose
nor the approval of Congress.
A
a penalty duty of three cents a pound
series of agreements, known as the
on coffee imported from countries
&dquo;Argol Agreements,&dquo; were negotiated
which he thought were treating Ameri-
and proclaimed. They were with
can products unequally and unreason-
France, Portugal, Germany, Italy,
ably.
Switzerland, Spain, Bulgaria, the
Brazil in particular was very largely
United Kingdom and the Netherlands;
dependent on this country as a market
and these countries alone received the
for its coffee. An effort was accord-
benefits of the lower rates in the Amer-
ingly made by our State Department
ican tariff.
On the other hand, al-
through our legation (now an embassy)
though we received concessions by
at Rio to obtain from Brazil tariff con-
these agreements, they were in no case
cessions in exchange for a guarantee to
confined to the United States. In most
continue the suspension of the penalty
instances we simply received, either
duty on coffee. After long negotia-
for the first time or in renewal of pre-
tions, the Brazilian Government in
vious grants, all or part of the minimum
1903 introduced a bill into the Brazilian
and conventional rates already en-
Congress providing for a reduction in
joyed by &dquo;favored&dquo; nations. In only
the customs duties on a number of
a few cases did the agreements secure
American products, chiefly wheat flour.
for the United States the benefit of
The opposition, which included English
conventional rates lower than those
milling interests owning flour mills in
which had been previously effective.
Brazil, was successful in defeating the
The third...