NOTE II. TO CHAPTER VI. GREAT EXTENSION OF COMPOUND DUTIES. The enormous rise of values which has accompanied the European War, by reducing heavily the ad valorem equivalent of the specific duties in force at the outbreak of the war; and secondly, the increased need for revenue and the necessity for economy in shipping and expenditure have all combined to increase very greatly the adoption of compound duties in the shape of surtaxes. (1) As an instance of war legislation proper, we may cite the Canadian Act of 1915, "The Customs Tariff War Revenue Act, 1915," which provides, § 3, that— (1) There shall in addition to the duties of customs otherwise established by Schedule A to the Customs Tariff, 1907, and orders in council amending Schedule A, be levied, collected, and paid upon all goods enumerated, or referred to as not enumerated, in Schedule A, except as hereinafter provided, when imported into Canada or taken out of warehouse for consumption therein, the several rates of duties of customs herein specified : British Preferential Tariff. 5 per cent. Intermediate Tariff. General Tariff. 7 per cent. (2) There shall be levied, collected, and paid upon all goods enumerated as being free of duty in Schedule A and in orders in council amending Schedule A, except as hereinafter provided for, when imported into Canada or taken out of warehouse for consumption therein, the several rates of duties of customs herein specified British Preferential Tariff. Intermediate Tariff. General Tariff. 5 per cent. 7 per cent. Some not very numerous exceptions follow. (2) More striking perhaps were the changes in the French tariff which followed the closing of the war. A French Presidential Decree of June 14, 1919, provided for the imposition of ad valorem surtaxes on a very large number of articles, practically all numbers from No. 176 onwards being affected: leaving unchanged the position of foodstuffs, animal substances, fruits and seeds, colonial produce, oils and seeds, etc. (Classes I.-XIV.: but including No. 23, wool of all kinds). The value on which the surtax was based was the declared value "of the goods at the place where and time when they are presented to the customs authorities, not including the import duty." The surtaxes ran variously from 5 per cent. ad valorem to 10, 15, and, in isolated cases, 20 per cent. "A Report to the President of the French Republic' is prefixed to the Decree, in which it is explained that the relaxation of the import prohibition régime . . requires to be accompanied by an increase in the tariff rates of duty, since the tariff, owing to the general increase of prices, no longer represents the level of protection which its framers designed (i.e., the ad valorem incidence of the duties is greatly reduced), and which is necessary if French industries are not to be overwhelmed by foreign imports as a result of the removal of the import prohibitions. Consequently, a provisional increase of the tariff duties is now introduced in order to re-establish the ad valorem incidence of the rates as far as possible on a pre-war basis, pending a general tariff revision, data for which are being collected and studied." 1 The system outlined above lasted but a short time. A decree issued on July 8, 1919, "abrogates the decree of 14th June, by which ad valorem customs surtaxes were imposed, and substitutes therefor a system by which the tariff rates of duty in respect of a large number of commodities. are to be multiplied by a figure known as (the) coefficient of increase,' which is calculated in each case to represent the relation which the official valuation of the goods of 1918 bears to the corresponding valuation of 1919. The total duty leviable in respect of each category of merchandise covered by the present decree will thus be the ordinary tariff duty multiplied by the coefficient' which has been fixed therefor on the above-mentioned basis. Under the present decree in no case does the 'coefficient' or multiplier exceed 3, this figure having been adopted as a maximum for the provisional increase. An Inter-Ministerial Commission is to be appointed which will be charged with the periodical revision of the coefficients.'" 2 1 See Supplement to B.T.J., 26/6/19. CHAPTER VII. DIFFERENTIAL DUTIES. §1. THE first question which requires treatment when the vast field of differential duties is reached, is the more exact delimitation of the ground. We have already seen in a previous chapter that it is incorrect to conceive of the normal rate per article as being necessarily a single rate only; and that, in fact, the more advanced commercial countries tend to replace the uni-linear by bi-linear and even more complicated tariffs. From one point of view, even these normal rates can be spoken of as "differential." The "autonomous rate, it may be said, is the only really normal rate, and even the autonomous rate where it is bi-lateral is differential in that the granting of the minimum rate is conditional, and the essence of a differential rate lies just in this point of the conditionality of its application. To this attitude two objections may be made. (1) It may be urged that, in fact, at any rate before the war, as between the leading commercial powers, the grant of the lower (conventional or minimum) rate to one another directly, or (through simple most-favoured-nation treaties) indirectly, was so much the rule, that the conception of the lower rate as a differential duty really loses its force. The exception, it may be urged, was the withholding of the favour, not the granting of it. (2) That even if we admit that, in one sense, the bi-linear tariff is differential in one of its parts, yet when we speak of "differential duties," there is something more intended by the phrase than merely this. Our task must be to find wherein this alleged difference consists. § 2. It would seem at first sight as if we could find the distinguishing characters of the differential duty in the excess or deficiency of the number of rates in the special case in which a differential duty is present, over the usual number of rates imposed in that tariff. Putting the matter quantitatively, if a1, a2 represent the normal rate in the tariff under discussion, then a single rate a, or the presence of a third rate as would indicate the presence of a differential duty: as, for instance, in the case when, in a maximum-minimum tariff, no lower minimum rate is granted; or, to take the case of an additional rate, when in either type of tariff additional rates are imposed, either as a consequence of the desire to grant special favours or to express the reaction to exceptional circumstances. This conception of the differential duty works very well : so long as we are dealing only with the individual article or unit. But it suffers from the defect that it does not satisfactorily cover the following case :-Let us suppose each article to be dutiable at rates a1, a2, a3, and yet let it be supposed that only one area of supply is either benefitted or prejudiced by the third of these rates. The normal rate is in this case made up of three separate components throughout, and yet the third component would be regarded as, what in fact it is, a differential duty. For that tariff, the third class of rates will be normal from the standpoint of form, but it will not be normal from the standpoint of purpose, for the object will be expressly to subject a particular source of supply to exceptional treatment. The essence of a differential duty, then, we will define as abnormality of purpose. Hence, we may say that differential duties are rates intended to favour or prejudice the importation of particular goods, or grades of a given article, in a special degree, on grounds peculiar to those goods, or the > circumstances attending their importation; or to favour or prejudice importation in a special degree on grounds peculiar to the source from which they come, or on both these grounds together. §3. We may now proceed to classify differential duties more formally. One of the difficulties of the situation is that the specific titles which some of these duties have received. have tended to obscure the underlying resemblances. It will be noted that there is a general correspondence of form between the upper and the lower halves of the table, though, of course, the two halves represent opposite directions of purpose. It will, therefore, be best to take the components of the table in appropriate pairs. ABOVE NORMAL Discriminatory duties Discriminatory duties (a) As being sold at unfair prices, or under unfair conditions. (Countervailing duties: antidumping duties.) (b) As socially or otherwise undesirable. (c) As imported indirectly or in (a) For subjecting goods of the (b) Imposed as a political measure NORMAL RATE.-(Which may itself be a complex phenomenon). § 4. Anti-dumping, Anti-trust, and Countervailing Duties.It is no part of the purpose of this work to enter into the very vexed question of "dumping," so far as the rights and wrongs of the matter are concerned. What we are here concerned with are the concepts underlying the various types of "countervailing" duty which the tariffs of the world reveal. We have 1. in fact to deal with the three following types of duty or penalty : (1) Duties or penalties against bounties. (2) Duties or penalties against dumping. (3) Duties or penalties against "unfair competition." Logically it is obvious that "unfair competition" is the widest of these concepts, and can be made to cover, without |