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honorable Delegate from the United States, himself a member of the committee, the United States had not contemplated a zollverein in speaking of a customs union.
Under these circumstances the majority of the committee deemed it expedient to begin their report by defining the expression “customs union," and, believing that the term might cover a zollverein as well as free trade among the American nations, it adopted both definitions, and pointed out the difficulties involved in the establishment of a customs union of either kind.
If the Conference will permit me, I will read the passages of the report which deal with these two points. The first refers to the definition of customs union, meaning a zollverein, and reads as follows:
As generally understood, the term customs union means the establishment among several nations of a single customs territory, the nations forming the union to collect import duties on foreign goods under substantially the same tariff laws, dividing the proceeds thereof in a given proportion, and mutually receiving, free of duty, their respective natural or manufactured products.
It follows a statement of the difficulties which would be involved in the adoption of a customs union, meaning a zollverein.
Further on the report defines the second meaning of customs union, as follows:
If by customs union is meant the free trade between the American nations in all their natural or manufactured products, which is, properly speaking, unrestricted reciprocity, the committee believes, etc.
To make my explanation clearer, I should state that the committee had adopted in its original report a statement mentioning the German Zollverein as a model of customs union; but at the request of the Delegate from the United States, a member of the committee, who repeatedly stated that the United States had not contemplated the establishment of an American zollverein, the statement was omitted. The majority of the committee has been much pleased to learn that the honorable Delegate from the Argentine Republic so thoroughly agrees with them in regard to the objections to a customs union in the sense of a zollverein. If the Conference reads the report, it will see that all the reasons set up by the honorable Delegate, as he has just read them to us, are included in the report, the only difference being that the honorable Delegate from the Argentine Republic has set them all at length, illustrating them with statistical data which tend to prove conclusively the correctness of the committee's reasoning. But as the majority and the minority are thus entirely agreed upon this point, it is clearly unnecessary to deal any further with this subject.
As respects free trade between the American nations, which might likewise be the meaning of a customs union, and which was the sense given to it by the United States, or at least by the Delegate from that country who is a member of the committee, it was our opinion, that by customs union might be understood the receiving free of duty the products or manufactures of the other countries, but custom-houses and duties being retained as against the products of countries not a party to the union. The majority of the committee could not recommend the adoption of customs union under this meaning, and upon this point the majority fully agrees with the opinion of the honorable Delegate from the Argentine Republic as he has expressed it in his speech ; it saw in it serious difficulties, and positively declined to recommend, under existing circumstances, the establishment of a customs union in the sense of free trade. So, in regard to this point, we also substantially agree.
The honorable Delegate from the Argentine Republic set up in his discourse a point which he had made in the · committee, with a view to impugn one of the fundamental ideas of the report.
If by customs union is meant free trade between all the American nations, the report says, inasmuch as import duties constitute in many of those nations the chief source of revenue, these might find their revenues considerably reduced. If I did not misapprehend his meaning, the honorable Delegate from the Argentine Republic seems to have understood the report to say, that if free trade is adopted the bulk of the revenues of the American
nations would wholly disappear. I will read such portion of the report as bears upon this point, so that the Conference may judge as to what the report means.
If by customs union is meant free trade between the American nations in all their natural or manufactured products, which is, properly speaking, unrestricted reciprocity, the committee believes it is in principle acceptable, because all measures looking to the freedom of commerce must necessarily increase the trade and the development of the material resources of the countries accepting that system, and it would in all probability bring about as favorable results as those obtained by free trade among the different States of this Union. But the committee believes that such a union is at present impracticable as a continental system because among other reasons the import duties levied on foreign trade constitute the main source of revenue of all the American nations.
As I am not familiar with the statistics of the Argentine Republic, I can say nothing positively as to this; but I have not heard in the speech of the honorable Delegate any denial of the proposition that import duties constitute the main source of the revenue even of the Argentine Republic, which is what the report declared. This continues as follows:
* * * The import duties levied on foreign trade constitute the main source of revenue of all the American nations, and such of them as are not manufacturing countries would thus lose such revenue on which they depend, in a great measure, to defray their national expenses. * * *
For instance, Mexico, which produces raw materials, like sugar, coffee, etc., would probably be affected by receiving manufactures of the United States free of duty, and would have its revenues reduced more or less considerably; but would not be wholly deprived of customs revenues, as seems to be implied by the language of the honorable Delegate from the Argentine Republic.
But this is a secondary question, and I allude to the point only in justification of the majority of the committee, which tried to formulate its report with due regard to the changes, exigencies, and conditions of all the countries concerned, and tried also to make it as reasonable as possible.
The principal argument against the report of the majority of the committee is based upon the fact that it recommends the making of reciprocity treaties; and this objection the two honorable Delegates who sign the minority report agree in urging.
The majority of the committee much regretted this dissent, and did all within its power to bring about common agreement upon a single report; but this proved impracticable, wholly without blame to the honorable Delegates who constitute the minority. All the members of the committee having agreed to the essential parts of the report, the division between majority and minority seemed to be unreasonable. But it could not be avoided; and this is the reason why there have been presented the two reports which have been laid upon the desk of the Delegates.
In the opinion of the majority, a customs union, in the sense of a Zollverein, was out of the question. In this view the minority agreed. The minority furthermore agreed with the majority that a customs union, should it mean free trade between the American nations, was not practicable; but to the majority it seemed to be in principle proper to recommend a liberal policy towards commerce, because, as the honorable Delegate from the Argentine Republic admits in his speech, such a policy can not but promote the development and growth of commerce.
In order to accomplish this, and approximate to something like free trade, not in an absolute degree, and with no idea of adopting such a policy in the shape of an economic war upon nations which are not American, but European or Asiatic, the first step which the committee thought ought to be taken was the negotiation of treaties of reciprocity.
The objection was at once raised by some members of the committee, that it would be very difficult to formulate uniform treaties suitable for all the American nations, not only in the relations of each of them to its neighbors, but in those of each to all the other nations of the continent. To avoid this difficulty, while still taking a step forward toward the freedom of trade and the encouragement of production, it was thought best to recommend a liberal policy in the shape of partial reciprocity treaties concluded in each case in accordance with the necessities of the countries concerned.
The committee is informed that such treaties have already been entered into by several of the American nations, and it understands that the five Central American States have agreed to treat as national each other's products. The Government of Mexico has entered into such a treaty with the Government of Guatemala, its neighbor on the south. The committee further understands that similar treaties have been entered into by some of the South American nations; the one which especially comes to my mind is the one between Chili and Bolivia. So that it is no unheard-of or inexpedient thing that the majority of the committee recommends, but, on the contrary, a step toward commercial freedom, promotive of the welfare of the American nations, though obviously this advance upon the road to commercial union was not one accepting either “absolute reciprocity” or a “Zollverein."
The majority of the committee, then, believed that it was not violating any duty of propriety; that it was not offering advice which had not been asked, in recommending to the American nations which should deem it expedient, to enter into reciprocity treaties under certain conditions. This is the meaning of the recommendation in the report.
Before taking my seat I desire to correct what seems to be a misapprehension on the part of the honorable Delegate for the Argentine Republic. He stated in his speech that the reciprocity treaty between the United States and Mexico had been signed “ ad referendum," and that it had been rejected by the Congress of the United States.
It was not signed "ad referendum,” but under special powers by a special commission appointed by the President of the United States; and the Senate of this country, which alone passes upon such matters, approved it; the ratifications were exchanged, and the treaty appears among the treaties in force in the United States. But as, under the Constitution of this country, all laws affecting the revenue have to be originated in the House of Representatives, many publicists of this country have been of opinion that reciprocity treaties can not be entered into, precisely be