Imperial Preference

IMPERIAL PREFERENCE. This consists in the charging, by States belonging to the British empire, of lower import duties on goods coming from another State of the empire than on like goods coming from countries outside the empire, or in exempting empire goods from duty altogether.

Until after the middle of the i9th century, colonial products enjoyed a preference in the customs tariff of Great Britain, and British goods in the tariffs of the colonies. Preferences in both directions disappeared about the same time. But while Great Britain removed tariff restrictions equally from all imports, from whatever source, the colonies—now obtaining responsible govern ment, and looking upon customs as the only available source of public revenue—proceeded to impose equal duties on all imports, from whatever source. The British Government in vain protested in 1859 against the imposition of duties by Canada on British goods. The Government of Canada insisted on "the right of the people of Canada to decide for themselves both as to the mode and extent to which taxation shall be imposed." The principle of tariff autonomy was henceforward acquiesced in by the British Government and acted upon by the self-governing colonies.

This was the situation for almost 4o years, in the course of which colonial tariffs became distinctly heavier. So great, how ever, was the reliance in Great Britain on the most favoured na tion clause in her commercial treaties with European countries, that by her treaty with Belgium in 1862 and with the German Zollverein in 1865 she actually bound her colonies, without con sulting them, to grant as favourable treatment to the products of the treaty country as to those of the mother country; i.e., to grant no preference to Britain.

Changed Sentiment.

A new stage in intra-imperial trade re lations was opened in 1897. In that year Canada granted tariff concessions to all countries treating her on equally favourable terms. In effect this was a preference to British goods; and in 1898 the Canadian Tariff Act was converted from one of general reciprocity to one avowedly of British preference. The Imperial Government had already in 1897 given notice to terminate the treaties with Belgium and the Zollverein.

In 1902 the policy of Canada became the policy of the domin ions. At the colonial conference of that year in London the f ol lowing resolution was passed : "That . . . it is desirable that those colonies which have not already adopted such a policy should, as far as their circumstances permit, give substantial preferential treatment to the products and manufactures of the United Kingdom. That the prime min isters of the colonies respectfully urge on His Majesty's Govern ment the expediency of granting in the United Kingdom preferen tial treatment to the products and manufactures of the colonies.

either by exemption from or reduction of duties now or hereafter imposed." Effect was given to this resolution by New Zealand and South Africa in 1903 and by Australia in 1906.

Tariff Reform.

Meanwhile in England the re-imposition for revenue purposes in 1902 of the old registration duty of one shil ling a quarter on imported wheat had raised hopes of preference in Canada which were defeated by the abolition of the duty next year. The episode completed the conversion of Joseph Chamber lain to the principle of preference; and imperial preference was a prominent element in the policy of "tariff reform" which he laid before the country in 1903. The movement, however, failed at the time to receive sufficient popular support in Great Britain. At the next colonial conference in 1907, though the resolutions of 1902 were re-affirmed by the colonial representatives, the British Government put in a definite reservation that they could not as sent in so far as the resolutions implied that it was necessary or expedient that the fiscal system of the United Kingdom should be altered.

Progress During the War.

The World War and the generous support which the dominions gave the mother country had con siderable effect on public sentiment in Great Britain. Early in 1917 the important committee appointed by the Government to consider commercial policy after the war (presided over by Lord Balfour of Burleigh) recommended : "That His Majesty's Government should now declare their ad herence to the principle that preference should be accorded to the products and manufactures of the British overseas dominions in respect of any customs duties now or hereafter to be imposed on imports into the United Kingdom." A few weeks later the Imperial War Conference expressed itself in favour of "the principle that each part of the empire, having due regard to the interests of our allies, shall give specially favour able treatment and facilities to the produce and manufactures of other parts of the empire" : a resolution now passed unanimously by the representatives no longer of the dominions alone but also of Great Britain. In April 1917 Lloyd George and Bonar Law, on behalf of the Coalition Government, announced their accept ance of the principle of preference, making it clear that this did not involve the taxation of food. In Sept. 1918 the British Gov ernment withdrew from the Brussels sugar convention on the express ground that they had "now approved the principle of giving preference to empire sugar." And, finally, in the Finance Act, introduced by Austen Chamberlain as chancellor of the exchequer in April 1919, preferential rebates on imports from the colonies or exemption from surtax were granted on practically all articles dutiable under the existing tariff.

The range of dutiable articles had been increased under stress of war. For many years before 1915 the only duties imposed by Britain were either purely for revenue purposes—those on tea, cocoa, coffee, sugar and tobacco; or for revenue with a certain mixture of ethical motive—those on wines and spirits. But the Finance Act of 1915 had introduced duties also on certain manu factured goods (the "McKenna duties")—cinema films, clocks and watches, motor-cars and musical instruments. These were in tended as luxury taxes, but had some protective effect. On these the measure of 1919 was now able to give preference.

Post-War Changes.

The area of preference was still further enlarged by the Safeguarding of Industries Act in 1921. Part 1 of this act provided for the imposition of duties on certain articles produced by "key industries." The list included cameras and opti cal lenses and a large number of scientific instruments and appa ratus, chemicals and special appliances, deemed essential for the safety of the empire; and from these duties empire goods were entirely exempted.

The growth of manufactures in Canada had affected the situa tion by enlarging the possibility of advantageous preference in Great Britain beyond the primary foodstuffs; motor-cars are an example. A similar extension of possibilities from Australia was brought about by the growth of fruit farming, largely as the re sult of the settlement on the land of ex-soldiers. The British Gov ernment took the opportunity of the imperial conference of 1923 to announce its readiness to enlarge the existing preference on dried fruits, to increase the rebate on empire tobacco and on cer tain wines, and to take other action of a similar character. Be fore these promises could be fulfilled, the Baldwin Government fell from power. The MacDonald Ministry which followed de clined to carry out the intentions of its predecessors; abolished the McKenna duties; and, though it did not entirely throw over pref erence in revenue duties, so reduced the tax on sugar, tea and dried fruits as to make the preference of less value.

Preferences Granted by Britain.

On the return to office of Baldwin at the end of 1924, the McKenna duties were restored with the accompanying preferences; and the preference on dried fruits, tobacco, wines and sugar was increased. The range of pref erence was further widened in two directions. The new Safeguard ing of Industries (Customs Duties) Act, 1925, imposed duties on imported cutlery, gloves and incandescent mantles; while the budget of that year introduced duties on silk, natural and arti ficial. To each of these new duties, empire preference was at tached, amounting to one-third of the full duty in the case of the safeguarding duties, and to one-sixth in the case of silk.

By the Finance Act, 1925, the preference on sugar was stabil ized at a fixed money value per cwt. for ten years or for so long within that period as the full rate of duty amounts to that figure: if the full rate falls below that figure, empire sugar is to be free of duty. By the Finance Act, 1926, all existing preferences (and that on packing and wrapping paper imposed by that act) were similarly stabilized for ten years from July 1, 1926.

Since the first grant of preference to the mother country by the great dominions, changes have from time to time taken place both in the general rates of duty and in the extent of the preference. In 1923 Canada, having in mind the removal of certain restrictions on the importation of cattle into the British market, undertook to give a discount of To% on existing duties on British goods com ing through Canadian ports. Australia increased its preference to British goods in 192o, and gave assistance to British trade both by anti-dumping legislation and by measures with respect to dyes. In 1927 the New Zealand tariff gave increased empire pref erence. So, during the last two decades a whole complex of pref erences has grown up between the several dominions and colonies, many of them the result of definite treaties, and thus preference within the British commonwealth of nations has already become a considerable factor in the economic and political world situation. (See also TARIFF.) BIBLIOGRAPHY.-The least partisan and most complete history of the Bibliography.-The least partisan and most complete history of the whole movement down to 1921 will be found in a Report on colonial tariff policies (1922), prepared for the U.S. tariff commission. Much information as to the views of the dominions and as to the volume of trade affected is given in the Record of Proceedings of the imperial economic conference of 1923 (Cmd. 2009, 1924) . The nature and extent of the preferences accorded to Great Britain, down to March 1925, together with the conditions governing the concessions, will be found in the Survey of Overseas Markets (1925) by the committee on industry and trade appointed by the British Government in 1924. That committee reported that "while it is difficult to obtain any exact statistical measure of the benefit to British trade of the preferential treatment, the surveys of British dominion markets and the statistics of distribution of British trade leave no room for doubt that the advantage has been substantial." (W. A.)