10. Draw-backs.—When imported products are in tended, not for domestic consumption, but for re-ex port, governments generally refund the amount of the import duty upon such re-exportation. This is called a "draw-back." The imported product in ques tion is generally in the form of raw material or parts and is worked up into manufactured form before being sent abroad.
In the United States draw-backs are allowed when imported materials on which duty has been paid are used in the manufacture of articles which are sub sequently exported. In order to defray the admin istrative expenses one per cent of the duties paid is held back. During the fiscal year ending June 30, 1919, the United States Government paid in draw backs $7,749,839.16.
In Italy, the law of "temporary importation and exportation" provides also for those cases where partly finished goods such as silks are exported to undergo a finishing process and then re-imported. Such goods are not required to pay the import duty.
It is obvious that the administration of these mat ters is difficult. The importer must comply with rather annoying technical requirements. The diffi culty of refunding the right amount to the right per son opens the way for many abuses. In Germany where the "equivalent principle" was accepted, ex port tickets were issued which indicated the quantity of goods upon which duty had been paid, but did not mention the name of the importer. These tickets were bought and sold and were used by exporters even when exporting goods containing no foreign ma terials.
Germany at one time used the draw-back as a clever scheme to pay a bounty to exporters of sugar without publicly acknowledging the fact. The sugar tax in Germany was levied on beets according to weight. The draw-back was paid on the basis of one pound of sugar for every twenty pounds of beets. As long as twenty pounds of beets actually yielded one pound of sugar the draw-back equalled the tax paid, but when the extraction processes improved and the sugar beets were more carefully cultivated and contained a higher percentage of sugar, the draw-back became a very considerable bounty.
Under the Canadian Customs Act, drawbacks are allowed in many cases, tho in some cases only 50 per cent of the amount paid in duties is refunded.
11. Bonded warehouses.—The refund of duties paid is a great aid to the exporter, but the refund can never repay him for the loss of interest on the amount temporarily invested in the duties. The . bonded warehouse offers an opportunity to postpone the pay ment of duties until the goods are actually released for home consumption. Goods which are re-exported never pay duty at all, but pass out of the bonded warehouse into the vessel.
Two classes of bonded warehouses are generally recognized, government bonded warehouses, and private bonded warehouses built and maintained by private individuals but nevertheless under strict gov ernment supervision.
the United States bonded warehouses may be classified as follows: government warehouses, private warehouses belonging to importers, private ware houses for general use; private warehouses for special articles such as sugar, coal and wood; grain elevators ; private warehouses for the manufacture or exporta tion of goods made wholly or in part from imported goods, or of goods subject to internal revenue; and finally, warehouses for imported ores to be refined and re-exported.
The use of the bonded warehouse is not as highly developed in this country as it is abroad. In France, bonded warehouses are found in all the large ports, while a wonderful system of bonded warehouses is maintained in Paris. The Compagnie des Entrepots et Magasins Generaux de Paris operates large ware houses in Paris, and also owns enormous loading and unloading facilities near railroads and canals leading into that city. By no means the least important is the service which the company furnishes; for all load ing and unloading, repacking and clearing are done by the company for its patrons. The warehouses are not used very much by American firms, tho large quantities of farm machinery have occasionally been stored there. The company issues two receipts, the recepisse a ordre and the bulletin. This latter cor responds to our warehouse receipts and the "warrant" of the English bonded warehouses and may be used as collateral with a bank. Banks in Paris will some times lend as much as 60 per cent of the value of the goods on it.