Friday, August 23, 2019


J. L'Angelle
University of Nevada, Reno
College of Liberal Arts
Fall 2019

United States grants China tariff autonomy in 1929

     Article X of the 1842 Treaty of Nanking, following the First Opium War, clearly defined how trade would eventually become stabilized between the Emperor of China, Daoguang, and the "barbarians," or rather, Great Britain;
     "His Majesty the Emperor of China agrees to establish at all the Ports which are by the 2nd Article of this Treaty to be thrown open for the resort of British Merchants, a fair and regular Tariff of Export and Import Customs and other Dues, which Tariff shall be publicly notified and promulgated for general information, and the Emperor further engages, that when British Merchandise shall have once paid at any of the said Ports the regulated Customs and Dues agreeable to the Tariff, to be hereafter fixed, such Merchandise may be conveyed by Chinese Merchants, to any Province or City in the interior of the Empire of China on paying a further amount as Transit Duties which shall not exceed per cent. On the tariff value of such goods."  (China.USC)
The fact that any form of tariff was established that superseded the existing warlord method of exacting taxes depending on the province, set the stage for what was to come when China became a nation.
     As important is how the foremost authority on China, Harvard Professor JK Fairbank,  characterized the Chinese worldview of the "barbarian;"
     "Concern with trade was a well-known barbarian idiosyncracy -in fact, it was one of the things that made a barbarian what he was and in later years the memorialists constantly repeat that the British 'look only for profit' " (JSTOR)

     Crucial to China becoming a sovereign nation was fetched from the dustbin of history in a 1928 editorial Ottawa Register citing Sir Robert Borden's report of the Washington Conference of 1922;
     "The powers have acknowledged China's right to revise the Chinese customs tariff. At the Washington Conference, the United States. Great Britain, Japan, France and  several other powers and China agreed by treaty that China's tariff rates should be increased. For the purpose of making the necessary arrangements, a special conference had to be held in Peking. Owing to delay on the part of France in ratifying the treaty, three years elapsed before the tariff conference could be called." (Ottawa Register)
Although France had nothing to gain by stalling, Japan had everything to lose by signing off on it. The new rules on tariffs went into effect in 1929 and it was the United States that sent its negotiators out on point to assure China got a square deal;

      "Whatever the new Chinese tariff may be, it is evidently going to be one of the first planks in China's national policy. With commendable alacrity, the Department of State at Washington has informed the Chinese government that the United States is 'ready to begin at once' negotiations for a new tariff treaty. While other powers are playing the game of diplomatic finesse, the United  States has taken a big step toward winning Chinese confidence by giving this practical evidence of readiness to concede tariff autonomy to China."  (Ottawa Register)
Blame the USA for setting China up with the free will to up the ante in the current trade duty escalation.
     This weekend, the so-called "G7" meets in Biarritz, France by the Spanish border on the Bay of Biscay. Although the US-China showdown may not be the hot topic of the meeting, it is clear that the formidable players have much to be concerned with the outcome of the tariff escalation. It reflects directly to the future of the European Union itself;
     "The Group of 7 or G7 is an informal meeting between France, the United States, the United Kingdom, Germany, Japan, Italy and Canada as well as the European Union. These world powers, which represent 50% of the global economy, also share the values of freedom and democracy, as well as a collective ambition to deal with the world’s major issues." (
France Diplomatie goes on to report that President Macron invited others from Australia, India and Rwanda to join the meeting, none of whom will apparently act as proxy for the big headache, China.
That brings up the European Union (EU) itself as the other big headache on the international scene. Italy will be represented at the meeting, according to the UK Standard, by Giuseppe Conte. (Standard) Following a no-confidence vote in Italian parliament, Conte quit;

     "ROME (Reuters) - Prime Minister Giuseppe Conte handed in his resignation on Tuesday after accusing his interior minister, Matteo Salvini, of putting his League party before the needs of Italy." (Reuters)
Keegan Elmer in The South China Morning Post reports that PM Conte's exit will affect Rome's position with Beijing;
    " The resignation of Italian Prime Minister Giuseppe Conte spells uncertainty for the country’s warmer ties with China. Conte, a staunch defender of closer relations with Beijing during his 14 months in office, resigned on Tuesday amid a stand-off with League party leader and Interior Minister Matteo Salvini, a vocal critic of China." (SCMP)

The EU overall is a hodgepodge of various self-interest political factions that make American politics kid stuff. There are so many confederated groups of whatever alliances and progressive identity democrats and socialists that it's no wonder at all that the United Kingdom wants to run screaming from the organization. The bottom line, however, is which country holds the most votes of the newly streamlined 751 MEP 2019-2024 constitutive assembly, and that's Germany with 96. Its particular political spectrum runs pretty much across the board. (EU) Note also that if the UK dumps the EU, there will be some reapportionment of MEPs adding weight to whatever particular green or trade special interest benefits.   (Image: Trade across the board)

[ Note: Three Member States had a trade surplus with China. The largest was held by Germany (EUR 18 248 million), followed by Finland (EUR 1 448 million) and Ireland (EUR 1 013 million). Twenty-five Member States had a trade deficit with China. The largest was held by the Netherlands (EUR 74 157 million), followed by the United Kingdom (EUR 29 955 million) and Italy (EUR 17 611 million). ] (Ec-Europa)

     How does all of this play into a possible conspiracy at the G7? No one can deny that the United States currently has the most to lose if the trade beef continues with the Far East. Wall Street is wobbling, inflation and recession appear to be on the horizon even with White House denial of it. Blaming the Fed is just a cop out and the investors know better. China will go somewhere else to off its WalMart goods and that someone could well be the EU. The G7 is being touted as the nations that hold "50%" of the world's wealth, even higher according to the World Population Review;

     "When breaking down the numbers, the G7 countries represent over 46% of the gross domestic product globally based on nominal values. These countries represent over 32% of the GDP based on purchasing power parity. The countries in this group have more than 62% of the global net wealth – or a total of $280 trillion." (WPR)
Note however from the graph on the right the already existing trade imbalance between the two.

Stats at WPR show the USA leads in population nearly three times over second place Japan. For consumer power then, if America is out for the time being in trade with China, then it makes sense Beijing will turn to Paris, London, Rome and Berlin for new deals. In effect, the US President at G7 will be handed patronizing assurances of the EU's commitment to stand its ground in a dispute that doesn't involve its members, only to be on the hotline to Beijing early Monday morning. If anything, the EU, whether it needs the goods or not, can act as the middle-man for other countries eager to open its ports to new trade opportunities in spite of what the US has to say about it. (Photo: Journalists at G7, Xinhua)
     Tariffs are not sanctions, no country can be forced to follow the rules if the rules are invalid. The Chinese have been right about one thing ever since the Qing dynasty; the barbarians are interested in just one thing, profit.

     Late News:  (08/25/19/1500PDT) Note that US intends to open major new trading deal with Japan comes on the heels of Asahi Shimbun-Reuters report that Japan now leads China in ownership of US Treasury instruments;
     "NEW YORK-- Japan overtook China as the largest non-U.S. holder of Treasuries in June, after raising its holdings to a nearly three-year high, according to U.S. Treasury department data released on Thursday.
Japan's holdings of U.S. Treasuries rose to $1.122 trillion in June, from $1.101 trillion in May, and were its largest since October 2016." (Asahi Shimbun)
The data can be verified at the Treasury Dept. ( Framed entries indicate the G7 ownership in the securities.

Further Reading:

Verified Sources
Treaty of Nanking,
Fairbank, JK, The Journal of Modern History, Volume XII, Number 1, March, 1940, Page 6.
Revised tariff,   Ottawa Register 30 July 1928 P20
Elmer, K.,
EU, Germany,
EU-China  Trade by country,,_2018.png
G7 Loot,
Opium War painting,,_by_E._Duncan_(1843).jpg
Journalists at G7 photo,
Trade across the board,
EU-China Trade Imbalance,

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