A.—s

300

and was prepared to admit it and other Indian Colonial products to the minimum tariff, in return for a purely nominal, or what might be termed in China, a " face-saving" concession. This concession eventually took the form of the lowering of the Indian import duties, not for France alone, be it observed, but for the whole world, on two absolutely insignificant articles— vinegar and green copperas. No hint was thrown out in the course of negotiations with France that India might possibly resort to retaliation. Lord Curzon's Government, it is true, suggested that the possibility of retaliatory measures should be mentioned, but His Majesty's Government — and this was a few years ago —declined to adopt the suggestion. They doubted its expediency, and they felt sure that when France had settled her dispute with Brazil, she would take steps to remove India's grievance. The second incident referred to by Mr. Deakin arose out of the action of the British Government in excluding Russian sugar against bounty-fed sugars in accordance with the Brussels Sugar Convention. The Russian Government protested against this exclusion as being an infraction of the " most favoured nation " treatment, and fpllowed its protest by placing a surtax on Indian and Ceylon teas entering Russia by Europe, or the Black Sea route. His Majesty's Government decided not to retaliate on behalf of Ceylon, and not to authorise retaliation by India, The surtax is still in force, but it has had, apparently, not very much effect on the export to Russia of Indian and Ceylon teas, which has increased not inconsiderably during the last few years, as the following figures will show. The Ceylon export, which was 4,000,000 lbs. in 1899, was 11,000,000 lbs. in 1905. The Indian export, which was 1,500,000 lbs. in 1901-2, was no less than 10,000,000 lbs. in 1905-6. The surtax has evidently not destroyed the Russian taste for the best of tea. Mr. DEAKIN : If it had, would the Government of India have taken any action ? Sir JAMES MACKAY : We might deal with that if it arises; but has not arisen so far. An analysis of the export trade of India supports the conclusion that India has practically nothing to gain from the adoption by the Empire of a system of tariffs, discriminating against the manufactured products and food stuffs of foreign countries. In a few articles, such as coffee, indigo, rice, and wheat, it is true that some slight gain is possible if these articles were admitted to the United Kingdom on better terms than the same articles from foreign countries, but the gain would be trifling. Tea also has been suggested as a possible article for preferential treatment. But, gentlemen, Indian and Ceylon teas have now a secure market, as the competition of China has ceased to be important. In a total import of 321,000,000 lbs. of tea —mark these figures—into the United Kingdom, China is now represented by only 13,000 000 lbs. Furthermore, in the Convention of 1902 with China, at the request of Great Britain, the Chinese Government bound themselves—l would like Mr. Moor to note this—to impose an excise duty on machine-made yarn and cloth manufactured in China, when they came to raise the import duties on the abolition of likin, so as to deprive the duties on these goods of any protective effect. Mr. DEAKIN : I do not know whether you are aware of it, but to some extent a distinct factor in the development of the trade in Indian tea in Australia was, in the first instance, the deliberate Preference given to India, as a part of the Empire against China, a country exterior to the Empire. In the earlier days of the Indian tea trade that was quite an influential motive in Australia,* afterwards the taste for the tea became established.

Tenth Day. 2 May 1907.

Preferential Trade. (Sir James Mackay.)