Coal & Canada

TAXTATION

The Revenue Act of 1932 imposed an import tax (tariff) of 10-c- per cwt. on coal, except from countries against which the U. S. had a favorable trade balance on that commodity. As the U. S. exports more coal to Canada than Canada sends to the U. S., the Dominion was automatically exempt from this tax provision. Last summer importers of British and German coal asked the U. S. to suspend the tax on their shipments. Reason: Britain and Germany have treaties with the U. S. promising them the same commercial treatment in this country as the most favored nation--in this case, Canada. In November the Treasury lifted the coal tax against British and German imports.

Last week Attorney General Mitchell ruled that the Treasury must reimpose the tax on British and German coal, regardless of treaty rights, and let importers fight out their claims in court. Reasoned "General" Mitchell: "Relief from this import duty on coal was only to be granted where a trade balance favorable to the U. S. existed, and as we have most-favored-nation treaties with most, if not all, of the nations likely to ship coal to the United States, the conclusion reached by the Treasury would practically nullify the efforts of Congress to impose an import tax on coal. Indeed it must be conceded that there is nothing to suggest that during the consideration of this legislation either House of Congress had in mind most-favored-nation treaties or that the clause in this statute respecting treaty provisions would operate ... to prevent generally the imposition of the import tax on coal."*

*For a broader development in the field of most-favored-nation trade treaties, see p. 29.

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