In relation to a proposal that a reduction of customs duty should be made on the importation into the Commonwealth of goods the produce of British settlers in the New Hebrides, the following telegraphic correspondence has passed between the Secretary of State for the Colonies and the Governor-General:

Secretary of State for the Colonies to Governor-General, 29 September 1906:

'Referring to your Despatch No. 162,13 July, in considering question of reduction of duty in favour of British settlers in New Hebrides your Ministers will no doubt bear in mind rights to most favoured nation treatment possessed by certain foreign countries under treaties by which Commonwealth is bound.'

Governor-General to Secretary of State for the Colonies, 5 October 1906:

'Ministers will be glad if treaties referred to in your telegram of 29 September can be specially named. They will also be pleased to learn whether any existing treaties affect practice under which goods produced by French nationals in New Hebrides are admitted free of duty into France and New Caledonia.'

Secretary of State for the Colonies to Governor-General, 8 October 1906:

'Referring to your telegram of 5 October, New Hebrides, for countries entitled to most favoured nation treatment in Australia see Parliamentary Papers Commercial No. 9 Cd. 1807 of 1905. Good example is Treaty with Italy of 15 June 1883, to which all Australian colonies adhered except South Australia. Will send reply later as to New Caledonia.'

Secretary of State for the Colonies to Governor-General, 19 October 1906:

'Referring to my telegram of 8 October, admission of goods produced by French nationals in New Hebrides into France or New Caledonia free of duty does not conflict with any commercial treaty between this country and France. His Majesty's Government have no sufficient information as to treaties between France and other countries to enable them to say whether it conflicts with such treaty.'

The Prime Minister asks to be advised whether there are any provisions of the treaties referred to which would prevent the making of any reductions or remissions of duty on produce raised by British settlers in the New Hebrides without at the same time making similar reductions or remissions on produce raised by subjects of other countries and particularly by subjects of France and Germany.

So far as citizens or subjects of France and of Germany are concerned, the treaties referred to in the Parliamentary Papers mentioned by the Secretary of State for the Colonies do not in my opinion contain any provisions which would be violated by such a reduction or remission of duty as is suggested.

The question remains whether the most favoured nation clauses, as to import duties or commerce generally, which exist in treaties with various other countries-notably Italy, Japan and Russia-and acceded to by some or all of the States of the Commonwealth would be violated by such a provision.

The typical import duties clause is to the effect that no other or higher duties shall be imposed on the importation, into the dominions and possessions of either contracting party, of articles the produce or manufacture of the dominions and possessions of the other contracting party, than on articles produced or manufactured in any other foreign country.

In some treaties the word 'nation' or 'State' is substituted for foreign country.

In the general commerce clauses the phrase 'the most favoured nation' is generally used.

In my opinion the New Hebrides are not a 'foreign country', 'nation', or 'State' in the sense in which those words are used in the treaties referred to.

The proposed remission of duties, viewed as a preference to certain goods imported from the New Hebrides, is not therefore a preference to a foreign country; whilst viewed as a preference to British settlers in the New Hebrides, as against settlers of all other nationalities, it is also not a preference to any foreign country.

I am therefore of opinion that the suggested reduction or remission of duties would not be a violation of any of the treaties referred to.

[Vol. 5, p. 445]