U.S.A. Copra Tax

Latest Development in Washington

IN last issue, we said that the United States Government proposed to place a special tax of 3 cents per pound on coconut oil; that this probably would shut Philippines copra out of U.S.A. and divert it on to the European market; and that in consequence, the outlook for copra was very black indeed.

Since then, there have been interesting developments, which are set out in the following report from Messrs. Faure Blattman and Cos., London, dated April 16: “Once again America has provided the most sensational developments. Whilst on the on© hand Mr. Roosevelt is still seeking for powers to vary existing tariff rates for the purpose of fostering Ameri can exports by arranging reciprocal tariff concessions with other countries, the Senate has adopted a bill imposing a pro cessing tax of 3 cents per lb. on all the principal imported vegetable oils and oils made from imported seeds, including palm oil and coconut oil.

“The bill provides, however, that in the case of Philippine coconut oil, the revenue will be returned to the Philippines Trea sury, which would no doubt mean in effect that the Philippine Government would utilise these remittances to subsidise copra and coconut oil exports to the U.S.A.

This would enable them to continue as hitherto.

“As the amount of tax exceeds the pre sent value of coconut oil, we might, if the total tax is handed over to the ship pers in the form of a subsidy, find the anomalous position that it may pay the Philippines copra and coconut oil expor ter to give away his oil and copra to the U.S.A. consumer, and even pay something into the bargain, so as to enable him to obtain the export subsidy.

“The bill, as adopted by the Senate, now has to go to the Joint Committee of

the two Houses, and if passed, would then become law, unless vetoed by the Presi dent. As the underlying principle of this bill is diametrically opposed to Mr. Roose velt’s policy of reducing tariffs for the purpose of fostering international trade, it is quite possible that he will finally veto it, but it is also possible that, even in that case, Congress in its present mood might over-ride this veto.

“It is a little difficult to see how the American farming industry, for whose benefit the bill has been composed, will derive any benefit from it, and it will cer tainly mean a further nail in the coffin oi international trade.

“Markets for the principal oils and oil seeds have again experienced a further severe slump during the month under review, especially copra, groundnuts and palm oil. At the time of writing, however, the slump has come to a stop. There has been a slight improvement in prices. It remains to be seen whether this is only a “flash in the pan’’ or the beginning of a more pronounced movement. So far, we must say that we can see nothing in the situation to warrant the expectation of any material change in the position in the near future.

“Until we know whether the new Ameri can taxes will definitely become law, all markets must remain in a most uncertain state. Up to now, the passing of the bill by the Senate has not seriously affected markets, which must be mainly attri buted to the fact that the whole situation is so involved that the trade has not yet been able to visualise in which way they would be affected by the passing or the vetoing of the bill. It is still too early to say in which way the European markets will be affected.”