[Distributed to the Council 1928. II. and the Members of the League.] C. 346. M. 103. [E. 350.] Geneva, Jan u ary 1929. LEAGUE OF NATIONS ECONOMIC COMMITTEE SUB-COMMITTEE OF EXPERTS FOR THE UNIFICATION OF CUSTOMS TARIFF NOMENCLATURE DRAFT FRAMEWORK FOR A CUSTOMS TARIFF NOMENCLATURE AND DRAFT ALLOCATION OF GOODS TO THE VARIOUS CHAPTERS OF THE FRAMEWORK WITH EXPLANATORY NOTES Publications of the League of Nations II. ECONOMIC AND FINANCIAL 1928. II. 37. SUMMARY. Page I ntroduction .................................................................................................................................................... 4 E xtract from the R epo r t of t h e S u b -Com m ittee of E x p e r t s o n Customs T a r iff N omenclature to th e E conomic Comm ittee (October 31ST, 1927) 6 E xtract from the R epor t of t h e S u b -Committee of E x p er t s o n Customs T a r if f N omenclature to th e E conomic, Committee (J u n e 23RD, 1928) ................................................ 10 D r aft F ram ew ork for a C ustoms T a r iff N omenclature ..................................................................... 13 D raft A llocation of Goods to the V a rious Ch apters of the F r a m e w o r k ........................... 17 E x pla n a t o r y N o t e s ................................................................................................................................................................. 74 S. (I. X. 2.500 (F.) 12/28 + 1.675 (A.) 1/29. Imp. Kundig. INTRODUCTION. The International Economic Conference, held at Geneva in May 1927, recommended the Council of the League of Nations to take the initiative in drawing up an appropriate procedure for establishing, in liaison with the producing and commercial organisations concerned, a systematic Customs tariff nomenclature, in accordance with a general plan covering all classes of goods. Following this recommendation, the Council, at its session in June 1927, decided to invite the Economic Committee to begin as soon as possible a preparatory study in regard to the unification of tariff nomenclature. In pursuance of the Council resolution, the Economic Committee, at its extraordinary session in July 1927, instructed the Secretariat to convene a meeting of five experts to consider the different principles on which the general framework of a tariff might be constructed and also to make suggestions regarding the later stages of the study of the question. The experts were to be guided by the main principles embodied in the resolution of the Economic Conference concerning the unification of nomenclature and the simplification of Customs tariffs and also by the necessity for subsequently securing the co-operation of economic interests. In conformity with the Committee’s decision, a Sub-Committee of five experts belonging to the following countries: Belgium, Czechoslovakia, France, Germany and Italy, was constituted. This “ Sub-Committee of Experts ", at its two meetings held at Geneva in August and October 1927, drew up a preliminary draft for a Customs nomenclature, comprising twenty sections, in which all commodities were arranged in logical order, in accordance with the principles set forth above (document E.350 (1) — " Draft Framework for a Customs Nomenclature ” and “ Draft Classification ”). These twenty sections contained : first, the main products of the animal, vegetable and mineral kingdoms, followed by the industries transforming the principal natural raw materials and most important mineral products. A third group covered industries which, by combining or transforming the products of the above-mentioned industries, produce new articles capable of being used for different purposes from those for which the materials employed in the manufacture of those articles are intended. In order to make the new nomenclature easier to consult, each section was subdivided into categories or chapters, amounting to 94 in all. The Economic Committee of the League of Nations, to which this preliminary draft was submitted at its session in December 1927, decided to collect in the countries concerned such information and advice as might make it possible to form an adequate opinion on the matter; it decided, further, that the Secretariat should forward the nomenclature framed by the experts to the persons and bodies qualified to express an opinion on it or able to supply useful data for purposes of a more detailed nomenclature which will now have to be established. During its two sessions of March and June 1928, the Sub-Committee of Experts, to which two new members, a Hungarian expert and a Swiss expert, were added in June, made a careful and detailed examination, of the observations which had reached it from qualified persons in different countries. The experts took into account the suggestions submitted to them in so far as they considered that the modifications or transfers asked for or proposed might have the effect of making the nomenclature clearer and more accessible to all those having to consult Customs tariffs. As stated in its report of June 23rd, 1928, the Sub-Committee of Experts, "by endeavouring to accept all the proposals which were not irreconcilable or in direct opposition with the principles laid down at the outset, has wished to show that it desired the new nomenclature to be the work of the greatest possible number of authorities, and therefore have a truly international character The Sub-Committee of Experts is further of the opinion that the new framework, which involves somewhat important changes in the original draft, should be regarded, in so far as the framewrork itself — not the draft classification of goods within that framework — is concerned, as final, and that it would be inexpedient to proceed to further consultations or enquiries in this connection, since any fresh changes would only destroy the harmony of a draft in which the — 5 — experts have endeavoured to reconcile theoretical principles and practical necessities. The Economic Committee agrees in principle with the opinion of the experts as stated above. In its present state, the draft framework for a Customs nomenclature consists of twenty- one sections, subdivided, according to the method employed in the preliminary draft, into categories or chapters ; these, however, are now reduced to eighty-six. As mentioned above, the system of classification into sections, as adopted in the preliminary draft, has—in principle—again been followed. For the reasons set forth in the general note at the head of the explanatory note, the principal products of the mineral kingdom no longer come immediately after the main products of the animal and vegetable kingdoms. This note also explains the principles by which the experts have been guided in classifying the goods under the various sections and chapters. EXTRACT FROM THE REPORT OF THE SUB-COMMITTEE OF EXPERTS ON CUSTOMS TARIFF NOMENCLATURE TO THE ECONOMIC COMMITTEE (October 31st, 1927). When calling attention to the importance of simplifying Customs tariffs, the International Economic Conference, held at Geneva in May 1927, recommended, in the first place, that the unification of tariff nomenclature should be studied. Tariffs are at present based on widely varying nomenclatures. Some of them — ad valorem tariffs—have very restricted nomenclatures, containing only a few items. Specific tariffs, on the other hand, have more detailed nomenclatures, the reason being that their authors desired to graduate the duties according to the value of the goods. With this object, they specified in their nomenclatures everything which contributes to increasing or diminishing the quality of an article, and consequently its price; and this is one of the main reasons for the complexity of certain nomenclatures. Serious disadvantages attach to any exaggerated growth in the number of items in a tariff nomenclature. The first effect of such unduly numerous subdivisions is to make the tariffs difficult of access, except to the officials of the administrations responsible for their application. It is important, however, for the trader, the manufacturer, the agent, and even the statistician, that tariffs should be easy to read and understand. In order to clear the new nomenclatures of their thousand-and-one useless details, we must attach more weight to the specific characteristics of the goods than to their value. The tariffs drawn up during the years before and after the war have certainly shown no tendency towards simplification. In the tariffs of the principal European countries at least, the number of items in the nomenclature has been continually increasing. Very striking observations are recorded by Dr. Trendelenburg in his report (document C.E.I.32) to the International Economic Conference. The German Customs tariff, which contained about 480 autonomous or conventional items in 1888, had 2,300 in 1925. In Italy, the number of autonomous items rose between 1878 and 1921 from 535 to 2,777. The process of development is still more remarkable in Belgium, where the old tariff of 1884 had only 235 items (though it was, it is true, divided only into general categories), whereas the 1924 tariff has 3,038. In France, the tariff of January nth, 1892, which contained 1,500 items under 654 numbers, now has 4,371 items under 1,272 numbers. There is nothing to suggest that this multiplication of tariff items is likely to be arrested or retarded. On the contrary, it seems clear that future negotiations for commercial agreements will inevitably lead to the inclusion of further