FREE TRADE AND THE CONGO BASIN TREATIES’ JACQUELINE MATTHEWS

THE CONVENTIONAL BASIN of the Congo is a vast area comprising several countries in Central Africa, all of which follow a commercial policy of equality of economic opportunity, commonly known as the ‘open door’ policy. A review of the Congo Basin Treaties, in which this policy was enunciated, is of particular interest at the present time when, on the one hand, the European Free Trade Area is under discussion and, on the other, several African territories appear to be on the verge of political independence and economic advancement.

Some aspects of free trade have existed in the Conventional Basin of the Congo for over seventy years. Free trade in the strict sense of the term implies an absence of taritTs and of discriminatory trade practices. A commercial policy free of tarifls is as rare as one which prohibits international trade altogether. Most countries follow a conimercial policy between these two extremes, and comparison brings to light the degree of freedom of trade, or the degree of protection provided by duties or other restrictive measures.

The ‘open door’ means absence of discrimination. Where duties exist, they must bc uniformly applied, without giving preferential treatment to any particular country. TaritTs in a colony or a dependency under the ‘open door’ policy will tend to be low, because they must also apply to imports from the mother country. In the scale of trade policies, therefore, the ‘open door’ provides for a considerable degree of freedom from restriction.

The ‘open door’ policy was established in the Conventional Basin of the Congo by the Berlin Act of 1885. It was reaffirmed in the Declaration of Brussels of 1890, and by the Convention of St. Germain-en-Laye in 1919. These three Acts constitute the Congo Basin Treaties. All thrce stipulate that the signatories will receive equal treatment within the area, but the prohibition on tarilfs in the Berlin Act was removed by the two subsequent treaties.

Originally, the Conventional Basin of the Congo comprised the whole of what is now the Belgian Congo, Uganda, Kenya, Tanganyika, Nyasaland, parts of French Equatorial Africa, the Cameroons, Somaliland, Angola and Northern Rhodesia, and a very small portion of the Sudan and Abyssinia (see Map). The anomaly of purrs of territories being included in the Conventional Basin of the Congo is due to the fact that the Treaty boundaries follow natural features which cut across existing territorial units. Subsequent developments in Northern Rhodesia, Nyasaland and French Equatorial Africa have altered slightly the limits of the ‘open door’ area.

1. I am grateful to Professor 0. P. F. Horwood for helpful criticism during :he preparation or tbis article.

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BERLIN ACT, 1885 The Bcrlin Act was tlic outcome of an international conference on African

amairs to which Bismarck had invitcd most of the European powers. It stipulated that “thc tradc of all nations shall enjoy complete freedom in all the regions forming the basin of the Congo and its I t statcd further that “merchandise imported into these regions shall rcniaiii free from iniport and transit dues . . . The Powcrs rcscrve to themsclvcs the right to determine after the lapse of 20 years whether this frecdom of import shall be retained or not”. The Berlin Act was signed by representativcs of the colonial powers in this area, namely Great Britain, France, the International Association of the Congo3, Germany, Italy and Portugal, and by countries without African dependencies, Austria-Hungary, Denmark, the Netherlands, Russia, Spain, Sweden and Norway, Turkey and the United States of America. The latter, however, did not ratify the treaty.

Two factors influenced the establishment of the ‘open door’ in Central Africa under the Berlin Act of 1885; they were ( I ) the free trade movement in Europe, and (2) the tense diplomatic atmosphere resultiiig from the partitioning of Africa.

( I ) Great Britain moved towards free trade earlier than the Continent. It can be said that in England, the tidc began to turn about 1820 and the year 1846 marked the victory of free trade over protection with the repeal of the Corn Laws under Robert Pcel. During the middle of the century, Napoleon 111 favoured a policy of freer trade in France, and most of the German states agreed to form the Zollverein, which swept away most of the tariff barriers between them‘.

A reccssion which began in 1873 and lasted for several years shook the sup- porters of frec trade and there was a gradual change of opinion in favour of protection. Britain was the last nation to abandon free trade. The drift towards protection was evident in 1894 when Imperial Preference was discussed at the Empire Trade Conference at Otlawa. This policy was finally adopted in 1932.

The Berlin Act was signed in 1885 when free tradc was beginning to give way to protection. But the free trade policy had been in favour for about 30 years and it was bound to influence a n iiilcrnational conference discussing trade policies in Africa.

(2) Tlic second factor was the exceptional diplomatic activity which developed during the ‘scramble for Africa’. Never before or since had such a vast continent been divided between foreign powers in such a short time. Precise demarcation of national frontiers was incomplete because the region was largely unexplored. Moreover, tlic legality of the claims of European powers and commercial companies to administer these countries (under ‘treaties’ entered into with indigenous chiefs) were opcn to dispute by those nations which had entered thc field too late to stake substantial claims in Africa.

The Berlin Act, by laying down certain rules to avoid restrictive measures, did much to stabilize inlernational relations and avoid conflict. By allowing other countries to participate freely in the economic development of these colonies,

2. Herttlel. Sir Edward: Trrorirr Vot. XVII. 1890 pp. 60 IT. I, Earlier nmne of the Independent Slats of the Congo. which became a Be1 ian Colony in 1908. 4. Henton. H c r k l : Econsmlc Hbfnry of€iiropr. New York: 1948. pp. 619 #.

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and by sharing thc new markets on an equal basis, tlic colonial powcrs which had dependencies in the Conventional Basin of the Congo consolidated their position, because this policy encouraged international recognition of their rights. Further- more, discriminatory trade policies in African dependencies might have antagonized non-colonial powers.

Prior to the Bcrlin Act, tlic ‘Intcrnationnl Association of the Congo’ which had bccn recognized by France, Britain and the United States of America, had already embarked on a policy of ‘open door’. I t had resolved to levy no customs dulies upon goods and articles of merchandise importcd into the tcrritory. Foreigners would have freedom of religion, rights of navigation, commerce and industry, and the rights of buying, selling, letting and hiring land, buildings, mines and forests, on the sole condition that they should obey thc laws of thc territory.

Representatives attending the Berlin Conference discussed delimitation of boundaries, navigation on the Congo and Niger rivers, liquor and arms traffic, Native intercsts and equality of cconomic opportunity. Peaceful negotiations recognized the posscssions and spheres of influence of various powers in Africa. The Conference accepted the concept of national trusteeship (the Powers exercising authority in the Conventional Basin of the Congo were bound to protect Native interests) and recognized that the slave trade was forbidden by the principles of international law. The Berlin Act created a precedent for the Mandates system and was the first and possibly the greatest single step in the collective treatment of African affairs.

BRUSSELS CONFERENCE. 1890 The Anti-Slavery Conference took place in Brussels in 1890, and the General

Act of the Conference was signed by Grcat Britain, Austria-Hungary, Belgium, Italy, the Netherlands, Persia, Portugal, Russia, Spain, Sweden and Norway, Turkey, the United States of America and Zanzibar. It was directed towards the suppression of the slave trade but it also dealt with liquor traffic and freedom of trade.

The Declaration of Brussels mentioned “ . . . obligations which demand new resources to meet them”, and with this end in view it authorized the Powers having possessions in the Conventional Basin of the Congo, to “establish . . . duties upon imported goods, the scale of which shall not exceed a rate equivalent to 10% ad valorem . . . ” However, this Declaration reiterated the principle of the ‘open door’ policy, that “no differentia1 treatment or transit duty shall be

’ established“. ST. GERMAIN-EN-LAYE, 1919

The third and last of the Congo Basin Treaties was signed at St. Germain-en- Laye in 1919 by the United States of America, Great Britain, Belgium, France, Italy, Portugal and Japan. It reaffirmed the ‘open door’ in the Conventional Basin of the Congo, but abolished the limit of 10 per cent on import duties. Transit of goods between the territories within the Congo Basin was to remain duty free. Equality of treatment was thus guaranteed again between the signatories, with

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the cxception of Portugal, who agreed to apply thc ‘open door’ policy in Angola but not in Mozambiquc, where she imposed differential duties’.

Equality of treatment was extcnded to members of the League of Nations who had signed the former Acts and declared their adherence to the new Convention of 1919. Another group of States which had not been parties to the Treaty of Vcrsaillcs but had signed the Acts of Berlin and Brussels, continued to enjoy the rights derivcd from the carlier Acts. They were the Scandinavian countries, Spain, the Netherlands, Russia and Persia. On the other hand, Germany, Austria, Hungary and Turkey renounced, in the peace treaties of 1919, all rights enjoyed under former Acts. After a few years, however, they again secured equality of treatment in the area, by special treaties.

MANDATE AND TRUSTEESHIP After the First World War, the problem of the status of German and Turkish

dependencies was discussed by the Allied Powers at Versailles. Among the fourteen points put forward by President Woodrow Wilson was the proposition that no annexation of enemy depcndencies would take place. I t was eventually agreed that these territories would become Mandates, under the administration of certain Allied Powers, subject to the supervision of the League of Nations. The Permanent Mandates Commission was to act as an advisory body. This system was established to avoid annexation and at the same time to allow all members of the League of Nations to share the economic advantages of the colonies in question. Among other stipulations, the ‘open door’ was to be applied to the Mandates in Asia Minor and Africa, with the exception of South-West Africa. Thus the ‘open door’ policy was extended, through the Mandates system, to parts of Africa not within the Conventional Basin of the Congo, namely, Togoland and the whole of the Cameroons.

The Mandates system ended with the League of Nations during the Second World War. Later, the United Nations promoted a Trusteeship system, based on * Chapters XI1 and Xll l of the United Nations Charter, which was signed at San Francisco in 1945. Most of the Mandates became ‘Trust territories’. The Trusteeship Powers were to ensure equal treatment in social, economic and commercial matters for all members of the United Nations and their nationals as long as it was not detrimental to the welfare of the indigenous peoples. For the first time, therefore, the principle of the ‘open door’ was subject to the interests of the Native inhabitants of the territories. It should be noted that some of the Trust territories are part of the Conventional Basin of the Congo, where the ‘open door’ was already the rule. These are Tanganyika, Ruanda-Urundi and part of the Cameroons.

SUBSEQUENT DEVJZLOPMENTS IN THE CONVENTIONAL BASIN OF THE.CONGO ( I ) Northern Rhodesia and Nyasalund. Imperial Preference implies discrimination against goods imported into the Commonwealth from nonmember countries. This is contrary to the ‘open door’ policy and, therefore, has not been applied

5. Hdley, Lord M.: An African Survey, Oxford Univaily Rcu, 1939. p. 1342.

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to British territories within the Congo Basin area. However, recent developments have altered thc trade policy of Nyasaland and the northern portion of Northern Rhodesia. Under the ‘open door’ policy, their tariffs differed from those of Southern Rhodesia and of the southern part of Northern Rhodesia, which followed the Imperial Preference policy. With the establishment of the Federation of the Rhodesias and Nyasaland in 1953, there were demands for ‘unification of the market’, and representatives of the Federation went to GATT (General Agreement 011 TarilTs and Trade, Gcneva) in 1956 to negotiate for a uniform tariff. Under the new tariff agreement, imports from Britain and the rest of the Commonwcalth receive preferential treatment throughout the Federation*. Nyasaland and the northern part of Northern Rhodesia have therefore abandoned the ‘open door’ policy, and are no longer part of the free trade area of the Conventional Basin of the Congo. (2) French Equalorid Africn. Until recently, the ‘open door’ policy was applicable only to the southern part of French Equatorial Africa. I t has now been extended to the whole area which is a federation consisting of the four territories of Gaboon, Middle Congo, Chad and Ubangi-Shari’. (3) Kenyo, Uganda utid Tmganyika. There has been no change in the ‘open door’ policy in these territories except for some limitations on imports due to shortage of certain currencies, which also affect to some extent the French territories. (4) A change which temporarily affected all territories within the area is that, under the Peace Treaty following the Second World War, Japan had to renounce all rights and interests that she derived from being a Signatory to the Convention of St. Germain-en-Laye. However, Japan’s position has been modified by obligations accepted by members of General Agreement on Tariffs and Trade. This is interesting in view of the fear, often expressed in discussions of ‘open door’ policies, that colonial markets will be made the dumping ground for cheap goods from the East.

CONCLUSIONS The ‘open door’ policy as applied by the Berlin Act of 1885 comprised two

major principles: equality of treatment and absence of tariffs. A comparison of the three Congo Basin Treaties shows that although the first principle of non- discrimination was repeatedly affirmed, the second did not stand the test of time, and duties were allowed, first to the limit of 10 per cent, then without this limit. Absence of discrimination, however, has tended to keep these tariffs low.

It is significant that the territories where the ‘open door’ policy was applied were all subordinated to the authority of other nations, and thereforc had no say in the matter. Furthermore, those nations which agreed to enforce this policy in their dependencies, did not apply the same policy at home. This suggests that although they agreed that a freer commercial policy was beneficial to the world in general, they themselves were not prepared to enforce it within their own frontiers. The history of international trade shows that as States attain full sovereignty, __ -

b. heoing’c Conrrriipornry Arrhivrs Au us1 10-17. 1957. p. I S l O l . 1. United Nations Publication: No~-rr(fgorrr#d### lirrlrarirs. Vol. I I . 19s). p. 39.

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tlicy tcnd to resort to tariffs as an important instrument of trade policy. At present, free trade only appears to cxist where there is some form of compulsion, which in the case of the African dcpendeiicies is provided by adherence to tlie Congo Basin Treatics. However, this state of affairs need not be regarded as inevitable. A movement towards freer trade might achieve a certain success, as happcned in the ninetcenlli century, if commercial policies are formulated on an international basis rather than from tlie exclusively national point of view.

Whether equality of economic opportunity promoted development or not is simply a variation of the controversy of protection versus free trade. It is often argucd that free trade is bencficial to tlie world as a whole but rarely benefits an individual country. I t is true that a free trade country may well be at a disadvantage if it is surrounded by protectionist countries. But where many co,untries trade freely among themselves intcrnational specialization is likely to raise the living standards of all. A good deal will depend on the commercial relations of the countries concerned, so it is unwise to generalize too far on this subject.

Tariffs are advocated, k / e r aka, to assist home industries by protecting them against foreigii competition. However, such tarilfs cannot hclp them in elternal markcts. Another disadvantagc is that if foreign industries find several markets virtually closed to their products, they will be inclined to ask for protection of h i r local markets. Thus a policy of protection induces other countries to erect tariff barriers, and this may lead eventually to a substantial impediment to international trade.

Arguments for the protection of growing industrics are unconvincing in the case of those under-developed countries where industries are virtually non- existent. Not every under-developed country is on the verge of industrialization. The presence of a few firms is not sufficient evidence of an industrial future which can be achieved through protection.

High tariffs restrict trade. For this reason, such measures are not advantageous to under-developed areas, where the main handicap is a low level of economic activity. Any practice which restricts trade without clearly improving the over-all economic development of the area, should be discarded.

Besides affecting international trade unfavourably, tarilfs add further costs to imports, which in vast areas such as those of the Congo Basin, already incur substantial costs. The low purchasing power of the peoples of under-developed areas necessitates cheap, coinpetitive imports, if commerce is to be encouraged.

Tarifi's can bc discriminatory. In some cases, they are low for imports from certain countries, and high for other imports. When tariffs of this kind are applied in a colony, it would secm that they may give more protection to those foreign industries which benefit from the low, preferential rates, than to local industries. Discriminatory tarirs applied to a dependent, under-developed country are probably aimed at promoting the industries of the administering Power, and not of the colonial territory. The benefits received by an under-developed country under such a policy is open to doubt.

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Discrimination may not only undermine trade between the dependent territory and foreign nations, but it may also discourage these foreign nations from taking a more active interest in the area, and from taking a greater part in its development. For example, equality of treatment of foreigners in under-developed areas may attract foreign capital from a greater number of sources than would otherwise be the case. The rapid dcvelopment of the Belgian Congo is probably due partly to the security which foreign investors may find in an economy under an 'open door' policy.

In a commercial world where discrimination and tariffs prevail, the Con- ventional Basin of the Congo is a reminder that a certain measure of free trade is not an unattainable ideal, but on the contrary, is a reality which has promoted development in remote parts of Africa. As there is no indication that the Congo Basin Treaties will be revised, the Conventional Basin of the Congo may prove to be the nucleus of an evergrowing free trnde area.

University of Natal, Durban.

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