Warehousing Versus Drawback
The main object of both the warehousing and drawback systems is to place a merchant selling in a foreign market in a position similar to that which Crown would occupy if there were no tariff. Drawback involves considerable sampling and testing of goods presented, as well as an accounting control, in order to identify goods with those upon which duty has been paid. All these costs to the administration are repeated in the warehousing system but in a lesser degree. Hence warehousing facilities help to reduce the Crown's expenses. From the consumer's standpoint the warehousing system tends to reduce costs in many trades because the payment of duty has been deferred. The foregoing discussion has had the storage warehouse in view, but it applies generally to the manufacturing warehouse. The production of cigarettes is a good illustration of many of the points discussed, as well as the interactions between the warehousing and drawback systems.