On December 5, 1893, the Trade Regulations were signed at Darjiling. The trade-mart at Yatung was to “be open for all British Subjects for purposes of trade from the first day of May, 1894,” and the Government were to be “free to send officers to reside at Yatung to watch the conditions of British trade.” British subjects were not at liberty to buy land and build houses for themselves, but were to be free “to rent houses and godowns (stores) for their own accommodation and for the storage of their goods,” and “to sell their goods to whomsoever they please, to purchase native commodities in kind or in money, to hire transport of any kind, and, in general, to conduct their business without any vexatious restrictions.” Goods other than arms, liquors, and others specified, were to be “exempt from duty for a period of five years”; but after that, if found desirable, a tariff might be “mutually agreed upon and enforced.” The Political Officer in Sikkim and the Chinese Frontier Officer in conference were to settle any trade disputes arising.
No arrangements for communication between British and Tibetan officials were made, but it was laid down that despatches from the Government of India to the Chinese Resident should be handed over by the Political Officer in Sikkim to the Chinese Frontier Officer.
And as to grazing, it was agreed that at the end of one year such Tibetans as continued to graze their cattle in Sikkim should be subject to such regulations as the British Government might lay down.
May 1, 1894, had been fixed as the date upon which the trade-mart at Yatung was to be opened, and at the appointed time Mr. Claude White, the Political Officer in Sikkim, was sent to visit Yatung, to attend the opening of the mart, and to report on the general situation as regards trade. He was instructed not to raise the question of demarcating the frontier, but to undertake, if the subject was mooted by the Chinese officials, that their views and suggestions should be laid before the Government of India.
Mr. White, writing on June 9 from Yatung, reported that, in the first place, the site of the mart had been “exceedingly badly chosen.” It will be remembered that it was chosen by the Tibetans, and simply accepted by us out of deference to their feelings. It was at the bottom of a narrow valley, shut in by steep hills, with no room for expansion. He further reported that the godowns (stores), or shops, built for the trade would answer the purpose of native shops, but were quite inadequate for the storage of goods or for the use of European merchants, and that the rent proposed was exorbitant, being Rs. 25 a month, when a fair rent would be from Rs. 4 to Rs. 5. He found the Tibetans most discourteous and obstructive, and he believed that the Lhasa authorities had issued orders that the free-trade clauses of the treaty were not to be carried out. The local official at Phari, at the head of the Chumbi Valley, charged 10 per cent. on all goods passing through Phari, both imports and exports; and this action, in Mr. White’s opinion, certainly did away with any freedom of trade, as provided for in the treaty, for it was obviously useless to have provided by treaty that Indian goods should be allowed to enter Tibet free of duty if a few miles inside the frontier, and on the only road into Tibet, a heavy duty was to be imposed upon them.