§ (1) If, as respects goods of any class or description which are chargeable or which it is apprehended will shortly become Chargeable with the general ad valorem duty, it appears to the Import Duties Advisory Committee that, having regard to any exceptional circumstances, the said duty ought to be reduced, the Committee may recommend to the Treasury that, in lieu of being charged with the said duty, the said goods ought to be charged—
- (a) with a duty equal to such percentage less than 10 per cent. of the value of the goods as may be specified in the recommendation; or
- (b) with whichever is the lower of the following two duties, namely—
- (i) a duty chargeable by reference to weight or other measure of quantity at such rate as may be specified in the recommendation; or
- (ii) a duty equal to such percentage not exceeding 10 per cent. of the value of the goods as may be so specified.
§ (2) The Treasury, after receiving a recommendation under the last foregoing sub-section, may, after consultation with the appropriate Department, by order direct that such duty of customs as is specified in the recommendation shall be charged under this section, in lieu of the general ad valorem duty, on the importation into the United Kingdom of goods of the class or description so specified, and references in any enactment to the general ad valorem duty or to duty chargeable under the Import Duties Act, 1932, or under Part I thereof shall, unless the context otherwise requires, be deemed to include, in relation to such goods, a reference to the duty chargeable under this section:
§ Provided that no order made under this section as respects goods which are not chargeable with the general ad valorem duty at the date when the order is made shall have effect until the date on which that duty would otherwise have become chargeable thereon.
§ (3) Sub-sections (1), (3), (4), and (5) of section nineteen of the Import Duties Act, 1932, shall apply to any order made under this section as if it were an order made by the Treasury under the said Act other 1544 than an order imposing a duty of customs, and in this section the expression "appropriate Department" has the same meaning as in that Act."—[Mr. Chamberlain.]
§ Brought up, and read the First time.
§ 3.48 p.m.
I beg to move, "That the Clause be read a Second time."
This is a rather long Clause, the purpose of which I will explain to the House. Under the Import Duties Act there is a general scheme of duties to provide for a revenue tariff of 10 per cent., and it is also provided that the Import Duties Advisory Committee can recommend additions to this 10 per cent. The Treasury are empowered to make an Order carrying out those recommendations, but there has never been any power to reduce the duty of 10 per cent. to something less than 10 per cent. Goods can be put on the free list or they can be subject to a duty of 10 per cent. and to additions to the 10 per cent., but they cannot be subject to 8 per cent. or anything between nothing and 10 per cent. Until quite recently there has been no difficulty arising in respect of that omission, and perhaps there would not have been had not certain circumstances arisen connected with one of the subjects which formed part of our discussions at Ottawa. At Ottawa we had a discussion about the importation of lead and zinc into this country. The producers of lead and zinc in the Empire were anxious to have the preference, and in order to give that preference, of course it would be necessary to put a duty on the foreign imports of these two metals, but we were anxious lest in doing that we might hamper the users of these metals, which are the raw material for a number of industries in this country. Then the producers offered to give us an undertaking that they would not, in consequence of the duty, raise the price of these two metals above the world price.
After a long discussion how an undertaking of that kind was to be put into words, a formula was ultimately discovered and formed part of the Ottawa Agreement. The formula in practice has given rise to a great number of difficulties and complaints. It may be remembered that the President of the Board of Trade accordingly invited the Import Duties Advisory Committee to go into the whole question and see what was the best thing 1545 to be done. They have been considering what was the cause of the difficulties and how they might be overcome and have been in discussion with the various interests concerned. Although they have not yet presented their final report, they have intimated to us that in all probability they will be able to find a solution on the basis of a duty of less than 10 per cent., in which case it will be no longer necessary to limit the prices of Empire supplies to the world prices, as there is great difficulty in determining what the world price is. In considering a solution of this kind, the Committee have come up against the difficulty that there is no statutory power which would enable them to make recommendations to that effect. They have, therefore, drawn our attention to the difficulty in which they find themselves, and this new Clause has been drafted in order to overcome it. If the Committee's inquiry had been concluded a little earlier we should no doubt have had the Clause at an earlier stage.
Although I have spoken of lead and zinc, those two metals are not mentioned in the Clause. The Clause is drawn in general terms. Having come up against the difficulty in the case of these two metals it was thought better not to put them in specifically but to employ general terms as we do not want to come again to the House if a case should arise in regard to other goods. Accordingly, it is provided that where it appears to the Committee that having regard to any exceptional circumstances—those words are put in to indicate that the power will be used sparingly—the duty ought to be reduced, the Committee will be able to recommend that instead of being charged with the said duty the goods shall be charged otherwise. There are two alternatives. The first alternative is a percentage less than 10 per cent. on the value of the goods and the second alternative is a duty chargeable by reference to weight or other measure of quantity at such rate as may be specified in the recommendation, or a duty equal to such percentage not exceeding 10 per cent. of the value of the goods as may be so specified. That will enable the Committee, for example, to recommend that there shall be either a duty of 5 per cent. ad valorem or a duty of 10s. per ton whichever is the lower of the two.
1546 Sub-section (2) recites the ordinary procedure under which the Treasury is entitled to make an order on the recommendation of the Committee and provides that references in any enactment to the general ad valorem duty or to duty chargeable under the Import Duties Act, 1932, shall be deemed to relate to goods under this Clause. Sub-section (3) provides that Section 19 of the Import Duties Act, 1932, shall apply to any Order made under this Section. A recommendation for reducing a duty does not require approval by a resolution of the House of Commons and here the procedure will be the same. But, of course, where prior to the application of the provisions of this Clause, in order that goods may be removed from the Free List, a resolution will still be required in accordance with Section 7 (3) of the Finance Act, 1932.
§ 3.55 p.m.
§ Mr. MORGAN JONES
We are obliged to the right hon. Gentleman for his explanation, but I gather that the explanation does not justify the optimism that I had entertained. I had hoped that this new Clause indicated that at long last and in good time before the Election some sort of conscience had overtaken the Government and that they were going to take some steps to reduce the prices of commodities rather than keep on increasing them. That apparently is not the case. My understanding of the position as it was before this new Clause was drafted was that if a commodity were removed from the Free List to the non-Free List it became immediately subject to 10 per cent. duty.
§ Mr. CHAMBERLAIN indicated assent.
§ Mr. CHAMBERLAIN indicated assent.
§ Mr. JONES
That is all to the good as far as it goes. I take it that as the Clause is drawn in general terms it can apply to any single commodity. Although the Chancellor of the Exchequer specifically mentioned lead and zinc, I take it that it can be applied to a whole series of commodities in the list. There is a phrase in the Clause of which I should like an explanation. It is the phrase: 1547having regard to any exceptional circumstances.We do not know what circumstances were in the mind of the Exchequer that would in their view be deemed to be exceptional. I have another difficulty, and that is in respect of the phrase:which it is apprehended will shortly become chargeable.Does that mean that the Import Duties Advisory Committee might impose the duty of 5 per cent. or whatever it might be simply on the ground that they apprehended that it would shortly become chargeable, and that simply on that belief they could automatically apply 5 per cent. or any other duty, or am I to understand that before anything of that kind could happen there must be a resolution passed by this House?
It is intended to cover goods which are now on the free list; where it is desired to remove them from that list and apply a duty lower than 10 per cent. The first thing to do is to remove them from the free list, and that is a thing which the Committee have power to do now. It is that to which reference is made when it is said that there may be articles which it is apprehended may shortly be chargeable. That is the first process. After that they make a recommendation for a lower duty than 10 per cent.
§ Mr. JONES
I understand now the intention of the paragraph. The Import Duties Advisory Committee has been operating since 1932, and it is rather astonishing that, while we have been in the process of putting on duties of 10 per cent. on this, that and other goods, we have suddenly come up against the realisation that the Committee have no power to reduce a duty. In the last few years we have been so busy adding duties that we have never had to contemplate the possibility of commodities being overtaxed or being over subjected to duty. Therefore, in this sudden realisation, they ask us at this stage to pass this new Clause. As far as I am concerned, I have no objection. The more you reduce the duties, the better it will be for the consumers, and the better it is for the consumers the better I, myself, am pleased. Therefore I have no intention to divide against the Clause.
§ 4.1 p.m.
§ Colonel GRETTON
Those of us who have been anxious that help should be given to industries in this country, and have tried to fight that question for a number of years, are apprehensive of the procedure which the Chancellor of the Exchequer has described. Of course, a duty of 10 per cent., in the majority of cases, would have no protective effect. I am not objecting to the special reasons for this Clause. Because of the difficulties which have arisen in the case of lead and zinc, it is desirable that the duty should be reduced below 10 per cent. in order to facilitate the Ottawa Agreement. I do not suppose anyone in the House will raise any objection to that, but the Chancellor of the Exchequer has gone further in proposing a general power, and it is that which raises some doubt in the minds of some of us. I do not want to be meticulous or over-critical, but my right hon. Friend has not given any example of a revenue duty which is desirable at less than 10 per cent. involving the setting aside of a general enactment. Parliament may not be informed. It is done by bureaucratic action, that is to say, official action which will not come before this House. There, I think, there is a strong objection.
In so far as the Clause deals with the two commodities, I raise no objection whatever; it is perfectly right. But the general application that in future duties are to be set up by the action of the Treasury, on the recommendation of the Import Duties Advisory Committee, of something less than 10 per cent., and that those duties may be imposed without the knowledge or confirmation of Parliament. It is opening a wide door to set aside the general provision which has been made by this House, and which vast numbers of people in this country value as being a substantial measure of protection to the industries of this country.
§ 4.4 p.m.
§ Sir PERCY HARRIS
So far as I understand it, the procedure in putting commodities on the Free List is not being altered. We have had at times a number of orders, made in the light of experience, when this procedure has been followed. A number of articles have been put on the Free List from time to time, and, needless to say, I have never 1549 offered any objection. In fact, a very strong case has to be made out under our present regime for any article to be put on the Free List. I take it that when an article is to be recommended to be taxed at any rate below 10 per cent., the procedure to be followed will be that the order has to be confirmed by this House after the statutory lapse of period; in other words, there is no change in the procedure to be followed. I see no objection to the same procedure being followed in taxing an article less than 10 per cent. as to taxing it at 10 per cent. or over, and, therefore, I see no objection to this proposal.
§ 4.6 p.m.
§ Mr. H. WILLIAMS
The point raised by the hon. Baronet seems of some interest, because the first Sub-section says, "the said duty ought to be reduced." It seems to me that if an article is now on the Free List, and a case is made out for imposing a duty of 5 per cent. An order will be made, and that order will call for an affirmative resolution by this House. When that order has been made, there will be subsequently a further order reducing it from 10 to 5 per cent. That, according to my reading of the new Clause, is how it will work out. While I have a considerable measure of sympathy with the apprehension of my right hon. and gallant Friend the Member for Burton (Colonel Gretton), nevertheless, on the whole, I am glad that the Chancellor is proposing this change. He has given us specific reasons, namely, the difficulties which have arisen with regard to lead and zinc. I remember hearing a good deal about them at the time of the Ottawa Agreements Bill when many people were perturbed about these articles. Up to that time the world prices meant the prices on the London Metal Exchange, but that ceased to have any meaning once that Exchange came inside the tariff wall. In the case of copper, however, the duties on which have never come into operation at all—at least I do not recollect their having done so—I. wonder if the Chancellor will tell us whether it is intended now to give effect to the copper agreement on a reduced basis. When I saw the announcement in the Press of what was proposed at Ottawa with regard to copper, I thought it was an extraordinary proposal, because it then worked out at 40 per cent. ad valorem, which I thought was much too 1550 high, and I was not surprised that difficulties arose. It may be that under this Clause it will be possible to give some effect to that arrangement.
With regard to the point raised by the hon. Member for Caerphilly (Mr. Morgan Jones) as to the meaning of the words "it is apprehended," I imagine that when next year the key industry duties lapse, as they will under the provisions of the Finance Act, 1926, it will then be open for the Import Duties Advisory Committee to make an order—in fact the duties will automatically come under the Import Duties Act. It may be necessary to re-arrange some of those duties, because some were on a specific basis, and that seems to be one of the cases where the Committee may apprehend that something is going to happen, because an existing Statute is lapsing. With regard to "exceptional circumstances," that safeguards the position to which the right hon. and gallant Member for Burton referred, because only in exceptional circumstances can this be done. But the words "exceptional circumstances" are a two-edged weapon, because there may be cases where it is desirable, on general economic grounds, to make this change, but where no ex-ceptional circumstances of the kind are contemplated, because there is an aspect of this Clause which so far has not been discussed. Sub-section (1, b) says that the duty at its reduced rate may be either specific or ad valorem.
I remember that on both the Committee stage and the Report stage of the Import Duties Bill my right hon. Friend the Member for Sparkbrook (Mr. Amery) and I pleaded, to the best of our ability, that there should be complete freedom to the Import Duties Advisory Committee in respect of the conversion of duties from an ad valorem to a specific basis, but I always thought that the position was unsatisfactory so far as the ad valorem duty was concerned, and I am a little disturbed about the basis on which it is being adopted here, whether if the duty, is only specific in these cases where its incidence would be lower than if ad valorem, it would place a check on what is called dumping. We are not worrying about the precise definition now—many things are sometimes called dumping. The best check is very often a, specific duty, but in this case, where we have a low rate of duty, nevertheless 1551 where it is made specific the person who dumps ought not to be able to avoid this specific duty owing to the fact that when he quotes sufficiently low prices he automatically comes under the ad valorem duty. I should have been very glad indeed if Sub-section (1, b) had provided that when a specific duty was fixed it should be generally equivalent to the ad valorem duty, and then, having been fixed, instead of the word "lower" being inserted, we had inserted the word "higher." Until we alter many of our duties from their present ad valorem basis, and put them on a specific or mixed ad valorem and specific basis, we shall not deal with the most undesirable forms of competition which occur from time to time. I hope the Chancellor of the Exchequer will once again consider this problem of giving greater elasticity for the conversion of duties from an ad valorem basis to a specific basis.
§ 4.13 p.m.
§ Sir S. CRIPPS
As a matter of machinery, apart altogether from the merits of the case, is it necessary to make a provision, as I understand Sub-section (1) does, to require two orders in respect of anything removed from the Free List which it is desired to tax at less than 10 per cent.? As I read it, if it is apprehended that you are taking something off the Free List, or it is going auomatically on the ad valorem list, if:it appears to the Import Duties Advisory Committee that, having regard to any exceptional circumstances, the said duty ought to be reduced.that can only apply where there is already a 10 per cent. duty. Would it not have been better if it had provided that where it appears to the Committee that a duty lower than 10 per cent. ought to be imposed, or that the ad valorem duty ought to be reduced, then they could go straight to the 5 per cent. or reduce from the 10 per cent. ad valorem? It is essential that these things should, for a certain period of time, be subject to ad valorem duty, or else the question of reduction could not arise. I suggest that where these exceptional circumstances, which have got to be inquired into, arise, you have got to have an ad valorem duty, because the exceptional circumstances have to show that the duty ought to be reduced. Until you have got the 10 per cent. you cannot have the exceptional circumstances. 1552 Therefore, it is necessary to have some period during which the goods are subject to an ad valorem duty in order to arrive at the conclusion that it is too high, and ought to be lower. I am not attempting to make any difficulty, but it seems that you have here an unnecessarily complicated machine, and simply by inserting the words "duty lower than 10 per cent." you can have a single order made, and go straight on to the 5 per cent.
§ 4.14 p.m.
§ The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin)
The House will have gathered from the explanation which has followed the moving of this new Clause that we find ourselves in this position. The Import Duties Act, 1932, and the Finance Act, 1932, gave the Import Duties Advisory Committee power to make recommendations, a free list power in certain circumstances, power to recommend removal from the free list, a general duty of 10 per cent. and a power to recommend an increase of duty, making 10 per cent. plus. In reply to the point put by the hon. Member for South Croydon (Mr. H. Williams), there have been tremendous fluctuations in prices, and there is a class of case—it is very small—in which the difficulty of arranging something that is satisfactory to producer and importer and also give Empire preference may be overcome, not by dealing with the matter on the Free List or on the 10 per cent. basis, but by finding something between 0 and 10 per cent. The new Clause provides that there shall be power to fix an ad valorem duty of any rate between 0 and 10 per cent. or, as experience has shown, a specific duty, which is often easier to calculate and is preferred by consumers. If it is a specific duty, then that specific duty, in order that the consumer may be protected, must as its upper limit have 10 per cent.; it must not be above that amount. The legislation provides that you may have an ad valorem duty of 10 per cent. or a specific duty, whichever is the lower. That is the object of the new Clause.
The hon. Member for Caerphilly (Mr. Morgan Jones) asked what are "exceptional circumstances." The intention is that the new Clause shall be used sparingly. The only two instances at the present time in contemplation are lead and zinc, two special raw materials where 1553 difficulty has arisen in implementing in practice the Ottawa provisions. These are the only two cases which are at present in contemplation. They are the exceptional circumstances, and I give the House an assurance that the Clause is intended to be used sparingly. In regard to the point made by the right hon. and gallant Member for Burton (Colonel Gretton), that the 10 per cent. is necessarily a revenue duty and that anything coming below that would obviously not be protected, we must remember that in all the operations of the new Clause the Treasury will be guided by the recommendation of the Import Duties Advisory Committee, and that recommendation will only be made after a case has been submitted by the industry. In the particular industry to which the Clause will apply the industry and the consumers will have agreed. I hope that the House now appreciates that this machinery involves the approval of the Import Duties Advisory Committee and that this safeguard gives protection to the industry concerned. As to the point put by the hon. and learned Member for Bristol, East (Sir S. Cripps), I think that under Section 7 of the Finance Act of 1932 it is necessary to go through the procedure of these double orders—
§ Dr. BURGIN
Is not that the answer, therefore, to his practical point to there being possibly some interval of time. It is to provide for the administrative task of the Treasury in dealing with a recommendation only when the other arrangements have been safeguarded. That is the answer to his particular point. It is the way in which in practice it can best be done.
§ Clause added to the Bill.