§ 10.0 p.m.
§ The Secretary for Overseas Trade (Mr. Bottomley)
I beg to move,That the Additional Import Duties (No. 3) Order, 1951 (S.I., 1951, No. 1176), dated 29th June, 1951, a copy of which was laid before this House on 2nd July, be approved.The purpose of this Order is to implement one of the Torquay concessions under which it was agreed that the duties on certain women's handbags and pochettes should be reduced. It was found, on technical grounds, impracticable to give effect to this concession without at the same time making handbags and pochettes made of plastics or paper board, which do not resemble leather, liable to possible increases of duty.
I am advised that the practical effect of the Order will not raise the duties on any considerable volume of handbags likely to be imported. Since, however, there is a chance that there will be a slight increase in the duty on some few handbags, it is necessary, under Section 19 of the Import Duties Act. 1932, to ask the House to pass a Resolution approving the Order.
The concession represents a reduction of 2½ per cent. in thead valoremduty on handbags and pochettes wholly or mainly of composition leather, and on those wholly or mainly of plastic or paper- board resembling leather, and also covers other handbags and pochettes which do not resemble leather and are liable to duty under different headings in the tariff. This Order also corrects two copying errors in the 1949 Import Duties (Consolidation) Order.
§ 10.3 p.m.
§ Mr. Russell (Wembley, South)
As the hon. Gentleman has said, this is one of the Orders arising out of the results of the Torquay Conference. There are five other Orders arising out of that Conference which, I understand, are not subject to the affirmative procedure, and, if I am not out of Order in doing so, I would like to mention that my hon. Friends and myself considered very carefully whether we should put down Motions asking that these other Orders should be annulled, but we decided that there was not sufficient argument to do so, because neither those Orders nor the one before the House have 162 any immediate harmful effect on Empire trade, which was the reason for which we were considering taking that action. However I would like to take the opportunity of this Order having to receive the affirmative approval of the House in order to raise one or two points in connection with it.
I have said that there is no immediately harmful effect to be expected from this Order, but there are two long-term disadvantages which I feel I must point out. This Order has the effect of reducing by 2½ per cent. the Customs Duty on imports of handbags and pochettes of these particular kinds, and that also reduces by. 2½ per cent. the margin of preference accorded to any imports, if any, from Empire countries. Therefore, there is a smaller chance of any Empire industry being developed in the manufacture of these handbags, should the opportunity arise. I admit that I cannot see it at the moment, but there is a danger that the Government's hands are being tied by this Order.
The second point is that, once this margin of preference has been reduced, it cannot be restored without the authority of some international body, which, so far as I understand, is not yet in full authority or even in existence; in other words, we would have to go to a body on which the potential trade rivals of our own manufacturers would be represented in order that we might restore the duty, and, therefore, the margin of preference.
I should like to ask the hon. Gentleman one question of which I do not think I gave him notice. If it is desired at any time in the future to raise this duty from the 15 per cent.ad valoremto which this Order reduces it, to the existing 17½ per cent. or to the original 20 per cent.ad valorem,will it be necessary to impose a duty of 2½ per cent. in connection with the 17½ per cent. duty on foreign imports, or one of 5 per cent. in connection with the 20 per cent. duty on foreign imports? I should like to know whether that is the case because, as I understand it, we must not increase the margin of preference, and, therefore, if in the future we want to restore the original Import Duty on foreign handbags, shall we have to place some Import Duty on Empire handbags? So much for the effect on Empire trade.
163 I wish to raise one or two points concerning the effect of this reduction on home manufactures. I understand that some manufacturers of ladies' handbags of this type are rather anxious about the effect of this reduction because, as I have already mentioned, it is the second reduction which has taken place in two years. After the Annecy Conference of 1949, the duty was reduced from 20 to 17½ per cent. I am ignoring the 1s. 6d. as I understand that very few of these goods pay the 1s. 6d., because in the normal course of events the 17½ per cent. is the greater. As I say, this is the second reduction in two years, the total reduction in that period being from 20 to 15 per cent.
Was this reduction made at the request of the Germans, and, if so, what corresponding concession, if any, have we obtained from them in return? I understand that in the United States the Import Duty on handbags wholly or mainly consisting of plastic or leather cloth is not merely 15 per cent., but something like 40 per cent. Therefore, our existing duty is comparatively small compared with that of the United States. The 15 per cent. bears little relation to the much lower cost of manufacture of these handbags in Germany where, I understand, the raw materials, the labour, the power, the transportation and the overhead costs are cheaper. I also gather that the imports of non-leather handbags from Germany increased from 2,862, valued at £1,392, in March, 1951, to 10,715, valued at £6,305, in May, 1951—a very substantial increase.
I should also like to know whether the hon. Gentleman has any information as to the policy of the German Government and the German industry regarding export subsidies, because I understand that when the present system of export subsidies for the export of these handbags to dollar countries comes to an end, they are considering providing export subsidies for the export of these articles to all other countries. There is a 66⅔ per cent. Purchase. Tax on these handbags sold in this country. That makes it very difficult for the industry to use mass production methods in order to lower their costs here. I know that the hon. Gentleman will not want to argue the question of the Purchase Tax at the moment, but I think that is something which ought to 164 be borne in mind where the future of this industry is concerned. All I hope is that this Order and the reduction in the duty will not have a harmful effect on our home industry.
§ 10.9 p.m.
§ Mr. Bottomley
With the leave of the House I will reply to the hon. Gentleman, to whom I am grateful for his co-operation. With regard to his first point about the preference, I would point out that as this particular concession was given after 1947, the "no new preference" rule does not prevent the preference being restored to its previous level.
The point was made that this is another concession. That is true, but I am sure the hon. Member for Wembley, South (Mr. Russell) will recognise that in this case the concession is on thead valorem duty and not on the specific duty. As to the import figures, it would be wrong to give the impression that the increase has been because of the reduction in duty. The increase has taken place because the open general licence scheme has been in operation and it is inevitable that more goods have come in. Indeed, we have been able to export more goods and, on balance, it has been to our advantage.
As to the suggestion that the Germans asked for this concession, I cannot say which concession we got in return. Many concessions were put together and we gave some in return. It would be difficult to put one against the other and to say that a certain concession was one we had against some other concession. In general, we are satisfied we had a reasonable deal.
I think there has been some misunderstanding with regard to a subsidy for German exports. It arises from an announcement that appeared about the foreign exchange working fund for the export trade. This is a German incentive scheme, and the idea is that German exporters can get preference for raw materials. It could possibly be used for other purposes, but I can give an assurance that the Board of Trade will watch that extremely carefully. If, as we have every reason to expect, Germany comes into the General Agreement on Tariffs and Trade this year, she will be subject in this matter to the same rules as the United Kingdom and the other contracting parties.
§ Question put, and agreed to.165
§ That the Additional Import Duties (No. 3) Order, 1951 (S.I., 1951, No. 1176), dated 29th June, 1951, a copy of which was laid before this House on 2nd July, be approved.
§ Motion made and Question proposed, "That this House do now adjourn."— [Mr. Popplewell.]