§ 6.17 p.m.
§ The Financial Secretary to the Treasury (Mr. Henry Brooke)
I beg to move,That there shall be power to impose on goods imported into the United Kingdom duties of customs, chargeable in addition to the full amount of any other duty, where it appears to the Board of Trade in some case—I apologise to the Committee for my piratical appearance, due to going on gardening too late in the evening when I could no longer see where the twigs were. I am only too well aware that I look more like an evader of Customs duties than an upholder of them.
but the expression "subsidy" shall not be defined so as to include a practice which consists of any application of restrictions or charges on the export of materials from any country which favours producers in that country who use those materials in goods produced by them, and the expression "fair market price" shall not be defined in a way which requires account to be taken of any such practice.
- (a) that goods have been dumped in the United Kingdom, that is to say that their export price is less than their fair market price in the country in which they originated or from which they were exported, or
- (b) that some Government or other authority outside the United Kingdom has been giving a subsidy, and provision may be made for any supplemental or incidental purposes and in particular—
- (i) for the allowance of drawback in respect of duties imposed under the authority of this Resolution and the giving of other relief in respect of those duties,
- (ii) for authorising the making of orders and other subordinate instruments,
- (iii) for conferring on some Government department or other authority the function of deciding whether there has been dumping or the giving of a subsidy,
- (iv) for determining the meaning to be given to expressions used in paragraphs (a) and (b) of this Resolution, including, in the case of any definition of the country in which goods originated, provisions framed by reference to the country in which some stage in the production of any components or materials incorporated in the goods was carried out,
1438 Parliament is already aware of the Government's intention to introduce an anti-dumping Measure. The method proposed is to counteract attempts at dumping by applying Customs duties that will be additional to any Customs charges which may already be payable. The object is not to raise revenue but to discourage dumping. Nevertheless, the Ways and Means Resolution stands in the name of my right hon. Friend the Chancellor of the Exchequer, for the reason that the Bill will, at least potentially, alter the tax system of the country. Indeed, that is the reason why a Ways and Means Resolution in the case of this Bill is necessary.
It seems best, therefore, that I should move this Resolution as a Treasury Minister to show Parliament that tax changes which will be contained in the Bill have the full support of the Chancellor of the Exchequer. My right hon. Friend the Minister of State, Board of Trade, will be ready to speak on any policy questions which may be raised in debate.
My right hon. Friend the Chancellor gives his full support to the intended Bill because he regards it as an essential corollary to the efforts which the Government are making in the interests of our export trade to bring about the reduction and elimination of trade barriers throughout the world. The elimination of any barriers which restrict or restrain British exports from rising to the highest possible figure is highly important for the Chancellor in discharging his responsibilities for the economy as a whole.
I want to emphasise that the Bill will not be in any sense an effort to impede, or to give a new form of protection against, legitimate trade, and I include in that, of course, legitimate low cost trade from countries which, without any element of dumping, are well placed to make and sell goods cheaply. The object of the Bill will be to counter dumped or subsidised goods. It is intended that the powers given by it shall in general be operated in conformity with Articles 6 and 16 of the G.A.T.T.
The Motion paves the way for a Bill that will empower the Board of Trade to impose Customs duties in addition to existing duties on imports from any source of goods of any description where it appears that goods of that description 1439 have been dumped or subsidised. Goods will be regarded as dumped if their export price is less than their market price in the country of origin or country of export. The terms "export price" and "fair market price" will be further defined in the Bill.
The powers to deal with subsidies are directed against direct or indirect subsidies to exporters and producers. They will not extend to other practices which may have the effect of assisting exporters but would not be regarded as subsidies for the purpose of the relevant G.A.T.T. provisions. The duties to be imposed under the Bill will not be applied to the imports of particular products from sources but directed in a discriminatory manner against goods which fall within a particular description and originate in a particular country or countries.
There will be provision to relieve from those duties an importer who can show that his goods have not been dumped, or that the actual margin of dumping is less than the flat rate of duty imposed by the order. Provision is to be made for the allowance of drawback of duties in appropriate cases.
I think the Committee will agree that it is not easy to have a comprehensive debate until the Bill is printed and has been studied. My object tonight is to commend the Motion and to express the hope that the Committee will accept its going forward in order that the Bill itself may be brought in and published as soon as conveniently possible.
§ 6.23 p.m.
§ Mr. Arthur Holt (Bolton, West)
I presume that the appropriate time for a debate on the subject will be when the Bill is before the House. I realise that the Financial Secretary was speaking tonight with the utmost circumspection, but there is a phrase which he used about which I would ask him. He used the phrase "legitimate low cost trade." I wonder whether he meant by "legitimate" that it comes within the rules of G.A.T.T., in particular Article 6, which gives rise, I think, to this Motion. Taking these powers which the Government intend to take is really a good thing if they are very carefully used, but they can become very dangerous weapons, it 1440 strikes me. That is, they might be used, though they should not be used, for giving protection, under the guise of protecting industry against some supposed subsidy. Whether there is a subsidy or dumping is often a matter for question.
I have two questions to ask. I hope I shall be in order in asking them now, but I have no doubt that I shall be pulled up if I am not. Am I correct in thinking that in what is proposed the Government would be in order in imposing some of these anti-dumping duties, say, for instance, on imports of certain foodstuffs from America which are subsidised, and whose price is below the American home market price, even below their cost? Would the Government be in order, for instance, in using these duties to protect the Indian textile industry, and some of the things which have been complained about recently, particularly the import of manufactured woven cloth which is supposed to be made from cotton yarn available at low cost to manufacturers in the rest of the world? As I read the details of this matter in the G.A.T.T. provisions, I take it the Government may not use these powers to impose a duty against imports of those Indian textiles.
I think we all realise that there is no point in our paying more for our imports than we need. Personally, I am in favour of free trade without interference by Governments, and if exporters abroad wish to sell their products to us, I am in favour of buying them as cheaply as possible, whether they are at below home cost production, or below their home price. That would seem to be entirely to our advantage. I am not in favour of Governmental interference either by export subsidies or by other things so as to distort the channels of trade, for they may damage home industries. Often they are temporary, and when the subsidies are removed industries have to be built up again. We want continuity and regularity of trade without interference.
Inasmuch as these duties are intended to be used to stop other people continuing undesirable trade practices, I give them qualified support, but for my part I shall watch the use of these duties by the Government with a wary eye, and I hope that they will be used only on the very rarest occasions.
§ 6.28 p.m.
§ Mr. Gordon Walker (Smethwick)
I sympathise with the right hon. Gentleman in his having a black eye. He should now follow the principle I follow: never over-garden; it is a very dangerous thing. I thought when I first saw him that he was turning a blind eye to the economic consequences of Suez actions we have recently been having.
This Motion to introduce tariffs has been approved by a Free Trader and though we have not seen the Bill yet, I support the Motion on the whole, because this is a sensible use of State action to prevent dumping and export subsidies which, of course, disturb the pattern of trade, and can be used to export unemployment. However, we must await the Bill. We can now give only assent to the principle of the thing.
We shall be very concerned about the definitions in the Bill, I should tell the right hon. Gentleman, particularly the definition of "dumping" and of what is meant by an "export subsidy." Clearly, it is extremely difficult, indeed, somewhat dangerous, to define "dumping" and to determine how far to take into account transfer charges, transport charges, differential taxes, and all the rest of it.
It has to be noted that this was attempted in the Safeguarding of Industries (Customs Duties) Act, 1925, by which powers were given to the Government to impose just these anti-dumping duties. They were in force nine years but just because it was so difficult to define "dumping" I do not think a single anti-dumping Measure was imposed in all that time.
Export subsidies are as difficult to define as dumping. There are all these disguised forms of export subsidy—the cheaper credit that America is using now and which most exporters get, the remissions of social service taxes and so forth, as in France, which amount to an export subsidy. Then there is the way in which Belgian manufacturers get cotton cheaply from the Congo, because the Congo is borrowing its money very cheaply. All these subsidies are difficult to define. We shall look very carefully at the definitions in the Bill to see how far these sort of problems, and others with which we shall be dealing on Second Reading, are covered.
1442 There is a certain suspicion around, as I have read in the financial papers, that the proposed measures are a bit of window-dressing and will be as difficult to use as similar Sections in the Safeguarding of Industries Act, 1921. There are some people who echo the fears expressed by the hon. Member for Bolton, West (Mr. Holt) that the Bill will be a disguised way of introducing protection to guard us against entering the European free-market. It will be quite impossible for us to enter that market with a mass of restrictions and safeguards.
The Financial Secretary to the Treasury said that the Board of Trade would be able to impose these duties, but I hope that proper provision will be made to retain the authority of Parliament to impose taxes on the people. It will be interesting to know by what sort of Order the Board of Trade will impose these taxes on the subject—for that is what they are, although their purpose is to safeguard industry. We shall scrutinise the Bill with some care and a little suspicion, and reserve our fire for the Second Reading, which is the proper time to debate the real issues that are raised by the Bill.
§ 6.32 p.m.
§ The Minister of State, Board of Trade (Mr. A. R. W. Low)
I am sure that the hon. Member for Bolton, West (Mr. Holt) and the right hon. Member for Smethwick (Mr. Gordon Walker) are right in saying that they will look at the Bill carefully and will watch the progress of the discussions. That is why it seems to us so wise of the Committee to treat this Motion in a quasi-formal way and to await the Second Reading and the Committee and other stages before entering into full discussion.
The hon. Member for Bolton, West wisely reminded us of the importance to our trade of avoiding the indiscriminate use and insisting upon the careful use of these powers. I do not think that I would go as far as he might want in, stressing the dangers of having these powers at all. We want to concentrate-upon the use of the powers, which are important as having a useful deterrent effect.
I should like to put the hon. Member's mind at rest. We shall certainly have in mind our international obligations and 1443 national interests as one of the great exporting nations. We do not intend to tackle legitimate low-cost trade.
As the White Paper on Customs Duties (Dumping and Subsidies) and the last proviso in the Resolution make clear, we do not intend to cover the export control practices to which the hon. Member referred in the case of textiles. Indeed, we think it would be contrary to the G.A.T.T. Article 6 if we tried to do so, because that practice is not a subsidy but a form of price control. As the Committee well knows, we ourselves do very much the same thing in the case of steel and coal, for broadly the same reasons as the Indians have been using these price and export control powers—for that is what they amount to in effect.
The right hon. Member for Smethwick referred to the Safeguarding of Industries Act, 1921. I hope that he will not get too pessimistic about the effectiveness of the proposals which we shall be putting before the House by reference to that Act and its fate. It is true that only nine applications were ever made under that Act, and in no case was it found that there had been dumping. But there are very important differences between the proposals then enacted and the proposals for which this Resolution provides, and which will be found in the Bill if the Committee allows us to introduce it. I hope, therefore, that the reasons which made those powers quite ineffective will not apply to the Bill which we have in mind.
I assure the right hon. Gentleman that we intend that Parliament should have control in the normal way over the imposition of duties. The same principles broadly will apply as with import duties generally, that is that if we are imposing an extra duty we shall put before the House an Order requiring an affirmative Resolution.
§ 6.36 p.m.
§ Mr. William Shepherd (Cheadle)
I want to take up one point made by my right hon. Friend the Minister of State, Board of Trade, with which I do not agree. He said that we should not be inclined to tackle the problem of differential cost, to put it that way, in connection with Indian raw cotton because we ourselves were guilty of similar practices.
1444 Without entering into the merits of the Indian case, because it would be out of order to do so now, may I ask whether it is not the fact that we have not been guilty of similar practices? What we have done is not to sell goods to producers overseas at lower prices than at home but to sell to people overseas certain raw materials—for that is what they are—at higher prices than at home. That is a very material difference and it does not support the case for not acting in connection with the Indian problem.
I hope that these anti-dumping duties may be of use to deal with those cases where a home Government deliberately fixes the prices of raw materials in order to give exporters an advantage in world markets. That is just as vicious a form of subsidy as any other.
§ 6.38 p.m.
§ Mr. J. T. Price (Westhoughton)
I should like to say a few words in support of the hon Member for Cheadle (Mr. Shepherd). It has always seemed to me, in all these controversies that have raged over these unfair methods of competition, for example, those which Lancashire industries face today, that these practices of giving a subsidy by indirect means are just as valid a target for Government action as the more blatant form employed in a more overt fashion.
Apart from the issue raised by the hon. Member for Bolton, West (Mr. Holt) and supported in another sense by the hon. Member for Cheadle, with whom I entirely agree, there are numerous instances of the use of alleviation of taxation as a concealed subsidy. There is in particular the removal or relief of social service taxation on exporters, which is being operated by France and Italy and other countries, to the detriment of our industry. No reference has been made to the problem of the seasonal dumping of agricultural produce into this country. Do the Government intend to use the Bill for that purpose as well?
§ 6.39 p.m.
§ Mr. Low
I must dispose of the new points that have arisen in debate. Both the points raised by the hon. Member for Westhoughton (Mr. J. T. Price) can be taken in our later discussions of the Bill. The words "subsidy" and "dumping" are defined in the Resolution in such a way—though I speak subject to 1445 correction—that we can discuss those points when we debate the Bill to ensure that we meet them or decide not to meet them as the case may be.
The reason why I spent a moment on the other point referred to by my hon. Friend the Member for Cheadle was that the Motion makes it impossible to deal with those practices in the forthcoming Bill. It may or may not be the view of hon. and right hon. Members that the practice of keeping the home price of a raw material below the world price by controlling the export of that material is a wrong practice. What we are saying is that it is not a practice which should be dealt with in an anti-dumping or anti-subsidy Bill.
I said, further, that we do something similar in the case of steel, and to a certain extent in the case of coal. It is a fact that our steel is sold on the home market at below the world price, just as raw cotton in India has in the past been sold at below the world price to Indian textile manufacturers. It has been possible to do that, not by price control, but by the export control. In the case of our own steel, the price control exercised by the Iron and Steel Board is bolstered by statutory and voluntary limitations upon exports. So the practices are much the same.
I should remind the Committee that to a large extent the price advantage which Indian textile manufacturers have enjoyed in the past few years by this practice has now disappeared, or nearly so. That is because the world price of cotton has come down somewhere near the Indian raw cotton price. To be fair, I should say that the latter has never been below the cost of production. It has been below the world price because the world price was higher than it might otherwise have been owing to circumstances in the United States.
§ Mr. Holt
Before the Minister sits down, would he confirm that in the Bill it is the intention of the Government merely to carry out the provisions in G.A.T.T. in connection with subsidies and dumping, and that the Government will not bring in a Bill which is wider than the descriptions of subsidies and dumping in Article 6 of G.A.T.T.?
§ Mr. Low
The G.A.T.T. provisions are fairly wide, but they have some limitations. 1446 Our trade with G.A.T.T. countries is of the order of 80 per cent. each way. Some 20 per cent. of our trade is with countries outside the General Agreement on Tariffs and Trade. At the moment we do not intend to put into the Bill all the limitations that are in G.A.T.T. The powers we shall ask the House to give us will, therefore, be somewhat wider than G.A.T.T. would allow us to use with the G.A.T.T. countries. However, that may well be sensible, and we hope it will meet with the approval of the House. It might be right to have wider powers for use with countries outside G.A.T.T., particularly countries with State-controlled economies; but that is a matter which we can discuss later. Hon. Members should not think, however, that even if we have the wider powers, we necessarily intend to use them indiscriminately without regard to our national interest as a great exporting nation. Of course, we do not.
§ Question put and agreed to.
That there shall be power to impose on goods imported into the United Kingdom duties of customs, chargeable in addition to the full amount of any other duty, where it appears to the Board of Trade in some case—
§ Resolution to be reported.
§ Report to be received Tomorrow; Committee to sit again Tomorrow.