§ Order for Second Reading read.
§ 4.32 p.m.
§ The President of the Board of Trade (Sir David Eccles)
I beg to move, That the Bill be now read a Second time.
It is an accident, but not without significance, that the first piece of Government business in the administration of my right hon. Friend the Prime Minister should be a measure designed to help British trade. As we begin today we mean to go on. We are asking the House to give the Board of Trade powers to place a duty upon goods dumped in this country or sent here with the artificial aid of a subsidy.
Under the Bill, we could not take action simply because the price of the goods was low. A duty would only be imposed when it could be shown that goods had been dumped or subsidised and that the entry of the goods would injure an established source of supply.
The first point to be made about the Bill is that it is not designed to protect the British market against legitimate low-cost competition. We are this afternoon concerned solely with unfair trade practices. I would say at once that the reason and sense of the Bill is that the United Kingdom could not move further towards free trade unless we were certain it was fair trade. In particular, we could not join in making a European free trade area unless we had safeguards against dumping and subsidies which were strict and within our own power to enforce.
British industry expects to be challenged by the products of European manufacturers, but, provided the competition is fair, our scientists, engineers, managers, salesmen and workpeople are confident of winning a rich reward from the expanding markets across the Channel.
In the Bill, it is proposed to deal with two methods of unfair trading. One does not need to be a tariff expert—I certainly am not one—to see how difficult it is to frame rules against dumping and subsidised exports.
Many attempts have been made in many countries to define what is a fair 57 market price. This is the essence of all anti-dumping legislation. The last time we tried in this country to find a solution to that problem, we failed.
In Part II of the 1921 Safeguarding of Industries Act, 1921, it was required that the cost of production should be established by an independent committee. This proved an impossible task. Accordingly, that part of the Act was judged to be useless and it was withdrawn in 1930.
We hope we have learned the lesson of that experience and, as I will show later, in this Bill, in the last resort, the Board of Trade is given discretion to determine what is a fair price.
Before I come to the Bill itself, there are one or two general observations I should like to make. I suppose that hon. Members, in all parts of the House, would agree that it is better to prevent than to cure unfair trade practices. That has always been the policy of Her Majesty's Governments. Since the war, British Governments have worked with the governments of other countries in the G.A.T.T. and in the O.E.E.C. to eliminate at the source export subsidies of one kind and another.
We have taken a leading part in those negotiations and we have had some measure of success. Clearly, it is a matter of hard self-interest for a great exporting country like ours to see that as many other nations as possible observe the rules of fair trading.
Among these international rules, recognised by nations with whom we do 80 per cent. of our trade, is Article VI of the G.A.T.T., which lays down what action may be taken against dumping and export subsidies. This is a useful article as far as it goes and we have had regard to the limitations which it imposes on antidumping and countervailing duties in drafting the Clauses of our Bill.
The fact is that at present we have no powers to do what the G.A.T.T. allows us to do. That is really the main reason why it is necessary to bring forward this Bill. It is, naturally, our intention to use the powers in the Bill, if Parliament gives them to us, against fellow members of the G.A.T.T. only in accordance with the obligations which we have assumed towards them.
The House will notice that the present Bill—
§ Sir D. Eccles
It is difficult. I am not quite sure what the hon. Member means. Does he want an example of dumping?
§ Mr. Collick
In operating the Article of G.A.T.T., to which he has referred, does the Minister have a firm example of goods that he would prohibit?
§ Sir D. Eccles
I suppose that if, say, at the end of the season, a foreign firm started to dump in this market fashion goods which it had failed to sell in its own market, it would be reasonable to consider putting on an anti-dumping duty. I hope that is the kind of example that the hon. Member wanted.
The present Bill goes rather wider than Article VI of the G.A.T.T., for the good reason that not all the countries with whom we trade and with whom we hope to expand our trade are members of that organisation. For example, Communist countries are outside the G.A.T.T. and, by the very nature of their economic system, they can fix what export prices they choose. It might be that political considerations are uppermost in their minds. One argument—and I think it a strong argument—for this Bill is that we have at present no deterrent against economic aggression by totalitarian methods which leave a free trader without any defence. I should have thought that Liberals would have seen the force of that contention, but I am told that there are people who, by some abstract principle, welcome imports from any quarter at any price. I must say I disagree with that extreme Free Trade doctrine.
Certainly we should go out of our way to stimulate fair and vigorous competition, because it keeps down prices and keeps standards rising, but we must remember, also, that the consumer has a real and permanent interest in maintaining steady sources of supply. The consumer is not served if our market is disrupted by ruthless and unpredictable sales below cost. Such sales could cause 59 lasting damage. Skilled workers once lost might never be recovered. The confidence that is required for programmes of research and expansion might disappear. The progressive efficiency of an industry if often unthinkable without some prospect of stability in turnover and earnings. Having said that, perhaps I should again reassure the hon. Member who represents the Liberal Party that this Bill cannot protect anyone from legitimate competition no matter how low cost it is. Its one and only object is to confound those who make unfair attacks upon our established sources of supply.
It will be seen that the powers in the Bill are permissive. They are not mandatory; they are not automatic since a duty is only to be imposed when it has been judged to be in the national interest to do so. We have found that industry generally agrees with this approach because it believes, as we do, that the chief function of the powers in this Bill would be to act as a deterrent. It might be alleged that to pass this legislation would be to encourage other countries, our competitors, to do the same. To that the answer is that most Commonwealth countries, the United States of America and many foreign countries already have similar powers and have made use of them. We are seeking this afternoon to put ourselves where our main competitors are already.
We have told the Commonwealth countries, of course, why we are bringing forward this Bill. We have given them an assurance that we would consult them first before imposing a duty upon their goods. While I am mentioning the Commonwealth, there is one matter to which I should like to draw the attention of hon. Members. It is that the Bill, like Article VI of the G.A.T.T., would allow us to impose a duty when the entry of the goods concerned caused damage to a source of supply outside the United Kingdom. For example, sales of subsidised foodstuffs might be made here. They might cause serious injury only to British farmers, but they might also cause injury to Commonwealth farmers and, perhaps in some cases, only to Commonwealth farmers. We should be able to consider a countervailing duty in such a case. We should hope, of course, 60 that Commonwealth countries in similar circumstances would take action to protect British manufacturers from unfair competition in their markets.
§ Mr. H. Rhodes (Ashton-under-Lyne)
Would the Minister apply that principle to imports from Hong Kong? This is not a catch question; I would not ask one in these circumstances. How shall we stand with reference to imports from Hong Kong processed in this country and then exported to other countries in the common market? Does the principle the right hon. Gentleman has enunciated with regard to agriculture in the Commonwealth apply to imports of manufactures from Hong Kong?
§ Sir D. Eccles
In order to apply the Bill to Hong Kong it would be necessary to prove that the export price from Hong Kong was unfair; in other words, that there was an element either of subsidy or of selling below cost of production. This Bill is not concerned to put on a duty against low cost goods from Hong Kong or anywhere else except where the price at which they are sold contains an unfair element.
§ Mr. Rhodes
The Minister has got the point wrongly; it may be because I was clumsy in explaining it. There are processors in this country who are looking forward to entry into the European free trade area so that they can buy goods from Hong Kong, process them in this country, and have an advantage over European manufacturers by releasing them into that market. Will the right hon. Gentleman explain whether the principle he has enunciated with regard to agriculture applies to that?
§ Sir D. Eccles
This Bill has nothing to do with the case raised by the hon. Member. I quite understand the case he has raised. That will depend on the outcome of the agreements, if we are able to make them—they are going to be very difficult to make—for the association of this country with the European free trade market. Certainly one hopes there will be general expansion of trade all round, but that has nothing to do with this Bill. This Bill could not in any circumstances be used, as I imagine the hon. Member would like it to be used, to prevent the re-export of goods, reaching this country from Hong Kong, to Europe.
§ Mr. Rhodes
If the right hon. Gentleman will excuse me, I would point out that Clause 1 of the Bill says:…the export of materials from any country so as to favour producers in that country who use those materials in goods produced by them.
§ Sir D. Eccles
The hon. Member is wrong; the point he makes is not covered by this Bill. This is a very technical matter and we had better have a talk about it afterwards. It is a fact that some of these Clauses are technical and will need a lot of explanation. Probably the best place for that explanation will be the Committee stage. My right hon. and learned Friend the Minister of State is to answer questions raised in the debate. If the hon. Member for Ashton-under-Lyne (Mr. Rhodes) has the good fortune to catch Mr. Speaker's eye, perhaps he will elaborate the point he wishes to make and will then be able to obtain an answer. I think the House would probably like to know how we think the Bill would work and, as we see it, what would actually happen.
§ Mr. Glenvil Hall (Colne Valley)
Before the right hon. Gentleman passes from this part of his exposition, I think he has said that the Commonwealth countries have been informed that this Bill was to be promoted. I wonder if he could tell us whether any of them objected to it?
§ Sir D. Eccles
They have not objected. The majority already have the same powers, or more or less the same powers.
§ Sir D. Eccles
Not that I know of.
This is what would happen. Someone would lodge a complaint with the Board of Trade that goods were being imported at unfair prices and were likely to injure one of our sources of supply. I should add that the Board could take the initiative itself under this Bill. I doubt if it would do it very often, but it could. However the process was started, the Board would urgently consider whether a prima facie case had been made out.
Once we were satisfied there was such a case we could either proceed to a detailed examination, or in the exceptional case, where it was perfectly clear that serious damage was being done, lay an Order at once, subject to an affirmative Resolution of this House, imposing a 62 duty. In the second type of case, where emergency action was clearly imperative, the examination in detail would be made as soon as possible to determine whether any re-adjustment was required. Clause 3 provides that duty may be repaid in either set of circumstances to the extent which it was found we had over-estimated the margin of dumping on a particular consignment. The reason for this provision is that we are bound by Article VI of the G.A.T.T. in respect of goods originating in the member-countries to limit the duty to the margin of dumping.
Clause 4 gives power to allow a drawback of duty on goods which are re-exported. There are arguments for and against that, but, on balance, I think it is right to ask for this power.
The next four Clauses are concerned with the operation of Orders once they are made and with the definitions of "fair market price", "export price" and "country of origin". It is here that the Bill is notably better than the 1921 Safeguarding of Industries Act. In that Act there was room for too much argument about the actual cost of production.
In our Bill, we lay down alternative criteria for the ascertainment of the fair market price in the country of origin. In the last resort, the Board of Trade is given power in Clause 7 to estimate the fair market price by reference to such figures as they can get on the cost of production, plus such additions as they think proper for selling cost and profit.
I see no other way to protect ourselves against dumping from countries who do not practise the normal rules of profit and loss. Hon. Members opposite may like to reflect that the more monopolistic and Socialist is the system of trading the easier it is for a Government to injure its competitors overseas by the device of unfair methods of export. In this country, we shall, from time to time, have to make judgments about fair market prices, and I am clear that the responsibility for making such judgments is better placed squarely on the President of the Board of Trade, who is directly accountable to Parliament, rather than to pass the job to an outside body of business experts. The experience of the 1921 Act strongly supports this view.
The Board of Trade will scrutinise carefully every allegation of dumping or subsidy. We shall not act precipitately. 63 On the other hand, unless we have in reserve the power to act promptly we might as well not introduce a Bill at all. In deciding whether to act, I should always consider the interest of exporters. They should not be deprived of an opportunity, other than in the most exceptional circumstances, of buying a raw material as cheaply as it can be bought by their competitors.
Finally, may I repeat that if this Bill were really successful we should not have to use the powers. The deterrent should keep the peace. Indeed, I feel as if I were asking the House for permission to put up a notice, "Beware of the Dog: He Bites Dumpers and Subsidisers."
Now that we are anxious both to extend our trade with countries which are not members of G.A.T.T., and are about to join in pulling European tariffs down to zero, we need this warning against unfair practices. For these reasons, I hope the House will give us this small but useful Bill.
§ 4.57 p.m.
§ Mr. Gordon Walker (Smethwick)
I should like to congratulate the right hon. Gentleman the President of the Board of Trade on his maiden speech in his new office. I have a feeling that he will probably feel happier in his new office than he did in his old one. Certainly he has very quickly mastered a complex brief on what is not a very major Bill but which none the less is a very difficult and complicated one, on which for that reason we will have to have our main debates during the Committee stage.
I should like to make it clear that, on this side of the House, we in general support the Bill, but we approach some of its details with a good deal of caution, not to say suspicion. There is a good case for taking powers to act against genuine dumping. It is a case quite distinct from anything to do with a European free trade area. Indeed, for reasons which I will give in a moment, I am rather sorry that the Bill has been associated with the European free trade area.
The reason it is right to take this power is that practically every other country in the world has it—practically all the Commonwealth countries—Australia, Canada, India, South Africa and New Zealand—and also the major foreign 64 trading countries, such as France, Germany and the United States. In this sort of matter, as in others, unilateral disarmament is not a very wise policy. I cannot accept the full Liberal free trade argument, for that reason; though I could never understand why people who believe in private enterprise are not complete free traders. There must be some reason for it which has escaped my notice.
I agree with my Liberal friends that we must be very careful in this Bill not to open the door to protection being smuggled in under the disguise of antidumping measures. Therefore, the first question, we have to ask about the Bill is whether its definition of dumping is right, whether the definition is precise enough to limit to genuine dumping the target at which we are aiming. I must say that, as I read the Bill, I have some doubts on that score. The right hon. Gentleman has said that it is not an easy matter to define dumping. Like the elephant, it is easier to recognise than to define.
The Government have taken as their basic definition the definition in Clause 6 of G.A.T.T., which says in effect that dumping is exporting at prices below the fair home market price. Since this definition is in G.A.T.T., it is, I suppose, inevitable that it must be used in the Bill. But it is none the less very defective as a definition. The truth is that many of the world's exports, including very many of ours, are in fact exported at a cheaper price than is prevailing at home.
The sound economic reason for that is that exports in the main, or very often, are marginal additions to the production for the home market. As the overheads fall mainly on the production for the home market, they automatically fall less on the marginal production for exports. Therefore, it is cheaper to produce for export. The unit cost for export is cheaper than the unit cost for the home market and, therefore, it is proper to sell exports cheaper than the same goods sold in the home market.
This is a very widespread and, on economic grounds, a justifiable practice, and yet this widespread practice is dumping under the terms of the Bill, and, indeed, under the terms of G.A.T.T.
§ Mr. Gerald Nabarro (Kidderminster)
If the right hon. Gentleman's argument is not to appear disingenuous, he should surely say that in certain classic cases exports from the United Kingdom are sold at a premium as compared with the home market—for example, coal.
§ Mr. Gordon Walker
I was going to mention that in a different part of my argument.
The Bill's definition does not really meet what everybody means by genuine dumping. By genuine dumping we mean unloading surplus stocks at throw-away prices or subsidies designed to export unemployment from the country concerned. These things are very harmful to an economy. They disrupt industries, spread unemployment and give no corresponding benefit to the nation. These things ought to be stopped because they are harmful. But there is no logical or statutory distinction between that sort of genuine dumping and the perfectly normal trading practice of practically the whole world.
§ Mr. Arthur Holt (Bolton, West)
I should like to make one brief point about the dumping about which the right hon. Gentleman says people are talking—surpluses at give-away prices. I appreciate that this is a difficult point, but if the goods are not to be sold somewhere, will the right hon. Gentleman say what is to be done with them? When coffee was burnt in Brazil, the Labour Party made a hullabaloo about it.
§ Mr. Gordon Walker
I do not think that the coffee was burnt because it was being sold for a lower price than was being charged on the Brazilian market. I think that what the hon. Gentleman says refers more to United States surplus stocks; and I will come to that in a moment.
What we must recognise is that, in practice, we have to give up the attempt to define dumping. What the Bill does in the end is very simply to say that, subject to Resolutions of the House, dumping is whatever the Board of Trade says it is. That is what it boils down to. The Bill provides a certain number of signposts and rules to direct the President in his decisions about what dumping really is.
66 Some of these powers are, I think, too wide. The Bill is riddled with discretionary powers which make nonsense of the main provisions which appear at the beginning of a Bill. By the time one gets to the end all the provisions in the first Clauses have been destroyed by the provisions giving the Board of Trade power to assume this and that and leave this and that out of account. Most of the matters on which the powers in the Bill are too wide must be dealt with during the Committee stage, but there is one general point I should like to make about the question of the very wide powers in the Bill.
I think that these very wide powers are dangerous because, if discretion exists, it renders the Board of. Trade subject to pressures from all sorts of vested and special interests and it is harder to resist those pressures if the Bill is full of loopholes. Whatever the President may say, he could keep out low cost imports even if they were not dumping because he has so many powers to decide what the cost of production is in a given foreign country, and so forth.
In this connection, I find the timing of the Bill somewhat alarming as I do also the right hon. Gentleman's references in connection with it to the possible entry of this country into the European free trade area. It has been very widely said that this Measure is a quid pro quo to certain industrial interests in this country for our entry into the European free trade area. Fears have been aroused, partly by the timing of the Bill, that the rigours of competition in such a free trade area would be softened by smuggling in protection dressed up as anti-dumping. That would, as the right hon. Gentleman himself said, be fatal. We cannot enter the European free trade area with all sorts of restrictions and special powers and provisions. We must go into it honestly or not at all. We must rely on its own machinery, in the control of which we would, of course, share to stop dumping.
I noticed that the right hon. Gentleman said, and I welcome it, that there would be no duties under the Bill to check imports just because they were cheap, that we want low-cost imports. They are certainly in the national interest, but I do not know that I agree with the right hon. Gentleman when he says that there 67 are no such powers in the Bill. I hope that the right, hon. Gentleman's strong statement to the effect that there is no intention to stop low-cost imports, except when they are dumping in the genuine form, will lead him to co-operate with us in Committee in inserting Amendments to make that clear where it is not clear at the moment.
Apart from these very wide powers there are one or two points where the Bill is, perhaps, too narrow. There are some deviations in it from the definition of dumping as set out in Article VI of G.A.T.T., and in particular paragraph (6, a) of that Article which is the one dealing with dumping. These are the important words:No contracting party shall levy any antidumping or countervailing duty … unless it determines that the effect … is such as to cause or threaten material injury to an established domestic industry.Although I have searched the Bill, I cannot find that anywhere in the definition of dumping, and I cannot see that by leaving it out we are helping ourselves in trading with Iron Curtain countries.
The right hon. Gentleman said that we departed from the definition in G.A.T.T. for that reason, but it seems to me that it is an essential part to genuine dumping that it should do harm to an established industry. It would be wiser to put this vital and integral part about dumping in the G.A.T.T. Agreement into the Bill in order to make it even clearer that it is genuine dumping and not mere low-cost imports that we want to guard against.
There is another matter dealing with this G.A.T.T. Article. The point has some Commonwealth significance and was referred to by the right hon. Gentleman. Indeed, he said this was in the Bill. It is, namely, the power to authorise countervailing duties to offset dumping which may not harm an industry in our country, but may harm an industry in another country. For instance, if United States surplus stocks were unloaded in this country that might not hurt our exporting industries, but might hurt Canadian and Australian exports to us.
The right hon. Gentleman said that there are powers in the Bill to do that. I have searched the Bill, but I cannot find any such powers in it. It is possible that 68 they are there by implication, so to speak, in which case I think it would be better to put them into the Bill straightforwardly and openly. I hope there will be no objection to such powers being written into the Bill because this is a matter of considerable Commonwealth importance. I hope that if these powers in fact exist, as the right hon. Gentleman says they do, they will be used.
For instance, I hope that it will be the Government's intention to put on duties against dumped United States surplus stocks that might otherwise harm Canadian, Australian or other Commonwealth exporters to this country; and also to help to guard against the dumping of wheat, for instance, from the Argentine or France, about which Australia is very apprehensive, as it would undermine her market for that commodity in this country. I hope that the right hon. Gentleman will give an assurance that, if he can find these powers in the Bill—and I am prepared to listen to him on that, and perhaps discover them with him—they will be used.
A number of industries are very concerned with the Bill and hon. Friends of mine will raise a good many points in connection with particular industries. The chief is the cotton textile industry, an industry that will be disappointed by the Bill because one of the things about which it is most concerned—the practice followed by India of putting a charge on the export of raw cotton which, of course, gives an advantage to the home producer—is specifically excluded from the definition of dumping. That practice is excluded from the scope of the Bill by Clause 7 (4). The reason is obvious. It is that, as the hon. Member for Kidderminster (Mr. Nabarro) has pointed out, we ourselves do exactly the same thing in regard to steel and coal.
I think that the only way in which the cotton industry could be helped in its troubles would be by State purchase of yarn and piecegoods as is done with jute. It always seems to me that the Government's refusal to do anything along those lines to help the cotton industry is quite untenable when it is remembered that they do exactly this in respect of jute, and in this respect there is really no difference that I can see, in principle or otherwise, between jute and cotton.
69 There are many other industries that might be concerned with the operation of the Bill, and I want to echo what was said by my hon. Friend the Member for Birkenhead (Mr. Collick). It would help those industries, and the House, to have some clear idea of the Government's actual intentions. Is there going on at present dumping or the subsidising of exports which this Bill could be used to stop? Are the Government introducing this Measure because they have a number of cases with which they immediately want to deal? Do they want to take action in some of these fields? Are there things that they would do today if the Bill were already law? It was about that sort of thing that my hon. Friend was asking the President of the Board of Trade who, if he does not mind my saying so, was being rather obtuse. That is the real point we want to get at.
There is one specific question concerning the United States' surplus stocks. These are disposed of now at a price lower than that obtaining on the American home market. That is dumping, absolutely plumb and full within the meaning of this Bill. Those stocks come absolutely openly and clearly within the term of dumping as defined here. Is it, or is it not, the Government's intention to operate the Bill in this very clear case? We ought to be given some answers to such practical questions before we can make up our minds on the merits of the detail of the Bill.
As I think my speech has made clear, we give the Measure rather qualified support. We do not think it a major Measure. We certainly do not regard it as a substitute for the real planning of our international trade by such means as bulk purchase of Commonwealth products. There will be many very detailed matters which we shall want to scrutinise closely in Committee, but we are not against the principle of the Bill. We have to arm ourselves against genuine dumping—we cannot be the only trading nation without such powers—and I join with the right hon. Gentleman in hoping that the mere possession of these powers will make it unnecessary for us often to use them. We must reserve our full rights in Committee—we have many doubts about some of the details of the Bill—but, because we do not quarrel with the principle of the Bill, which is all we are debating now, I 70 would advise my hon. Friends not to divide on its Second Reading.
§ 5.15 p.m.
§ Mr. Richard Fort (Clitheroe)
In welcoming this essentially minor Measure—though it is, perhaps, rather more important than was suggested by the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker)—I do so principally as one who, for the general welfare of our country, welcomes the Government's policy with regard to the free trade area in Europe. It is no good overlooking the fact that, in discussions about this policy throughout industry, many are uncertain and doubtful how it will affect their own industries.
I believe that the importance of this Bill is to give confidence to those who have legitimate fears and worries about the future as the European free trade policy is introduced. If I understand it aright, having heard my right hon. Friend's amplification, the Bill will remove one of the most important of the anxieties that other countries may well take advantage of the lower tariffs to dispose of goods here at prices much lower than can be obtained in the various home markets.
If properly operated by the Board of Trade, this Bill should act as a deterrent to countries which have a long tradition of doing that sort of thing. Although it is extremely difficult to get exact figures, we all know that at the present time a good many European countries are selling here for finishing grey cloth, both rayon and cotton, a good deal more cheaply than their own finishers are buying at in their own home markets. The same applies to yarn. Although representations have been made to the Board of Trade, it has been difficult to press the argument home under present legislation and regulations because of the difficulty of getting exact facts—a point brought out by my right hon. Friend when he was discussing the shortcomings of earlier legislation.
It is to be hoped that the very wide expression appearing in Clause 1:Where it appears to the Board of Trade … that … it would be in the national interest …will mean that it will be possible for the Board of Trade to take action which it cannot at present take. My right hon. 71 Friend has removed one of the difficulties which I foresaw; namely, the slowness with which the Measure might operate if the Board of Trade did not intend to put teeth into it. As I understand it, it will be possible, as soon as the Board has found a prima facie case, to issue an Order for the new duty to be imposed, and if, subsequently, the House rejects the Order, then, by Clause 3, the additional duty would be repaid. But, as the Bill is drafted, prompt action could be taken in order to prevent importers bringing in large quantities of goods while we here are discussing the matter; otherwise, the intention of the Act could in that way be negatived.
I should be glad if some further explanation could be given as regards the latter part of Clause 1 and as regards Clause 7 (4), two provisions to which the right hon. Gentleman the Member for Smethwick drew attention. I should like to be assured that goods which incorporate raw materials subsidised in other countries will come under the definition required for the anti-dumping provisions to operate. There is an unhappy outlook for some of our trades because certain European countries with colonial possessions are allowing those colonial possessions to sell their raw materials at prices considerably below world prices to the processing mother country. I know that the danger here is retaliation over our own activities in connection with steel and steel products; but I should like there to be rather wider discussion on this point than we have so far had. It is undoubtedly a very serious matter as regards products from the colonial territories of certain European countries.
§ Mr. Nabarro
My hon. Friend and I have closely allied interests, he with cotton and I with carpets, and I hope he will permit me to say a word here. He should add to his description of the activities of these colonial territories the payment of an acreage subsidy for increasing crops, since that affects the ultimate market price and is, in effect, a means of granting an export subsidy on the finished manufactured article.
§ Mr. Fort
My hon. Friend has given us yet another example of the subtleties about which the Board of Trade have to 72 learn, if it does not know about them already, in enforcing this Measure.
I should be glad if we could be given a clearer idea as regards the machinery to be operated by the Board of Trade in enforcing this Bill when it becomes an Act. We know that in the first place the Board will rely on complaints from industries here. Will it increase the number of people working in its own Department, or in contact with embassies abroad, to collect information about the subsidy arrangements in other countries and the home prices being paid in those countries in order that it may have the necessary evidence to establish the prima facie case which must be established before the Bill can come into force? Perhaps my right hon. and learned Friend will say something about the methods of enforcement.
With those comments, some of them on Committee points but some of them relating to matters of rather wider importance, I welcome the Bill. I am very glad indeed to see that the first Measure introduced by the new Administration is one which is an integral part of our effort to encourage freer and more prosperous trade for our country.
§ 5.24 p.m.
§ Mr. H. Rhodes (Ashton-under-Lyne)
May I congratulate the Minister on his accession to the Board of Trade? I never thought he was really very comfortable at the Ministry of Education. We welcome him, I hope for a short time, at any rate, to the Board of Trade as Minister. I remember the exhortations he used to give us on the subject of incentives; he was very strong on the subject of "the stick and the carrot", and I hope he will practise some of the principles he advanced when he was on these benches.
If I had been in a position yesterday to vote for a Dumping Bill, I would have voted for it. At the risk of being out of order, I will mention why. Last week I had quotations for a commodity from several firms. As near as can be, those quotations were all alike. Those firms had all said they had got to add on 10 per cent. because their association said so. That type of hindrance to trade is more important than this Bill.
We all look at this Bill through different eyes, considering how it will affect us personally. Nations do the same. According to the state of trade, 73 so our views alter. If a nation overseas cannot get enough of a certain commodity, whether it be consumer goods or capital goods, and if it is charged more than the home price by the exporter, that nation grumbles and says it is being discriminated against. Take the example of Canada's attitude on the price of cotton yarns in 1949. The same thing could apply, of course, with regard to coal. There is a higher price overseas and a lower price at home; overseas there is grumbling at discrimination because people are not able to get it cheap enough.
But let trade alter, let there be a buyer's market, and at once sections of industry begin to run the line that they are being hard hit. We have had examples of that during the last six or twelve months; we had a short period in 1952 when there was quite a lot of propaganda put out about the difficulties of a particular industry.
We must take a balanced view on all these things or we shall be running to and fro with different arguments every week. Private industry, when it is doing well, likes to be left alone. But as soon as industries get into difficulty, they come running to the Board of Trade and expect the Board of Trade to do something about it overnight.
There are certain practices about which we know already. Let me take the example of the textile manufacturers in Italy whose work is done in the vicinity of Florence. Manufacturers in places like Prato have edged away from the factory system as we know it and have gone back to the homework system as it was known here a hundred years ago. As a result, those manufacturers are evading taxation.
Welfare taxation in Italy is imposed directly on manufacturers on the assumption that the manufacturer responsible for the wages he pays to his operatives should pay the tax over to the State. If a manufacturer in Italy can prove that his employees are self-employed, he can evade taxation. He can prove that very neatly by letting out the machines at a peppercorn rent or by sending out to people's homes the materials for manufacture. He evades taxation in that way, and to that extent the goods come into this country at a lower price. It is quite considerable. The taxation levied on the manufacturers 74 of Italy is almost the mount of the wages. I will not pursue that one any further.
Let us go to France. Some little time ago the French instituted welfare taxation with the prime object of increasing the population. They levied taxation on manufacturers. It has been a bone of contention all over Europe that the French manufacturers of yarn have been working at a tremendous advantage to themselves because they get a remission of the welfare taxation for every pound of yarn that they export. Does that come under the Bill?
Let us go to Egypt, which is an exporter of cotton. Egypt exported cotton against armaments from Russia in considerable amounts last year. Russia offered that cotton to European countries at not much more than three quarters of the market price that had been charged to Russia by Egypt. Does that constitute an infringement of what the Government are trying to do in the Bill?
Let us go to India. There is no provision in the Bill for the protection of the British manufacturer against the action of the Indian Government in allowing the Indian manufacturer to get his cotton at a cheaper price. Why not? I do not think the Commonwealth would object. Now is the opportunity to get it in. When the disparity existed American cotton was 32d. per 1b. and Indian cotton was 24d. per 1b. and it would have caused a tremendous upheaval in the Commonwealth, but it would not do so today. I am surprised that the Government have not put this into the Bill. Why be shy about it? Why not have a go at it and put it in?
The price of American cotton and the way in which the cotton has been marketed over the last six to twelve months has also given rise to disquiet, but it is not so important now.
If the Government are aiming this legislation at certain types of practice, they must define them a little more closely. We all ought to be aware that the competition from places like Hong Kong and Japan does not come under the Bill. The "fair market price" consideration comes into it. I have no doubt that manufacturers in Hong Kong and Japan are making a normal profit on the prices at which they have sold their products throughout the year. A lot of people in 75 this country think that we can by legislation indefinitely keep out consumer goods from countries that can make them more cheaply than ourselves. We cannot.
Competition from other lower-wage countries or countries with a lower standard of living than ourselves is inherent in our economic system. If it does not hit us in one day and generation it hits somebody else, and if it is not hitting one industry it is hitting another. The difficulty of the textile industry today may be the difficulty of light engineering, engineering or some other industry in another generation. It is a great mistake for any industry to think it can protect itself by this kind of legislation against all competition coming in from abroad. It cannot do it. It must set its own house in order.
One of the great mistakes, for instance, that the cotton industry made immediately after the war was in thinking that there would be a safeguard for the home trade. Whilst it had that in its mind there was an effort on the part of many people in the industry to make sure that their share of the home trade would be there when difficulties arose. Instead of going out for exports as far as they could, they were leaning towards the home market in the hope that legislation would be brought in to safeguard the trade when difficulties arose.
My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) referred to the powers given to the President of the Board of Trade. I think that the Department will have great difficulty in using this legislation at all, and I ask the right hon. Gentleman to consider appointing a panel consisting of the best brains in a group of industries: the textile, rayon, terylene and nylon sections are all affected in some way or another. They may all be subject to competition at some time. I would include also the wool and carpet industries. Let them pool their knowledge on these matters for the benefit of the right hon. Gentleman.
My right hon. Friend also mentioned the remarks made by the President of the Board of Trade about previous legislation. I think he mentioned 1921, and said that the cost of production was not a suitable medium. Surely he is doing that in Clause 8. I would like the Government to look at this point again, 76 because in that Clause they are defining a percentage of the cost of production. Processes which can be put on commodities can vary the price and the quality, making them cheaper or dearer. That makes the assessment quite difficult to carry out.
§ The Minister of State, Board of Trade (Mr. Derek Walker-Smith)
My right hon. Friend was referring in this context to the difference between the cost of production as a criterion in the 1921 Act, and the definition of the ascertainment of fair market price in Clause 7 of this Bill. He was not there on the point of Clause 8. He was dealing with the fact that we have much more flexible criteria which should make the whole machinery of the Measure easier to operate.
§ Mr. Rhodes
I thank the right hon. and learned Gentleman for the correction. I accept it.
In Clause 8 the test is by percentage of cost of production. My view is that the Board of Trade should have more flexibility than this, because I think that the cost of a commodity should be estimated for this purpose by the cost of the processes rather than just by a percentage of the whole cost of production.
As to our entry into the European free trade area, there is much to be done before we can go into it. There is the matter of the import of cheap cotton textiles from Hong Kong, which I mentioned before, and which is not my argument, but one which has been stressed very often by the Textiles Committee of the O.E.E.C. I would ask the President to examine it, because that will cause him more anxiety than anything else that has cropped up in all the negotiations so far. He will find it referred to on several occasions. That is one of the difficulties he will come up against in operating Clause 4, which provides for a remission of tax paid on imported goods liable to the dumping duty.
Our entry into the free trade area of Europe, I suppose, needs some guarantees. I have mentioned a few, and I hope that before we come to the end of our consideration of the Bill we shall be given by the Government a clearer idea of what they intend to do.
§ 5.43 p.m.
§ Sir John Barlow (Middleton and Prestwich)
I am glad to follow the hon. Member for Ashton-under-Lyne (Mr. Rhodes) because he speaks with considerable knowledge of the textile industry. He admitted that on one or two occasions he was near to being out of order. I think he started so many hares in respect of which he may have been out of order that I do not propose to chase them, but I would ask my right hon. Friend to look most carefully into the matter of cotton prices.
There was very serious hardship a few years ago when the American price of cotton was relatively high artificially compared with the Indian price, which was low artificially. This country suffered very considerably from Indian competition. As the hon. Member for Ashton-under-Lyne pointed out, if this country had taken drastic action at that time there would have been very considerable international feeling. There is an opportunity now which should be taken to prevent such circumstances arising in the future.
I think that we all welcome the Bill. It is bound to be controversial, though in a small way rather than a large way. We in industry have all suffered in various degrees from dumping in the past. When I say industry I mean labour, capital, management, and everyone. I think it is only those who have had real experience of it who know how devastating it can be to all the different people engaged in industry.
This country is probably one of the most sought after markets in the world, owing to our high standard of living and our comparatively high values. I cannot think readily of any market outside the dollar market which is more popular and more sought after than the British market. For that reason, we are extremely vulnerable, and we should take suitable measures to see we do not unduly suffer on that account.
This Bill is a permissive one. It does not go nearly so far as legislation imposed by members of the Commonwealth, for example. Canadian, South African and, I believe, Australian measures go very much further than this.
I suggest to my right hon. Friend that if he wants a Bill which is to be largely 78 a deterrent, and does not want a large number of Orders, it must be a strong Bill which can be easily and quickly effective, and which can be seen to be easily and quickly effective, otherwise people wishing to dump into this country will not take it seriously. The stronger the Bill is, the less likely it will be that we shall have to use frequently the powers conferred by it.
Those of us who have had experience of dumping will, I think, agree that it falls into three separate categories. One is the regular dumping. A manufacturer abroad sees a good market here and plans his production to dump regularly part of that production to his benefit and to the detriment of manufacturers of that commodity in this country. Then there is the intermittent, sporadic dumping, which occurs once in a while. It is not regular, and is not so organised.
Then there is the dumping of temporary surpluses, of which my right hon. Friend gave one example. It is very often the unexpected surplus of some large production which cannot be consumed at home. The manufacturers look around the world to see what markets there are in which they can dump their surplus most easily. Measures to prevent dumping of these three different types may require rather different methods, and I suggest to my right hon. Friend that he will have to be careful that the Bill is capable of meeting those different circumstances which may arise.
It would appear that under the Bill, as far as one can understand it, the initiative is taken by somebody in this country who has suffered because dumping has taken place. He reports it to the Board of Trade; the Board of Trade looks into it to see whether a prima facie case is proved. If so, then presumably the complainant, whether an individual manufacturer or an association of manufacturers, will be put to a great deal of time and trouble and expense in providing information for the Board of Trade to show whether a duty should be imposed.
The Minister has not told us how he proposes to deal with that problem. There might be a large number of applications which might almost embarrass the Board of Trade, and that is saying a great deal, because it is never easily embarrassed. The Board of Trade would 79 not want too many applications. It would want a reasonable number so that a case law could be provided. It is important that whoever winds up the debate should indicate quite clearly how all this is likely to work, otherwise there might be objections to the Bill because of hon. Members not seeing clearly the different steps that will be taken to implement the Measure.
The Bill provides that the export price is to be compared with the home price in the country of origin of the goods. I should be glad if the Minister would be more specific in his information on that point. Is he referring to the price in the factory, the f.o.b. price, the c.i.f. price, or some other figure? One knows the difficulty of taking any price and proving whether there has been subsidy at any stage or not—in the raw material, in the labour element, in the packing element, in the shipping element, or in the financing element.
Only those who have tried to prove such cases in the past realise how difficult that can be. In the textile industry, for example, before the war, similar information was sought on production in Japan, and more recently information has been sought from behind the Iron Curtain. It is known to be extremely difficult to obtain accurate information. I hope that the Minister will tell us, when he winds up the debate, how he proposes to deal with that problem.
The Bill rightly mentions the question of the national interest. Could we have some clearer definition of "the national interest"? Is the Minister thinking of industrial interest or political interest or both? One of these may change from time to time. I feel sure that in a matter of this kind it is desirable to have a lasting, agreed type of national interest as far as possible, otherwise matters will become very confused. So far as we can understand the Bill at present, I suggest that the methods adopted to prove a case are likely to take too long and are too cumbersome. I can see the Minister getting into very great trouble, even with all the advice that is readily available to him on whether something is or is not a subsidy.
My right hon. Friend might consider the possibility of having an advisory 80 committee composed of representatives of industry and his own advisers to work on these matters whilst he retains the ultimate authority as to whether he accepts that advice or not. We have seen that system work excellently in other directions. It might be of great help and a protection to him if he adopted something similar in this case. My right hon. Friend might also tell us whether there is an appeal beyond him. I assume that there is not. Many of these matters, obviously will be the subject of much greater discussion in Committee, but we all recognise the great necessity for a Bill of this kind. While some of us would like to improve it, we wish it well in its passage through the House.
§ 5.56 p m
§ Mr. Ernest Thornton (Farnworth)
I am glad to have the opportunity of following the hon. Member for Middleton and Prestwich (Sir J. Barlow), because I should like to offer him a definition of the national interest according to the present Chancellor of the Exchequer when he was President of the Board of Trade. That right hon. Gentleman's definition of the national interest, in the context of this Bill and in relation to his attitude towards one industry, is that the national interest would be served by any industry except the cotton textile industry of Lancashire. That is the treatment which we in Lancashire have had from the present Chancellor of the Exchequer.
It appears to me that the Bill is designed to afford the President of the Board of Trade the opportunity of protecting any industry in the country against dumping at present, except the cotton textile industry, which is the only one in the world today that is faced seriously with this problem of dual pricing that, as the hon. Member for Middleton and Prestwich pointed out, was a problem which at one time was a very serious factor in the cotton industry.
At the beginning of 1955 the difference in price enjoyed by Indian manufacturers over manufacturers in this country was 15d. per 1b. At four yards of cloth to the pound of raw cotton that represented 3¾d. per yard, which was about the total wage cost of transforming a pound of cotton into four yards of cloth. That is a situation with which no industry, however efficient, can cope. I am not justifying the cotton 81 textile industry in every respect. A great deal that ought to have been done has not been done, but our best mills are as efficient as any in the world and our best mills could not compete with competition of that kind, which was in effect a concealed export subsidy. As a result, our industry has had an extremely difficult time.
I am disappointed to find that the Bill's definition of dumping excludes that part of G.A.T.T.'s definition which refers to serious injury to an industry. I think we can claim that serious injury has been inflicted on the cotton textile industry in this country as a result of the practices to which I have referred. The fact that in the last five years the number of people employed in the industry has declined by 70,000 reveals a very serious situation. The labour force in the industry has shrunk by one-fifth in five years. I would remind my engineering friends in Coventry, who are concerned about the motor car industry, that they would feel very severely aggrieved if they had experienced such a loss of manpower in the industry as 70,000 over that period.
I am not suggesting for a moment that Bills of this kind should be designed with the idea of attempting to maintain industry in a static condition. We are living in a changing world. The pattern of trade has changed, the size of industries changes. Some industries must expand and some must contract. Yet we should be without a sense of responsibility if we did not pay some regard to the rate of contraction, because a rate of contraction such as has been experienced in the textile industry of Lancashire in the last few years has caused considerable dislocation, considerable disturbance of civic government, and the depopulation of some of our towns, with an increase in the rating burdens on their populations. Those factors should not be ignored but, unfortunately, this Bill makes no provision for assistance in that direction.
Neither does this Measure refer to the problem of cheap labour and allied matters. I know how difficult is the problem of the increasing industrialisation in countries of the East which have low standards of living, and I appreciate its impact on the industries of those countries of the West with higher standards of 82 living. That, however, is a serious problem which the West must face in the not distant future.
I believe that in recent years the Board of Trade and hon. Members on both sides of the House have thought too much of the future of this country in terms of more and more concentration upon the production of capital goods and equipment. I believe that such development is important, inevitable and desirable, but I also believe that too much emphasis has been placed on that aspect of development.
I would call the attention of hon. Members on both sides of the House to an article—if they have not already read it—in yesterday's Manchester Guardian on automation in the Soviet Union. Let not our hatred of some of the things that happen in that country blind us to its development of capital goods. I have read of and seen the progress and development that has been made there, and I believe it is probable that in the next decade the Soviet Union will beat the rest of the world in the production of many types of capital goods. If we are planning the future of this country on the production of such goods, we may find ourselves in very severe difficulties.
Therefore, our consumer goods and light industries should not be neglected, and I want again to call attention to the fact that the cotton textile industry still has a part to play in our economy. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) gave the impression that the Lancashire textile industry expected to be protected against difficulties in the home market. He spoke as though the cotton textile industry was asking for the protection of its own market when all the rest of British industry was operating in a free trade system. Well, we are not living in a free trade economy. Most of our industries are protected from overseas competition on the part of their chief competitors, but our industry has had to submit to the importation of goods made from subsidised raw material produced by cheap labour from one of the chief cotton textile industries in the world today, namely, that of India. That has been manifestly unfair, and so I hope that some attention will be paid to it.
The problem of low wages, which I want to develop a little further, is one which we must face in relation not only 83 to India and Pakistan, which is developing a light industrial economy, but also to Hong Kong and to Japan. Within recent weeks in the United States of America there has been great agitation in her textile industry because Japan has been importing cotton textile goods into that country to the extent of 2 per cent. of America's domestic production of cotton textiles. In this country we have reached the situation where over 12 per cent. of the cotton textile goods consumed in the United Kingdom are made in India, Hong Kong and Commonwealth countries and come into our market completely free of duty. Yet our trickle of exports to India has to climb a tariff wall of 30 per cent. or 40 per cent. I hope, therefore, that when this Bill is discussed in Committee the President of the Board of Trade will consider this problem.
I know that, when he replies to the debate today, the Minister of State will tell us that the Americans dealt with their problem by reaching an industrial agreement with the Japanese cotton textile industry to limit exports of Japanese textile goods to the American market. He will probably tell us also that at the present time there is a mission from the Lancashire industry out in India which will be going on to Hong Kong. I hope that the mission will succeed in this attempt to reach some agreement on controlling or limiting what could be unlimited supplies which could completely destroy our industry.
When the Minister replies I hope that he will answer this question. Does he anticipate that this system of encouraging industries to make agreements with each other on limited trade is a trend which will develop throughout the world? Also, does he believe that our tacit acceptance of the dual-pricing system will be to the long-term advantage of this country? I am conscious that we adopt it in relation to coal and steel but I suggest that our long-term interests as a manufacturing nation will not be served by this system, as we are dependent on raw materials, of which we have very few. Great industrialisation processes are developing rapidly in the East and in Africa in countries which produce raw materials. If that industrialisation is based on those countries providing themselves with cheap raw materials I do not think that it will 84 be to the long-term advantage of this country. I hope that the Minister will deal with the points which I have raised when he replies to the debate.
§ 6.10 p.m.
§ Captain J. A. L. Duncan (South Angus)
So far the debate has dealt mainly with the cotton trade, and I hope that the hon. Member for Farnworth (Mr. Thornton) will forgive me if I do not follow his observations on that subject. I would merely congratulate him upon making a first-class protectionist speech for his own trade. I hope he will support the Government's Bill, although it is limited in scope when compared with the evils in respect of the cotton trade which the hon. Member would like remedied.
§ Mr. Thornton
I was not making, I hope, a protectionist speech. All I was asking was that our industry should have the same measure of protection as other industries, but not more.
§ Captain Duncan
That is fair enough. The point is that the hon. Member's speech seemed to go much further than the intentions of the Bill. The Bill is not "protection." I am glad to see present the hon. Member for Bolton, West (Mr. Holt), who may move an Amendment to the Motion. We ought to get this question clear. We are moving into a liberalised era—the amount of liberalisation that we and other O.E.E.C. countries have done has been very extensive—and an era of freer trade. The "free trade" to which I refer is not the "free trade" of nineteenth century Liberalism, for that meant "free imports" whereas all other nations were protectionists.
What we want to see, in dealing with this limited problem of real free trade—it does not mean that we should let things in free only if other countries let things in free—is fair trade. The Bill is simply an attempt to deal with unfair trade so that free trade in the future, whether it be European free trade or whether the G.A.T.T. arrangements eventually lead to freer world trade, will be fair trade. That is the main justification for the Bill.
The Bill is essential if we are to have fair trade and free trade. If we are to be free, it must be a corollary of that that competition is fair and not unfair or accompanied by hidden subsidies. A 85 great deal has been said, and no doubt will be said, about the definition. It seems to me that in producing the Bill the Board of Trade—I congratulate my right hon. Friend upon making his maiden speech as President of the Board of Trade—has gone as far as it can in defining unfair trade in that goods are to be regarded as dumped if their export price from the country of origin—I presume that refers to the wholesale price—or the country of export is less than their fair market price in that country.
We shall, no doubt, discuss this matter in Committee, but I would just say now that it seems to me that the definition is the best that could be devised. The fact that the Board of Trade is given a great deal of discretion in the later Clauses of the Bill is an advantage in that it can determine whether there are cases of unfair competition or dumping and bring legislation to the House for approval.
There are two trades in which I am particularly interested from my constituency's point of view. One is flax, the oldest textile industry of all. Flax sails were being made before cotton was ever imported into this country. That industry, which has been going for centuries, is having a very difficult task in keeping alive in competition with other textiles, man-made and natural. It is up against not a direct subsidy but an indirect one.
The French give a 15 per cent. remission of social service charges on flax exports. That means unfair competition on the part of the French exporters at the expense of our people. It is true that France is a member of G.A.T.T. and that we could have taken action, if we could have proved our case, under Article VI. If this point can be proved, our hands will be strengthened by the Bill, and our flax manufacturers will be enabled to compete fairly with other European countries. They are not complaining about Belgian competition. It is only the French competition which is alleged to be unfair. Does not the hon. Member for Bolton, West agree with that? Is it not right that there should be fair competition, and that the French should not be allowed a 15 per cent. benefit at the expense of their competitors? I believe that competition ought to be fair in all cases.
The other industry, which is of interest not only to my constituency but to the 86 whole country, is the horticultural industry. I believe that the Bill, properly operated, may be of very great interest to it. My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) defined three types of dumping. I believe there have been cases of all three types in relation to the horticultural industry.
One of the most difficult types to deal with in the horticultural industry is the dumping of a surplus crop. That may be due to weather, lack of buying power in the home market in a particular year, or a whole range of other reasons. Suddenly the dumping occurs, and it may ruin the private grower here although he may have spent a year or more preparing his crop for market.
It seems to me that we do not want any advisory committees or other delay-making arrangements. We must have speed. I will give the House an example. On 4th June last year the French Government announced that for a period of a few weeks beginning on that day they would grant substantial subsidies for the export of new potatoes. Two days later they increased the rate of subsidy on exports to the United Kingdom for the following ten days. That was just the time when our own new potatoes were coming along. Yet the French Government wanted to dump a surplus crop upon us, and, no doubt after representations from the French growers, they encouraged the dumping with an export subsidy. Unless the answer in the form of a countervailing duty is given with speed, it is of no use at all, for the market here will have been flooded and the price will have dropped. I hope that the right hon. Member for Smethwick (Mr. Gordon Walker) is listening to this, because he wanted an advisory committee.
§ Captain Duncan
I apologise. It was the hon. Member for Ashton-under-Lyne who wanted an advisory committee.
Although there may be a committee, it is important on these occasions for the Board of Trade to be free to act decisively and quickly, because, without speed, action is of no use at all.
87 I also wish to raise the Dominion aspect of this matter. As one hon. Member has mentioned, Australia may well become interested in Argentine exports of beef to this country. If it is proved that Argentine beef exports to us constitute dumping, that is to say, that beef is being sold to this country at a cheaper rate than in the country of origin, it would seem to me to be in the interests of British agriculture and Imperial relations alike that there should be the right of the Board of Trade to impose anti-dumping legislation.
There are several instances of other commodities—such as tomatoes—from Spain and from countries of the Soviet bloc where there is no fair market price, but a State-fixed price, and it seems to me very important that Clause 7 (3) should remain in the Bill to deal with exports from the Soviet bloc countries where there are State prices and no free market prices.
I believe that within its limited scope this is an essential weapon in our armoury—a weapon which has been employed and is in action in almost every other big country in the world, including the United States and the Commonwealth. I believe that if it is made strong and firm, without equivocation and above all without delaying action, it may not have to be used very often. The very fact that the deterrent is there—thht the weapon is in our armoury—may be of the greatest value to this country, and particularly to the interest of the industries which I have mentioned.
§ 6.22 p.m.
§ Mr. Arthur Holt (Bolton, West)
I beg to move, to leave out "now" and at the end of the Question to add "upon this day six months."
The hon. and gallant Member for South Angus (Captain Duncan) has made a number of mild appeals to me which seemed to imply that I, as a free trader, was in favour of unfair trading. Of course, that is not so. At the extreme, all that the free trader is asking for is that Herr Schmidt in Germany be allowed to trade freely and without let or hinderance with Mr. Smith in England. If one thinks for a moment, this anti-dumping and subsidies Bill would be quite unnecessary, would serve no purpose and would not need to be brought in if there 88 were free trade between countries. [Interruption.]
It is quite obvious from the many comments he has made that the hon. Member for Kidderminster (Mr. Nabarro), although he is keen on competition in this country, is not so keen on competition from abroad, but is an adamant protectionist. If there was free trade between the United Kingdom and India—I take this example because there has been a lot of talk about textiles—and India started to send cotton goods into this country at dumping prices, then anyone here could make a profit by sending those goods back to India.
At the moment, India can send goods to England, and there is no tariff here to stop them coming in, but if there was any profit to be made by sending them back again they have got to get over a 30 per cent. tariff wall. I hope that hon. Members will be alive to the fact that this antidumping and subsidies Bill is entirely due to protection. We now have to have this Bill in order to protect ourselves from the worst results of protection.
§ Mr. Nabarro
Surely if we are to have a European common market, of which I am somewhat critical, this Bill will remain on the Statute Book? Surely it is essentially a safeguard against abuse in the common market arrangements and from other quarters as well, and the two things are complementary.
§ Mr. Holt
There will be no abuses if Governments stop interfering. It was put to me by the hon. and gallant Member for South Angus that because one was a free trader, apparently one was, therefore, in favour of unfair trading. The simple point which I make at the moment is that if, in fact, there is free trade on both sides between two countries, the kind of thing proposed in the Bill is unnecessary. In this debate and in our debate on the common market, some people seem to have got the idea that a free trader is concerned only about having free trade in his own country. That information is apparently obtained from the history of free trade in the last century.
May I briefly point out that what happened then was that after the Napoleonic wars this country was in a far more protected position that it is now. There were prohibitive barriers between ourselves and 89 France and very high tariffs in this country, up to 100 per cent. The feeling grew that no expansion of trade could take place unless we reduced them and literally removed some of these blockages, and it was hoped that as this idea of free trade gathered force, other countries on the Continent would do the same.
That was the point. Those who have studied Cobden will remember that after the passing of the Corn Laws Cobden went off on a great tour of the Continent and was warmly welcomed everywhere. He hoped that the Continent would have free trade. It did not. What did he do? He negotiated with France the famous treaty of 1860 which was warmly welcomed by Gladstone, who was the Chancellor of the year, and put through Parliament.
That was essentially a treaty under which both sides lowered their tariffs. Although I stand here as a free trader I do not like it to be suggested that a free trader is concerned only with removing tariffs in our case in the United Kingdom. We want them all down. That is one of the reasons why we welcome a common market. It is only in a small area compared with the whole world, but there is going to be a great lowering of tariffs, and that is something to be welcomed.
We come back to the point that this Bill is necessary because we have protection. That is a fact. We are not talking about Utopia. We have never had complete free trade and maybe we never shall have, but it does not alter the fact that this Bill is necessary because of protection and because Governments are constantly finding ways and means of interfering with trade. I hope that it will be realised that the whole point is that we have stability with free trade; there is nobody to interfere. We have protection at the moment. How can we make this protective system which we have to put up with for the time being as stable as possible?
As regards those elements in the Bill which are concerned with stopping Governments from interfering with trade by giving direct subsidies, I support the Bill, not because I hope that the Government will actually put on the countervailing duties, but because I think that the very fact that they have a weapon in their hand means that if a Government are 90 considering sending some products into this country, whether hides, cotton, manufactured goods or cherries from Italy, they will know that the Government here have anti-dumping powers to put on immediately to the exact amount of the subsidy. If it is known that we have these powers, and that they will be used, that will be sufficient, but it would be as well that anything we threaten to do we should threaten to do tonight. Of course there are many dangers in that, but I agree that administratively it is the most effective deterrent. Whether the powers which we are giving to the President of the Board of Trade are too large is another matter which we can perhaps discuss on another occasion.
However, the Bill does not deal with all those interferences by Governments which have been already indicated. One of them is specifically excluded by Clause I. It is where Governments institute some price control. I regret that the first action of the new President of the Board of Trade has been the licensing of certain steel products to stop them leaving the country. That is an interference. Here we are with a Bill the main project of which is that steps should be taken to reduce these interferences, and yet the first thing done by the new President of the Board of Trade is to increase them on one of our own products. I know there is a case for it, and we will not deal with it now. However, we must recognise that that has been done this week, and that sort of action is not covered by the Bill.
It is the kind of thing about which manufacturers in this country complain, the playing about with controls so that countries retain a large proportion of a raw material, and force down its price so that their own manufacturers may export much more cheaply. The leather trade has a strong complaint about the quota control of calf leather by the French. That is depressing the price of calf skins in France and is a help to the French manufacturers. I know that the quota is increasing, but it is a lot less than it was before the war. British manufacturers buy most of their calf skins from France and are, of course, paying higher prices than the French manufacturers. That is unfair competition. It is wrong, and it is that kind of thing which we have to try to remove.
91 We do not remove that abuse by the Bill. Let us be clear about that. I know that constant efforts are being made by the Government at O.E.E.C., and have been made for a number of years, to get the French to raise this quota. The same can be said for other products.
§ Captain Duncan
The hon. Member will agree that under G.A.T.T. the abolition of quotas is one of the prime aims to which we and the French are committed.
§ Mr. Holt
Another aspect of this subject is that the Government are taking powers to deal with dumping from Communist countries or from dictatorships where there are controlled economies and where the price mechanism does not work. The Bill deals with those on a separate basis. That also is quite reasonable. I approach this matter with the aim that in the end Herr Schmidt should be allowed to trade with Mr. Smith and that no one should interfere with that trade. I know that in that aim we are seeking Utopia, but we are all agreed about the direction in which we want to go and there is considerable support for that general line of approach, although I know that others want to stop before I want to stop.
The third purpose of the Bill is to deal with dumping from private firms. It is on this topic that I join issue with the Government. Is there any difference between goods dumped in this country because a Government, with all the backing of the taxpayers, can deliberately subsidise the export of a product—an hon. Member mentioned new potatoes—and those dumped when the financial backing is that of a small company's capital?
For instance, if there is a silk manufacturer in France who is dumping stockings in this country at ridiculous prices, how long can he continue to dump stockings?
§ Mr. Holt
We will come to that point in a moment.
Prima facie he is dumping. There may be provisions in the Bill under which the President of the Board of Trade may say 92 that he will not do anything about it. If the manufacturer is selling in this country silk stockings at half the price for which he is selling them in Lyons, he is dumping—according to the Bill's description of dumping.
The House should think carefully before it decides that it wants to stop that. Where will those stockings go? Are they to be burned? Is it suggested that one private firm, whose capacity to damage the industry is very limited, must be ruled to be dumping and have its goods kept out of the country? Ten thousand dozen stockings coming in at half the price may depress the home market and slightly inconvenience some manufacturers in the hosiery trade who will not make so much profit, but it is hardly likely to do serious damage to the industry.
That, of course, is a rather extreme case. We must remember that at the moment we are dumping all over the place within the context of the provisions of the Bill. I remind hon. Members of a Press interview given on 18th October, 1956, by representatives of electrical manufacturers. The Monopolies and Restrictive Practices Commission had looked into their sales arrangements because it was suggested that they were selling generators, etc., to the Central Electricity Authority on equal tendering. The spokesman on that occasion was a Mr. Banks.
A Press report said:Yesterday the electrical manufacturers pleaded their case in public at a Press conference at the Savoy Hotel.This is the point to which I wish to draw the attention of the House:The electrical industry … was the second largest exporting industry in Britain and had been subjected to the most acute competition. … It had met with considerable success … but Mr. Banks made it clear that this had only been possible because British manufacturers had been able to make good at home the losses they had incurred abroad.They were justifying level tendering and equal prices on the basis that competition was so acute abroad that they had to make a good profit at home in order to make both ends meet.
§ Mr. Nabarro
The hon. Member is presenting only half the story. If one followed his argument through to its logical conclusion one would assume that the entire output of electrical manufacturers was sold to the monopoly of the 93 Central Electricity Authority and that losses abroad were being recouped by charging the nationalised undertaking an unduly high price. That is quite a wrong surmise in fact. Heavy electrical manufacturers sell a very large part of their output on the home market to private enterprise undertakings, and not only to the nationalised Central Electricity Authority.
§ Mr. Holt
That may be true; I do not dispute it. But it does not alter the point that I was making, which is specifically made in the quotation which I have read, namely, that they charge a higher price on the home market and remove some of the competition, by level tendering, in order to get their orders abroad, which, they suggest, they have to quote at a lower price and do not make a profit on some of them.
§ Captain Duncan
If that is in fact so—and I am not prepared to argue about it—why have not some of these foreign countries, which have the powers we want in the Bill, not taken action?
§ Mr. Holt
That is a very interesting point. It may be that they will do so.
When the Money Resolution was before the House during last Session the Board of Trade was good enough to give me some details of the anti-dumping legislation which other countries had introduced. Those details contain a number of references to "legislation is pending"; "this country is intending bringing it in," etc. It is a growing practice. All I want to do is to draw the attention of the House to the fact that if we do not see exactly what our object is, there are great dangers ahead.
We can safely bring in measures which will dissuade Governments from interfering with trade—chiefly by subsidies but also by price control in one way or another—but when we start to attack what some people may call dumping by private firms we are on much more dangerous ground. My point about the electrical manufacturers was made to give one instance of technical dumping on our part. Are we to impose anti-dumping duties upon some electrical manufacturers from abroad who, we find, have admitted in the Press that they are getting a higher price in Germany than in Britain, and are not making any profit in Britain? Such 94 action may only be marginal, and amount to a small percentage, but according to the Bill it is still technically dumping.
Much depends upon the interpretation of Clause 1, which reads:Where it appears to the Board of Trade"—that certain goods have been dumped—and that, having regard to all the circumstances, it would be in the national interest, they may exercise the power conferred on them. …It would be very interesting to hear the opinion of various hon. Members as to what should be the Board of Trade's interpretation of "in the national interest." The hon. Member for Middleton and Prestwich (Sir J. Barlow) was very concerned to get a body of case law built up, which seems entirely to defeat the idea of the President of the Board of Trade that there will he a semi-dictatorial decision of his own, based not upon any particular case law but purely upon what he considers to be the national interest at any one moment.
I should like to draw attention to what is happening in America. First, Article VI of G.A.T.T., interpreting "the national interest", says that anti-dumping legislation may be introduced if a certain importation,is such as to cause or threaten material injury to an established domestic industry.I do not know whether the President agrees with that. Recently a new precedent has been established in America which affects our goods. Some cast iron soil pipes of a standard type being imported ino America have recently been caught by a decision of the Tariff Commission under its anti-dumping duties. The interesting point is that a comment in a United States trade journal, Domestic Engineering, of December, 1955, says:This decision of the United States Tariff Commission set two new precedents. … First, of five cases thus far decided by the Commission … this was the first case in which the Commission found that an industry in the United States was being, or was likely to be, injured by the importation of foreign goods. In all preceding cases no injury was found by the Commission. … It was established that the showing of any injury"—"any" is the operative word—was sufficient (not necessarily, as previously held, substantial or material' injury). Alas, the phrase in the Act an industry in the United States' could mean a section of the industry in a particular area.95 I know that in one sense this is not relevant to us, but I give that example to show that once we start on the slippery slope of seeking to define what is in the national interest bodies come along and urge their own interpretation, and the tendency is to move in one direction according to the feelings at the moment. If people want the definition to be broader it becomes broader; if they want it narrower it becomes narrower. If we give these very wide powers to the President and enable him to decide the true interpretation of what is in the national interest I wonder how it will be interpreted in ten years' time.
Would anyone like to risk a guess? Will a whole lot of goods have been subjected to anti-dumping restrictions? If we have a series of fairly liberal-minded Presidents there may be scarcely any cases, but if we have a protectionist President the tendency will be the other way. It is quite clear that the matter is not within the control of Parliament as it now stands.
§ Sir D. Eccles
The hon. Member knows that no duty can be imposed without an Order being laid before this House, subject to an affirmative Resolution. Therefore the House will have a chance to deal with each case.
§ Mr. Holt
I am aware of that. As the Minister says, the House will have a chance, but as everybody knows, when the President of the Board of Trade puts on the Whips he gets the thing through. He must realise that a great deal depends upon his own powers of resistance to many interested people who will put up cases to him. In this respect we must try to be effective protectors of the public interest against a protectionist President of the Board of Trade. I am not suggesting that the present President is a protectionist; I hope that he is not.
I hope that the President will give serious consideration to the point that I have made about private industry. If he accepts it, I think, after a long study of the matter, that it would require only some extra phrase at the end of Clause I to the effect that the imports of private firms, who are operating entirely freely and are in no way assisted by Governments, should not be subjected to antidumping duties. If the right hon. Gentleman 96 does not like that, I hope, nevertheless, that he will consider the arguments that I have advanced, and see in what way it is advisable to curtail the wide limits of this Bill.
§ 6.50 p.m.
§ Mr. Gerald Nabarro (Kidderminster)
I hope that the Amendment will be decisively rejected by the House.
Though my right hon. Friend did not say so in these words, I am sure that the correct interpretation of his view upon the necessity for this Measure is simply that, as we move towards a freer European trading market and a single market—which I believe is one of the major objectives of the policy and purposes of Her Majesty's Government—it is necessary, in certain extreme circumstances, to have powers of sanction to discourage or even preclude entry of goods and commodities from Europe—and perhaps elsewhere—if there is evidence that they are being dumped or sent to the United Kingdom on unfair trading terms.
Though I have been critical of the European free market proposals—and unless there are effective safeguards I shall continue critical—I cannot see any possible objection from any quarter of this House to ensuring that the livelihood of the British workman shall be safeguarded; that the prosperity of British industry, as far as this House is able, shall be safeguarded by measures of this kind against extreme unfair practices on the part of overseas competitors; and that, I believe, is genuinely the purpose of this Bill.
Of course, there will often be price differentials as between goods of the same kind sold on the home market and those exported oversea. We are guilty in that regard; and a passing reference has been made to coal. I shudder to think what the finances of the National Coal Board would be like at this moment if there had not been a substantial premium on every ton of coal sold in Western Europe and elsewhere during the period of nationalisation. That amounts to a very big tonnage, and it has all been sold at a premium—or price advantage, if hon. 97 Members wish to put it that way—compared with the price on the home market.
Exactly the same argument may be advanced with regard to steel, and I see nothing detrimental or unsatisfactory, for example, to the American economy in the fact that a Jaguar car is sold in the United States—leaving out the element of Purchase Tax in the comparison—at a somewhat lower figure than in the United Kingdom in order to attract and promote increases in American sales and earn what is, from our point of view, hard currency. Those are legitimate trading practices. What, in my opinion, are illegitimate trading practices are those which comprise a deliberate attempt on the part of a foreign nation to flood our home market with particular commodities or goods at a particular time, thereby undermining the security of employment of the British workman and affecting detrimentally the prosperity of the particular industry concerned.
We have, of course, had experiences of this kind. I have no desire to exaggerate any particular case, but, in the complexity of this situation, I think it may be helpful if I try to explain one of the pitfalls which we may meet in introducing legislation of the kind contemplated today against the background of our general arrangements in relation to the General Agreement on Tariffs and Trade. I speak particularly of the Kidderminster carpet industry, as indeed I should do in this House, as the major part of the industry is concentrated in the town of Kidderminster. It is a valuable industry which contributes largely to our national export trade.
As the President of the Board of Trade will know, this industry has suffered very considerably in the last twelve months through short-time working, and in a measure from unemployment. In fact, the incidence of short-time working in this industry has been, in relation to its size, somewhat greater than in the motor car industry. This short-time working has occurred, in my opinion, partly due to the credit squeeze and to Purchase Tax, and partly due to the restriction on the export of British carpets to Australia. Largely, at the cheaper end of the industry, it has been due to a phenomenon which may be illustrated by a series of figures which I have collected regarding the imports of cheap cotton carpets from 98 Belgium. In the period between 1952 and 1956 inclusive, only a period of five years, the increased imports of these carpets has amounted to 600 per cent. Relatively, that is something far worse than any other branch of the textile industry has had to suffer.
§ Mr. Nabarro
I will come to that later.
In 1952, the United Kingdom import figures of Belgian cotton carpets were 978,830 square yards. In the following year, 1953, the figures were 2,477,870 square yards. In 1954, they almost doubled to 4,552,177 square yards. In 1955, the figures were 5,250,590 square yards. Last year, though there are no official figures yet published, they are estimated to reach almost 7 million square yards—6,808,563 square yards.
Every hon. Member opposite who has spoken has emphasised the point that British manufacturers and the trade unions do not mind fair competition. Yet the Belgian cotton carpets are imported into this country at a lesser price than the cost of raw materials in the equivalent carpets manufactured in Britain. Everyone has a right to question how it is possible for that to be done. I have done considerable research on this subject. I have established the fact that the Belgian workman is paid approximately the same amount as the British workman; that the Belgian machinery costs, approximately the same; that general overhead charges in Belgium are approximately the same as they are here.
I come back to the element in respect of raw materials. I find that the Belgian manufacturer gets his raw cotton, and thus his cotton yarn, evidently at a much lower figure than anything which can be achieved by way of purchase by the British manufacturer. How is it done? Here is the tortuous train of events which my right hon. Friend will have to pay some regard to under this Bill. What evidently happens is that all the raw cotton that comes into Belgium for the production of these cotton carpets is obtained from the Belgian Congo. In fact, practically none of the Belgian Congo raw cotton is sold on the open market. It is bought by financial 99 interests or Belgian banks often before the cotton is even sown. It is bought long in advance, and this last year the amount exported from the Belgian Congo to Belgium was 86 per cent. of the crop. It is supplied to manufacturers in Belgium at prices which are never disclosed. All we know is that the price is vastly lower than the world price, which, is the average paid by the British manufacturer.
That leads to the belief that the element in respect of raw material cost to the Belgian manufacturer is so much less than the figure that the British manufacturer has to pay for raw cotton as to make it impossible for the British manufacturer to compete with the finished product.
How do we deal with a case of that kind? The carpet manufacturers in all parts of the country, and not only in Kidderminster, have applied for a revision of the tariff arrangements under G.A.T.T. That application was made many months ago and has gone through all the inordinately slow processes of examination in the Board of Trade, including the hearing of objections. Of course, there are objections, which come from the vested interests, namely, the merchants who import Belgian cotton carpets and who are on a very good thing with the inflated sales. In the end, the whole application is bogged down under this wretched G.A.T.T. procedure.
I cannot fit this form of dumping into the Bill; I cannot find a provision in Clause 1 which will cover it. It is a form of subsidy so overt in character and so manipulative in design, in the hands of foreign financial interests as to make it nearly impossible of precise ascertainment. I want to know the views of my right hon. Friend on this kind of thing. If we are to have protective measures against dumping in order to secure employment in this country, which is the primary purpose, we must have regard to the kind of thing which I have mentioned.
I will mention a further and parallel case, because it is germane to much that has been said today. Recently we have all been concerned with the activities of Colonel Nasser, who has sold part of the Egyptian cotton crop to Czechoslovakia, not for money but in return for armaments produced at the Skoda works. It would be very interesting to know what price the Czechoslovakian Government 100 charged their textile manufacturers for that cotton prior to the export of the cotton piece goods to Great Britain and elsewhere. It was probably a manipulated, artificial price which contained a substantial element of subsidy. Again, this is a manipulative process which it would be excessively difficult to fit within the framework of the Bill.
I return for one moment to what I said about carpets earlier in order to respond to the question asked of me by the hon. Member for Farnworth (Mr. Thornton). The increase in tariffs asked for in the application is very big. Before the war there was a tariff of 1s. per square yard on carpets, or 20 per cent. ad valorem, whichever was greater. In prewar days that represented generally a measure of protection of 30 per cent. or 40 per cent. The application to G.A.T.T. is for the protection to be increased to 7s. per square yard, or 20 per cent. ad valorem, whichever is greater. The hon. Gentleman will recognise from those figures that the increase asked for in the application is very substantial indeed.
I do not regard this as properly a matter for a G.A.T.T. application, because it concerns a deliberate policy of dumping on the part of Belgian interests which is rapidly deranging the cheaper end of the British carpet industry and is causing substantial short-time working in the industry and a good deal of unemployment.
§ Mr. Thornton
I am extremely obliged to the hon. Gentleman. He has presented an excellent case for the Kidderminster carpet industry. Would he not agree that the cotton textile industry has all the problems and disadvantages of the Kidderminster carpet industry plus no protection against imports?
§ Mr. Nabarro
That question would involve me in a long and discursive operation. I did not want to interrupt the hon. Gentleman, because many other hon. Members wish to speak, but I thought he was something less than just to himself when he described what is happening in India today in regard to the price of cotton. I think he will find that the Indian Government place a ceiling on the price at which the cotton crop should be marketed. By that means they secure indirect control over the acreage of cotton sown and encourage an appropriate 101 acreage being devoted to growing food. That is the primary consideration and it is not, in my view, an unfair trading practice. It does not compare with what I have described in regard to the Belgian carpet industry.
Where the hon. Gentleman was correct was in saying that I suffered precisely the same disability as he in defining all the difficulties of the carpet industry, because many of them are due to the grave disparity of Anglo-Indian tariffs; but that is not a matter which comes within the provisions of the dumping Bill which we are now discussing.
I would add to what I have said generally about the Bill that the Economist this week made an interesting point when it said:No doubt Mr. Thorneycroft and Sir David Eccles will have been talking about the Bill to M. Spaak this week, and trying to persuade him (on the whole rightly) that the concessions to be made to British protectionism are not very big ones.I would not concede that they are not very big concesisons. I do not think they are concessions at all but are a measure of equity and a complementary factor in progressing towards a free trade area.
Let me add a word before I resume my place about the horticultural industry, which is a special constituency interest of mine as well as of other hon. Gentlemen, especially on this side of the House. We were told that the European common market arrangement would exclude food and farming products. The French do not like this very much, because most of the goods which they send to this country are within the horticultural group. The Italians like it even less. Already the French and the Italians are trying to persuade representatives of the British Government to include horticultural products within the European free trade arrangements and not to exclude them, as was originally suggested.
I would enter a powerful plea with my right hon. Friend to continue our tariffs on all horticultural products and, if necessary, to use the powers of the Bill to reinforce them. The case of new potatoes mentioned earlier was not a matter of limited interest. That point could be applied with equal force to other kinds of horticultural products. We have fought—my hon. and gallant Friends the Members for Isle of Ely (Major Legge-Bourke) and 102 South Angus (Captain Duncan), and I—a long action in this House to get protection for horticulture and to prevent dumping by the Italians and other Continental nations. We do not want to see these hard-won advantages lightly frittered away.
The National Farmers' Union, in an admirable statement to hon. Members, strongly supports the view which I am expressing that we should not only retain our existing preferential tariff arrangements and the protection they give to home horticulture but should welcome, in addition, the provisions of the Bill as furnishing a speedy and most effective additional means of helping the home grower, who has many vicissitudes to contend with. He should not have heaped on his broad shoulders the additional vicissitudes which can be caused by dumping of produce from Western Europe.
I hope that the Bill will go through with the minimum opposition and with amplification in Committee of many of its terms and expressions. I wish it every good fortune in reaching the Statute book at an early date.
§ 7.10 p.m.
§ Mr. G. M. Thomson (Dundee, East)
This is a rare occasion which, I feel, really ought to savour. I do not suppose there is any hon. Member opposite with whom I normally disagree more than the hon. Member for Kidderminster (Mr. Nabarro), who advocates a number of policies which deeply affect the prosperity of my constituents, but today I am in the fortunate position of being in agreement with the very powerful case he has put forward.
I wish to add my modest words to speeches which have been made in support of this Bill. Its provisions may affect a great deal the attitude of the City of Dundee, which I represent, towards the proposals of a common market. As the President of the Board of Trade knows, Dundee is the centre of the nation's jute industry. I hope he will pardon my calling attention to the special position which the jute industry occupies in the city. I can only excuse myself by saying that in Dundee we are very anxious that the new President of the Board of Trade should be informed as quickly as possible about our problems.
103 The President will probably know that jute is in a unique position in the sense that we have a national industry which is very intensively concentrated in one medium-sized city with a population of less than 200,000. It is an industry which still dominates the City of Dundee, despite the very excellent new light industries we have had established since the war. Jute has been recognised by Presidents of the Board of Trade in successive Governments as an industry of strategic interest to the country.
Under the proposals for a European free trade area, there is a very real danger that Dundee would face mass unemployment. At the moment the jute industry in Dundee enjoys—I say so very eagerly—a protection which I wish the cotton industry of Lancashire also possessed.
The two main sources of jute goods which compete with Dundee are India, on the one hand, and France and Belgium on the other. In the case of India there is a government-control exercised over the import of jute goods, a control which even the present Government, with its known doctrines of disbelieving in all control, has felt compelled to preserve. In the case of French and Belgian jute goods we have a tariff imposed. At the moment, therefore, the Dundee industry is protected.
But the kind of position which the hon. Member for Kidderminster has been outlining in regard to Belgian cotton carpets exists in relation to continental jute goods. At the moment France and Belgium produce a surplus of jute goods for which they are anxious to find a market. It is a surplus which is just about equal to the 40 per cent. imports of jute goods into this country required in addition to the output of the domestic industry in Dundee. For various reasons, however, those jute goods are produced with concealed subsidies. There is no doubt that if the present protection were to disappear in the proposed European free trade area it would be a catastrophe for Dundee. Even though the proposed change would take place gradually, perhaps over ten years, it is very difficult to see how Dundee with this intense geographical concentration could adapt itself to the new circumstances.
104 Like hon. Members on both sides of the House, I hasten to add that the jute industry in Dundee does not fear fair competition. I think it true to say that the Dundee jute industry since the war has modernised itself and made itself the most up-to-date textile industry in the country. Immediately after the war a jute working party was set up. When one looks back on the recommendations of that working party, one finds that all the principal recommendations laid upon the industry have been met. Ten million pounds has been invested in the jute industry since the war. This investment has been made on assurances given by successive Presidents of the Board of Trade that suitable safeguards would be given to Britain's jute industry, sited as it is in one small and somewhat isolated city. The jute industry is a modern and efficient industry which does not fear fair competition, but it would be impossible for it to meet the kind of subsidised competition which it would be required to face in the European free trade area unless the provisions of this Bill were available to give it protection.
My main regret is that in this Bill the definition of what constitutes dumping has not been extended. I agree with the hon. Member for Kidderminster about this. In the case of continental jute goods, as in the case of Belgian cotton carpets, very often it is difficult to prove precisely what is happening. I think it would be very much better if the definition in Article VI of the G.A.T.T., which has been quoted already, had been included in the Billsuch as to cause or threaten material injury to an established domestic industry.It would strengthen the Bill a great deal if that phrase could be inserted.
I do not wish to detain the House, as other hon. Members desire to speak, but I wish to say that in putting forward this plea for a constituency interest, which I think is a fair and just constituency interest, I am not asking for a moment that we should not seek industrial arrangements, both national and international, which will allow goods to be produced in the places in which that can happen most efficiently. Clearly in the long run that sort of thing is in the interests of us all because it increases output and raises standards of living.
105 That is the case put forward in connection with the proposed European free trade area, but I think it is most important for Governments to keep in mind the points which were made so excellently by one of my hon. Friends representing a Lancashire constituency about dealing with the adjustments which must take place in this process. The changes brought about by moving an industry from one place to another or in reducing its scale should take place gradually and under social control. It is very important to keep in mind that the end product of all industrial processes is the welfare of the men and women who use the fruits of those processes.
It is also very important—I would say this to the hon. Member for Bolton, West (Mr. Holt) on the Liberal benches—that in looking at the economics of this matter, one should not interpret the word "economics" too narrowly. I sometimes think that accounting concepts used in free trade arguments are very limited indeed. After all, there is a social accounting to be borne in mind as well as a purely commercial accounting. One has to remember the return on the social capital of the whole community associated with an industry as well as the actual industrial and commercial capital sited in the factories of that industry.
In bringing about changes in the pattern of industry over a large area like Europe it is very necessary in the first place to bring those about very slowly and to preserve the right of Governments to social control and social planning. It It is also very necessary to remember that our economic concepts should be sufficiently broad, and that all those processes have as their end the raising of the living standards of human beings and the making of lives of men and women happier and fuller.
§ 7.19 p.m.
§ Mr. R. Gresham Cooke (Twickenham)
I cannot follow the hon. Member for Dundee, East (Mr. G. M. Thomson) into the intricacies of the jute trade, but I realise that in industry there has been a certain amount of concern about the European common market. I think we ought to place on record today that more than two-thirds of British industry, through the Federation of British Industries, has expressed agreement with the 106 European common market, and for that the House ought to be rather grateful—
§ Mr. Gresham Cooke
Yes, but the majority came out in favour of the proposal. It is quite obvious that the European common market cannot work properly unless the conditions and tariffs are fair on all sides. One of the objects of the Bill is to see that the conditions and tariffs are fair. I think that hon. Members on all sides of the House, with the exception of the Liberal Party, agree in principle with this Bill, but I must say that I have a great many doubts whether it will be effective, and I am not certain whether, if I had to do so, I could go into the Lobby conscientiously tonight and support this Bill, for reasons which I will give in a moment.
§ Mr. Gresham Cooke
For exactly opposite reasons to those for which the hon. Member for Bolton, West (Mr. Holt) opposes the Bill.
The whole core of the Bill lies in the juxtaposition of Clauses 6 and 7, and on the comparison between the export price of goods coming into this country, as set out in Clause 6, and the fair market price of the goods in their own home country. If the export price is below the fair market price, the Board of Trade has power to impose additional duties, as I read Clause 6, which says—(2) If the goods are imported under a contract of sale which is a sale in the open market between buyer and seller independent of each other,"—that, of course, means a foreign seller and a British buyer—then, if I read the Clause correctly, the export price will be the wholesale price of the goods landed in this country. That has to be compared with the fair market price of the same goods in the country of origin, as set out in Clause 7, which says—..… the fair market price shall be taken to be the price at which goods of the description in question are being sold in the ordinary course of trade in the said country for consumption or use there.Indeed, in the Explanatory Memorandum, the description of Clause 7 says this:Clause 7 defines the 'fair market price' of goods imported into the United Kingdom 107 by reference to the price at which similar goods are sold for home consumption in the country of origin.It appears, then, that the price referred to in Clause 7 is the retail price in the country of origin. If I am correct about that, this Bill will be brought into disrepute at once, because we shall probably find that all goods imported into this country are subject to the provisions of this Bill. We are comparing the wholesale price at which goods are brought into this country with the retail price at which those goods are sold on the home market, and we shall probably find that the wholesale price is below the retail price paid at home. I would ask the President of the Board of Trade to clear up that point, because it is a very important one when we come to consider whether the Bill is likely to be effective or not.
If my reading of the Bill is wrong and both Clauses 6 and 7 refer to the wholesale prices of goods entering this country, then here again I would ask that verb careful thought be given to this question during the Committee stage of the Bill in order to see whether these Clauses are really watertight. Let me give an example. I have been on the other side of the fence in this problem, in that I was closely connected with the motor industry and concerned in selling cars in Canada at a price which was considerably cheaper than that at which Canadian cars could be manufactured there. British manufacturers were accused of dumping cars in Canada, and the Canadian automobile manufacturers went to their own Government asking that legislation should be brought in against the British motor industry.
The argument then revolved on the point of the true wholesale price of British motor cars—whether it was the list price, less 15 per cent., at which many manufacturers were selling their cars, the list price, less 25 per cent., at which some others were selling, or the list price, less 30 per cent., at which some others were selling their cars.
I am happy to say that, in the ultimate, the anti-dumping legislation of Canada was not invoked against the British motor industry, for one very good reason, and that was that the wholesale 108 prices of British motor cars could never be strictly ascertained. In other words, the Canadian anti-dumping legislation was not as clear as it should have been. In this case, it must be the duty of the Board of Trade and its officials to see that any anti-dumping laws, and particularly Clauses 6 and 7 of this Bill, are absolutely clear as to what is meant, in order that such provisions may be effective.
Let me now give another example. If we send cars into Italy at the present time, one meets a tariff comparable with our own, and the Italians say that the tariff as between this country and Italy is fair. However, in addition to the tariff, the Italians have another extra tariff of 9 per cent.—I think it is at the present moment—which is called a compensation tax, the object of which is to make up for what the Italians claim Italian manufacturers have to suffer; namely, a sort of purchase tax levied on the raw materials—electricity, coal, steel and so on—used in the manufacture of Italian cars.
Here again is a point of considerable difficulty. Whether or not the Italians are right in saying that there is a purchase tax on their raw materials sufficient to permit them to charge a compensation tax of 9 per cent. on foreign cars entering Italy, the difficulty is in finding out what is really the wholesale price of goods in foreign countries. France also imposes a compensation tax, I think of 5 per cent., to make up for some form of purchase tax levied on goods there.
In principle, naturally, as the greater part of the House does, I support this Bill, but when we come to look at the actual wording and make a comparison between Clauses 6 and 7, I am not certain that the provisions will be effective. I think it may be found that the Bill is very loosely worded. I am not certain whether the Board of Trade has yet made up its mind whether it is dealing with the wholesale or the retail price, and, if the Bill is to be effective in operation, this point must be most carefully watched in Committee. Having said that, and having made that reservation as to its effectiveness, I should like to give the Bill my support and wish it a fair wind for the future.
§ 7.28 p.m.
§ Mr. John Grimston (St. Albans)
Like every other hon. Member who has spoken in the debate, I should like to welcome this Bill, and to say clearly that, while we cannot do everything which every trade or industry would like us to do, I think it is a most useful piece of machinery. I shall be very brief, and shall direct my remarks to the one point whether the duty, when it is applied, shall be applied in the way which is proposed in the Bill, which is only permissive, or whether it should be mandatory.
I know that, in his opening remarks, my right hon. Friend the President of the Board of Trade said that, generally speaking, industry was in favour of these powers being permissive, but I think it is also fair to say that that was probably before industry realised how strong the pressure for the European common market is going to be. I feel that the grounds advanced by industry, namely, that mandatory powers would invite retaliation, might now he felt by them to be a lesser evil than going into the common market with the possibility of having an antidumping 13i11 which was not, in practice, effective.
I believe that the experience of Canada, to which my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) has referred, is very important in this respect. I would say that it is generally found by exporters that the Canadian anti-dumping laws are the most difficult to circumvent, which, after all, is what the exporters are out to do. Those laws make dumping very difficult. The antidumping duties are automatically imposed and collected by the Customs of Canada, and it is then up to the exporter to prove that his prices are in fact fair prices and not dumping prices.
§ Mr. Holt
With his experience of the Canadian market, would not the hon. Gentleman agree that the Canadian Customs duties and the difficulty in getting United Kingdom goods into Canada are some of the reasons why so many British manufacturers are frightened of exporting goods to Canada? If we make these dumping duties too cast-iron, they then in fact restrict trade. In our particular case, we want to export goods into Canada, and I should like to do so, but because of the anti-dumping duties, many British manufacturers are prevented from doing so.
§ Mr. Grimston
That is an interesting point, but I do not know whether I should be in order in following it.
The difficulties of the Customs machinery in the United States are even greater than those found in Canada. Our experience in exporting to Canada is that once we have convinced the Canadian authorities that our prices are right and fair they are most co-operative and the difficulties are overcome.
I return to the question whether the imposition of these duties should be mandatory here or not. I think that, with the present proposal, one can envisage many months, and may be a year, of inquiry before the Board of Trade can make up its mind that the case for imposition exists. I would remind my right hon. and learned Friend the Minister of State of something that a former Permanent Secretary said. First, however, I should like to congratulate my right hon. and learned Friend on his appointment, and on continuing to lend lustre to the representation of the County of Hertford in this House. A former Permanent Secretary who is now in industry once said that the real problem with the Board of Trade was to know whether it was an administrable unit. It is quite clear that there is plenty to do there, and we may possibly be putting on that Department a great deal of additional work.
Another argument against making the powers permissive is that the Board of Trade may, in negotiations which we may not learn about, undo the effect of the Bill by private understandings reached in negotiations with Commonwealth or foreign countries. The President referred today to an understanding which had already been given to the Commonwealth. We do not want to see the effect of the Bill undermined in that way.
I think it is possible to envisage a recurrence of the kind of thing which happened so often before the war, when Germany, as a matter of policy, subsidised all her exports to this country to the extent of 33⅓ per cent. The Germans denied doing it, but if that happened again, if any other country were to do it, the Board of Trade might be faced with the necessity of coming to the House with dozens and dozens of Orders. I should have thought that we had already plenty to do, and that we should not want to do that, too; and that is in 111 addition to the fact that the House is not generally at its best when discussing arithmetic.
For all these reasons I hope that the Board of Trade will consider again whether or not it may be better that the powers contained in the Bill should be mandatory and not permissive. I support the Bill, as I have said, and I seek only to make it more certain that the foreigner inclined to dump in this country is made to see that that will not pay.
§ 7.33 p.m.
§ Major H. Legge-Bourke (Isle of Ely)
Earlier in the debate, the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) said that he could not understand how anybody who believed in private enterprise was not a free trader and could be a protectionist. I make no bones about being a protectionist, and at the same time I am second to none in believing in private enterprise. The reason why I believe the Bill is necessary is that there are always some people who will not play fair; and there is also the fact, which we have to face, and which I do not think the Liberal Party has ever really faced closely, is that there is all the world of difference between being a debtor and a creditor nation.
It is for those reasons that we have to make Governmental adjustments of one sort or another. The question is whether we should adopt the Socialist method of direct Government control, or put on a tariff, or make some arrangement of that kind, so as to reduce Governmental interference to the minimum, leaving actual control in the hands of trade itself. If we have to choose between those two things, then a tariff is the infinitely better way of proceeding, and it is infinitely better than seconding or recruiting a body of people expressly detailed to operate some new controls.
In this Bill we are fulfilling a pledge given some years ago by the Conservative Party. We published it originally, I believe, in 1948, in "Conservative Policy for British Horticulture," which was reissued a few years ago. There are two passages in it I would quote, because I think they are of some important relevance to this debate. In dealing with the 1948 situation and the Agricultural Charter, we said: 112For the future we consider that there should be an increase in the production both of vegetables and fruit not only up to the peak output of wartime but beyond it.Later we said:Safeguards on the lines of those adopted by Conservative Governments before the war must be introduced, whether by way of sliding tariffs adjusted to seasons or in other ways, to protect British horticultural producers from the dumping of foreign surpluses.That was repeated in the 1949 declaration, "The Right Road for Britain," in which we said:A Conservative Government will protect British Horticulture against destructive imports.I should like to feel that this Bill is the complete implementation of that pledge. Certainly the review of G.A.T.T. in 1953 went some way to adjusting the tariffs, in some instances 100 per cent. In considering what happened we went on record as saying even that we would never import anything we could produce equally well and in sufficient quantities here. I would only remark that since 1947, in the last ten years, the amount of vegetables and fruit imported into this country has virtually doubled, while the price of it has increased by even more, to give some idea of the peril in which the home growers are constantly placed. Unless there is anti-dumping legislation which will really protect them we cannot really say that we have fully implemented the undertaking on which we have fought every General Election—at any rate, every General Election in which I have been a candidate—an undertaking which we have reiterated always more strongly.
Listening to what has been said in this debate, and particularly by my right hon. Friend, I have the impression that this Bill is to be the last desperate resort when all other methods have failed in trying to dissuade people from damaging our industries. We have had a very illuminating observation from my hon. Friend the Member for Kidderminster (Mr. Nabarro) today which show how difficult it will be to decide exactly what is the native cost of any produce.
Incidentally, I should like an assurance from the Minister of State, Board of Trade, when he replies to the debate, that the expression used in the Bill, "goods of any description", includes food and foodstuffs and agricultural produce which is not edible. It is very important that it should include them, because there is 113 much horticultural produce which is not eaten—bulbs, for instance; and we import bulbs from Holland. Such produce is of vital importance to our home producers, and if it is not included a great deal of the value of the Bill will be lost.
The hon. Member for Bolton, West (Mr. Holt), with whom I have often joined in argument, has reiterated this theory that it is impossible for anybody to decide what the national interest is. I agree with him that it is extremely difficult for anybody to do so. Probably it is what every man thinks it is, and that is about as far as we shall get in deciding it. If the hon. Member really thinks that it is difficult to define the national interest, I am astonished that nevertheless his party and those who believe in his philosophy think that they can impose a system of universal free trade on the whole world. I think that all Governments have made a big enough mess of their own country without taking time off to try to teach the rest of the world. [HON. MEMBERS: "Oh."] Yes, all Governments. I deplore the necessity for Government, and I certainly think it would be absurd to suppose that anyone can say what is precisely in the national interest here. It is even more absurd to attempt to say what is good for the rest of the world.
§ Mr. Holt
The difficulty is not in saying what any one of us thinks is the national interest but in describing the national interest in such a way that we all agree with that description. What the hon. and gallant Member thinks is the national interest will be quite different from what the President of the Board of Trade thinks it is.
§ Major Legge-Bourke
I am sure that what the hon. Member thinks is the national interest is quite different from what my right hon. Friend the President of the Board of Trade believes. Something has been said in debate about my right hon. Friend when he was Minister of Education. I would say that he has plenty of scope inside the Board of Trade if he is still in an educational frame of mind, because for a considerable number of years I have been trying to educate that Department out of a free trade complex into the belief that protection is the best answer for this country, more particularly because I believe that we are a debtor nation and that until we become a creditor nation we cannot bask in the 114 luxury of having free trade. This is all a question of the means or the end, a question of which comes first, the cart or the horse.
Free trade is a goal to aim at, but we shall never get to that goal by adopting free trade before we become a creditor nation. We shall never win prosperity by free trade. It is something we shall enjoy when we are prosperous. Free trade has worked only when we were the greatest creditor nation in the world. That is one of the reasons why I am most concerned about these plans for a European common market. I am absolutely ruthlessly opposed to that project and I shall continue to be opposed to it, so long as it is based on the idea of free trade, until we are a creditor nation. I do not believe that it can do anything but harm.
I am reinforced especially in my anxiety about agriculture and horticulture by the words spoken by M. Spaak a few days ago when he said:It will he exceedingly difficult to persuade nations which live largely by their agriculture to accept this exclusion. … By the end of the 12 to 15-year transitional period, according to the draft treaty, agriculture is to be part of the general common market.If that is what is in the mind of European countries, this Bill is all the more necessary.
If that happens, it will mean that we are going into future arrangements with Europe under false pretences. It will damage our basic industry. I believe that today, more and more, we are coming up against an old problem which has existed since long before the war and certainly since 1932 when the Ottawa Agreements were signed. It is the question of whether or not, or ever, we are going to believe that the Americans are not in business in the altruistic interest of keeping us alive. The whole European set-up is based on the American aim to smash the Commonwealth as a trading organisation. Until we realise that, none of our economic or trading policies will make sense.
I welcome the Bill because it is a nibble in the right direction. I hope that it will be used quite firmly and that that will be made very clear to all countries, whether it be the United States, or countries in Europe, or Japan or even countries such as India inside the Commonwealth. I hope that we shall not hesitate 115 to use the Bill in a way which will make our own British economy as strong as possible as quickly as possible. If we are going to look upon the Bill as a last refuge we might just as well not waste time on it today. I believe that it can be used as a most useful instrument, but there are one or two minor details which I should like to query.
Clause 5 gives power to require information from importers, and the Commissioners of Customs and Excise are given permissive power to require the importer of any goodsto state such facts concerning the goods and their history as they may think necessary to determine whether the goods are goods originating in a country specified in an order under this Act …I should have thought that that should have been automatic and that the Commissioners of Customs and Excise should have been obliged to do that and not have been given power to exercise discretion. If the Bill is to be effective, I should have thought it absolutely essential that the powers should be obligatory and not permissive. I am rather surprised that the Commissioners do not do this already. I should have thought that they would have already checked up on the source of goods and that it ought not to be very much more difficult to add any special requirements under the Bill.
The Bill states further that,… the Commissioners shall require proof of the country in which goods originated in relation to any duty under this Act in the case only of goods exported from such countries as the Board of Trade may direct in relation to that duty.It seems to me that that implies that it is only when the Board of Trade says to the Commissioners of Customs and Excise, "We want you to check on such and such an import coming into the country under this Act" that the Commissioners will do anything about it. I should have thought that the moment the Bill became an Act the Commissioners would automatically check everything to which the Act could apply, whether or not the Board of Trade decided that there was a special risk.
I say that because when we had the great potato trouble last year one of the difficulties of the Potato Marketing Board, which had only just got under 116 way, was that Customs and Excise information was far too out-of-date to be of the slightest use. The more we can gear up the Customs and Excise to keep a steady watch so that at any moment the Board of Trade can be supplied with information the better. There is too much slow-motion in the Bill as drafted, even if we are prepared to use it.
The time is coming when we shall have to go right back to a policy of full protection again. The Bill moves slightly in the right direction and for that reason I am glad to welcome it, but I ask my right hon. Friend for an assurance that it is not the intention that the Bill should be the last refuge to prevent the British grower from going under. I want it used as a deliberate instrument of policy to deter from this country stuff which comes in at far too low a value and competes unfairly with what is produced at home.
The real issue underlying every speech made in this debate has been the question of relative wage rates. By this Bill we are trying to ensure that the standard of living of those who do the work in this country should not be reduced, and that the work they do should not have unfair competition from those who are being paid far less. Although this Bill has been designed to prevent our people being damaged, it may mean that some people will have to pay more for their food. However, I would rather see that spread over the whole population than see one industry unfairly competed against simply because the Conservative Party had forgotten its tradition, the tradition of protection.
I do not say that because Joseph Chamberlain was the first person to say it, but because nothing is good just because it is old and nothing is good just because it is new. What matters is whether it is necessary and whether it works. Protection is necessary, it has worked, and until we have it again the economy of this country will not be right. I welcome the Bill.
§ 7.51 p.m.
§ The Minister of State, Board of Trade (Mr. Derek Walker-Smith)
We have had a useful and informed discussion on what is inescapably a technical and complex subject. The majority of the House in all quarters are clearly in favour of the 117 general principle of the Bill and clearly favour action to safeguard against dumping and subsidies. It is true that the Liberals, in the person of the hon. Member for Bolton, West (Mr. Holt), appear on this occasion, as so often, to be the exception that proves the rule. I do not think that the hon. Gentleman has been quite consistent, because he has now tabled an Amendment for, in effect, the rejection of this Bill, whereas on the occasion of the debate on the Ways and Means Resolution on 19th November he said that the Bill had his qualified support. So the hon. Gentleman appears to be exercising the feminine prerogative of changing his mind but he does not get the feminine prerogative of the last word; for, if he should press his opposition to the Division Lobby, I do not suppose that he would get much comfort therefrom.
§ Mr. Holt
The Minister has been a little less than fair to me because on that occasion the Bill was not before us. What we were debating was the Motion moved by the Financial Secretary to the Treasury, and I specifically made my provisos with regard to what the Bill contained. If the right hon. and learned Gentleman will read what I said on that occasion, he will find that I said in principle exectly what I have said today.
§ Mr. Walker-Smith
I do not want to enter into a detailed controversy with the hon. Gentleman, but he said: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."—[OFFICIAL REPORT, 19th November, 1956; Vol. 371, c. 1444.]I should have thought that made it clear that the hon. Gentleman favoured the permissive powers which are proposed in the Bill, but would scrutinise their exercise, as he put it, with a wary eye.
At any rate, the majority of the House have expressed their support for the broad principle of the Bill, and in various speeches many interesting points have been raised. They group themselves broadly under these heads: first, questions as to whether it is right to take these powers at all, especially in view of our European free trade area negotiations. Secondly, assuming that it is right, whether the machinery proposed is effective and practicable. I think that most 118 hon. Members who have addressed the House have referred to that question, from the right hon. Member for Smethwick (Mr. Gordon Walker) at the beginning of the debate, to my hon. Friend the Member for St. Albans (Mr. J. Grimston) and my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke), who have spoken recently.
Then there was the somewhat allied question, raised by a number of hon. Members, as to whether the machinery of the Bill is appropriate: namely, whether the powers given to the Board of Trade are too wide or, as the right hon. Gentleman put it, too discretionary, or whether they should be qualified by some judicial or quasi-judicial scrutiny.
Lastly, much of the debate has turned on whether the Bill is wide enough in its drafting to catch various specified practices which, it is alleged, are injurious to the economy of this country or to parts of it. So perhaps, Mr. Deputy-Speaker, I may address myself to the observations of hon. Members under those four heads.
In the first place: whether the powers taken by the Bill are proper, especially in the context of what we are now seeking to do in Europe. My right hon. Friend the President of the Board of Trade dealt with that question in his opening speech. Of course, in our negotiations for the free trade area we shall expect to preserve the right to apply anti-dumping and countervailing duties consistently with any internationally agreed rules. As regards subsidies, we shall obviously continue to work for their elimination in the context of the free trade area, just as we do already in the context of the G.A.T.T. and O.E.E.C.
Various references have been made to the fact that other nations have already got these powers and that we are, therefore, not doing anything which could invite retaliation by the act of taking the powers: we are simply catching up with what other countries are already doing. The right hon. Member for Smethwick said it was important that this Bill should not be an instrument of disguised protection. On that I would echo what was said by my hon. and gallant Friend the Member for South Angus (Captain Duncan) in his most interesting speech, in which he pointed out that competition, though it should be vigorous, should not be vicious. I 119 suggest that it is false logic to suggest that the Bill is in any way hostile to a vigorous, competitive approach by industry. After all, the fact that one takes steps to avoid being kicked in the stomach should not be taken as evidence of any lack of enthusiasm for keen competition under the Queensberry Rules.
So I think I can leave the first question, whether we are derogating from our principles in taking these powers, by saying that we are doing what other countries are doing already; we are doing what is permitted by the G.A.T.T., and we are not seeking to use these powers in any way to blunt the keen spur of legitimate and proper competition.
Now I come to the second broad matter: the question of the practicability and effectiveness of these powers. I will deal first with the point put just now by my hon. Friend the Member for St. Albans. Why are these powers simply permissive and not mandatory, as in the case of Canada? Canada's powers, of course, are some of the oldest, dating back in origin almost to the beginning of the century, and certainly well before G.A.T.T. G.A.T.T. does not permit the imposition of anti-dumping or countervailing duties in the absence of material injury or the threat of material injury. As hon. Members have pointed out already—and I will come to this question again in that context in a moment—there is not an express provision about material injury in this Bill.
Where we are dealing with other G.A.T.T. countries, which represent 80 per cent. of our trade, we shall, of course, have to abide by the material injury provision, not because it is in the Bill, but because it is in G.A.T.T. However, in the case of the other 20 per cent., it may be advantageous not to be bound by that provision. By making these powers permissive and not mandatory we are able to leave out of the Bill a specific reference to the material injury requirement, and that gives us a more flexible instrument for dealing with dumping and subsidising countries which are not contracting members of G.A.T.T.
The right hon. Member for Smethwick asked—it is a basic question—whether the definition of "dumping" in the Bill is right. The definition results from a 120 comparison of two defined prices, the export price and the fair market price. In effect, the right hon. Gentleman gave himself the answer when he pointed out that we are adapting definitions based on the internationally accepted rules and that we could not in any event deviate from them. What we think, and hope, we have done in the definitions which we have written into the Bill is to get a more flexible method of dealing with the subject than we had in the Safeguarding of Industry Act, 1921, where the somewhat more rigid framing of the formula was one of the reasons which made the Act inoperative and caused it to be revoked.
The next series of questions fell under this broad category: is the procedure effective and practical? My hon. Friends the Members for Clitheroe (Mr. Fort) and Middleton and Prestwich (Sir J. Barlow), both of whom speak with authority on these questions, asked for an indication of how the procedure would work in practice. As my right hon. Friend has said, the Board of Trade can itself initiate action, but ordinarily, and obviously, the action will be initiated as a result of representations from aggrieved industries or companies.
The procedure that one would contemplate under the Bill would be something like the following. First, the industry or company affected would make an application to the Board of Trade asking for an order in regard to a specific matter. The Board of Trade would then furnish it with a document showing the relevant data to be established by the industry according to the criteria specified in the Act. The complainant would then assemble his evidence and submit it to the Board of Trade. It would then be for the Board of Trade to decide, first, whether a prima facie case of dumping had been established, and, secondly, whether there was any evidence of material injury, which, as I have explained, would, in the case of G.A.T.T. countries, still be relevant.
If the answer was that there was no prima facie case or no material injury, the matter would lapse. On the other hand, if a prima facie case were established, there would then probably be some procedure for the advertising of the application with a view to giving other interested parties the right of objection 121 before the Board of Trade made up its mind whether there was a case for an Order. Then, under Clause 1, the Board of Trade would have the duty of making its decision in the broad context of the national interest.
My hon. Friend the Member for Middleton and Prestwich and others asked me what constitutes "the national interest." I should say that one of the matters which would have to be taken into account is the question of material injury. The hon. Member for Farnworth (Mr. Thornton) thought that it ought to be written into the Bill. I have dealt with that point in reply to my hon. Friend the Member for St. Albans, but in the generality of cases that would be one of the things which would have to he taken into account. With all respect to those who have suggested a definition of "national interest," I do not think that the national interest is susceptible to definition. To the best of my recollection, no attempt has ever been made to define it in a Statute. The safeguard is that all these Orders require an affirmative Resolution of the House of Commons, and the best judge of what is the national interest at any time is the House of Commons.
The right hon. Member for Smethwick criticised this procedure by saying that the discretionary powers of the Board of Trade were too wide. The hon. Member for Bolton, West described them as "semi-dictatorial powers", but they are certainly not that. It would certainly not be possible for the Board of Trade to do what the right hon. Gentleman rather suggested it might, which would be to use its discretion to convert these antidumping and anti-subsidy provisions into a general protectionist instrument.
The Board of Trade would be under a statutory duty as defined in Clause 1. It could act only if it appeared to it that certain conditions were satisfied. If it acted outside that it would not be acting in good faith, and it would be subject to the usual supervisory control of the courts, which runs against Government Departments which either exceed their statutory powers or operate them in bad faith. The right hon. Gentleman has exaggerated the possibilities of what could be done in that context. It is our intention to use the Measure only for what it is intended, which is to deal with the problem of dumping and subsidies.
122 As to the actual operation of the procedures, both the hon. Member for Ashton-under-Lyne (Mr. Rhodes) and my hon. Friend the Member for Middleton and Prestwich urged the setting up of an advisory panel or committee of some sort to assist the Board of Trade in the duties which will be placed upon it by the Bill. It is true that under the 1921 Act there was an advisory committee of five persons who were required to be experienced in trade and industry. The trouble about having such a body is that it slows up the procedure. It is difficult enough to find members for such committees, but that is only the smaller part of the difficulty; as these persons are not whole-time members, a much greater difficulty is to assemble them quickly at a time convenient to them all.
Various hon. Members have rightly referred to the necessity for speed. My hon. and gallant Friend the Member for South Angus referred to it in connection with cases of the dumping of surplus crops and stocks. Perhaps I might here answer the question asked by my hon. and gallant Friend the Member for the Isle of Ely. The phrase "goods of any description" has a very wide connotation which includes the horticultural products with which he was concerned. In that context, and many other contexts, speed is of the essence. One has to bear in mind that if one had an elaborate procedure to assist the Board of Trade the procedure would be slower, and the slower the procedure, the greater the risk of forestalling.
What we have really tried to do here is to seek the highest common factor of a reasonable maximum speed to prevent forestalling with a fair and thorough examination of the issues such as we would ourselves expect in other countries and such as we ought to practise in our own tradition of fairness and to avoid retaliation or ill will.
The next points raised were those on Clauses 5 and 6. Clause 5 is the Clause which prescribes the machinery for getting information after the making of an Order. It gives certain powers to the Commissioners of Customs and Excise. My hon. and gallant Friend the Member for the Isle of Ely thought that perhaps those powers should be wider than they are, and the Customs should exercise a broader jurisdiction in this matter.
123 Of course, he will see in studying that Clause, that it is imposing obligations upon importers. The reason for the proviso on the top of page 5 of the Bill, which he queried, is to limit the area to those countries which are relevant to an inquiry into a particular imported article. What we do not want to do in this context is to place burdens on importers of such a sort as to impede or slow down the normal, legitimate processes of trade.
On Clause 6, my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) put to me a point in regard to the ascertainment of the export price. Clause 6 defines the export price as the f.o.b. price, that being, in our view, the true yardstick of comparability with the overseas domestic price. He asks whether it is a wholesale or retail price which is to be compared. The answer is, if my hon. Friend will be good enough to look at the concluding words of Clause 7 (2) that:…adjustments …"—can be made—whether for differences in conditions and terms of sale, for differences in taxation or otherwise, which may be required for the purpose of ensuring that the comparison between the fair market price and the export price is effectively a comparison between the prices on two similar sales.Therefore, in each case there will be a proper, effective comparison of like with like, in the comparison of the export price and the fair market price.
I turn to the fourth main head—the various practices which have been referred to by hon. Members, who have queried whether they are within or without the operation of the Bill and whether they should be. Of these practices, the first which was referred to by the hon. Member for Farnworth and certain of my hon. Friends and by the hon. Member for Ashton-under-Lyne was on the question of low-cost competition generally. I must answer by saying that this Bill is not dealing with that because mere low-cost competition in a general context does not satisfy the criteria either for dumping or subsidies which are prescribed in the Bill. Whether there ought to be action in regard to that is another and wider matter which can be discussed on some convenient occasion, but clearly it would not be within the ambit of the Bill.
The next specific practice is this rather difficult matter—at least I find it rather 124 difficult—of Clause 8, which was raised also by the hon. Member for Ashton-under-Lyne. The definition given in Clause 8 really amounts to this: a country is not a country of origin, despite the fact that goods have undergone processes there, if 25 per cent. or more of the cost of production is due to processes after it has left that country. The principle which we have sought to follow in the Bill is this: to allow the imposition of duties on those goods which are merely vehicles for the import of other dumped components into the United Kingdom, but to exempt goods where the processes have substantially transformed the components into a new or different article. There is no magic in the figure of 25 per cent., but I think that 25 per cent. represents a substantial transformation by the processors and it is, of course, the same figure as used in the Safeguarding of Industries Act, 1921 and it is also the figure, as the hon. Gentleman so well knows, which is normally taken to determine questions on Imperial Preference.
§ Mr. Rhodes
I was not being really critical about it. I was trying to be constructive in that if we can settle this point we shall save ourselves a lot of trouble when we get closer to the European common market about the value that is put on goods imported here and then processed. I should like the Department to look at it again.
§ Mr. Walker-Smith
Of course we always give very careful consideration to anything that the hon. Gentleman, with all his experience of these matters, is good enough to suggest, and perhaps we can have another word about this at or before the Committee stage.
The third practice which has been referred to by many hon. Members is the Indian practice in regard to cotton. On that, whatever the rights and wrongs of this matter, it is not really a matter open to us now in this Bill because the Ways and Means Resolution has in fact been drafted so as to exclude the possibility of incorporating those practices into the Bill.
§ Mr. Walker-Smith
The hon. Gentleman asks me "Why?" It is a very fair question but let me point out this to him. The House did it with their eyes open 125 when they accepted the Ways and Means Resolution. My right hon. Friend the Member for Blackpool, North (Mr. Low), who was then Minister of State, Board of Trade, and, if I may say so, whose great talent and knowledge of this subject as a Minister will be a great loss to the Government and the Board of Trade and who would certainly have done this task much better than I, made it quite clear to the House that that would be the effect of passing the Ways and Means Resolution. The House accepted it on that information and in that spirit; so I do not think that I would be in order in going into that question. All I would say is that the reason for it, if I may answer the hon. Member for Stalybridge and Hyde (Mr. Blackburn), is that we have parallel practices, as has been mentioned, in regard to our steel industry, etc.; and we cannot really, although the hon. Gentleman the Member for Ashton-under-Lyne seems to suggest it, do one thing in regard to the Indian practice on cotton and take a quite different attitude in regard to our own practice in respect of steel here at home.
The next special practice was about surplus crops and particularly the United States surplus stocks to which the hon. Gentleman referred. It is difficult to comment in general on a variety of practices like that, but prima facie the powers conferred by the Bill would be capable of use against certain categories of surpluses but it would have to be done consistently with our G.A.T.T. obligations and particularly concerning the one about material injury to which I have already referred.
My hon. Friend the Member for Kidderminster (Mr. Nabarro) raised the topic of Belgian carpets. I had the misfortune not to be present when he was speaking and now he has elected to have the good fortune to absent himself while I am speaking. As it may be that the rest of the House does not share the enthusiastic interest of my hon. Friend in Belgian carpets, I can deal with him on a more informal basis.
The last series of practices to which the hon. Member for Ashton-under-Lyne and one or two other hon. Members referred were the French and Italian practices. The French practice, where the French Government remits social 126 insurance taxes in respect of exports, is a clear case of an export subsidy not only in relation to the Bill, but also in relation to G.A.T.T. The subsidy is not defined as such in the Bill, nor is it in G.A.T.T., but hon. Members may take it that this practice is covered by the Bill just as it is by G.A.T.T.
The Italian practice to which the hon. Member for Ashton-under-Lyne referred—he was good enough to tell us about it earlier, after his visit to Italy—is that which is found in the arrangements in the Prato district near Florence, which is a method of organising industry adopted by employers to minimise their liability for tax. Tax avoidance in that way could not be regarded as a subsidy by the Italian Government. If I may say so from my short experience at the Treasury, it would not be normal for Governments to welcome tax avoidance, and I do not think that the Bill would cover that practice.
§ Mr. Holt
Would what the right hon. and learned Gentleman has said about the remission of tax on goods from France apply, for instance, to remission of the German turnover tax which is now widespread on all exports? The remission of turnover tax is about 6 per cent., which the Germans argue is not really a subsidy, but something similar to our Purchase Tax.
§ Mr. Walker-Smith
I am not sure whether the operation to which the hon. Member is referring is the one which under agreement with us has been discontinued in Germany. Perhaps he will allow me to look into that and to have a word with him about it.
§ Mr. G. M. Thomson
Can the right hon. and learned Gentleman say whether the French and Belgian habits of concealed subsidies on jute goods will come within the ambit of the Bill?
§ Mr. Walker-Smith
It is a little difficult to give an off-the-cuff answer, and as a lawyer I am always cautious about doing that, even on matters far simpler than the jute industry. I would rather not reply without looking more carefully at the facts, because undue weight might be attached to the answer, it having been given in the House.
I think that covers at all events the main points which have been put in 127 the debate. Not even the strongest optimist would hope that a Bill having the obvious difficulties of definition and application of this Bill and having to take into account so many legitimate interests could give universal satisfaction to all people at all times. I am very grateful to the House for recognising those difficulties and appreciating our good intentions and for making so many valuable and interesting comments upon the Bill; suggestions to which we shall, of course, give full weight. I am sure that we can all co-operate in Committee to make any improvements which are both desirable and practicable. Meanwhile, I ask with confidence that the House give a Second Reading to the Bill.
Question, That "now" stand part of the Question, put and agreed to.
§ Bill read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Bryan.]
§ Committee Tomorrow.