§ 3.43 p.m.
§ Mr. Gordon Walker (Smethwick)
I beg to move, in page 1, line 23, after "interest", to insert:or would assist the economy of any member of the British Commonwealth of Nations".
§ Air Commodore A. V. Harvey (Macclesfield)
On a point of order, Sir Charles. Can you tell me why the Amendment in my name, in page 1, line 18, to leave out from "that" to "affecting" in line 19 and to insert:a subsidy has been given".has not been called?
§ The Chairman
It is out of order, because it goes beyond the Money Resolution.
§ Mr. Gordon Walker
The effect of my Amendment would be to make explicit what may be implicit in the Bill, namely, a reference to Commonwealth exporters to this country and our intention to extend to them the same sort of protection that we would extend to our own traders and producers. I do not doubt that the right hon. Gentleman will say that this is already in the Bill by implication, but it is important, especially in respect of Commonwealth countries, to write this into the Bill and make it clear. It is certainly explicitly included in Article VI, paragraph (6, b) of G.A.T.T., which says that it is proper for us to protect exporters from third countries whose exports to us might be affected by dumping in our own market by some other country.
The reason why it is important to make this provision explicit and not merely to leave it implicit is that we should first make it quite clear that we want to encourage Commonwealth trade in every way, including the small ways made possible by the Bill and, secondly, that it is our clear and deliberate intention to extend to Commonwealth producers 1003 the various provisions of the Bill, including, I hope, one or two others that we may be able to write in during the course of the Committee stage.
The Amendment having appeared on the Notice Paper, to reject it would be unfortunate because it would tend to discourage and worry Commonwealth producers. They have real fears; they are frightened that Argentine meat may be dumped in this market, which may not necessarily affect our own farmers because of our internal arrangements, but might gravely affect exports from Australia. The same thing could apply in the case of a possible dumping of wheat from France—and there is always the danger that the United States may unload its surplus stocks in such a way that Commonwealth exporters to this country would be gravely affected. These Commonwealth exporters want to know that prompt action would be taken, and the acceptance of the Amendment would make it clear to them and to their Governments that it was our intention to use the powers of the Bill promptly.
We ourselves are also in need of reciprocity. We need the same sort of protection in Commonwealth markets against dumping by some other country that they need in our market. As The Times said in its City column on the 25th of this month:It is still difficult for British traders to compete on equal terms with American exporters in countries where the Export-Import Bank is active.That means that there is a form of subsidisation of American products and exports which may go to Commonwealth markets and, because they are cheap owing to the cheap credit underlying them, they can hurt our exporters to those Commonwealth countries. We are, therefore, greatly in need of reciprocity, and it is easier to get reciprocity if we make it completely clear what we are going to do ourselves.
If the Government are to argue that putting these words in would make no difference, they are really putting forward an argument for accepting the Amendment. There can be no objection to putting them in, whereas there can be obvious advantages in making our intentions clear to Commonwealth Governments and producers. If it is in the 1004 Government's mind so to argue I hope that they will turn the argument in favour of something which can do no possible harm and can make no difference in the strict legal sense, but can make a considerable difference in the confidence which Commonwealth exporters will have about the intended actions of the Government.
§ Mr. Robert Edwards (Bilston)
I wish to support the Amendment. It may be argued that to dump meat, butter or wheat on to the British market can be of great advantage to consumers, but it would be only a temporary advantage compared to the harm it might do to parts of the British Commonwealth. For example, I understand that America has huge stocks of surplus butter. These stocks can be released at any time on to the British market. Temporary advantages would arise, but immeasurable harm could be done to parts of our Commonwealth.
I do not see any reason why the President of the Board of Trade should not accept this very reasonable Amendment.
§ The President of the Board of Trade (Sir David Eccles)
We have complete sympathy with the intention behind the Amendment. As I said on Second Reading, one of the advantages of the Bill is that, following the provisions of G.A.T.T., we shall be able to use it where goods are dumped in this market and, as a consequence, they injure one of our established sources of supply outside this country.
Naturally, one thinks first of the Commonwealth sources of supply when considering the possibility that we should use the powers under the Bill in this way. But, having regard to the very good and close relations which we have with the Commonwealth, I do not think that it is necessary to spell out in the Bill words of the kind which it is here proposed to put in. As I have said, the Commonwealth countries would be uppermost in our minds, but I do not think that it would be very wise to put in words which gave the impression—as these words certainly would—that other countries would not have the benefit of the G.A.T.T. provision.
I can see that a case might arise where, if we got reciprocal treatment from a 1005 country which was not a member of the Commonwealth, we might like to use the powers in the way in which the Bill lays down. Far from this Amendment making no difference, it is so worded as to cause extreme trouble. Hon. Members will see that Clause 1 says in what cases these duties may be imposed, and, as a qualification, it lays down that we should have to be satisfied having regard to all the circumstances that it would be "in the national interest." Then comes the right hon. Gentleman's Amendment:or would assist the economy of any member of the British Commonwealth of Nations.That is an alternative. We could not write into the Bill that in cases where it was not in the national interest, but in the interest of a Commonwealth economy, we should use these powers. I sympathise with hon. Members opposite who drafted this Amendment. I am in exactly the same position as they are, as I have only had a short time to examine the Bill, and I realise how difficult it is to draft accurately; but to put in this Amendment as it is would create a very awkward situation.
Surely the phrase, "in the national interest" would cover the case where, in the opinion of the Board of Trade, dumping had taken place which injured a source of supply outside this country. We should only suggest to the House that an Order be confirmed for a duty because we thought it in the national interest, and I think it would be better not to try to spell this out. The Commonwealth countries know quite well, and we have told them, that in suitable cases we are ready to use the powers in this way.
Having regard to our general obligation under the G.A.T.T., I do not think it would be wise to single out one section of G.A.T.T. members, the Commonwealth countries, and write them into the Bill. The Amendment, as drafted, will not do, and, therefore, I advise the Committee not to accept it, while giving them the assurance that we have the powers and will use them in this way.
§ Mr. Ronald Williams (Wigan)
I am disappointed at the President's reception of this Amendment. I am not impressed, and I hope that the Committee is not either, by the right hon. Gentleman's arguments. He assumes that when one says that something should be done in the national interest, and then puts it 1006 in the words of the Amendment, a distinction is made which would imply that we were saying, "Now we will do something for the Commonwealth countries if it is against our national interest". The right hon. Gentleman has put it as if it were an alternative which involves a certain amount of mutually exclusive consideration. In fact, it can be looked at in quite another way.
It can be considered from a standpoint from which we should be influenced solely by whether or not it was in the national interest. Then there is a standpoint from which it would not prejudice our national interest in any way; in fact, it would be irrelevant to our national interest. That would happen in respect of many trades which would assist the economy of one of the Commonwealth countries, but would not help or injure our national interest. But, because of our close link with the Commonwealth, we should be inclined to say that because this was doing harm there we wished to do something to help. As my right hon. Friend pointed out, it could have that effect. If that is made absolutely clear, the Commonwealth countries could, by reciprocal arrangements, make things much easier for us. We lose that benefit unless we state this specifically and indicate our intention.
I am disturbed, because it appears to me that part of the President's argument was that we did not wish to say this and to put the Commonwealth nations in a special position. We wanted to consider our national interest solely, and there might well be a conflict which would suggest, not that we wish to help the Commonwealth, but that we saw reasons why we should not. I should have been more impressed by the President's argument that we are being specific in relating this matter to the Commonwealth and not other contracting parties to G.A.T.T. if the right hon. Gentleman had said, "Here is a jolly good idea. Article VI of G.A.T.T. specifically states that this sort of thing should be done and we will go the whole hog and do it in accordance with that Article."
I should have been more impressed had the right hon. Gentleman also said to hon. Members on this side of the Committee, "My quarrel with you is that you have not drafted your Amendment in sufficiently wide terms. You have related it to the Commonwealth, and you 1007 have not gone far enough. But the idea is good; it is strictly in accordance with Article VI of the General Agreement on Tariffs and Trade, and, therefore, between now and Report stage I will consider the matter and produce something which will give you all this, and something more as well."
Instead of taking that line the President has flatly refused to accept this Amendment. When the observations made in this debate are read in Commonwealth countries, I hope that they will concentrate on what the right hon. Gentleman said about being in general agreement with the idea although he did not like the method of doing it. If Commonwealth leaders address themselves to the arguments which the President used in refusing this Amendment, the right hon. Gentleman may find that those arguments will do much more harm than he considers that our Amendment can do.
§ 4.0 p.m.
§ Major H. Legge-Bourke (Isle of Ely)
I would support my right hon. Friend in resisting this Amendment, but for rather different reasons from the ones he gave. I should have thought that the one thing which we ought to try to avoid in this Committee is to attempt virtually to legislate for an autonomous Dominion. If we do incorporate these words in this Clause, it is virtually certain that we are saying in so many words that we are better judges of what is in the interests of individual Commonwealth countries than what their own Governments can decide for themselves. For that reason alone, I think there is a very strong case for resisting this Amendment, not because we do not wish to do anything which would help the Commonwealth in the long term.
I hold the view that the moment we start talking about the national interests of this country, those words become synonymous with the interests of the Commonwealth. I do not believe that this country can ever afford to do something which is damaging to the Commonwealth in the long run, or that the Commonwealth well-being is improved by doing something which is damaging to the United Kingdom. For that reason, also, I think that there is a strong case for resisting the Amendment.
1008 Further, I believe that the use of the word "or" at the beginning of the Amendment is most unfortunate, because it implies that there is some difference between this country's interests and the interests and well-being of the Commonwealth as a whole. If the Amendment is to be incorporated in the Bill at all, it ought to begin with the word "and" rather than "or", but, personally, I feel very strongly that it would be a mistake to incorporate it in the Bill at all.
We have to remember that there are certain commodities which are produced in Commonwealth countries, particularly Canada, which can be very inconvenient for home producers, particularly in horticulture. We have had examples in the past, when the Canadians at a particularly unfortunate time sent in apples at very reduced prices at a time when the home grower was hoping to be able to dispose of his crop. Therefore, without contradicting what I have said, I think that sometimes, when not enough thought is given to these things by the United Kingdom Government, as when hon. and right hon. Gentlemen opposite were in power, certain things can happen which allow the Commonwealth countries to do things which, with a little more thought, the United Kingdom Government ought to have been able to show them they would be very wise not to do.
Therefore, so long as the United Kingdom Government are fully aware of the great necessity of protecting people in this country who are producing commodities which really cannot stand up against unfair competition, there is nothing at all contradictory, in my view, in a policy which is in the interests of this country and the general well-being of the Commonwealth as a whole. I therefore hope that the Amendment will be rejected.
§ Mr. Gordon Walker
I must say a word or two in reply to the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke). He said that we did not give enough thought when we were in office to what we were doing, but, clearly, the hon. and gallant Gentleman has not given enough thought to the arguments he has used in his own speech. He is guilty of a flat contradiction. He started by talking about the interest of the Commonwealth never being in conflict with the interest of this country, and then gave a specific example when they could be 1009 in conflict. The hon. and gallant Gentleman must make up his mind on which point he will rest.
When the hon. and gallant Gentleman said that we were proposing that we should legislate for other Commonwealth countries, he was talking nonsense. What we must do is legislate ourselves, here, and use the powers here. Indeed, the President said we would do the very things which this Amendment is intended to spell out. The right hon. Gentleman was not against giving that power, but thought that it was unnecessary. If this were legislating on behalf of the Commonwealth, which the hon. and gallant Gentleman said we shoud not do, it is the very thing which the Government are prepared to do. We think it is not legislating on behalf of another Commonwealth country, but legislating in this House and in this country within the powers which Parliament has. I do not think that the hon. and gallant Gentleman's speech had any relevance at all to the matter under discussion.
§ Amendment negatived.
§ Mr. Gordon Walker
I beg to move, in page 2, line 3, at the end to insert:Provided That, where goods are exported to the United Kingdom by any of the contracting parties to the General Agreement on Tariffs and Trade, the Board of Trade shall not exercise its power under this Act unless it appears to the Board that the dumping or subsidising of such goods would cause or threaten material injury to an established industry or retard materially 'he establishment of an industry in the United Kingdom.The President of the Board of Trade will not be able to use one argument here which he used against the last Amendment, namely, that it singles out some members of G.A.T.T., because this one specifically includes all of them. The right hon. Gentleman will have to think up some other argument in that respect, because the argument he used on the previous Amendment, or that part of it, is now in favour of our Amendment.
The purpose of this Amendment is to write clearly into the Bill an important part of the definition of dumping which occurs in Article VI of G.A.T.T., in paragraph (6, a). We want this in the Bill because we are very keen that the Bill shall do what it sets out to do, that it shall deal only with dumping and improper subsidy of exports and shall not in any way be the pretence for smuggling 1010 in protection in general. I know that I shall carry our Liberal hon. Friends with us on that point.
No doubt the argument will again be used that it is not, in the strictest sense, necessary. On the other hand, it seems to us a very great pity when there is a very clear definition of dumping in an international instrument to which we are a party not to follow that definition up, and all the more because the main definition of dumping in the Bill is, of course, drawn from Article VI of G.A.T.T. If we draw part of it from that Article and leave out another part of the definition, which is very important, it really suggests that we are deliberately leaving out that part of the definition.
Our first reason for the Amendment, therefore, is that we really want to define genuine dumping as closely and as narrowly as we can. I think that that is also the intention of the Government, and that it is an objective on which we are not at variance, but I believe that our wording would achieve that objective better than does the Clause unamended.
The Minister of State said, on Second Reading, when I made this point in general, that if we put these words in from Article VI of G.A.T.T. it would hamstring us in our trade relations with countries which are not members of G.A.T.T. I think he said that they were the Iron Curtain countries. We saw the force of that, and the hon. and learned Gentleman can see that we have drafted our Amendment to meet that very point. This would not in any way hamstring us in our trade relations with the Iron Curtain countries, or any other countries not included in G.A.T.T. which do not have obligations towards us which some others have under Article VI.
We feel that it would be worth while spelling this out to make clear that we do not intend to smuggle in protection, and that, in regard to our relations with other members of G.A.T.T., we intend to apply a definition of dumping which is strictly and literally in accord with the definition agreed by all members of G.A.T.T. under Article VI.
§ Mr. Peter Remnant (Wokingham)
I confess that I had at one time considered tabling an Amendment which would have the same effect as that which the right hon. Member for Smethwick (Mr. Gordon Walker) has moved. I thought at that 1011 time that it was inherent in the purposes of the Bill that attention should be paid to material interests. On looking at the Amendment of the rignt hon. Gentleman, I would have thought that not only is his wording considerably better than that of the Amendment which I had thought of tabling, but that the right hon. Gentleman is perfectly right, and that it is better to write this into the Bill than leave it as an understanding. The prime purpose of the Bill is to avoid doing material injury to an established industry or retarding materially the establishment of an industry in the United Kingdom.
The other point which obviously arises is the differentiation between member countries of G.A.T.T. and other countries. Here again, if liberty is to be given for action by the Board of Trade, I suggest that the right hon. Gentleman the Member for Smethwick is quite right. If we believe in G.A.T.T.—there may be some of us who do not believe in it 100 per cent.—and if we are aiming at the objective expressed in the Amendment, I suggest that we are right to limit it to G.A.T.T. I join with the right hon. Gentleman in asking my right hon. Friend the President of the Board of Trade to consider whether he can accept the Amendment.
§ Mr. R. Williams
I hope that the Minister will receive the Amendment favourably. We are at one in that we wish to avoid the effect of dumping on our industries. We are at one in that we wish to avoid the effect of these practices where they damage our national interest. In Lancashire, in particular, we are most sensitive about this, because goods which have been manufactured there have had to be left in the shops, and in stock, and the workers engaged in their manufacture have been on short time or unemployed. At the same time, the men and women so affected have had the humiliating and infuriating experience of seeing dumped and subsidised goods being sold in the shops in the very areas where they themselves were manufacturing their goods. There will be no lack of sympathy for the measures which should be taken to provide the terms of fair trade.
In deciding and defining what is to be done in that connection, it would be right, if G.A.T.T. did not exist at all, for the Bill to be just as it is, without the 1012 Amendment. There is, however, one point which must surely be decisive in any argument as to whether the proviso should be included, and that is that the Bill stems from Article VI of G.A.T.T. In Article VI this definition appears in specific terms.
What is our position if we say, in an Agreement solemnly arrived at, "This is what we mean", but, when we are putting that Agreement into legislative effect in a Bill, we say, "We will apply a much wider definition and go beyond what we have agreed."? That is not a question of the greater including the lesser. Here, we are doing something fundamentally different from Article VI if we do not define in terms similar to those in the Agreement how far we wish this to apply.
Does the Minister really intend the Committee to give authority for the application of the measures proposed in the Bill in cases against G.A.T.T. countries where the definition in the Agreement would not be applicable? Has he some idea of dumping or subsidising—thinking now only of that obtaining between the contracting parties to G.A.T.T.—and does he want to take some measures beyond the Agreement, even though he is presumably in honour tied by the terms of the Agreement? It is most advisable that, when we are giving the wide powers which I think we are properly giving in this Measure, we should ensure that they are defined in the terms to which we have, as contracting parties to G.A.T.T., already agreed.
§ 4.15 p.m.
§ Major Legge-Bourke
If I may be allowed to try to put the brake on this unshovelling of sovereignty exercise in which we are indulging, I should be grateful. The argument we are hearing is that because a General Agreement on Tariffs and Trade was signed some years ago we must, therefore, make quite certain that the Bill in no way infringes the undertakings of that Agreement. I do not mind openly confessing that if the Bill could be used to reassert our right to discriminate in trade, and so undermine the whole principle of G.A.T.T., nobody would be more pleased than I.
The difficulty we are in is that half our trade concerns the Commonwealth, one quarter of our trade concerns European countries and the remaining one 1013 quarter is with countries which are neither Commonwealth nor European. Unfortunately, however, the General Agreement on Tariffs and Trade embraces a great many countries in all three of those groups. We are, as it were, discussing the Bill with a sword of Damocles hanging over our heads, in the shape of the proposals for the free trade area in Europe. My own belief is that when that agreement is signed, whether we become members or not, the General Agreement on Tariffs and Trade will, from that moment onwards, be entirely inadequate to meet the needs of the future.
It would seem to me a pity, in discussing the Bill, if we felt so bound to the existing terms of the General Agreement that we produced a Measure which will not be the most effective we could devise to deal with the problem with which we are confronted—namely, dumping. If it is really a question of international relationship, depending upon the moment when this is implemented, I would far sooner that we drafted a Bill which really did restore to the United Kingdom the right to discriminate in that quarter of our trade which is neither European nor Commonwealth, and delayed the appointed day when this Bill will become an Act, rather than that we should try to devise a Bill now which will be undermined by the very fact that we have tried to keep it within the terms of G.A.T.T.
The Amendment has another danger in it. I refer to the question of threatening material injury to an established industry. Of all parts of industry threatened by dumping, none is more threatened than horticulture, which is often regarded as part of agriculture. It may well be argued by those who want to dump horticultural produce into this country that, when we take the global amount of the dumped commodity and compare it with the total production of British agriculture, the imports could not possibly be regarded as any material menace to the agricultural industry as a whole.
The horticultural industry is not sure whether it can be regarded as a separate industry in the context of G.A.T.T., but the impact of dumped commodities upon the industry can be catastrophic. Even so, it may very well be that we should 1014 not be able to establish that material injury had been done to it because agriculture, of which horticulture may be regarded as part, would not have been seriously damaged.
§ Mr. Remnant
Surely my hon. and gallant Friend is not conveying the impression that he intends to give, because he might be interpreted as not regarding horticulture as an established industry.
§ Major Legge-Bourke
The whole implication of my remarks is that horticulture is very much a separate industry. Growers in this country regard themselves as separate from agriculture, although they rely on the leadership given by the organisation which represents agriculture as a whole. There is a very strong subcommittee of the National Farmers' Union to deal with horticulture, but when high level talks take place on the subject it is the N.F.U., as a body, which conducts the negotiation and not its horticultural sub-committee.
I do not think that anybody in horticulture wants a complete banning of imports, but to avoid the effect of unfair competition it is important to take action in time. There is a very real risk arising out of the slight difference of emphasis shown between the opening speech of my right hon. Friend on the Second Reading and the speech of my right hon. and learned Friend the Minister of State, Board of Trade, when he was replying to the debate. There is uncertainty whether or not the procedure will be quick enough. The full rigmarole outlined with great lucidity by my right hon. and learned Friend the Minister of State would often be far too slow to produce any real benefit to horticulture in this country.
§ Mr. R. Williams
I am following the arguments of the hon. and gallant Member for Isle of Ely (Major Legge-Bourke) as well as I can. If his embarrassment is to be found in the fact that horticulture should be regarded as a separate industry and is not so regarded—which I understand to be his point—and if he is speaking against the Amendment and his argument were to succeed, he would be thrown back on the words "national interest." Horticulture being regarded as a small part of agriculture would embarrass him just as much, if not more 1015 in that case, because "national interest" is a much wider expression than the words we are discussing.
§ Major Legge-Bourke
For the purpose of his own argument the hon. Member very conveniently forgot to give any consideration to the point I made earlier, about having the right to discriminate in this country. My greatest hope of the Bill is that it will not be "cabin'd, cribb'd, confin'd" by the present terms of G.A.T.T. If the European market is established, G.A.T.T. will be completely out of date and will have to be redesigned. We should draft the Bill to see that what we get is in the best interests of our country and of those industries or parts of industries which are most open to threats of dumping and unfair discrimination.
I would like to call attention to a particular form of dumping which might be relevant also on a later Amendment. I should like to raise it now to avoid having to speak on the subject again later. There is a form of disguised dumping which is often suspected to be taking place and which it is virtually impossible to prove. It particularly affects commodities which are still under quota, and in horticulture that means apples and pears. The quota permits are based on the monetary value. It is possible for Italian farmers to send double the amount of pears that the quota would include at current prices, and yet to keep within the quota.
§ Mr. R. Williams
On a point of order. I am very interested in the hon. and gallant Gentleman's argument, Sir Charles, but surely it is related to subsection (3), in respect of which there are Amendments on the Notice Paper. If a debate is raised on this point some of my hon. Friends who are interested in the matter would like to take part in it. Would that be in order on this Amendment?
§ Major Legge-Bourke
We are discussing the threat of material injury to an established industry in this Amendment. I should have thought my argument was not out of order on that point. I do not know whether you wish to give a Ruling, Sir Charles.
§ The Chairman
To which Amendment was the hon. Member for Wigan (Mr. R. Williams) calling attention?
§ Mr. Williams
We have an Amendment in page 2, line 20, after "goods" to insert:or certain loans or other credit facilities in respect of raw materials".It is to be read in relation to subsection (3, b), which contains these words:where such treatment has the effect of assisting a reduction of the prices of goods offered for export.That is exactly what the hon. and gallant Member for Isle of Ely is talking about.
§ The Chairman
I would not like to rule on that matter at the moment. The hon. and gallant Gentleman said that we should be discussing the subject later. Perhaps we might discuss these Amendments together.
§ Mr. Williams
My fear is that my hon. Friends who are concerned with subsequent Amendments might be tempted to make their contributions now.
§ The Chairman
Perhaps the hon. and gallant Gentleman will try to keep his remarks as close as he can to the Amendment before the Committee.
§ Major Legge-Bourke
Yes, Sir Charles. I had very nearly come to the conclusion of those remarks.
It is possible for the pears sent in a particular consignment to be in accordance with the quota value and yet be double the quantity. They come in to the great advantage of the importer and to the great disadvantage of the home producer. The deficiency is made up later by putting up the prices of imports which are not subject to quota. The practice is notorious, although I do not think that it is widespread.
If we are to prevent material injury, our action must be very prompt indeed if it is to have the slightest effect in protecting the home producer. I hope that we shall have a re-emphasis of the points made by my right hon. Friend and my right hon. and learned Friend to the effect that the Board of Trade will have power to take action on its own very quickly and that we shall not always have to go through the entire procedure outlined by the Minister of State.
I come back to the point I was making at the beginning of my speech, that it would be a pity if we did not take advantage of the opportunity that the Bill gives to produce something in the long-term 1017 interest of this country, visualising the possibility of circumstances changing very considerably as the result of the Messina Powers taking action and of the O.E.E.C. Powers coming in.
I am not asking for a definite decision today because I know that he would not be able to give it, but I hope that my right hon. Friend will not rule out the possibility that if European free trade is something we shall simply have to go into he will give far more consideration to that quarter of our trade which is neither European nor Commonwealth and see whether it will be necessary for us, contrary to the present terms of the G.A.T.T., to reassert our right to discriminate in that portion of our trade.
§ 4.30 p.m.
§ Mr. R. Edwards
Perhaps we may now get back to the Amendment, as we are not discussing the European common market, or the terms of G.A.T.T. We are discussing putting into the Bill some words in Article VI of G.A.T.T., which is about the best definition of dumping which has been written into any documeent which has come from any series of conferences in the world.
In moving the Second Reading of the Bill, the President of the Board of Trade repeatedly declared that the Bill itself is greatly influenced by Article VI of G.A.T.T. If that is so, I do not see why there should be resistance to this simple and very clearly defined Amendment, which would merely write into the Bill those words in the Agreement which refer to dumping which is likely to undermine…or threaten material injury to an established industry…My hon. Friend the Member for Farnworth (Mr. Thornton), in an excellent speech in the Second Reading debate, gave the concrete example of the Lancashire cotton industry where, in only five years, 7,000 skilled and trained workers had been driven out of their industry. We do not want that to happen to engineering, or plastics, or a whole range of other industries. By accepting this wording we would merely define the prevention of injury which could arise out of dumping.
We could have dumping of products which might be cheap but which would ruin and completely undermine a strategic industry, of this country. Because 1018 there would be no possibility of competing, skilled workers might be dispersed, and in times of crisis it would be impossible for us to reassemble and retrain those workers. We might have temporary advantages 'through low prices of commodities, but those advantages would have no meaning at all if serious damage were done to a growing or established industry.
For these modest reasons, and those submitted by my hon. Friend the Member for Wigan (Mr. R. Williams), I hope the President of the Board of Trade will accept this Amendment. He has already indicated the influence which Article VI of G.A.T.T. has had on the Bill. For the life of me, I cannot see why there should be resistance from the Government benches to the Amendment.
§ Sir D. Eccles
My hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) depressed me quite considerably. I knew that we were about to go in for a very long and difficult negotiation on the European free trade area, but I had not reckoned that it would be followed by renegotiating G.A.T.T. That would be a tremendous task indeed.
Since my hon. and gallant Friend raised this as an important question, I think I ought to tell him that there is no intention at all of balancing the advantages which we hope to gain from going in with the European free trade area by greater discrimination against the United States and other countries which are neither European nor members of the Commonwealth. Indeed, we look upon the possibility of joining in the free trade area in Europe as another move in a line we have been pursuing for some time, namely, the liberalisation of trade over the widest possible field.
We have put our name to G.A.T.T. Although I quite agree with some of my hon. Friends that to be 100 per cent. supporters of G.A.T.T. is very difficult, none the less the balance of advantage for a trading country like ours, seems fairly clear. As I said in my Second Reading speech—of which I should like to remind the hon. Member for Wigan (Mr. R. Williams)—we have no intention of going back on the obligations that we have assumed under Article VI.
1019 The question, therefore, is whether we should write into the Bill the particular words concerningmaterial injury to an established industry.We did not do so because it makes a distinction between our treatment of members of G.A.T.T. and countries which are not members of it. I thought that, possibly, it would be sufficient to give the Committee an assurance that we were going to abide by Article VI without writing it into the Bill. However, I am quite ready to do so and to accept the principle of the Amendment moved by the right hon. Member for Smethwick (Mr. Gordon Walker) and supported by my hon. Friend the Member for Woking-ham (Mr. Remnant).
The interesting thing about the Amendment is why it cannot be accepted as it stands. It cannot be accepted because it is contrary to the interests of the Commonwealth, which the right hon. Member defended so lustily on the previous occasion. The Amendment says:…would cause or threaten material injury to an established industry or retard materially the establishment of an industry in the United Kingdom.Since we have the interests of the Commonwealth at heart we should not restrict this to the United Kingdom. As we said on the previous Amendment, where a clear case is made we mean to use those powers if the source of supply which is materially injured is outside this country and, more particularly, in the Commonwealth.
Therefore, if the right hon. Member will be good enough to withdraw the Amendment, I will undertake at the next stage of the Bill to propose words which will embody what the right hon. Member wishes to do and widen the scope so that the industry concerned may be one which is outside this country as well as one which is inside this country.
§ Mr. Gordon Walker
I am very much obliged to the right hon. Gentleman. It was not our intention to damage the Commonwealth. The right hon. Gentleman may be able to conflate the Amendment we were just discussing and the Amendment he has promised. We shall be very interested to see the words he chooses to achieve that object. In the light of the undertaking that he has given, I beg to ask leave to withdraw the Amendment.
§ Major Legge-Bourke
Before the Amendment is withdrawn, may I say to my right hon. Friend that, although I do not propose to pursue the matter now, the statement he has made about our intentions if we were to go into the European common market I regard as the most disturbing statement which has yet been made on this subject. I hope that he will understand that I feel that what he has said has made it all the more important that we should not go into the European free trade area.
§ Amendment, by leave, withdrawn.
§ Mr. Arthur Holt (Bolton, West)
I beg to move, in page 2, line 17, at the end to insert:Provided that this section shall not apply to imported goods unless the dumping is the result of the subsidy affecting the goods, or of a restriction or control imposed by the Government or other authority ofI am somewhat relieved to hear that the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) is greatly disturbed about something which the Government are doing, because that means that I shall probably be a great deal happier about what they are doing.
- (a) the country in which the goods originated, or
- (b) where the country from which the goods were exported to the United Kingdom is different from the country in which they originated, either the country in which the goods originated or the country from which they were exported.
Since the President of the Board of Trade has, in principle, accepted the last Amendment, and in view of some of his remarks on Second Reading, the present position is that we have some general definition of national interest. The hon. and gallant Member for the Isle of Ely would perhaps like to be assured on one point which disturbs me, and it is whether the horticultural industry is considered to be an industry of its own or part of the agricultural industry. I referred on Second Reading to a recent ruling made on this in the United States, from which he will see that there is hope for him that if the Bill is passed the President of the Board of Trade might decide that "industry" also means "a section of an industry." That is the case on which there has been a ruling in the United States.
My complaint about this kind of legislation is that Parliament passes something 1021 which is essentially very vague and which is developed as time goes on. It may well be that as time passes it will be considered in the national interest to impose some dumping duty if only a small injury has been done to an industry, and not only in the case of a whole industry but to a section of an industry or a section of an industry in an area. That is now the position in the United States. It all arises from the basis of Article VI of G.A.T.T. If we are on the basis of Article VI, where shall we be in a few years' time in the various interpretations which will follow?
On Second Reading, I made it clear that the Liberal Party was in support of the Government having weapons as a deterrent to stop interference caused by Governments with the smooth flow of trade. I had in mind circumstances in which Governments gave subsidies, or even if they interfered with trade in a way which is excluded by this Bill in the last paragraph of subsection (2). I notice that the hon. and gallant Member for Macclesfield (Air Commodore Harvey) has tabled an Amendment, in page 2, to leave out lines 28 to 31. If the general principles which I should like the Bill to follow were to be adopted, I should gladly support that Amendment; but not, I am afraid, if things go the way I expect.
We should divide in our minds those acts of dumping which take place as the result of the assistance of an industry in another country by its Government from that dumping which is done by a private firm which has some surplus of which it wishes to dispose. I was alarmed by what the President said, as reported at column 58 of the OFFICIAL REPORT of 22nd January. I wonder whether, on second thoughts, he stands by it. He was answering an intervention from the hon. Member for Birkenhead (Mr. Collick), and he gave the following answer off the cuff—and if he stands by that answer it is an alarming description of the way in which he intends to use these powers: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." —[OFFICIAL REPORT, 22nd January, 1957; Vol. 563, c. 58.]Is it reasonable? What will happen to those goods? We shall do it. In fact, 1022 we are doing it all over the place. Certainly, it will happen when there is a common market in Europe. There will be surpluses at the end of seasons and at other times. There will be nothing vicious or underhand about it. People will have made a little more than the market wants at the price which would show a profit, and the only way they can get rid of the goods is to cut the price. There will be a limited quantity of such goods. How can we refuse to have any of that dumping? if we refuse, we shall get into trouble.
In any event it would be unwise, for our market can absorb such goods, but We shall get into trouble from the point of view of retaliation, because we shall be doing the same thing in France, Germany, Italy and elsewhere, and if we prevent their surpluses from coming here, when they have some, they will try to prevent our surpluses from entering their countries.
§ 4.45 p.m.
§ Mr. John Grimston (St. Albans)
Will the hon. Member explain why the exporting, dumping country cannot cut the price in its own country, too?
§ Mr. Holt
if that is the position, I am most interested to know it, but it is not my reading of the Bill. A fair market price is related to the cost price, too, as I understand. I take it from the Bill that it is dumping if anything is sold below the cost price, and in this case that would mean the cost price plus the cost of transit to the country where the goods are being sold.
§ Mr. Gordon Walker
It says specifically in Clause 7 that the difference must be the difference between the price at which it is exported and the price at which it is selling in the ordinary course of trade in the country of export. It is not the cost price; it is a comparison between the price in the market there and the price in the market here.
§ Mr. Holt
I know that, but hon. Members will see that it involves a question of the interpretation of Clause 6 (3). If I am wrong I shall be pleased to hear about it and shall be relieved of many worries, but I take it that when the 1023 market price cannot be ascertained because of some disturbance of conditions the President of the Board of Trade is entitled to find out the cost price.
§ Sir D. Eccles
If the goods are on sale in the country of origin, that is the first criterion. It is only when that does not exist that we go on to an estimation of what they cost. If there is a home market price and that price has been cut, then we cannot claim that the goods are dumped.
§ Mr. Holt
I am very glad to hear that and I shall look further into it, but it seemed to me that if the market had been disturbed in some way and the price had been reduced, that might be a sufficient reason for the Minister to examine the question purely from the point of view of cost.
The last point that I want to make in support of my own Amendment is that the chief problem in creating stability of trade comes from endeavouring to get countries to stop interfering, and the residual problem left, once that is done, is very small indeed.
§ Mr. Gerald Nabarro (Kidderminster)
All that the hon. Gentleman's argument presupposes is that no country in Europe or elsewhere has a nationalised industry. If an industry is nationalised and forms a substantial part of the national economy it is inseparable from the operation of the Government policy that the Government wishes shall be carried out by that industry, as in the case of France with the Renault factory or Italy with the Fiat factory. How can he make a statement of that kind, which is so general in character as to be invalid?
§ Mr. Holt
Does the hon. Member mean by that that every industry in France is to some extent interfered with by the Government? That is presumably his point.
§ Mr. Nabarro
It is not presumably my point at all. The point is that all these countries have in a degree nationalised industries and the general policy of those industries is determined at least in some measure by Governmental action. It is, therefore, stupid to say that a Government must not in any circumstances interfere in commercial policy when it is their duty and responsibility to guide the policy of nationalised industries.
§ Mr. Holt
We are now on a different point. I am not now arguing whether Governments should interfere in industrial or commercial policy on any occasion. I am merely saying that one of the troubles in trade is the constant interference of Governments which results in some kind of subsidy to private firms. In the prevention of that kind of thing I am wholeheartedly in support of the Bill.
The whole point of my Amendment is to say that where a private firm, unsupported by any Government subsidy or any Government control which has the effect of subsidising its goods, happens for a month or two to sell its goods at a price which amounts to dumping in another country, it should not be a dumping activity which should attract the attention of the President of the Board of Trade. The basic reason that I say this is that such a firm could not go on doing that for long. If it sells goods below cost to another country for long, it eventually goes out of business. Meantime, we do not want a lot of work done here and a lot of people disturbing the whole channels of the Customs looking for this kind of thing.
We shall spoil the whole effort if we try to catch every little attempt at dumping by every firm in countries which send goods here. We should concentrate on the major problem, of which there was mention in a previous debate, concerning dumping activities, such as the French subsidy on potatoes and subsidies on wheat, American butter and the like, which might completely upset the agricultural market. If we concentrate on dealing with those problems, then the others are of minor significance and we would do far better to leave them out of the Bill.
§ Mr. Emrys Hughes (South Ayrshire)
I hope that the Committee will not accept this Amendment. If it were adopted it would vitally effect the great national industry of agriculture. The hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) has pointed out the risks to horticulture, but I am interested in the possibility of the dumping of new potatoes.
My hon. Friend the Member for Bolton, West (Mr. Holt) would allow the free import of all kinds of new potatoes into this country at all times.
§ Mr. Hughes
Let me give an illustration. When I have given it perhaps my hon. Friend will be able to convince me that I am wrong and that I should vote for his Amendment.
I understand that if the Amendment were carried there would be free importation to this country of new potatoes, say, from Cyprus. Last year we had an importation of new potatoes from Cyprus into South Ayrshire, which was simply catastrophic—far more catastrophic than the importation of potatoes from France.
Ayrshire farmers like the new potato market to come in about March or April. While we had no objection to the importation or dumping of new potatoes into this country when we could not supply them, as a result of Government action in Cyprus the Cyprus potato crop was delayed for a whole month because of the potato ships being held up in Famagusta. Just as Ayrshire new potatoes were coming on to the market, four shiploads of new potatoes from Cyprus came in a month late and arrived in Glasgow and the Port of Leith. The result was that Ayrshire farmers paid the collective fine imposed on the people of Cyprus, because through this dumping, Ayrshire farmers lost approximately £500,000.
To the farmers in that particular part of Scotland this is an essential national industry, and the Ayrshire branch of the National Farmers' Union sent me an urgent message telling me to bring this to the attention of the Government. Supposing the hon. Member for Bolton, West represented South Ayrshire, would he have agreed that this huge lot of potatoes should be allowed to come into the country and completely ruin the farmers in his constituency?
§ Mr. Hughes
So far as I read the Amendment, it would mean that new potatoes from Cyprus would be allowed to come in ad lib., with the result that it would completely ruin those farmers and completely undermine the standard of life of the people in the agricultural industry. I therefore share the apprehension of the hon. and gallant Member for the Isle of Ely.
1026 I am not so enthusiastic about this European common market at present. Is Cyprus likely to come into the European common market? If it is, I cannot see the slightest enthusiasm on the part of the farmers I represent about this new development in Conservative policy. They will share the grave apprehensions of the hon. and gallant Member for the Isle of Ely, whom I do not often support, but who has, I think, justified certain statements which he made on this occasion. I suggest that this old, orthodox free trade argument which has been produced does not apply to my particular constituency. Indeed, we shall watch very carefully at what time Cyprus new potatoes are likely to come in this year.
I should like an assurance from the President of the Board of Trade that he will be a little more considerate to agriculture in the west of Scotland than was his predecessor. I regard some parts of the old Liberal philosophy and some parts of the free trade argument as quite acceptable, but I suggest that we are entitled to some protection at certain times. We do not want to increase the cost of potatoes in the first three months of the year, because the cost of living is going up enough already.
§ Mr. Holt
Do I understand that the hon. Member does not want protection when there is no point in it, but wants it only when it will be effective?
§ Mr. Hughes
It is certainly no remedy at all for the problem to which I have drawn the attention of the Committee.
My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) used the phrase "ordinary course of trade." Surely the dumping of Cyprus potatoes a month late is not the ordinary course of trade. I shall have to oppose this Amendment, in the interests of the particular section of my constituents to whom I have referred.
§ 5.0 p.m.
§ Mr. Christopher Boyd (Bristol, North-West)
I do not want to join this remarkable alliance of the outside wings of the political field which has just been demonstrated. It seems to me as though we have extreme reactionaries on both wings of political thought, and I am not in agreement with them. With the hon. Member for Bolton, West (Mr. Holt), I am glad of the assurance we have had 1027 that the plan of a free trade area in Europe is not intended to be the means of discriminating to a greater extent against countries outside that area. In fact, I hope that this conception will lead to an attempt to draw into it other countries, especially America. If that suggestion could be put to the Americans it would be a useful exercise for them to discuss, and might make it more difficult for them to accuse us of lagging behind in inter-national, especially European, co-operation.
§ Major Legge-Bourke
When the hon. Member expresses the hope that America may come in, I hope that he does not overlook the fact that all this tendency towards getting Europe together, either federally or otherwise, was first promoted by the Americans themselves.
§ Mr. Boyd
Their coming in would be a useful step towards the solution of our dollar problems. Most of all, we need to open up dollar markets. I believe that Britain is ready to face any competition and make inroads into the American market if American protection can be lifted, and we should frankly say that we should like America to come into this free trade area. At least, when the plan has got under way and the Americans can see that it is a reality, it is probable that they will not want to be left out of the large European market that will be created.
I hope that the Government will push ahead with the plan for the European free trade area without waiting for the narrower Customs union of the Six to come into operation first. It might be that the six nations will get so bogged down about the details of the tariffs on which they could agree that they might prefer the free trade area as a whole, in which case we might be able to go right into it, instead of tagging on behind.
I have great sympathy for what the hon. Member for Bolton, West says. To a great extent I am a free trader. I have said that our industries should be—and I believe they are—willing to face fair competition—that applies especially to the ablest and most successful of our industries and businessmen—but they are entitled to look to the Government to protect them against extreme degrees of unfair competition from abroad. That is 1028 recognised even in the Liberal Amendment. It is, however, mistaken to believe that such dumping by private industry could not at any time be a serious danger.
If we could be sure that dumping would continue; if we could, as it were, arrange a bulk, long-term contract for continuous dumping of a certain type of goods so that it was no longer necessary for us to have our own industry capable of supplying those goods, then, of course, dumping would be wholly advantageous to us. We should get products below cost, and benefit by a subsidy provided by another country. That is just what a private industry cannot do. Dumping as a policy of private firms is purely short-term, so I think that this country must be equipped to deal with that kind of eventuality.
§ Mr. Walker-Smith
It must be a matter of keen disappointment to the hon. Member for Bolton, West (Mr. Holt) that his advocacy was unable to convince the hon. Member for South Ayrshire (Mr. Emrys Hughes). I think that I would lay myself open to a charge of using the language of hyperbole if I suggested that the hon. Member for South Ayrshire invariably reflected majority opinion in this House; but I think that on this occasion it is probable that, in his opposition to the Amendment, he does so reflect majority opinion.
I have listened very carefully, as, I am sure, has the whole Committee, to what the hon. Member for Bolton, West had to say. Last night I re-read the speech which he made on Second Reading. I had the pleasure of hearing it at the time. when he also developed his theme of a sort of dichotomy between the two sorts of dumping which, he suggests, exist—a dumping with a Governmental promotion, and a dumping arising purely through the agency of private traders. I am bound to say that, in his differentiation between these two sorts of dumping, he has made a definition which is not in accordance with the facts as known.
The hon. Member classifies the second sort of dumping, that which he would wish to exclude from the benefits of this Bill, as dumping by private firms with small surpluses. It is, of course, the fact that private individuals do use dumping as an act of deliberate policy. And they 1029 need not be individuals; trading corporations or combines of one sort or another do likewise. Moreover, though the periods of dumping may be only seasonal and may be only temporary, it does not at all follow that the effects of well-promoted, well-organised dumping may not be permanent upon the relevant industry in this country, and manifest itself in terms of unemployment, bankruptcies, etc. Therefore, it is not right to take the view that, where we are dealing with dumping originating from acts of policy by traders or trading organisations in other countries, we are dealing with only a small matter. During the Second Reading debate my right hon. Friend gave one example. That, of course, was not an exclusive example but was only illustrative.
The hon. Gentleman expressed apprehension that every little bit of dumped goods will attract the machinery of this Bill. There he is clearly under a misapprehension, as I am sure he will appreciate if he will be good enough to refresh his mind as to the actual text and provisions of the Bill. For an Order in relation to dumping to be made by the Board of Trade, and approved by this House, the following conditions have to be satisfied. First, there has to be dumping in accordance with the criteria specified in the Bill; that is to say, the export price must be less than the domestic fair market price. Secondly, it has to be in the national interest, having regard to all the circumstances. Thirdly, as has been made explicit by the Amendment moved by the right hon. Member for Smethwick (Mr. Gordon Walker) earlier this afternoon, which my right hon. Friend has accepted in principle, there will have to be a material injury to the industry in the case of all G.A.T.T. countries.
Having regard to those three conditions which have to be satisfied, it is apparent that the hon. Gentleman's fears that every petty matter of the sort which he appears to have in mind would automatically bring into operation the machinery and procedures of the Bill, are groundless. In point of fact, I am bound to say to the Committee that the hon. Gentleman's Amendment runs right counter to the whole principle and pattern of the Bill.
§ Mr. Holt
Would the right hon. and learned Gentleman be able to reassure 1030 me about this? Would the President of the Board of Trade think, when he comes to look at it now, that the remark which he made, reported in col. 58 of the OFFICIAL REPORT of 22nd January, given rather "off the cuff", was not really an accurate description of what he would do, and that those conditions do not really comply with the conditions laid down in the Bill?
§ Mr. Walker-Smith
My right hon. Friend was asked for an example of the way in which the Bill might work. He took as his example a foreign firm startingto dump in this market fashion goods which it had failed to sell in its own market"— [OFFICIAL REPORT, 22nd January, 1957; Vol. 376, c. 58.]In giving that example, my right hon. Friend had in mind in his use of the word "dumping" that the conditions specified were satisfied, namely that the export price as defined in Clause 6 was less than the fair market price ascertained under the provisions of Clause 7. Therefore it was, as one would expect, a perfectly valid example, though not intended to be an exclusive catalogue; it was merely what he was asked to give, an example of how the Bill might operate in practice.
§ Major Legge-Bourke
I hope that in what he is saying my right hon. and learned Friend is not in any way detracting from what the President himself said on Second Reading on 22nd January:On the other hand, unless we have in reserve the power to act promptly we might as well not introduce a Bill at all."—[OFFICIAL REPORT. 22nd January, 1957; Vol. 376, c. 63.]I hope that the emphasis will be on promptness.
§ Mr. Walker-Smith
Yes. My hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) made that point very eloquently on Second Reading. I think that I did assure him and the House then, in answer to his observations, that it would be necessary for the proper implementation of the Bill that there should be a speedy and efficacious way of dealing with these cases, more particularly cases of seasonal dumping.
We have that very much in mind, and so far from in any way differing or derogating from what my right hon. Friend said then, I am very happy to have this opportunity of reinforcing it as best I may.
§ Mr. Emrys Hughes
The right hon. Gentleman has said some words of consolation to his hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke). Could he give us some assurance about new potatoes?
§ Mr. Walker-Smith
I listened with careful attention, as always, to the speech of the hon. Member for South Ayrshire. It was not clear to me how his case actually fitted into the pattern of this Bill. I was not quite sure what result he had got when he applied his mind to testing it against the criteria specified in the Bill. But I am sure that his constituents will be very gratified that their legitimate interests have been so powerfully advocated in the House of Commons today.
May I now return to the basic objection to the Amendment moved by the hon. Gentleman the Member for Bolton, West (Mr. Holt). As I was saying, it runs counter to the principle and pattern of the Bill. We are here seeking to give protection by a common remedy against two specific abuses, one, dumping, and the other, subsidies.
What the Amendment is in fact doing is to make the identification of a subsidy or bounty a prerequisite for applying the remedy in case of dumping. In other words, under the Amendment dumping would qualify for the remedy of an import duty only if it were, in the words of the Amendment,the result of the subsidy affecting the goods".The consequence of that is that the test of dumping could be satisfied only in those cases where there was no point or advantage from it because the remedy would be obtainable under the other half of the Bill.
The hon. Gentleman's Amendment would bisect the Bill and jettison what we consider to be an indispensable half of it. I think he will not take it amiss if I say that it is a wrecking Amendment. It is based on the Liberal misconception that traders are everywhere fair-minded people and that evil actions are done only under the stamp of Government authority. That is not, I am afraid, the experience that we have of the world. The effect of his Amendment would be to take away a very large part of the protection which the Bill is designed to give, and quite clearly it is unacceptable for that reason.
1032 I ask the Committee to reject the Amendment.
§ Amendment negatived.
§ Mr. John Cronin (Loughborough)
I beg to move, in page 2, line 20, after "goods," to insert:or certain loans or other credit facilities in respect of raw materials.
§ The Temporary Chairman (Dr. Horace King)
Before the hon. Gentleman continues, may I say that I think it would be for the convenience of the Committee if we took with this Amendment the following three Amendments—in page 2, line 20, at the end to insert:
In line 25, after "currencies," to insert:
- (a) the giving of any special subsidy on the growing, processing or sale of any raw material or raw materials embodied in a particular product, whether such raw material or raw materials originated in the country from which the goods were exported or a colony, dependent territory, trustee territory, or protectorate of it;
- (b) the giving of favourable taxation treatment to producers or exporters of a particular product or favourable taxation treatment to growers, processors or sellers of any raw material or raw materials embodied in a particular product, whether such raw material or raw materials originated in the country from which the goods were exported or a colony, dependent territory, trustee territory, or protectorate of it.or the granting of loans or other credit facilities in respect of raw materials.In line 26, to leave out "has" and to insert:loans or other credit facilities have.There could then be a general discussion on all four Amendments.
May I point out that the Amendment standing in the name of the hon. Member for Portsmouth, Langstone (Mr. Stevens) has not been selected.
§ Mr. Nabarro
On a point of order, Dr. King. It would be very much for the convenience of the Committee, I submit, and would ultimately save a great deal of time, if we might have your permission to include in the general discussion to which you alluded the Amendment standing in the name of my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey). to leave out lines 28 to 31 at the end of Clause 1.
§ The Temporary Chairman
The hon. Gentleman suggests that it would save time in discussion, but the Amendment to which he refers is not in order.
§ Mr. Gordon Walker
On a point of order. The arrangement you propose, Dr. King, is very satisfactory to us. I merely wish to know whether the Amendment actually under discussion would be the Amendment standing in my name?
§ The Temporary Chairman
§ Mr. Cronin
It would probably be convenient to the Committee if, in addition to moving the Amendment in page 2, line 20, I were to move the other two Amendments—
§ The Temporary Chairman
The hon. Gentleman will move only the first Amendment, but in the debate on it we can discuss and talk about the others.
§ Mr. Cronin
The purpose of this Amendment and those Amendments which I have not moved is simply to ensure that the Board of Trade, when considering the question of bounties and subsidies, will take into consideration loans or credit facilities in respect of raw materials.
This might seem rather like an attempt to gild the lily, but I hope to advance reasons which will show that this is to be taken as a serious Amendment. I was fortified to find that the roving eye of the hon. Member for Kidderminster (Mr. Nabarro) had lit upon raw materials, and that he regarded this matter as providing an important loophole in the Bill which should be stopped up.
The Committee is, I am sure, familiar with the fact that fiscal legislation is almost always followed by attempts to find ways of escaping a loss of prospective profit; and frequently a Finance Bill is followed by amending Clauses in the next Finance Bill to deal with a loophole which has to be stopped up. It therefore seems desirable that we should make the Bill as water-tight as possible. Here we have a serious gap which could be used by people with reprehensible intentions for getting indirect bounty or subsidy.
Clause 1 (3), unamended, simply makes it compulsory for the Board of Trade to consider the giving of direct or indirect bounties or subsidies. I suggest that a loan or a credit facility on exceptionally favourable, or even comparatively favourable, terms is also the equivalent of a bounty or subsidy. The economic principle involved is the very 1034 simple one that jam today is worth substantially more than jam tomorrow. In other words, if a credit is given—if a payment due in, say, a year's time is given immediately—it is equivalent to giving rather more than the sum involved.
To take an example, suppose that a grower of a raw material or someone who mines a raw material requires a loan of £1,000 for a year. Normally, he would have to pay, say, 6 per cent. interest and, therefore, would pay about £60. If, however, the £1,000 loan were given to him at a favourable figure—say, at an interest rate of 2 per cent.—he would be in pocket to the extent of £40. That is a rather elementary arithmetical example to illustrate the point, but it is clear that a subsidy or bounty could be given indirectly simply by giving a loan at a particularly low rate of interest.
It might be that the prospective grower or miner of a raw material might not be a very credit-worthy person; it might normally be necessary for the market to charge an even higher rate of interest. In that case, if he is given credit on low interest at favourable terms, he would have the equivalent of a direct bounty or subsidy.
§ Mr. Nabarro
What is the position of a nationalised industry which has capital provided or perhaps a loan from the Government on exceptionally preferential terms, as in France, for example, in the case of certain motor car factories? Is that a subsidy?
§ Mr. Cronin
I do not think that the hon. Member for Kidderminster has read the Bill with the care that he should have done. The point is that the Board of Trade has a discretion and is not bound to take action. Quite obviously, an enlightened President of the Board of Trade, such as we hope the present occupant of the office will be, would not take any action against a nationalised industry such as those of France unless it was exceptionally against the national interest.
§ Mr. Nabarro
I am following the hon. Member's argument closely. It is the fact that a French Renault car would be in competition with a British Morris car. If the British Motor Corporation has to pay for the capital in its undertaking producing the Morris car the normal commercial money market rates for the capital employed, but the French capital 1035 used by its competitor, Renault, is subscribed by the Government on extremely preferential terms, that amounts to a subsidy to the French nationalised undertaking. That is the point I want to put to the hon. Member.
§ Mr. F. Blackburn (Stalybridge and Hyde)
Does the hon. Member suggest nationalising the motor car industry here?
§ Mr. Nabarro
That observation is very stupid. In the case of Britain, our motor firms are not nationalised. In the case of the French concern to which I have referred, it is nationalised.
§ Mr. Blackburn
I was only asking the hon. Member if his solution was nationalisation.
§ The Temporary Chairman
I hope that the Committee will proceed in the ordinary way by speeches rather than by cross-questioning and interruption.
§ Mr. Cronin
I will reply to the hon. Member for Kidderminster, but I hope that these stentorian interventions will be kept to the minimum. They add a certain life to our proceedings, but if continued indefinitely they become somewhat tedious. I take the point made by the hon. Member. That is something which the President of the Board of Trade will have to consider when the right hon. Gentleman uses his discretion to take appropriate action. I do not, however, think that it would be proper for me to tell the Board of Trade what it should do in advance of a circumstance like that.
To return to my argument, another example is the possibility that a grower or miner of a raw material might have to raise an issue of ordinary shares to obtain capital. That would mean that every year he would have to dispense with a substantial part of his profits to the new holders of the equity. If instead he could get a loan under favourable terms, that again would mean that he would have the equivalent of a constant bounty or subsidy year after year.
I have given some hypothetical examples, but we know that loans and credit facilities under exceptionally favourable terms are being used at this very day more or less to subsidise goods for export. On Second Reading the 1036 point was made that growers of cotton in the Belgian Congo export their cotton to Belgium very cheaply and that as a result the Belgians can export carpets and undercut our market here. The hon. Member for Kidderminster made, I thought, a very moving appeal on behalf of the carpet manufacturers.
I do not think it is generally known that the cotton growers in the Belgian Congo receive credit facilities from their banks at a very much lower rate of interest than in the market generally, and that, of course, constitutes a bounty or subsidy. In these days, when we are dealing with the Iron Curtain countries, where indirect subsidies of this nature can be given with considerable ease and no protest whatever, we have to be particularly careful because those countries are increasingly using trade as an instrument in the cold war. It is very important, therefore, that we should ensure that there is no gap which could be used as a weapon by those countries.
We shall be happy to withdraw the Amendment if the President of the Board of Trade can find an alternative Amendment which would be equally helpful. I am sure the President will agree that we on this side are trying to be as co-operative and helpful as possible about the Bill, particularly as it seemed from the speech of the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) that the President is dealing with an incipient rebellion rather similar in type to the rebellion that incommoded the Government before Christmas. Naturally, we feel some sympathy with him. We want to help the President as much as we can, and if he can produce an Amendment to the same effect we shall be quite happy to withdraw ours and leave the matter to him.
§ 5.30 p.m.
§ Mr. Gordon Walker
I should like to point out to the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) that there is no difference—certainly not in intention—between his Amendment and ours, and I should not like the hon. Gentleman to deliver a very heavy and unnecessary attack upon us for something which is not really intended to be different. I do not doubt that he has other things he wishes to say with which he will take up the time of the Committee.
1037 There is, I think the right hon. Gentleman and the Committee will agree, a real difficulty here. In general, we are agreed that to come under this Bill goods, to be dumped, must be exported abroad at a price cheaper than that at which they are selling at home. There is, however, the possibility that their price may be artificially depressed both at home and for export. That is conceivable. The importing of such goods would be dumping in the ordinary layman's sense of the word but it would not be dumping within the terms of the Bill.
The hon. Member for Kidderminster mentioned the possibility that a nationalised industry in a foreign country might receive subsidies for selling its goods both in the home market and in the export market at what was really an artificially depressed price. Those goods would not, however, come under the terms of the Bill, because there has to be a differential between the home and export prices to bring the goods under the Bill.
We do not want to extend the terms of the Bill improperly, but we do want to meet what is a real subsidy or dumping that can harm unnecessarily, and with no advantage to us here, our industries in this country, and unless some Amendment such as this one is made, or an Amendment, indeed, like that of the hon. Member for Kidderminster, though it is ours we are discussing, the Bill will have a great defect in it.
There is also the consideration—and I think that this was what the hon. Member for Kidderminster was primarily thinking about in his Second Reading speech—that some subsidies are concealed and are very difficult to detect, but, none the less, exist. He mentioned the case of cheap credits from the Belgian banks to the cotton growers in the Belgian Congo, or subsidies to the producers of cotton in the Belgian Congo which enable the textile manufacturers in Belgium to get their raw materials far cheaper than anyone else in the world can. Of course, they are subsidies. Whether they are subsidies by the Government or private persons does not matter. Those subsidies would not be subsidies as defined by the Bill as it stands, and if the Bill is to extend to subsidies of that sort we must extend the Bill in this way which we propose.
There is the further consideration that credits can be given to exporters, as, for 1038 instance, by the United States Export-Import Bank. Cheap credit, or very long credit, which comes to the same thing, can be given against which other exporters in the world cannot compete, and that means that American exporters are receiving a subsidy, as my hon. Friend the Member for Loughborough (Mr. Cronin) pointed out, for they get credit more cheaply than normally one can get it, or get it on longer terms than one can normally get.
If we are to make the Bill cover those things we must extend it in this sort of way. As I have told the right hon. Gentleman many times, we on this side of the Committee are not desirous of extending its terms in such a way as to smuggle in, as the hon. and gallant Gentleman the Member for the Isle of Ely (Major Legge-Bourke) wants to smuggle in, protection. We do not agree with the hon. and gallant Gentleman at all about this, but we do want to cover genuine dumping and genuine subsidisation and we do not think that the Clause, unamended, will do so.
§ Mr. Nabarro
I am grateful to the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) for his words of consolation. My wish in this matter is that the apprehensions expressed so cogently from many quarters of this Chamber during Second Reading are met by suitable Amendments of the Bill now, during Committee. It is true that there is very little difference in principle, between the Amendment of hon. and right hon. Gentlemen opposite and that standing in my name and the names of some of my hon. Friends, except, if I may say so with due modesty, that our Amendment is a great deal more explicit and a great deal more detailed. It has real advantages, as I shall show in a few moments.
It would be a mistake to confuse, while we are debating this very complicated issue, three separate though related considerations. The first of those is the question of loans and credits. The second is the question of taxation advantages and favourable terms for taxation purposes. The third is the subsidy for raw materials subsequently embodied in a manufactured article or commodity which finds its way into the United Kingdom in the form of an import. I submit that they are separate considerations 1039 though related, and I would plead for the indulgence of the Committee in addressing a few remarks to each of those separate, though related, considerations.
First, as to the question of loans and credit facilities, it is true that credit facilities for exports are available in manufacturing countries on widely diverse terms. They may be available in one country very much more cheaply than in another. I do not think that any form of words within this Bill could possibly cover contingencies of that kind. When I talk of credit facilities I mean that I as an exporter in Britain may wish to send manufactured goods to Argentina and have to expect to wait six or eight or twelve months to receive my payment, and I may have to finance that transaction, and I may have to pay 7 per cent. or 8 per cent. or more, according to the risk entailed in the market. One of my foreign competitors may then find a merchant banker in his exporting country prepared to finance his transaction on cheaper terms. That is a question of commerce, I submit, and I do not think that my right hon. Friend could conceivably find any form of words to cover differentials of that kind. It is for that reason that I deprecate the form of words used in the Opposition Amendment.
The question of loans, however, is another matter entirely. What are loans within the context of the Amendment? Are they loans in the form of capital, or are they short-term loans to promote exports from the manufacturing country and merely to tide the exporter over the relatively short time until he receives his payment from his customer? Which are they?
§ Mr. Gordon Walker
§ Mr. Nabarro
Both. I have dealt with the first type of loan in what I said a moment ago. It is impossible, in my opinion, to find a form of words to cover that. On the capital subscription point, I hope to say something in a non-political party spirit about the difference between a nationalised undertaking in one country and a private enterprise competitor in another.
It would be possible for a nationalised manufacturing concern in a foreign country to secure loans in the form of capital from its own domestic Govern- 1040 ment on terms of interest which were much more favourable than a private enterprise competitor in this country could secure by borrowing on the open money market. The hon. Member for Stalybridge and Hyde (Mr. Blackburn), in somewhat disingenous terms, I thought, suggested that that was a good reason for nationalising the motor car industry.
I do not wish to dwell on the wider philosophy of whether that is a good thing or not, but I suggest that it is manifestly impossible to try, within the terms of a British Bill, to legislate for diverse variations in the terms of capital subscriptions, which are, in effect, longterm loans, and which obviously exist in manufacturing countries competing with one another. That is why I deprecate the Opposition Amendments.
I want to add the reasons why the Amendments in my name and those of some of my hon. Friends are essentially different in character. They are designed specifically to deal with the second and third considerations which I mentioned at the outset of my speech. Let us take, for example, the second consideration—the question of taxation. I will quote extremes in the benefits that the foreign competing manufacturer can enjoy in taxation arrangements as compared with our taxation arrangements in Britain.
Until relatively recently the West Germans were given a direct abatement of corporation taxation, in respect of exports. It has now been stopped by common consent and as a result of action by the British Government, as it was held to be a contravention of the terms and spirit of G.A.T.T. But there are other foreign countries which do not subscribe to G.A.T.T. which may seek to do likewise and grant reduction of taxation related to the exports and over which, therefore, we would have no direct or indirect jurisdiction in the preferential fiscal arrangements made. The exporters in such a country would thus enjoy advantages which competing British firms do not enjoy. There is an indirect form of subsidy there, to a foreign competitor of ours. Such would be a blatant case.
May I quote a much more obscure case and one with which it is much more difficult to deal? I refer to Belgium. It will be common knowledge that an important part of manufacturing costs is the depreciation allowance granted for taxation 1041 purposes on the plant, machinery and equipment. In this country our manufacturers have always laboured under the disadvantage that the Inland Revenue depreciation allowances are applicable to the historical cost of the plant. If plant had been installed in pre-war years the amount of depreciation is related to the pre-war cost, but the cost has risen three or four times, according to the type of plant, in the meantime, and the manufacturer does not obtain a commensurately larger annual sum in depreciation, for tax purposes.
The Belgians, very wisely, at the end of the war deliberately allowed all their manufacturers to double or more the value of plant standing on their books, to take account of inflation during the war years. The result is that the Belgian manufacturers' depreciation allowance for taxation purposes annually is much greater than that which is granted for comparable plant in this country. This is a matter which has been often ventilated in chartered accountancy circles when complaints are made about the basis of depreciation of assets for taxation purposes in relation to historical cost. It is indisputable that the Belgian carpet manufacturer, using an elderly loom, will have a substantial advantage over his British counterpart and will, in effect, have a taxation subsidy.
The persons whom I am primarily trying to catch with paragraph (b) of my Amendment in page 2, line 20—the giving of favourable taxation treatment…are any foreign competitors who gain a direct abatement of taxation on exports as part of a deliberate fiscal policy from that country, thereby giving the manufacturers of that country an unfair advantage over their British counterparts.
The first part of the Amendment I consider to be the more important—the question ofthe giving of any special subsidy on the growing, processing or sale of any raw material…I readily confess that this part of the Amendment is exploratory in character.
I have read the Bill a hundred times and have studied it in the most minute detail and I still cannot understand 1042 whether raw materials are included in the generic term "goods." For example, in Clause 1 (1, b) the words used are:…some Government or other authority outside the United Kingdom has been giving a subsidy affecting goods of any description which are being or have been imported into the United Kingdom.I am not sure whether the words "affecting goods" mean that if a subsidy is applied to a raw material which subsequently is embodied in manufactured goods, that would fall within the ambit of the words which I have read out.
That was the gravamen of the case which I put on Second Reading concerning Belgian cotton carpets and which evidently has rather captured the imagination of the Committee, because almost every speech today has referred to it. I think that I can say with due modesty that it was a very good example and one which may be widely applied to other manufactured goods, for many manufacturers are suffering from the same disability.
My right hon. and learned Friend the Minister of State, Board of Trade, when he replied to me at the end of the debate, was generous indeed. He said, referring to me:I had the misfortune not to be present when he was speaking and now he has elected to have the good fortune to have absented 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."—[OFFICIAL REPORT, 22nd January, 1957; Vol. 563, c. 125.]I want to correct my right hon. and learned Friend. The House of Commons is very interested in Belgian cotton carpets.
I did not know what his "informal basis" meant, so I rang up his secretary and asked, "Please get your boss to write a full explanation." This is what my right hon. and learned Friend wrote. The Committee ought to be stimulated by his words of wisdom and elucidation which I have his permission to quote:…You then raised the question about the use of the powers in the Bill we were debating in relation to imports of Belgian cotton carpets. Again, I cannot say at this stage what the prospect is of imposing an antidumping or countervailing duty on these goods: clearly, we cannot and should not consider individual cases before the Bill becomes law. Once this has happened, however, it will be open to the carpet manufacturers to apply 1043 to the Board of Trade for the imposition of a duty, supporting their case by evidence necessary to meet the criteria in the Bill.My right hon. and learned Friend's explanations are impeccable and I am entirely in agreement with him. He goes on:In this connection, I can say that, if there is, in fact, a subsidy, however indirect, given by the Belgian or Belgian Congo Government or a quasi-governmental body to the producers of raw cotton in the Congo, the Bill would be capable of dealing with the practice. This would be achieved by Clause I (1, b): the carpets exported to the United Kingdom would have been affected by a subsidy given by the Government or other authority outside the United Kingdom. The Bill could not operate against this practice, however, if the subsidy were only privately given, for example, by one section of industry to another or by a bank in the normal course of its commercial activities.As a result of the statement in that letter, my right hon. and learned Friend has said, in effect—I want him to correct me at once if I am wrong in that interpretation—that if it is demonstrated that a raw material, subsequently embodied in a manufactured article or commodity, has become at an earlier stage the object of a Government subsidy or quasi-Government subsidy, the operation of this Bill may be called into effect and antidumping duties in this country may be imposed on the manufactured article referred to.
§ Mr. H. Rhodes (Ashton-under-Lyne)
This is very important—
§ Mr. Nabarro
I would not be quoting my right hon. and learned Friend were it not important.
§ Mr. Rhodes
—because the Belgian Congo is subject to edicts from the home Government and is told at what price its cotton is to be sold to the Belgian manufacturers. Does that come into it at all?
§ Mr. Nabarro
Yes, I think it does, and I believe that my right hon. and learned Friend has covered that point.
I am grateful to the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes) for attaching such great importance to it. It is a critical part of this Bill and the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) did less than justice to me when he inferred that my Amendment was not sufficiently explicit. If he studies the last few words of each paragraph of my Amendment he 1044 will find that they are identical. The words are:…or raw materials originated in the country from which the goods were exported or a colony, dependent territory, trustee territory, or protectorate of it.Hon. Gentlemen may question why the words "trustee territory" are there. They are included to catch the case of RuandaUrundi, which was a League of Nations mandate until the United Nations decided to call it a Trustee Territory. It is a cotton grower, and the veiled subsidy conditions to which I referred in my Second Reading speech apply to the cotton grown there. Subsequently, that cotton finds its way to the Belgian cotton manufacturers, who are then able themselves to sell Belgian cotton carpets in this country at prices lower than the raw material content alone and by itself in the British carpet counterpart. That is what is putting British carpet weavers on short-time and out of work. Therefore, I welcome what my right hon. and learned Friend has said about the fact that raw materials come within the ambit of the Bill, but, in view of the uncertainties, I ask that my Amendments—which are much more explicit than the Bill—shall be written into it at this or at a later stage.
Before I sit down, I will leave carpets and come to a point which my hon. Friend the Member for Harrogate (Mr. Ramsden), who is in Paris on Parliamentary business, has asked me to raise for him. It concerns the raw materials of another industry somewhat analogous in principle to the British carpet industry. I hope that the President of the Board of Trade will understand that the terms of this Bill are causing grave apprehensions to many trades and industries, the manufacturers in which just do not understand exactly what the Bill seeks to do.
As an example, I will quote from a memorandum submitted to my hon. Friend, and thus to me, from the United Tanners' Federation on behalf of the leather manufacturing interests of this country. They write:Restrictions on the export of raw materials are not considered unfair export assistance.That is exactly contrary to what my right hon. and learned Friend said in his letter to me. The memorandum continues:The raw hide or skin represents about 70 per cent. of the value of the finished leather and for this reason any tampering with the price of the raw material has a far greater 1045 effect on the price of the finished product than in most other industries.…Countries such as India and France, by restricting or prohibiting the export of raw material, cause an artificial surplus which enables their tanners to produce at below the world market price. The industry maintains that to ignore Government export assistance of this type and extent is completely to destroy the value of the Bill as a protection against dumping of leather from these countries.I hope that my right hon. and learned Friend will tell the Committee that precisely the same conditions apply to this matter as apply to the carpet industry, in so far as the ingredient raw materials in the manufactured article are concerned.
I have put a case which, I think, is widely supported in all parts of the Committee. I plead with my right hon. and learned Friend that there shall be written into this Bill explicit conditions to make it possible to impose anti-dumping duties, first, in the event of subsidies upon raw materials being given to foreign manufacturers and, secondly, in respect to favourable taxation treatment given to foreign manufacturers.
§ Sir D. Eccles
We have had an interesting discussion on these important Amendments. This is a complicated subject and I will do my best to explain why I think that, on balance, the Bill is all right as it is.
Subsection (3) of Clause 1 deals with subsidies and, of course, the Bill is in two parts. Part of it is against dumping, and in that case it is necessary, before there can be a duty imposed, to establish the difference between the export price and the fair market price. The other part of the Bill, with which we are dealing only here, is concerned with goods that come into this country subsidised. In that case, there is no need to establish what is the price in the country of origin at which similar goods are being sold. We have only to establish that a subsidy has been used to reduce the price of the imported goods which are causing material injury to one of our established sources of supply.
As I understand, it has always been impossible to define completely and to the satisfaction of everybody exactly what is meant by a subsidy. In this part of the Bill, we are following Article VI of G.A.T.T., which makes no attempt to define a subsidy closely, but states that it is a bounty or subsidy which has been granted
1046…directly or indirectly, on the manufacture, production or export of such product…
§ Mr. Cronin
§ Sir D. Eccles
Paragraph 2. The Article states that a countervailing duty may be imposed' where the form of that subsidy has been of special assistance to the transport of the goods.
The Committee will see that in subsection (3, a) we have reproduced that, and it is one of the only two qualifications of what is meant by "subsidy" in the Bill. The paragraph reads:the giving of any special subsidy on the transport of a particular product…Then, in paragraph (b) we have also included the case of currency manipulation.
The reason for making those two definitions of subsidy is that they are really outside the actual manufacturing cost or the production of the raw material; that is to say, transport and currency manipulation might not be caught by the generally accepted definition of a subsidy, and, therefore, we thought it right, following Article VI of G.A.T.T., to put those two exceptional definitions in the Bill.
Beyond that, when one comes to the more straightforward notion of what a subsidy is, it is really anything that can be construed as being directly or indirectly of assistance to the manufacture, production or export of a product, and that would cover the cases mentioned by the hon. Member for Loughborough (Mr. Cronin) in his Amendment and by my hon. Friend the Member for Kidderminster (Mr. Nabarro) in his.
Perhaps I might deal, first, with the point about loans and credit. It is true that by financial assistance of one kind or another a Government can cheapen the export price of some of the products of its territory, and in certain cases where it is extremely clear and blatant, where there are large, manifest subsidies on production, I have no doubt that we should consider the matter. However, I think that the hon. Member for Loughborough will appreciate that in the sort of case which he raised, where a bank gives a loan at 2 per cent. instead of 6 per cent., where the credit-worthiness of the borrower comes in and where the loan is 1047 £1,000, it is really not possible for the Bo6ard of Trade to go to a foreign country and discuss the credit-worthiness of a certain borrower, or, indeed, the rate of interest at which he borrows his money. We must leave that, in general, to the ordinary course of business.
On the subject of the nationalised industries, what has been said is, indeed, true. I would go further than my hon. Friend has gone. In this country we have a nationalised system of transport which every year makes a large loss which is covered by the taxpayers. I have not the slightest doubt that under the definition of the Bill all our transport would be considered to be subsidised, because Parliament votes money which covers the losses made by nationalised industries. Therefore, it goes extremely wide.
When we come to the problem about raw materials, I think the difficulty experienced by my hon. Friend the Member for Kidderminster and my hon. Friend the Member for Harrogate (Mr. Rams-den), who is interested in tanners, arises from the distinction between subsidies and dumped goods. It is possible for the raw materials of goods to have been subsidised, but not the manufactured products themselves: the leather goods or carpets to be dumped in this country might be selling in Belgium at the same price as here. But we could catch that case under not the anti-dumping provisions but the subsidy provisions of the Bill. If we could find an effective instrument by which the Customs could identify subsidised raw cotton in made-up shirts or carpets, it would be possible under the Bill to come to the House for an order to a duty. I do not know how it could be done.
§ Mr. Rhodes
I can tell the right hon. Gentleman right away how it could be done. He should alter Clause 5. I should like to explain later how it can be done.
§ Sir D. Eccles
I always listen with respect to anything that the hon. Member for Ashton-under-Lyne (Mr. Rhodes) has to say about how to do something in connection with the cotton trade, and perhaps he will tell us later on how to do it. What I want to stress is that where it is clear that the raw material content of a manufactured product coming here has been subsidised, we can do something about it under the Bill if it is practicable 1048 to identify the subsidised part of the product when it enters this country.
Having put those points to the Committee, I must say that I do not believe that we should gain by trying to go further in defining what we mean by "a subsidy" than I have gone in relation to the two special cases of transport and currency manipulation. If we incorporated the substance of the Amendment of the hon. Member for Loughborough or the Amendment of my hon. Friend the Member for Kidderminster, it would, perhaps, make it more difficult to get the courts to consider that other kinds of subsidies not defined in the Bill are, in fact, subsidies. The more we try to particularise about what a subsidy is, the more difficult it is in relation to other brands of bounties, and so on, which we have omitted. I think it is clear that the wide phraseology used in the G.A.T.T. Article, and more or less reproduced in the Bill, covers all these things.
I should have liked to accept one of the Amendments if I could, but I do not think that I should improve the Bill by doing so. The Amendment in the name of my hon. Friend the Member for Kidderminster would not, as it stands, do all that he wants. He refers only to the case where the raw material originates in a colony, dependent territory, trustee territory or protectorate of the manufacturing country. We intend the Bill to go wider than that. It might be that the Belgian manufacturer obtained his material from Japan or some other country, but not one of Belgium's dependent territories. We should, therefore, have to ask my hon. Friend to withdraw his Amendment, and it would have to be widened.
We have had a very short time in which to consider the extremely difficult question whether it is in the national interest to try to define "a subsidy" more closely than is done in the Bill. I am not at all sure that it is. However, if the Amendments might be withdrawn, I will, before the next stage, without giving any undertaking, consider whether it would be worth while to enlarge upon the definition. I can, of course, give an assurance that all that hon. Gentlemen have said that they wished to be done in relation to the definition of "a subsidy" we can do already, and it is our intention to interpret "a subsidy" as covering those points.
§ Mr. Holt
Will the right hon. Gentleman clear up the point of the hon. Member for Kidderminster (Mr. Nabarro) about the importation of certain leather skins from a number of countries? On Second Reading I raised the question of calf skins from France. I take it that the kind of concealed subsidy which those imports have cannot be dealt with under the Bill because of the last sentence in Clause 1. The hon. Member for Kidderminster appeared to be under the impression, as the result of the letter which he received from the Minister of State, that they might be dealt with in the same way as the cotton in the Belgian carpets.
The point is that the countries from which these skins come restrict the export of the skins and so falsely depress the price in the home market, thus enabling manufacturers of leather goods in the home market to take part in the export trade at a great advantage. For instance, calf skin goods manufacturers in France are getting their raw material far more cheaply than it can be bought by manufacturers in this country. That is because of the restrictions on exports. Manufacturers in this country therefore believe that they are unfairly placed. It is a concealed subsidy by price control or export control. I take it that we cannot deal with that kind of practice under the Bill.
§ Mr. Nabarro
I want to thank my right hon. Friend very much indeed for so clearly bringing out the position of these raw materials, to which I referred and which attract some form of subsidy and which are subsequently embodied in manufactured goods exported to this country. I am very satisfied with what my right hon. Friend has said, because it covers the case of Belgian cotton carpets. He has completely exploded the misconception of the United Tanners' Federation, the tanning industry and the leather industry, which was to the general effect that raw materials were ultra vires the provisions of the Bill. He has now said that as long as the definition of dumping is satisfied, then the raw materials to which the tanners referred are included.
§ Mr. Rhodes
Does this apply to Indian cotton, also? That seems to be on all fours with Belgian cotton about which the hon. Member for Kidderminster has been talking.
§ Sir D. Eccles
I am glad to have the opportunity to make this clear. I did not realise that skins for tanners were on the same footing as Indian cotton, a case which we discussed last time. Of course, it is quite correct that paragraph (b) excludes that form of assistance. The former Minister of State, Board of Trade. in the debate on the Ways and Means Resolution, made quite clear the reason for doing that. It is quite simple. We do it in this country with steel. It is a practice which is operated in the interests of large industries and we do not think that it would be wise to include it in our definition of a subsidy.
However, if the tanners or leather manufacturers can bring a case to show that a definite protection subsidy has been paid on the skins used in that country. that is a different thing, but the Bill does not include…the application of restrictions or charges on the export of materials from any country so as to favour producers in that country…
§ Mr. Nabarro
The cases of steel and skins are not analogous in this context, but entirely different. For example, the French Government impose a ceiling price at which the skins may be sold, to create an artificial surplus and hence low prices. That artificial surplus may then be exported and dumped. I believe that such a contingency would come within the provisions of the Bill, notwithstanding the words which my right hon. Friend has just read. However, that is not the case with steel. We do not impose control on steel in this country in order to keep the price of steel artificially low.
§ Mr. Gordon Walker
Oh, yes, we do.
§ 6.15 p.m.
§ Mr. Nabarro
Oh, no, we do not. If we did that by Government action, it would connote a loss in the sale of steel. We do not do that. We impose a control which facilitates steel being sold at the full economic prices. The fact that we happen to sell steel overseas at a premium, as we do in certain cases, has no bearing on the case. The imposition of a price ceiling to keep the price of skins artificially low and create a surplus, which is the French practice, and our imposing a maximum price at which steel may be sold, which is for general economic reasons, but certainly not to create a surplus, are entirely different matters.
1051 I am satisfied from what my right hon. Friend has said that the case of skins may well come within the provisions of the Bill. I propose to write to the United Tanners' Federation tomorrow morning, send to them a copy of the OFFICIAL REPORT, and invite them to ask the President of the Board of Trade for further elucidation. Skins are not largely processed, neither is leather largely manufactured, in Kidderminster.
§ Mr. Rhodes
We must get this matter clear. We have been told that the Bill excludes raw materials such as cotton from India and we have had it explained that that is because the same principle applies to steel and coal. We then had another explanation, that the Amendment of the hon. and gallant Member for Macclesfield (Air Commodore Harvey) was out of order, because it was lost on the Money Resolution, that the Ways and Means Resolution already prevented it coming before the Committee. Which reason is it? Is it the Ways and Means Committee decision?
§ Mr. Walker-Smith
On a Bill which is introduced as the result of a Ways and Means Resolution, the Committee is bound by the terms of the Resolution. That is the technical reason why the Amendment of my hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) was out of order. If the hon. Member for Ashton-under-Lyne (Mr. Rhodes) wants to know why the Ways and Means Resolution was framed in that way, he will see that my right hon. Friend the Member for Black-pool, North (Mr. Low), in the debate on the Ways and Means Resolution, which I quoted on Second Reading, referred to the practice in regard to the steel industry in this country as a reason why it was appropriate for us to limit our action in the Ways and Means Resolution in that way.
§ Mr. Rhodes
Does it mean that the Indian cotton question, which has been raised here many times, cannot be considered in the context of the Bill? Let us have an answer to that. Can it or not?
§ Mr. Walker-Smith
§ Captain J. A. L. Duncan (South Angus)
In case there should be the misconception that the Committee is in 1052 favour of incorporating Amendments which may be restrictive, I should like to support my right hon. Friend and to say that after long experience of this sort of thing it is my view that it would be very much better to leave the Bill as it is. If extra words are inserted, the lawyers will decide that something more must be left out. If the words are left as vague and as wide as possible, as they are now, in the end it will be better for all of us who have the same object in mind, the prevention of dumping and subsidisation of all kinds. The wider it is, the better.
§ Mr. Cronin
I heard the speech of the President of the Board of Trade with some dismay. I gathered from what he said that he thought that his Department need not be cognisant of such matters as the rate of interest of countries overseas who exported goods to us. I was very surprised to hear that. I thought that the Board of Trade would watch these matters. It is discouraging to hear the right hon. Gentleman adopting this sort of lackadaisical attitude towards them. With the help of the Foreign Service he could have obtained this information quite easily. One wonders whether the Board of Trade will adopt the same slapdash attitude.
I cannot agree with the right hon. Gentleman that the more vaguely the Bill is worded the better. In a few years' time High Court judges will have great difficulty in understanding what is intended by the Bill. They will read it with corrugated brows, and the only conclusion they will come to is that the right hon. Gentleman himself is not sure what is intended. Nevertheless, we have had an assurance that he will look into the matter and see whether he can clarify it further, and in those circumstances I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Motion made, and Question proposed, That the Clause stand part of the Bill.
§ Major Legge-Bourke
Before we part with the Clause I want to draw the attention of the Committee to some observations which I believe to be of extreme importance and relevance to our debates on the various Amendments. These observations were included in the Report of the Committee on Horticultural Marketing, which has just been published. I should like to quote a few sentences from 1053 a paragraph in page 126 of the Report. The Committee was precluded by its terms of reference from going in detail into the question whether or not there should be protection for horticulture, but it made a point of giving its views upon the relative merits of quotas and tariffs.
In our discussion of one of the earlier Amendments I raised the question of the ease with which the quota method could be used to undercut the home market to a very considerable extent. In his reply the President of the Board of Trade did not comment upon this question. I gave an example of Italian pears coming in under quota, the quota being based upon current market prices. The quantity of pears imported could amount to as much as double what the permit for the quota would have entitled the exporters to send in. After that, the exporter in Italy is recouped by the placing of a higher price upon some other commodity which is not subject to quota restrictions. The transaction could go through completely outside the terms of the Bill and, as far as one knows, could never be brought within it under the discretionary powers which the Clause gives to the Board of Trade.
That emphasises the truth of the statement made in the report of the Runciman Committee. In paragraph 503 it says:For the reasons indicated, quotas are an unsuitable form of protection for horticultural commodities If, however, protection is by tariffs. the trade can adjust itself to them and yet still operate freely, and producers can be given reasonable certainty of the conditions under which the imports to the United Kingdom will be made.The penalty arising out of offences committed under the Clause will be by means of tariff, and I think that most of us believe that the tariff is probably the best weapon in the long run.
I cannot allow the Clause to go through without making this comment upon what my right hon. Friend has said about the future. We must reconsider what we are going to do if and when the Bill becomes an Act, and if and when a European free trade area is set up. with a sort of inner circle of Messina Powers operating a common market. Whatever else we may say there is no question but that the offences specified in the Clause are of the utmost importance. I believe that the effectiveness of the Clause will depend entirely upon whether or not we are 1054 going to use it simply, as my hon. Friend said—using a very colourful metaphor during the Second Reading debate—as a notice saying, "Beware of the dog. He bites dumpers and subsidisers", or as a deliberate instrument of policy to try to deter.
It is conceivable that if the Board of Trade were really vigorous in investigating the imports now coming in—with G.A.T.T. as it is—the Bill would give it power to deal effectively with the situation, but if it is to rely upon the Bill purely as a kind of longstop, only to be implemented with the greatest reluctance, it will not have the desired result. It certainly will be very far from adequate if and when a European free trade area is set up. For that reason I can only deplore, and ask my right hon. Friend to reconsider, what he said this afternoon about that part of our trade which is neither Commonwealth nor Empire.
Unless we have the right to discriminate among the various sections of our trade we shall never have a hope of reaching that blessed state of prosperity with which the Liberal Party will be satisfied, when we can once more enjoy a policy of free trade.
§ Mr. Boyd
As we are badly behind our time schedule I shall be as brief as I can. I ask the Minister to add one assurance to those which have already been given by him and the Minister of State. We have been told that the Government do not wish to use the power given by this Bill more than necessary. I hope that the right hon. Gentleman will resist the efforts of the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) to persuade him in this direction. So far, they have given assurances only of what one might describe as a negative type. They say that they will not use these powers unnecessarily.
I invite the President of the Board of Trade to add that in cases where he is unable to prevent an unfair trade practice being used against this country and causing injury to an established source of supply he will not only use these powers but will then get in touch with the Government concerned and see whether he can negotiate arrangements which will enable him to dispense with the countervailing duties that he has found necessary. That is what I am after.
1055 the right hon. Gentleman has given what is virtually an undertaking to this effect regarding Commonwealth countries. He has made it clear that there will be Board of Trade examinations in detail immediately after establishing these countervailing duties, so that there will be quite a lot of work done by the Board of Trade in any case. I ask him to assure us that included in that examination will be an attempt in consultation with the Government of the country from which the dumped or subsidised goods are corning to see whether it is possible to devise arrangements which will make possible the scrapping of the countervailing duties.
§ 6.30 p.m.
§ Mr. Ronald Russell (Wembley, South)
I wish to bring to the notice of my right hon. Friend a matter which I heard of yesterday and which I consider important as it concerns the manufacture of building board in this country. There is a danger that the industry may face subsidised competition from overseas and that such competition may be subsidised in a manner which it will make it difficult to discover exactly where the subsidy is applied.
Everyone knows that the main supplier of imported building board to this country is Sweden, although there are a number of other European countries from which we import it. I understand that part of the industry in Sweden, probably the greater part, is nationalised. There are a number of free enterprise firms which also operate, but the part which is nationalised includes not only the manufacture of the building board but the ownership of the forests from which the timber is obtained and the mills which process it. In fact, the whole operation is completely under Goverment control.
Subsection (2, a) of this Clause would probably enable the Board of Trade to determine the fair market price of the goods in Sweden so long as there is some privately-owned industry operating on a free market. I gather that there is some danger—at least, hon. Members on this side of the Committee would consider it a danger—of the whole of the Swedish industry eventually being nationalised. In those circumstances, there may no longer be a free market on which the goods are sold in Sweden, and then it may prove difficult for my right hon.
1056 Friend to determine where the subsidy is being applied.
Some of the building board imported into this country from Sweden is offered at a lower price than our manufacturers can quote. It is difficult for any firm in this country to find out where the Swedish subsidy is being applied, if there is a subsidy, or how they are being undercut by their nationalised Swedish competitors. This matter has been brought to my notice by a firm in my constituency which manufactures building board, but I do not think that it has been brought to the notice of the Building Board Manufacturers' Association. At any rate, I have not received any representations from the Association.
I have been supplied by the Association with rather interesting figures of the production of building board in this country and that imported from abroad. Production in this country has increased steadily in the last five years. In the case of hardboard it has increased from 25 million square feet in 1952 to 56 million square feet last year, a very satisfactory rate of progress. Imports of hardboard have also risen steadily from 189 million square feet in 1953 to a maximum of 434 million in 1955. Then there appears to have been a fall off in 1956, although I have figures which relate only to the first eleven months. Possibly there is not much danger at present, but the point which interests the firm in my constituency is whether this Bill will protect the home industry from unfair competition from an industry in a country like Sweden, where it is nationalised, and where it may be difficult to discover exactly where a subsidy is applied.
I should be grateful if my right hon. Friend would examine this matter and see whether it is covered by the terms of the Bill, and whether, if the whole of the Swedish industry became nationalised it would still be covered. If not, would he consider amending the Bill accordingly?
§ Mr. Ernest Thornton (Farnworth)
I wish to express regret at the inclusion of the words in lines 28 to 31 of the Bill. They explicitly prevent any action being taken about what is probably the worst experience of any British industry in the post-war period regarding concealed subsidies. I refer to the problem of the imports of cotton grey cloth from India.
1057 As I said during the debate on the Second Reading, at one time this concealed subsidy represented as much as 25 per cent. of the price of the goods marketed here from India. That is competition which no British industry can face, and manifestly it is unfair. Yet, by including these words in Clause 2, the Government make clear that they do not intend to deal with the problem. This dual pricing of raw material is a growing practice and I believe that it will result in grave danger to us as a manufacturing country.
The hon. Member for Kidderminster (Mr. Nabarro) referred to the Kidderminster carpet industry and the competition from Belgium, which is based on cheap raw cotton. He is far more optimistic than I am if he thinks that there will be any action by the Government to deal with the case he has quoted. It is parallel with the problem of the Lancashire textile industry and Indian imports. The Lancashire textile industry has no tariff protection at all against India. At least the Kidderminster carpet industry has a tariff against Belgian imports.
This is a practice which the United States is carrying out in reverse. They are exporting raw material at a lower price than it is sold to the domestic manufacturers. That, again, has brought problems in its train. The result is that Japan, with an efficient, low labour cost industry, is exporting cotton textiles to America based on lower-priced cotton than the American mill owners are using, and, in consequence, there have been threats by America to impose quotas or increase the tariffs on Japanese textiles. On the basis of that threat, the Japanese cotton employers have been obliged to get together with the American cotton employers and come to a quantitative and qualitative agreement about Japanese imports into America.
We are being driven into the same pattern, and a mission from our industry has been to India and is in Hong Kong at the present time. This is a growing trend, and, I believe, a dangerous trend, so far as the long-term interests of this country are concerned. What happens by the inclusion of these words in this Bill is that it is made plain to the world at large that the Government consider dual pricing to be a fair trading practice. If we recognise it as such, I think that very serious 1058 consequences can flow from it for this country in future.
Why does the Board of Trade want to deny itself the power to take action in flagrant cases of this kind? In effect, the Bill tells Lancashire, India and the world that if no agreement is reached the Government will do nothing about it, and that this practice can continue indefinitely. The President of the Board of Trade, in moving the Second Reading, referred, as the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) has reminded the Committee, to the Bill being equivalent to the notice:Beware of the Dog: He Bites Dumpers and Subsidisers."—[OFFICIAL REPORT, 22nd January, 1457; Vol. 563, c. 63.]I would suggest that the intention of the President of the Board of Trade and the Government is that this Bill is likely to bite nobody and do nothing, so far as the Western world and the G.A.T.T. countries are concerned. As I interpreted his speech on Second Reading, the paramount purpose of the Bill is to protect the economy of this country against an economic offensive from the Iron Curtain countries. I am not criticising that action, but I do not think we ought to fool ourselves into believing that it is intended to use this Bill except against Iron Curtain countries.
By the inclusion of these words, I suggest that the Iron Curtain countries are better able than any other countries in the world to take advantage of this Clause, and particularly of the words in lines 28 to 31, because they have completely controlled and managed economies, and they would be able to prove, if need be, that they are not subsidising in any respect, but are providing their raw materials to their own industries at cheaper prices and are, therefore, covered by this section of the Bill.
I want to point out on this matter that we are now living in a world which is rapidly industrialising. Countries in Asia and Africa, which, since the industrial revolution in this country have been providers of raw materials, are now starting to industrialise on the pattern established and followed by the Soviet Union, and by China at present. This industrial transformation will be far more rapid in the second half of the twentieth century than it was in the first half. Let us remember that when these countries 1059 start to utilise their own raw materials, then quite probably there will be a shortage of raw materials, as far as established manufacturing countries are concerned, and that the United Kingdom will have a very raw deal in those circumstances.
Let us make no mistake about it. A long-held theory has been exploded. We used to think that it took two, three or four generations to produce skilled workmen, technicians, scientists and industrial administrators, but we have now to note the fact—and we shall be foolish if we do not note it; we should not let our hatred of what happens over there close our eyes to these results—that in the Soviet Union it has been proved that within one generation these people can be produced.
I want to remind the Committee that in the Soviet Union there are between 40 million and 50 million industrial workers who are in the hands of thousands of technicians, scientists and competent industrial administrators, and that more than half of these people are the sons of illiterate peasants. That process will take place in other Asiatic countries, in China in particular, and I seriously suggest to the right hon. Gentleman that the policy of recognising as fair trading practice the dual pricing of raw materials is fraught with very grave danger as a long-term policy for this country.
§ 6.45 p.m.
§ Mr. John Grimston (St. Albans)
I wish to refer very briefly to two points and I ask my right hon. Friend the President of the Board of Trade to consider them.
The first is that, by accepting the Opposition Amendment on the point of threatening material injury, we shall have the position that material injury will be threatened or may be threatened to established British industry, when in all the circumstances it will be in the national interest that something shall be done, but nothing need be done. The powers which the President may exercise are only permissive, and I think it is important that they should be obligatory, or that we should consider now whether or not it would be wise for them to be obligatory.
1060 We do not doubt the intention of the present Government or of the present President of the Board of Trade, but the great day may come when the hon. Member for Bolton, West (Mr. Holt) and his friends are the Government of the day, and they may not be so keen to act in that way. Therefore. I think that there should be a duty on the Board of Trade to take action when a clear case is established showing detriment to British industry.
The second point has reference to subsection (3), to which a number of Amendments were put forward. I think that my right hon. Friend might possibly find that, if he sticks a little more closely to Article VI (2) of G.A.T.T., he will get more help there on the problem, which is admittedly a very difficult one. with which he is faced. There we are permitted to impose these countervailing duties on any product, and are permitted to impose a duty where the subsidy is applied directly or indirectly to any merchandise.
It seems to me that that covers part of the problem of some of these raw materials cases, which are very difficult, and which have been explored by various hon. Members on both sides of the Committee. I think that if the words used in G.A.T.T. are studied with that in view, they might help my right hon. Friend to meet some of the valid points that have been made.
§ The Chairman
Sir John Barlow. If the hon. Gentleman cares to remain seated, in view of his recent accident, he may do so.
§ Sir John Barlow (Middleton and Prestwich)
Thank you very much, Sir Charles, but I wish to make only a very brief speech.
It seems to me that both sides of the Committee have this in common—that the opinion that the Bill should protect industry and workpeople in this country is strongly held. That is the great common unity between both sides of the Committee. In looking through this Bill, one wonders whether it has sufficient teeth in it, beginning with Clause 1, which we are at present discussing. We are looking into the question of dumping very late in the day. Other countries, such as Australia, South Africa and Canada, to mention only a few, initiated legislation thirty years ago, and, in practically every 1061 case, they found that it was not strong enough, and periodically had to pass further legislation to give it more teeth.
I have here the Commonwealth Australian Customs Tariff (Industries Preservation) Acts of 1921 to 1936 and the Tariff Proposals, 1956, and I note that even last year several new sections were added to strengthen the hand of the Government to protect industry in Australia. I understand that the Government of South Africa have gone even further, and we know that the Canadian Government have adopted very strong measures indeed. Are we not starting where they started? Should we not start where they left off and take advantage of their experience? We may not want to go as far as they have gone, but I think that we should have the power.
It is useless to have a Measure of this kind unless the President of the Board of Trade has complete power which he can use quickly. Quickness is the essence of the whole Bill. During the Second Reading debate I mentioned the isolated dumping of goods. I said that it was only too easy for certain types of goods to be imported, to be sold in the shops and consumed before the matter was brought to the attention of the Minister. That problem may present a real difficulty unless my right hon. Friend has strong powers to take action himself rather than being compelled to wait to hear the views of the manufacturer who has been injured, or the trade association.
I urge my right hon. Friend to make this provision stronger than it is now. Following the admirable speech of the hon. Member for Farnworth (Mr. Thornton), wherein he criticised the Bill for not dealing with the difficulty of competition from Indian cottons, it seems extraordinary to me that my right hon. Friend should indicate that the difficulty about skins will come within the ambit of the Bill, whereas competition from India of a similar kind apparently will not. It seems to me that the two cases are very similar, and I am sure that Lancashire will want to know exactly why Indian cotton is excluded when skins are included.
I wish to refer briefly to the question of a "fair market price" which is mentioned several times in subsection (2). I came across an example a few years ago where country A had exported textiles to 1062 country B and was selling them at the same price in both countries, according to the official figures. It was found, however, that the original selling country A sold a small quantity of goods at a cheap price—the same as the dumped price— but sold the majority of the goods in the home country at a very much higher price. Will the Clause catch a sale of that kind? Perhaps 5 per cent. of the goods were sold at the lower price, but the majority were sold at a far higher figure.
There is in the Clause a reference to the "national interest". Can my right hon. Friend clarify what he means by those words? I think that I know what he may mean, but it might be very different if, in years to come, the hon. Member for Bolton, West (Mr. Holt) became President of the Board of Trade. The hon. Member for Bolton, West might think that it was in the national interest to encourage the sale of cheap goods. because it would help the consumers and keep the cost of living down, irrespective of the fact that it might destroy whole industries. Different holders of the office which is now held by my right hon. Friend might interpret these words very differently. I should like to know what protection we have.
§ Sir D. Eccles
It is quite clear from the speeches which have been made that hon. Members in all parts of the Committee are much concerned about the Bill. It is a departure for us to have powers of this kind, and I should like to repeat that they are aimed only at unfair practices and are not intended to give additional protection.
It might be right, as my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) has suggested, to consider the degree of protection that the horticultural industry has, but under this Bill that industry can be helped only in circumstances where either dumping or subsidies have been proved. I assure my hon. and gallant Friend that it is certainly my view, which I think will be held everywhere, that horticulture is a separate industry. We should certainly consider it so. Indeed, I think that we shall have to interpret the word "industry" fairly widely when considering material damage. There might be one particular class of goods dumped here 1063 which really injured only one manufacturer, but if it really injured him we should take action. I should hope that I should be allowed under this Bill to go fairly wide on that.
I will not follow what my hon. and gallant Friend said about the prospects of the European free trade area. I have no doubt that another opportunity will occur for a debate on that subject.
The hon. Member for Bristol, North-West (Mr. Boyd) reminded me that I had said on Second Reading that we would consult Commonwealth countries before using the powers in the Bill against any goods originating in those territories. He asked whether we would do the same in the case of foreign countries. I cannot give a complete assurance, because it might well be that it would be better to talk to the foreign countries through our representatives abroad rather than here. I will certainly try to negotiate that they should stop the practice, because it is far better for all concerned, but I am not prepared to give an assurance that I will warn every country throughout the whole world before we take action. If I did I should very likely destroy the power of speedy action which in connection with certain countries—I should not like to mention names—may be far and away the best chance we have of stopping dumping.
§ Mr. Boyd
May I explain that I did not mean to ask so much as that any Government should be consulted before we took the necessary action? I can appreciate that many countries outside the Commonwealth might well drag out the negotiations, and we could not afford to await action until we had had discussions with them. I was asking the right hon. Gentleman to assure us that when these countervailing duties have been imposed, efforts would be made to use them rather as a bargaining lever to get the dumping or subsidising abolished instead of our being content simply to leave the countervailing duties on.
§ 7.0 p.m.
§ Sir D. Eccles
Each case would have to be looked at on its merits. I was thinking that in the general run of case it would be to our advantage to bargain and get the practice stopped at the source, in which case we would remove the duty.
1064 My hon. Friend the Member for Wembley, South (Mr. Russell) mentioned building boards imported from Sweden and asked whether, if the manufacturing industry of that country became nationalised, the provisions of the Bill could be used if it were found that a subsidy had been paid. The answer is "Yes." Of course, it is extremely difficult to know how much subsidy. I mentioned on Second Reading that the more Socialist the economy is the easier it is for the Government concerned to infiltrate into other countries by all kinds of evil practices. It is difficult to say to what degree the products of any nationalised industry have been subsidised. If this is a case which my hon. Friend would like the Board of Trade to look at in detail we should be very glad to do so.
The hon. Member for Farnworth (Mr. Thornton)—I well understand him—said he was sorry that lines 28 to 31 were in the Clause. We have reason for them. I can only say that in the case of Indian cotton the mission is there trying to come to an agreement for placing an upper limit on the export from India to this country. We must all hope that it will come back successful. It is very difficult to put duties on goods from Commonwealth countries where the form of assistance is an export control of a kind which we practise ourselves.
My hon. Friend the Member for St. Albans (Mr. J. Grimston) wished the powers to be mandatory. From the bargaining point of view it is probably better to leave them permissive. There is a great deal of judgment used in these questions. It is a matter of relying on judgment in many cases, for example, to decide how much subsidy is attributable to a certain consignment of goods. It will now be a matter of judgment, in the case of member countries of G.A.T.T., whether material injury has been done to an established source of supply. Where so many questions of that kind have to be decided it is better to leave the matter in the hands of the Board of Trade as a weapon that can be used when it is thought to be clear that an advantage can be secured.
My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), who gallantly made a speech despite his injury which we all hope will soon mend, 1065 thought we were taking these powers very late in the day, and wondered whether they were sufficiently strong to enable us to take speedy and effective action. I think that they are. As soon as an allegation is made of dumping or subsidy, we can come to the House for an Order asking for a duty. There are provisions in the Bill for the repayment of the duty if we make a mistake. That is precisely because we wish to take action without going into a very detailed examination which would stultify the good that the Bill could do.
I am afraid that my hon. Friend was wrong in saying that skins for leather manufacturers were caught by the Bill, whereas Indian cotton was not. As I understood the case put by my hon. Friend the Member for Kidderminster (Mr. Nabarro), the skins would not come under the Bill any more than would the Indian grey cloth. My hon. Friend asked me whether, if a small proportion of the supply of a certain article were sold at a very cheap price in the country of origin in order to establish a low price, whereas the bulk of the supply was sold at a higher price, we would have regard to the small parcel at the cheap price. The answer is "No." We shall have power to ascertain the normal, regular price at which the particular kind of goods is sold.
Finally, my hon. Friend asked the old question, What does "national interest" mean? I have always understood that "national interest" means what Her Majesty's Government think that it means at any particular moment. There is really no other way of defining the national interest. Luckily, both sides of the Committee know pretty well what we mean by it in a broad way, but it is not possible to define it in a Bill.
§ Mr. Gordon Walker
The Rent Bill is not in the national interest, then?
§ Sir D. Eccles
It may be that I have made some slight mistake on some point here, but I am new to the Bill, as most hon. Members are aware. If so, I will put it right on some other Amendment. I hope that I have answered the questions raised, and that the Committee will now let us have the Clause.
§ Major Legge-Bourke
Can my right hon. Friend give an assurance on the particular point that I raised about the quota 1066 and say whether avoidance of the quota might be caught by Clause 1 (2, a)? Will my right hon. Friend consider this matter before Report, because it is rather important. It would be a good thing to cover the practice by the Bill.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.