§ 10.26 p.m.
§ The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan)
I beg to move,That the Import Duties (General) Order, 1958 (S.I. 1958, No. 973.), dated 13th June, 1958, a copy of which was laid before this House on 20th June, be approved.The Import Duties Act, 1958, received the Royal Assent on 20th February. It replaces our complex protective tariff legislation by a single comprehensive Measure and empowers us to introduce an up-to-date tariff based on the internationally agreed Brussels nomenclature. Since under the Act the old duties lapse on 1st January, this Order, which is the first one under the new Act, introduces a new tariff with effect from that date. Before the end of the year another Order will be made, first, to provide for any amendments in the new tariff, secondly, to conform with any changes made under the current tariff; and, thirdly, to provide for any temporary exemptions. Further Orders will also be made to provide for drawbacks and duty reliefs.
When we were discussing the Import Duties Act, the whole House was agreed that the introduction of the Brussels-type tariff was desirable and we explained then why we intended to lay an Order in the summer introducing the new type tariff, even though it did not come into effect until 1st January, 1959. I want to emphasise, subject to what I say later, that tariff rates are not in general being changed, but the change-over to a Brussels-type tariff is a tremendous operation and one which affects thousands of importers and manufacturers in their day-to-day activities. We thought it right that they should have six months to get used to the details of the new tariff before it actually becomes effective. Customs will therefore publish an advance
§ opinion therefore that the letters from the Chairman of the London Electricity Board and the Board's Solicitors constituted no breach of Privilege.
§ edition of the tariff when the House has approved the Order.
§ I have in my hand an advance copy of the tariff as it will now be published. Those who are familiar with the old volume will see that this is a much larger one, but it is very much clearer and contains other details, as I will explain in a few minutes. Translating the present tariff into Brussels terms has been carried out with great care, but inevitably, with a major operation like this, there may be a few mistakes which will have to be put right before January.
§ Again, although we have done all we can to consult all the interested parties about the details of the new tariff, there may be some cases which have still to be examined, or where we have not yet been able to reach agreement with interested parties. We shall, of course, be prepared to deal with any such cases during the next month or so after publication, and then, if necessary, introduce an amending Order, which, of course, the House will be able to debate, before the new tariff becomes effective in January. On this understanding, I hope that hon. Members will not press for explanations or details about particular items in the Order, as distinct, of course, from points which affect the new tariff as a whole. Perhaps if they have such queries they will write to me about them.
§ The Schedule to the Order we are discussing shows only protective duties. It does not include revenue duties chargeable under various Finance Acts, nor does it include anti-dumping duties which are imposed under separate legislation. Nevertheless, the advance edition of the Customs and Excise tariff I have here will include all duties whether protective revenue or countervailing.
§ The aim has been to recast our tariff in the new form reproducing the substance of the existing duties with no more than marginal changes in the rates, if any.347
§ Perhaps the best example I can give is this. If the right hon. Gentleman the Member for Battersea, North (Mr. Jay) would care to turn to page 99 of the Order and look under the heading 42.02, he will see the comprehensive schedule which includes everything from travel goods to ladies' handbags made of various materials. He will see that there are now to be three rates of duty, two of which are bound in G.A.T.T. They replace what were formerly 70 or 80 different rates, many of them overlapping. That is the type of clarification and simplification which has been carried out.
§ Inevitably, in removing all the overlaps and complexities which flow from the fact that the duties have been imposed at different time by different Acts, the rates on certain goods will be slightly changed, but we felt, and I think the House and industry will agree, that these minor changes are a small price to pay for the major simplification which is now made possible. There has been consultation with industry throughout, and it will be clear that our proposals are in the main acceptable.
§ On the Second Reading of the Import Duties Bill, it was stated that no deliberate changes would be made in the existing rates except for the purpose of simplification. Now I have to explain that there is one exception. I ask the House to note on page 38 of the Schedule to the Order the heading 22.01, that is, waters, including spa waters and aerated waters; ice and snow. The House may recall that some years ago when snow was imported to make a ski jump on Hampstead Heath Customs rightly ruled that it was liable to 10 per cent. duty. That was, in the eye of the general public, demonstrably nonsense. However, a duty free licence was then issued under the provisions for goods imported for the advancement of sport.
§ We have, therefore, chosen this opportunity to effect this one change and, under the heading 22.01 (B), ice and snow will henceforth be free of duty. If the right hon. Member for Battersea, North wants to import any snow to make a snowman in his garden he had better do it after 1st January, when it will be duty free. I should have thought that this unilateral effort towards free trade would have been welcomed by the Liberal Party, but I 348 see they are not here. That is the only deliberate change made, and I trust the House will condone this.
§ I am sure that the whole House is already well aware of the advantages of the new tariff. Unlike our current tariff, each article of commerce is classified in one place only where the rate of duty can be found. In addition, this is an international classification, so that once a trader is familiar with our tariff he will be equally at home with the tariffs of those other countries which adopt the Brussels nomenclature.
§ Once the House has approved the Order, we shall be ready to ratify the Brussels Convention, which we signed in 1951. We may be the first to ratify it, despite the fact that the task of transposing our tariffs into the new form has been more difficult for us than for any other country. Actually, two important countries, France and Germany, are already operating Brussels-type tariffs, and others will soon follow suit. Under the Import Duties Act, the old duties will cease to apply from 31st December next. The Order introduces new duties on 1st January, 1959, and we therefore need the approval of the House, although the new duties are the old duties in a new guise.
§ We hope that this new tariff classification will stand the test of time. It is a good, simple classification, and we have been as careful as possible in preparing it to avoid interfering in any way with the level of protection which industry at present enjoys. We hope that the task has been well done. If it has, it is due very largely to the help which the Board of Trade and Customs have received from industry in general. I think that the House would like to thank all those in industry and commerce who have devoted their time and energy in helping us to see the job through.
§ 10.37 p.m.
§ Mr. Julian Snow (Lichfield and Tamworth)
I was very glad to hear some of the observations made about the duty-free importation of snow. I shall use the Minister's words when next I pass through H.M. Customs. Perhaps I should declare an indirect interest. Judging by an answer given to me by the Treasury last week, I. understand that these proposed tariffs will include certain tariff protection which was originally given under the 349 terms of (he Safeguarding of Industry Act, 1921, which provided for the imposition of key-industry duties. I am particularly interested to put a few questions about Chapter 29, which deals with organic chemicals.
The Minister, in his statement, mentioned that he had taken the advice of industry, and I should be very grateful if he could inform me—though I should understand it if he could not do so at such short notice—what organisations in industry he consulted on such proposed tariffs as are scheduled.
My reason for putting that question is that the pharmaceutical industry as a whole is faced with a slight dichotomy of interest, for the cost of the National Health Service bill is attracting the attention and, indeed, the criticism of many people and many organs of public opinion and is causing disquiet, while it is a fact that certain drug production in this country is protected by pretty steep duties, amounting to as much as 33⅓ per cent. in some cases.
Did the Minister's consultations take into account the fact that many of the producing companies in this country are not what we might call British industry, in the sense that while they are British-established companies they are, from the shareholding point of view, foreign companies? Although they are very largely American, they are not exclusively so. I should like to know what consultations took place in relation to these chemicals, not only as regards the protection of industry but as regards National Health Service cost. It is, of course, inevitable that duties levied under such tariffs are published and enforced but cannot take into account new developments as they occur.
I should like to ask the Minister a second question. Why is it that when a new drug is imported it is assumed that it will attract the highest possible duty? This seems to be wrong and against both the interests of the public and those of the commerce concerned. I put this question to the Minister in no provocative sense, but merely in an exploratory sense and to let him know that it would, perhaps, be a good thing to have a look at the tariff in the light of what I have said.
I am not sufficiently familiar with the operation of the tariff to know whether this is subject to amendment before it 350 comes into operation next January. As I understood the Minister's words, this is, with small exceptions which are not of great importance, fairly rigidly agreed. Perhaps he could enlighten us on that point.
§ 10.41 p.m.
§ Mr. Douglas Jay (Battersea, North)
As this matter is largely one of nomenclature, I thought it best that my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) should address the House first on the particular issue he wished to raise.
We are not now discussing a controversial topic such as we discussed earlier today, but it is a matter not entirely without importance. This Order, as the Minister said, follows the Import Duties Act which the House approved in February and fulfils the promise given us then of a codifying and qualifying Order.
I must say that I think that the Schedule to the Order—and it is very little but Schedule—fully justifies the vote of thanks which came from all parts of the House during the discussion on the Import Duties Bill for the enormous labours of officials and others which have gone into this job of codification and simplification. I do not know about other hon. Members but I must say that I personally found our import tariff a good deal more intelligible after studying this Order than I was ever able to do before.
I am slightly intimidated by the information given us by the Minister that this is not the whole truth and that there is a further document which, I take it, will be published both to Parliament and to industry and which will further simplify the details of what we have before us tonight. As far as the Order goes, I think that it makes the effects of our import tariff a good deal clearer, but whether in making the facts clearer it does not make one wonder all the more about the exact reason and justification for the rates being what they are, I am not sure.
To some extent, the more we see this tariff the more one wonders what the justification for its structure is. However. I only want to say this tonight. First, let us be clear—and I think that the House should be clear—in agreeing to the Order that, though 351 it is very largely a codifying and qualifying Order, it is not entirely so. We are, as the Minister quite candidly said, altering a few tariff rates in a marginal sense. I accept the Minister's assurance that they are only marginal and are alterations made only where necessary for the straightforwardness of the clarification. The hon. Gentleman also told us about the minor change as far as snow and ice are concerned. I do not think we can deny him indulgence in this one matter. As someone who watched with great pleasure the ski-jumping competitions on Hampstead Heath a few years ago, I certainly welcome the removal of the tariff from snow. I take it, however, that if snow arrives in more normal manner in these islands it will be carried free, as it always has been, apart from this Order.
One could talk for many hours about the details of the Order, but I hasten to add that I have no intention of doing so. I would only draw the attention of the House briefly in passing to just two points which strike one in looking through the tariff list. The first is that it is almost a convention or a cliché in the House in the course of the Finance Bill for someone to argue, very often the hon. Member for Kidderminster (Mr. Nabarro), that whatever we are debating at the moment, for instance it might be chassis for lorries, is the one example in the country of where we have a tax of some kind on one of the tools of trade.
Though perhaps that is a cliché, I think it is profoundly untrue. We have only to look briefly at this Order to see that there is a vast array of materials and semi-finished manufactured materials in industry which are subject to heavy import duties in this country. All the main steel products, machine tools, plant and equipment, electrical goods and all sorts of tools and materials of a wide range of industry are subject to import duty. It is well that we should remember that sometimes and take note of it in discussing this Order.
This Order demonstrates the falsity of the proposition the President of the Board of Trade was laying down, or attempting to lay down, in our debate on the cotton industry last week when he talked about the principle of duty-free entry of Commonwealth goods to the United Kingdom. Again, one has only 352 to look at this Order to see—as I am sure many hon. Members will realise—that over a vast range manufactured Commonwealth products come to this country not duty-free but subject to import duty at a lower rate than corresponding foreign goods.
One thing this Order makes abundantly clear is that it applies not merely to all sorts of metal goods such as motor vehicles and parts, clocks and watches, musical instruments and so on, but also to a large range of textiles. It is the case that over the whole range of silk, rayon and man-made fibres, as they are fairly intelligibly described—yarn and cloth and made up goods—the Commonwealth product comes in at a high rate of duty, usually five-sixths of the full rate of foreign goods. I am not saying whether that is right or wrong but simply drawing attention to the fact. I think we ought to take account of this in debates about the cotton industry, because the President of the Board of Trade gave the impression that virtually all Commonwealth manufactured goods come into this country duty-free and that it was absolutely impossible, therefore, to make an exception in favour of cotton. We have only to look at this Order to see that on the face of it the cotton industry has a grievance in that its products are imported from the Commonwealth duty-free whereas that does not apply to a large range of other textile goods.
If I believed that tariff policy was one of the major elements of our general economic or balance of payments policy, I should think that this Order deserved a great deal more time and attention than we are able to give it tonight, but I think we can all agree that from the point of view of our general balance of payments and economic policy quotas are nowadays very much more important. But we should not think this is a negligible question, because all the discussions and plans relating to the European Common Market and the Free Trade Area are an issue of tariffs rather than quotas. I do not think, therefore, that we should regard it as negligible, but I think we should agree to the Order, not on the grounds that the structure of the tariff as it stands is perfect or that it is the last word on this matter, but because it is at least a step forward and gives us very much more clarity and simplicity, for which we ought to be thankful.
§ 10.50 p.m.
§ Major H. Legge-Bourke (Isle of Ely)
I want to join those hon. Members who have said that the work on these new tariff tables deserves our congratulations and thanks. I support the change-over for want of something better, and I believe that the deplorable part of the proposition before us is that we are stili basing our tariffs, preferences and protections on a level which is completely and utterly out of date—namely, 1932. The time must come when we go into the whole question of reappraising the Ottawa Agreements and our position vis-°-vis G.A.T.T. in the light of the changes in Europe and in the character of the Commonwealth. The tragedy about this new nomenclature is that it does not tackle that problem.
Every year the Anglo-Spanish trade agreement is negotiated. Now that Spain has become partially associated with O.E.E.C., does she, too, accept the nomenclature? That is important from the point of view of the horticultural industry, in particular. I know that my right hon. Friend has recently been there and has been considering the possible danger, particularly to the tomato industry of this country, of the Spanish product, and I am grateful for the interest he has taken, but it is important that we should know whether Spain accepts the new nomenclature now that she is partly associated with O.E.E.C.
I still believe that the whole of the policy of our party is bedevilled by some spurious Liberalism creeping into our trade policy. The sooner we get it out, the better pleased I shall be.
§ Mr. H. Rhodes (Ashton-under-Lyne)
How many countries have accepted this classification? Have any Iron Curtain countries had anything to do with it? How many countries have reached the same stage as ourselves in ratification?
§ 10.53 p.m.
§ Mr. Vaughan-Morgan
Perhaps, with the leave of the House, I may reply to some of the questions asked.
Replying, first, to the hon. Member for Ashton-under-Lyne (Mr. Rhodes), I gave on Second Reading and Third Reading of the Import Duties Bill the number of countries which have accepted. I am afraid that I had rather dismissed the point from my mind and I cannot give the figure tonight. I think it is fourteen, 354 mostly the Western European countries. Spain either has accepted, or is about to accept, the nomenclature.
The right hon. Member for Battersea, North (Mr. Jay) raised the question of duty-free entry. My right hon. Friend's words were perfectly clear; all these duties were imposed before the Ottawa Agreements and have been carried on. The artificial silk duties were originally imposed as revenue duties, and revenue duties, as opposed to protective duties, have always been charged on Commonwealth goods. The point of my right hon. Friend's explanation was that when we abolished all these complex Acts and had one new Statute we did not include the statutory bar on the imposition of protective duties on Commonwealth goods which had resulted from the Ottawa Agreements, but in the debates on that Bill the Government gave a pledge that there would be no change.
§ Mr. Vaughan-Morgan
The position is as I have said. There was a statutory bar. We renewed the pledge in the debates on the Bill. That is a clear principle. The right hon. Member asked when the new advance tariff would be published. It will be published as soon as possible after the House has approved the Order. He has done some homework on the Order and I hope that he welcomes it, because it is a remarkable example of lay-out and lucidity. Anybody who has to wade through the details of a tariff, as I had to do in my youth, will welcome this Order as being rather large but very clear and, as a result, very useful.
Dealing with the point raised by the hon. Member for Lichfield and Tamworth (Mr. Snow), I cannot give the exact names of those consulted. There have been, I think, something like 1,900 consultations, and exactly whom all were with I could not say offhand, but I will write to the hon. Member on the subject. As I say, there are no real, substantial changes at any stage in the duties. He asked: Is this fair? The whole point is that there are now to be nearly six months during which all those concerned will have a chance to look at this tariff. 355 Then, as I said at the beginning of my speech, we will introduce a mopping-up Order that will take care of all the considerations that have been raised. I hope that, with that explanation, the House will give its approval to this Order.
§ Mr. Vaughan-Morgan
Originally, most of the associations were approached, and then, in case anybody was overlooked, it was advertised, but any further representations will always be looked at, of course.
§ Question put and agreed to.
That the Import Duties (General) Order, 1958 (S.I., 1958, No. 973). dated 13th June, 1958, a copy of which was laid before this House on 20th June, be approved.