SYNTHETIC ORGANIC DYESTUFFS (IMPORT DUTY) (Hansard, 8 March 1960)

§ The Minister of State, Board of Trade (Mr. F. J. Erroll)
I beg to move, That the Import Duties (General) (No. 1) Order, 1960 (S.I., 1960, No. 252), dated 16th February. 1960. a copy of which was laid before this House on 19th February, be approved. I do not propose to detain the House for more than a minute or two, but hon. Members might wish to have a brief word of explanation about the Order. It provides for an import duty of 33⅓ per cent. ad valorem to be chargeable under the Import Duties Act, 1958, on synthetic organic dyestuffs. When introducing the European Free Trade Association Bill to the House on 15th February this year, I explained that as a result of the obligation to eliminate quantitative restrictions on imports, it was necessary in respect of dyestuffs and their intermediates—that is the term used for chemicals employed in the manufacture of dyestuffs—to abandon the present system of prohibition of imports except by licence.
The Dyestuffs Acts, under which imports which were first prohibited, remained on the Statute Book although they had not been used since 1939. Clause 5 of the European Free Trade Association Bill provided the appropriate occasion for repealing those Acts to clear the way for introduction of the tariff. The Order which is now being laid before the House completes the change-over to a tariff régime by providing for the imposition of the necessary import duty. At the same time, the control of the imports of these goods has been lifted by an amendment to the open general import licence.
The Order is thus a necessary step in the change-over from a system of protection by prohibition and licence to a system of protection by tariff for this important British industry. I accordingly ask the House to approve the Order.

§ Mr. Douglas Jay (Battersea, North)
I wonder whether the Minister can tell us a few things more about the Order. It is true that he is simultaneously getting rid of a system of protection and introducing a tariff system instead. That does 378 not, however, entirely absolve the House from inquiring why it is necessary at this date still to have some system of protection. It may be true that in 1939 or before it was considered necessary, but it does not automatically follow that it is still necessary in 1960.
From my study of the Order and the parent Order—the Import Duties (General) Order, 1958—I think that what the Minister is doing is raising the import duty on these dyestuffs from nothing to 33⅓ per cent., which is a quite steep increase in the tariff. Indeed, from some points of view, it is a quite steep increase in taxation on these materials. We are dealing not with some technical and recondite form of import, but with an important industrial raw material. It is true that not all, but only certain types, of the dyestuff imports are covered.
Can the Minister tell us what has been the total value of imports in recent years of the particular dyestuffs which are covered by tonight's Order? Was it a quite small figure? Is it trade worth several million pounds a year that we are considering? Can he tell us, since we are dealing with an industrial raw material, which, obviously, from many general points of view, some hon. Members may feel should not bear any import tariff at all, why is it still necessary, even allowing for the fact that the quota system is going, that this really quite high import duty of 33⅓ per cent. should be retained on an important material of industry?
I will not, at this time of night and on this Order, go into all the recesses and subtleties of the Government's economic policy, but I believe that the Minister of State would agree that it is the policy of the Chancellor at present that industry should keep its prices and costs down. One way in which the Government can help to keep prices and costs down is to lower or dispense with, or at least refrain from increasing, import duties, particularly on raw materials.
I think that in these circumstances we need just a little more explanation why this is necessary. It has sometimes been thought suitable, notably by Germany in recent years, to maintain competition in industry and to keep internal prices down by lowering import duties. I do not know how far it is true to say that these dyestuffs are produced 379 by some of our larger and better known quasi-monopoly firms, such as Imperial Chemical Industries. If they are, in fact, monopoly products one would have thought that the case for lowering import duties would have been even stronger.
I am only asking the Minister these questions. I am very glad to give him time to supply himself with the information to answer them, because we are really dealing here not with some quite negligible form of import which does not have any material effects on the rest of industry, but with quite an important raw material; and I think that we ought to have a case made for raising the import duty on it from nothing to the comparatively high level of 33⅓ per cent.

§ Mr. Erroll
May I reply briefly to the points raised by the right hon. Gentleman the Member for Battersea, North (Mr. Jay)? I should make it plain that imports were prohibited before this Order and that what the Order does is to apply the same tariff to dyestuffs as is applied to most other chemicals. We had what amounted virtually to a complete prohibition of imports of dyestuffs previously, except where a case could be made out. There was relatively little relaxation of control of imports of dye-stuffs until this Order came into effect. There will be a tariff instead of complete prohibition. Nevertheless, it was possible to make out a case for dyestuffs to be imported when comparable dyestuffs were not available in the United Kingdom and dyestuffs imported under these arrangements amounted to about £5 million worth per year.
I can quite understand the point of view of the right hon. Gentleman when he feels that there must be something doubtful about the value of imposing such a high tariff at present, but it must be remembered that this is merely imposing the same tariff as the rest of the chemical industry, broadly speaking, enjoys today. In the case of the E.F.T.A. countries, that tariff protection will be progressively reduced so that there will be no tariff protection against dyestuffs and chemical imports from members of the E.F.T.A. at the end of a period of ten years.

§ Mr. Jay
It will not apply to non-members of the E.F.T.A. countries? Did the Minister find out what tariff was on other chemical products and decide automatically to apply that to these products, or did he consider whether it is justifiable at all to keep it on all those chemicals?

§ Mr. Erroll
It seems to be logical to give the same tariff protection to the dyestuffs part of the chemical industry as is enjoyed by other parts of the chemical industry. It is seen to be a logical starting-off point, particularly as the dyestuffs industry itself previously enjoyed complete protection as a result of the virtual prevention of importation. It will have to experience competition because there is now a tariff instead of the quantitative restriction and because it will also face the repeated reductions in the tariff on dyestuffs from the E.F.T.A. countries. I would add that the chemical industry has realised that this changeover is necessary and has co-operated in the change-over.