HC Deb 21 March 1961 vol 637 cc343-54

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

10.12 p.m.

Mrs. Patricia McLaughlin (Belfast, West)

The subject which I wish to raise this evening is of great importance to the linen manufacturers and merchants of Northern Ireland. This subject has been under discussion with Her Majesty's Ministers at the Board of Trade for a number of years now and up to date apparently there has been no means of finding an answer to the problem.

The problem is that goods coming from Iron Curtain countries, and linen piece-goods in particular, are the cause of great difficulty in the home market. I am raising this important matter under the black shadow of unemployment which is looming over the shipping industry in Northern Ireland, where shipyard slips and gantries are lying idle and there is not much future that we can see at the moment. We know that there is a future in other industries in Northern Ireland, and also in shipbuilding, but at present the situation is serious and the linen industry needs to have support on this urgent problem.

The linen industry today must have a flourishing home market if the industry is to test out many of the things which we have to try to sell to a much more discriminating market overseas than the market of years past. I know that my right hon. Friend the Minister of State, Board of Trade has considered this subject very carefully and I know of his many problems and difficulties in the matter, but I must ask him tonight whether he will think once again in terms of what this problem means to an industry which is comparatively small when measured in United Kingdom numbers but is one which is of great importance not only to the home market in Northern Ireland but also in the value of what we hope to continue increasingly to sell to various countries overseas.

We must get this matter in perspective. In 1952 imports from all Iron Curtain countries were approximately £40,000 in value. In the eleven months of 1960 for which figures are available that value had risen to £145,000, an increase of about five times. This is evident from the factual information contained in figures issued by the Ministry of Commerce in Belfast. I know that the Minister of State will say that this is not a serious matter for the United Kingdom as a whole, having regard to the quantity of imports, but it is a very serious matter indeed for Northern Ireland's linen manufacturers.

In terms of re-export this type of material is not affected at all, because re-export in this line is practically non-existent. I have talked with several prominent members of the trade on this matter and they are all agreed on one point. Indian and Hong Kong cotton is imported, then embroidered and re-exported to one or two countries in the form of pillow-cases and things of that kind, but that does not happen with the ordinary type of linen imports from Iron Curtain countries. There is no comparable make-up of that as far as I can find out. Most of the export countries that can use linen or able to buy it cheaper direct from the Iron Curtain countries than from Britain.

I have with me many different samples. In the past, during discussions which the Irish Linen Merchants' Association has had with the Board of Trade, we have been told that insufficient samples were available. I have taken the trouble to send some to my right hon. Friend the Minister of State, and he has kindly returned them. I have a number of others. It is untrue to say that we only have samples from one or two countries. I do not intend to wave these samples around tonight, because I have too little time. But I want to refer to one or two.

I have here a type of linen towel imported from Czechoslovakia and invoiced at approximately 15s. 6d. a dozen. The average price, at the cheapest level at which one would hope to introduce this towel into this country should be from 26s. to 27s. a dozen. That would be the minimum, fair price, and the towel would not be of lower quality than expected at this price.

If one considers this matter in terms of what is happening to the duty lost by allowing this type of goods to be imported and compares the price here with the price in the country of origin, one realises that this country is doing itself a double disservice. It is hampering the efforts of Irish linen manufac- turers, and, I presume, of the Scottish manufacturers, while at the same time losing a reasonable amount of duty which could be charged on these goods.

I have here another towel which comes from Prague. It sells there at the equivalent of 8s. 9d. at the official rate of exchange, and 4s. 4½d. at the bonus rate for tourists. It is selling here at approximately less than half that price. I have also another towel of the standard size imported from Czechoslovakia. These towels are landed, with duty paid, into the London warehouse at 18s. 6d. a dozen. They sell in the country of origin at approximately two and a half times that price, at the very minimum.

This is the sort of problem we are faced with. How are we to find a reasonable balance between what is good for this country in exports and imports, and what is important to us in providing a sound and reasonable background to an industry like linen, which faces very heavy competition? The industry does not demand feather-bedding, but only a fair and reasonable background.

I have another towel from Budapest. It sells for 6s. 10d. in a retail store there, yet comes to this country at a nominal figure. It thus costs us twice over—in loss of duty and in loss of home markets to the Irish linen industry. I know that my right hon. Friend says that these imports must be judged against the sales of home produce as a whole, and he will say that they have dropped slightly in percentage value, but I believe that this type of linen import is rising. The fact that this slight percentage drop has occurred does not alter the fact that that is precisely what happened in the case of the cotton industry. I wish that I had time to go into all the figures. The cotton industry figures available show what can be achieved in a few years with small beginnings of this sort. It is, in fact, the thin end of the wedge. We in Northern Ireland are anxious that the thin end of the wedge should not be put in any further on this matter of unfair competition from Iron Curtain countries with linen imports.

It must not happen in the linen industry. One merchant tells me that it has already affected his export trade. He said that he was quoting 37s. 6d. per dozen for tea towels to a buyer from New Zealand. That is a fair price, but he was brought down to 36s. because he was told by that buyer that Red China was importing a similar type of goods and he had to be beaten down. A difference of 1s. 6d. per dozen means that there is virtually no profit, and in the long term this is not an economic proposition for the linen industry.

Instead of going out for expanding markets and beating fair competition, we have to meet that kind of competition not only overseas but at home. Nobody is asking for special treatment, but only for fair consideration of what is an acute problem. It is no good the Minister of State saying that there is no case proven, because he agreed in June, 1960, that it would appear that this type of goods from Czechoslovakia was being imported into the United Kingdom at prices which one might almost term as dumped. It is said that they are too small to worry about and to cause injury to the United Kingdom industry. Are they? I do not believe that they are.

The bulk of this United Kingdom industry is in Northern Ireland, and I ask the Minister to look into this with regard to the long term seriousness of the problems. We cannot afford to start taking new steps when already the problem has become too great. At the moment it is very severe, and I know that the Minister will understand that we are not asking him to do anything unreasonable, however difficult it may be for him to settle this now.

There are several other points I should like to raise in the short time available. First, the Government are losing duty by allowing this type of material to come in far below the economic price. Can we afford to lose duty in this way? Is it fair on other goods which come into the country? Secondly, why should not quotas be placed on this type of goods which have such an importance to the economic life and prosperity of Northern Ireland? Why is it not possible in this case to alter the type of arrangement of importation and change the monetary value to a yardage value? We find that the main state trading countries are selling far too much at far too low a price because they find that is the way in which they can get sterling. Thirdly, where imports into the United Kingdom are from State monopoly countries, should the import duty not be a specific one? In other words, so many shillings and pence per yard for cloth instead of the ad valorem duty as at present.

I have here a large sheaf of papers and I am sure that it is not possible to go through all the points I have listed, but I should like to emphasise two or three of them before I conclude. In Northern Ireland at the moment we face great competition from many types of fibres, and I must pay tribute to the fact that the industry has adapted itself as far as possible to all the new methods and ideas and new ways of finding markets. Despite the rising difficulty of increased competition there has been with very little grumbling about the hard and hurtful type of reorganisation which has been necessary within the industry, and those who are going ahead have gone ahead thoroughly.

The Irish Linen Merchants Association has to date met with a complete lack of success in getting anything done on this subject, and in one of its letters it says: meantime the imports have definitely led to a worsening of the manufacturing situation in the linen industry here."— That is in Belfast— This particular point will be vouched by firms concerned in the manufacture of glass towelling. The letter goes on to mention the reports of meetings and applications which have gone on between themselves, the Ministry of Commerce of Northern Ireland and the Board of Trade, and says that the facts contained in its application of 10th September, 1959, justify immediate action being taken by the Board of Trade to halt these imports"— It should be noted that that was in 1959; it is now March, 1961, eighteen months after the first application was made on that subject— which are a real menace to the economy of Northern Ireland, and unless some action can be taken to stop this unfair competition which is based on state subsidies, what should be a prosperous section of the Irish linen industry will become seriously impaired. This is the main crux of the matter for Northern Ireland, and I believe that the important point for Her Majesty's Government is that any industry today which is alive and go-ahead; which is able to benefit this country with a fair amount of exports; which is able to offer in future a continuing amount of exports; which brings into this country valuable dollars and other currencies that we need, and which has done so much in the past to make certain that everything that it can do today to help Britain is done, in this case has a right to ask that what needs to be done for it should be done. Material injury to the home industry is being done.

A survey has been carried out by the Association, which has circulated its members in order to ascertain the trend of production in sales of printed, striped or other types of linen towels of the kind that I have here. The survey shows that this is causing a great deal of difficulty. It will be too late to start doing something about it when the snowball has become too large for us to handle. It will be difficult to do anything when the same pattern that developed in regard to the cotton industry repeats itself in the case of the linen industry.

I hope that my right hon. Friend will be able to tell us of the way in which he hopes to see that the British Government are not done out of their fair due in duties, and that the Irish linen industry is not prevented from keeping its looms turning and so providing the work which it so urgently needs.

10.28 p.m.

The Minister of State, Board of Trade (Mr. F. J. Erroll)

I am grateful to my hon. Friend the Member for Belfast, West (Mrs. McLaughlin) for securing the Adjournment debate tonight, because it enables us to have a short and useful debate about the problems and opportunities of the linen industry. This is an industry for which the Board of Trade has always had the highest regard. I emphasise that because I know that some people think that the Board of Trade has its favourite industries, and disregards the interests of some others. I can assure my hon. Friend, and everyone else present, that we have no favourites. All the industries for which we have a Departmental responsibility are looked at by us with the greatest care, particularly the linen industry, with its special problems.

We have always recognised that this industry has a long tradition as a substantial exporting industry, and we fully appreciate the importance of its role in the economy of Northern Ireland. I am glad that my hon. Friend referred to the existence of the linen industry in Scotland, too, because the Board of Trade must also remember that, in addition to certain linen firms in other parts of the United Kingdom.

We realise the many problems which the industry has to face, especially at present. These problems may arise again. There are fluctuations in the price of raw flax and in the demand for textile products generally; there are import restrictions and high tariffs in a number of the industry's overseas markets, such as the United States, Cuba and South America; there is competition from man-made fibres, and there is the need, with high-quality products of the type which this industry produces, to be constantly in the lead in its efforts to go in for research and promote it to a successful conclusion.

I can assure my hon. Friend that it is against this background of our appreciation of the importance of the industry and its current problems that we look at the issues arising, which my hon. Friend was kind enough to outline to us this evening, especially in relation to imports from State-trading countries, to which she devoted a substantial part of her most interesting speech.

Before I turn to the subject of the State-trading countries I should just like to emphasise, in order to get matters into perspective, that imports from these State-trading countries amounted to substantially less than one-half by value—about 40 per cent.—of our imports of linen fabrics and made-up goods in 1960, and in order not to disappoint my hon. Friend, who said I would say this, I will now say that it does represent a slightly declining percentage over the last two years. These imports are therefore my no means predominant and certainly are not an increasing proportion of the import competition which the industry, particularly in Northern Ireland, has to face.

However, I appreciate my hon. Friend's concern over the special problems which can arise from trade with State-trading countries, and I would say just a brief word about the general arrangements which we have for trading with these countries. I know that the House will not wish me to expound again the theme of our urgent need of increasing exports whenever and wherever possible, but I would remind my hon. Friend that there are many Members of this House who are constantly pressing us to create additional opportunities for our exporters in the large and increasingly important markets of the Eastern area.

We are making what progress we can in this difficult field, but all these countries are short of sterling and therefore we have to give them reasonable opportunities of earning sterling by giving them the chance to sell some of their goods in our own United Kingdom market so that with the sterling they can buy more from us. It would be quite impossible for us to make a reasonable agreement with them if we refused to give them any opportunity whatsoever to sell products such as linen goods which they have been exporting to us for many years and which can be imported freely—I think this is an important point—from all other countries in the world except Japan over a tariff which is normally about 17½ per cent. to 20 per cent.

An absolute ban on imports in these circumstances would be an altogether unreasonable discrimination against one part of the world and would prejudice all our efforts to promote the additional exports which we badly need. I think that I must mention this because these are things which face us at the Board of Trade and which we must take into account in reviewing the position.

I had hoped that my hon. Friend would have given us at the Board of Trade a passing nod of approval for the very low level at which we have in fact been able to keep these quotas. The total amount of all current quotas for imports of linen goods from the Eastern area is no more than about £200,000. Some small additional quantities of linen goods come under the general quota for household goods, but the figure I have just given of £200,000 is a broad indication of the size of these imports.

We have maintained these quotas at a very low level despite the constant and very real pressure upon us to allow an increase. We have resisted this pressure because we appreciate the difficulties which the industry has to face. This figure of £200,000 itself must be seen in perspective against the general performance of the industry. My hon. Friend rightly referred to the fact that this is an exporting industry, and it has a very fine export record. Its exports are currently of the order of £15 million a year, and that is, of course, only a part of its total production, which is several times the figure of £15 million. So my hon. Friend will see that the imports of £200,000 are a very small total in comparison with the whole output of the industry.

Mrs. McLaughlin

This is the very point of the argument, that in fact the monetary value does not represent clearly to the public the total yardage.

Mr. Erroll

I was coming to that point in a moment. Even allowing for the low prices at which many of these imports may take place, the present quotas represent only a very small fraction of the total sales in the home market.

A number of suggestions have been made for dealing with the problem of the low prices of these imports. I would not dispute that some of the prices which were quoted by my hon. Friend—I have not yet had the opportunity of looking at the samples which she brought into the Chamber tonight, but I acknowledge gladly the specimens she sent me on an earlier occasion—seem to be low in relation to the current market prices in the United Kingdom. If these low prices contain an element of dumping and if the volume of imports constitute a serious threat of material injury to the United Kingdom industry, we should be willing to consider a case for acting under the anti-dumping legislation. But so long as the imports are kept at present levels by our quotas, it is not easy to see how a serious threat of injury could arise.

Mr. Douglas Jay (Battersea, North)

Does the Minister agree with the hon. Member for Belfast, West (Mrs. McLaughlin) that these goods are being sold at retail prices below those at which they are sold in their own country, and if so is not there a case for anti-dumping action?

Mr. Erroll

There is a case if, in addition to them being sold at less than the domestic market price, there is evidence of material or threatened material injury to the United Kingdom industry.

Previous approaches have been made to us on this subject, and if the industry has any new evidence to offer, we shall be glad to consider it. Regarding the loss of duty to which my hon. Friend referred, I do not think there has been any because, as the quotas are limited by amount and value rather than volume—I will come to the other point in a moment—and assuming that the quota is fully taken up, on an ad valorem duty the Treasury collects the same amount of revenue. In any case, the duty is intended as a protective duty and not a revenue raising duty. I do not think that one can seriously say that there is any serious loss of revenue, provided the quotas are fully taken up.

The question of whether they should be value quotas or volume quotas is a difficult one, because the fact is that quotas for trade with Eastern area countries are normally exchanged on a value basis, because then it is possible to make a comparison of quota performance over a very wide range of goods. But if it would help the industry, I am perfectly prepared to consider negotiating volume quotas, exceptionally, where there is an important advantage in doing so. I must say, however, that it would be a difficult thing to negotiate and difficult to calculate. One would have to convert overall value figures into volume figures because of the variety of types of linen goods which can be imported. I must admit that I should be reluctant to contemplate doing this unless I could see a real advantage in it, but I should like to make the offer tonight to my hon. Friend who, I hope, will pass it on to the industry.

I assume that the main interest of the United Kingdom industry is in the quantity of these imports. One must remember that a conversion which maintains the present flow might not have any real advantage for the industry. On the other hand, if what my hon. Friend has in mind is a conversion which reduces the amount of the imports, I should have to take into account their present very low level and the adverse effect on our export trade which would result from any cut in it.

My hon. Friend suggested that State trading countries have no real interest in the price at which they sell so long as they fill their quotas. All our evidence tends to show that they try to get the best prices possible, although they often have to sell at low prices in order to be able to sell their goods in competition with other suppliers. They want to earn as much sterling as they can within the fulfilment of their quotas and, naturally, they have no interest in sending us more of these goods than they have to for their purpose. But, here again, if my hon. Friend either now or in the future can give detailed evidence on these points which she thinks may affect our present conclusions, I shall be very glad to receive them from her.

That is about all I have time to say, apart from a passing reference about imposing a specific duty on imports from Eastern Europe. We would be willing to consider specific duties where these are appropriate and where an industry establishes a case for them. I would, however, warn the industry that they can be extremely complicated to operate, particularly when we have, as in this case, to deal with a wide variety of products within the generic title.

We have no powers to impose such duties separately on goods coming from State trading countries, and if we were to pursue this proposal it would have to be on the basis that similar duties would be appropriate for imports from all sources.

I hope that what I have said will show my hon. Friend that we are sympathetic to the problems of the linen industry both in Northern Ireland and in the United Kingdom. We are prepared to help in any way that we think proper, but I hope that she will not under-estimate the seriousness of making changes which would have serious repercussions and which we must take into account.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Eleven o'clock.