§ 7.7 p.m.
§ The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson)
I beg to move,That the Anti-Dumping Duty Order, 1962 (S.I., 1962, No. 419), dated 26th February, 1962, a copy of which was laid before this House on 2nd March, be approved.This Order imposes an anti-dumping duty of £3 per ton on ammonium sulphate originating in the Soviet zone of Germany. The duty arises from an application of the British ammonium sulphate industry for a duty under the Customs Duties (Dumping and Subsidies) Act, 1957.
Before duties can be imposed under this Act, the Board of Trade has to be satisfied not only that dumping or subsidisation is taking place but that this is causing or threatening material injury to a British industry and that action would be in the national interest. As soon as we were satisfied in the present instance that there was a prima facie case both of dumping and of consequent threatened material injury, a public announcement was made inviting representations from interested parties. Representations were made, and they were taken fully into account in our consideration of the application.
After a full investigation of the facts, my right hon. Friend reached the conclusion that East German sulphate of ammonia was being sold to Britain at a dumped price within the meaning of the Act, that these imports threatened material injury to the British producers and that an anti-dumping duty would be in the national interest. A Press announcement was published to this effect the day after the Order was made.
468 The House will recall that in 1960 the Board of Trade considered an application for anti-dumping action against sulphate of ammonia from Belgium and West Germany. We then reached the conclusion that dumping by those countries threatened material injury to the British industry and that action was justified within the terms of the Act. On that occasion, the Belgian and West German exporters agreed to increase their prices so that an actual duty did not need to be imposed.
In considering the case against East German sulphate of ammonia we had to have regard not only to East German supplies in themselves. If dumping from East Germany was not checked, Belgian and West German suppliers would be likely to press to re-enter the market at dumped prices. The British industry was thus potentially at risk from dumped imports from a number of sources. Consequently, my right hon. Friend was satisfied that a threat of material injury again existed.
In conclusion, I would say that the Board has investigated the whole case carefully, including the costs and profits of the producers. The House will remember that the Monopolies Commission reported in 1960 that the activities of the major British producer, Imperial Chemical Industries Ltd., were not contrary to the public interest and that its profits were not unduly high. Since the report, I.C.I. has reduced the price of fertilisers twice. After full investigation, the Board has concluded that material injury to the British sulphate of ammonia industry is threatened, and I therefore commend this Order to the House.
§ 7.10 p.m.
§ Mr. Douglas Jay (Battersea, North)
The Parliamentary Secretary to the Board of Trade has given us a very sketchy justification for this Order, which, I think, demands a little more careful consideration.
There is, of course, a rather unusual background to this anti-dumping duty, in more ways than one, partly because, the hon. Gentleman said, these imports come from East Germany, and there has been a certain amount of controversy of a political kind in the Press connected with the Leipzig Fair and other things about these imports and the desirability 469 of this country trading in this way with East Germany. The Minister, I noticed, did not advance any political argument of that kind as a reason for this Order, and I did not expect that he would do so. Nevertheless, I think that the Government, to some extent, are themselves to blame if people are a little suspicious about the motives for this Order.
The Lord Privy Seal took it upon himself to give a warning that any British visitors to the recent Leipzig Fair might be politically exploited by the East German authorities. That sounded a little like discouraging people from going to that fair and doing business there. I myself could not see the point of that warning, since the Federation of British Industries organised, presumably with the full knowledge of the Government, a British Pavilion at this fair, and since a large number of reputable British firms were attending it, and also, incidentally, a large number of West German firms. I believe that actually 626 German firms were exhibiting and trading there.
Therefore, my own view of this is that, however much we may dislike the political policies of the East German Government, or, perhaps, even some of the methods of trading between traders in this country and East Germany, it does not seem to me sensible to have a sort of ineffective, semi-official economic boycott of East Germany at the present time.
Surely, in the matter of trading, either we have some organised internationally recognised sanctions, or we ought to have no interference of a political kind with trade at all. Indeed, we in this country are trading with Russia, Spain, Portugal, China and a number of other countries of this kind with whose political policies we do not sympathise, and I do not see why we should take any different attitude to East Germany on political grounds. Therefore, it seems to me that this House ought tonight to examine this Order from a strictly economic point of view, which is what I hope the hon. Gentleman did. I trust that the Minister will assure us that there was no other motive than that in introducing the Order.
Further, when we look at the Order as a strictly economic and trading matter, 470 we find that there are some rather unusual circumstances. The first is that, as the hon. Gentleman towards the end of his brief speech submitted, I.C.I. is the dominant producer of this particular fertiliser in this country. We are now in this rather odd position. We had Mr. Paul Chambers the other day publicly justifying monopoly on the ground that international competition made it necessary nowadays to have strong and large producers in this country. That was his main justification for having a single producer, but in this case, when imports of an I.C.I. monopoly product are being brought into this country at prices with which I.C.I. cannot compete. I.C.I. comes to the Board of Trade asking for a heavy import duty in order to raise the price to the level at which I.C.I. is selling in this country.
The hon. Gentleman quoted the Report of the Monopolies Commission on fertilisers, quite rightly showing that, in its general conclusions, it did not convict the British producers of monopoly practices. But the Report also said something else, which the hon. Gentleman did not quote, and that was that imports of these fertilisers from East Germany had been one of the factors in keeping prices down. I thought that the hon. Gentleman might also have mentioned that.
We have to remember, further, that this House, on other occasions, has voted public money for fertiliser subsidies, and, by imposing this duty tonight, if the House decides to do so, we may, no doubt, exclude East German fertilisers from this country, but we may also raise the price that farmers in this country will have to pay for their fertilisers.
§ Mr. Macpherson
May I make it quite clear that sulphate of ammonia did not start coming into this country from East Germany until 1960, whereas the Report was in 1959?
§ Mr. Arthur Lewis (West Ham, North)
Surely, the principle was there, whether, as suggested by the Minister, it was 471 potash or any other fertilizer. It mentions fertilisers, and surely that is what the Report means.
§ Mr. Jay
I quite agree, but the point I was making was that by raising the price, as the hon. Gentleman will agree we shall do by this Order, we are automatically increasing the subsidy that will have to be paid, and, therefore, the charge on public funds, as well as I.C.I.'s profit, by this Order. We may say that all these considerations are quite irrelevant, if it has been shown that this ammonia sulphate is being dumped in the sense defined in the antidumping legislation, but these facts make me approach the argument with a certain amount of scepticism.
To establish the case, as the hon. Gentleman says, that the anti-dumping duty is justified, it has to be shown first, that the national interest—not just the material interests of one firm or a group of firms, but the national interest—is threatened, and, secondly, that goods are being sold in this country by a trader at lower prices than those at which they are being sold in some other market.
I do not think the Parliamentary Secretary showed that the national interest is being threatened or has been injured by this, and I should like him to tell us how it is being injured or substantially injured. What are his grounds for thinking that, and what is the evidence on which he asks us to take that view? In what way are the interests of anybody, other than I.C.I. and perhaps one or two other producers, being threatened by these imports?
Secondly, the allegation that the ammonium sulphate is being sold here at dumped prices may very well be true. Presumably, what the Parliamentary Secretary means, although it was very far from clear, is that this ammonium sulphate is being sold in this country by the East Germans and their agents at lower prices than it is sold either in East Germany or in some other export market. I presume that that is what the hon. Gentleman meant, but, according to my information, I.C.I. is doing exactly the same thing, and this he did not tell us. Will the Minister say whether it is true—because we should know this, and it is not easy for us as private persons to find out—that I.C.I. 472 is now charging £18 2s. 6d. per ton or thereabouts in the United Kingdom market, and he is asking for a duty of £3 per ton because the East German imports are selling at £16 per ton, which I.C.I. says is gross under-pricing and quite unfair, whereas I.C.I. itself at the moment is selling in the Irish Republc at £12 10s. per ton?
I ask the Minister whether that is true. If it is, it seems to me a curious use of the anti-dumping legislation. If the facts are anything like this, we are being asked to impose a heavy duty to raise the price of fertiliser against the British farmer—and, incidentally, raise the cost to the taxpayer—to enable I.C.I. to make monopoly profits here and to sell fertiliser produced in this country to Irish farmers—who may compete with British farmers—at a lower price than the British farmer is allowed to enjoy; and also, of course, at a lower price than that at which I.C.I. complains that these wicked East Germans are selling it in this country.
That seems to me to be mad-hatter economics, and a distinctly odd use of the anti-dumping legislation. Had it been understood that the legislation would be used in this way I do not think that the House would have been so willing to pass it. It means that we are being asked by legislation to ensure that Irish farmers may compete with British farmers—having received fertiliser at a much cheaper price—so that I.C.I. may enjoy a monopoly in the British market. That is an extraordinary proposition.
Before we approve the Order I should like these points answered by the Parliamentary Secretary and the House to be given a great deal more information than the hon. Gentleman gave in his very sketchy speech.
§ 7.21 p.m.
§ Sir Cyril Osborne (Louth)
The farmers in my constituency have asked me to oppose this Order, or at least to protest vigorously against it, not so much from the Leipzig point of view as from their point of view, and to ask some questions on their behalf. The farmers complain that every year, at the time of the Annual Price Review, they are asked to be more and more efficient and to reduce their prices. They say, I think rightly, that everything they have to buy is going up in price and that it is unfair 473 that their supplies should go up in price and yet that they should be asked, on behalf of the taxpayers, to keep bringing down their own prices.
It is true that over the last year or so the price of fertilisers to the British farmer has come down, but my constituents say that it has not come down nearly as much as it should, and not nearly as much as it could if this Order were not approved. I understand that in addition to the duty of £3 per ton which we are now asked to impose, there is already a £4 per ton duty which has been in existence, as a protection, for over twenty years. So, tonight, the House is being asked to give to I.C.I., which has a virtual monopoly in the supply of sulphate of ammonia, a protection of £7 per ton. I must be satisfied on these points by my hon. Friend the Parliamentary Secretary before I can consider voting for this Order.
In passing, may I say that I do not see why we should not trade with East Germany if it is to the national advantage. I do not see why we should allow West Germany to take up a dog-in-the-manger attitude. West Germany does a great deal of trade with East Germany, but is prepared to kick up a row when we try to do the same. We should take no notice of what the West Germans say on political grounds about this kind of business. If it helps our farmers and saves Exchequer grants, it should be allowed to go on.
I am advised by the farmers in my constituency that application was made by I.C.I. as long ago as July for this extra duty of £3 per ton to be placed on fertiliser. The complaint is made by those people interested that the duty was imposed as from 3rd March this year, but no notice was given to those who would be affected by it. They were notified on 3rd March, the morning that the duty was imposed. This shows a lack of courtesy which is unusual in the Department. I should like to remind my hon. Friend of what was said by the Financial Times about this matter on 10th March. This is the background to the whole situation:The fact seems to be that all producers are prepared to offer some of their surplus output for export at prices much lower than could be sustained over the whole of their production—and I.C.I.'s sales in Ireland, cited to show that U.K. prices are too high, fall into this class. 474 In short, all the recent sensations have arisen from one familiar situation—a world surplus in a market dominated by very large producers and divided by tariff walls…. Mr. Wormald stated that competition inside Europe has become severe enough to revive negotiations for a cartel, and his evidence cannot lightly be dismissed.This is to be controlled by international legislation for the protection of the producer without any consideration at all for the consumer. I am speaking on behalf of the consumer. My farmers rightly say that they are sick and tired of being told at each Annual Price Review that they are being "feather-bedded" and subsidised, and that they are being given grants by the taxpayers when, in this case, the money goes either to the middle-men or to the suppliers of the commodities which they have to use. They say that the subsidy for fertiliser is going to I.C.I. and not to the farmers.
It has been established that I.C.I. is offering this sulphate of ammonia at £12 a ton. It is selling it in this country to the compounders at £18 2s. 6d., but charging the farmer £20 a ton. That is £8 difference between what I.C.I. is prepared to sell at outside and what it is charging the farmer. If the farmer gets a subsidy of £8 15s., as he does at the moment, £8 goes to I.C.I. and only 15s. to the farmer. The farmers in my constituency are live enough to protest against this. They carry the burden of an accusation of taking the taxpayers' money, but they are not taking it at all. The bulk of it is going to preserve the great monopoly of I.C.I.
In another place, when questions were asked about this matter, the Minister said that it was only a small amount which was being sold abroad, that a mere 8,000 tons was sold to Southern Ireland at this low price. I am advised—I should like this to be confirmed or denied by the Minister—that during last year exports from this country to Mauritius amounted to 35,000 tons; to Ceylon, 46,000 tons; and to Indonesia, 54,000 tons. It is known that I.C.I. has offered a 10,000-ton contract to Pakistan at £12 a ton, but it was beaten by the Americans. Therefore, it is reasonable to suppose that this vast quantity, over 100,000 tons, has been sold abroad at about £12 a ton. If I.C.I. could afford to do it overseas it can afford to do it at home.
475 My farmers are saying that it is unfair to blame them for taking public money which they do not receive. They say that the £7 a ton paid in subsidies this year for fertilisers has really gone to I.C.I. Another aspect which worries my constituents is that I.C.I. produces 90 per cent. of supplies of sulphate of ammonia and that the company is also the agent of the trust or syndicate which handles the whole of it. So the whole trade is in the hands of this one firm. It has complete control.
My hon. Friend quoted the Monopolies Commission Report, which says that I.C.I. had not made unreasonable profits on its home sales. Did the Report say anything as to whether I.C.I. is a firm of efficient producers? I understand that the bulk of this chemical is produced at the Billingham works, which are over thirty years old and which, in terms of chemical engineering, are well past being really efficient.
It is not the duty of this House to support I.C.I. if its equipment is inefficient. I protest, on behalf of my farmers and of myself as a taxpayer, that we should be subsidising I.C.I. if it is inefficient and has old-fashioned plant which makes it cost more to produce this commodity here than in Western Germany, in Belgium, or in Eastern Germany. I am also advised that quite recently the Western European ports price f.o.b. has been between £9 4s. and £11 6s. per ton, yet the farmer here is being charged £20 a ton. People have the impudence to say that farmers are "feather-bedded", whereas in this case it is the I.C.I. which is "feather-bedded".
Coming back to the point made in another place that the amount which was sold abroad was only a tiny proportion of the total, I am advised that in the last four years the amount of I.C.I. production sold abroad varied between 27 per cent. and 14 per cent. of total production. That is not a tiny proportion, but an important factor in this production. We ought to say to I.C.I. that we cannot allow this kind of thing to go on.
Three years ago 25 per cent. of sulphate of ammonia consumed in this country was imported. It was imported at very much lower prices than I.C.I. now produces it. The very existence of 476 that considerable factor of imports helped to keep down the prices which I.C.I. charged the British farmer. The Minister said that three years ago the Government requested the Belgian and West German suppliers to increase their price by, I believe, about 50s. per ton which effectively shut out those imports from this country. It left only East Germany which, I understand, is supplying about 3 per cent. of our requirements. If this Order goes through that 3 per cent. will be stopped and I.C.I. will have a complete and utter monopoly in this market.
If I were satisfied that I.C.I.'s productive capacity was the best in the world, I would support it. The Minister said, when introducing the Order, that the Board of Trade must be satisfied, first, that there was dumping and, secondly, that there was material damage done to producers in this country. The Government ought to consider whether material damage is being done to users in this country by the steps which are being taken. It is not fair merely to look at this from the point of view of the producer. From the taxpayer's point of view and the fanner's point of view something more should be said about it.
A few days ago Mr. Paul Chambers, a very energetic business man, was speaking to the Institute of Personnel Management, and on this very issue said:Almost anything that will drive away the lethargy of industries hiding behind high walls of protection and subsidy will put new life into the country's economy.I wish that he would take a dose of his own medicine. I remember, as the House will, that I protested on many occasions at the action of I.C.I. in trying to take Courtaulds into its monopoly on the ground that it was charging in the man-made fibre industry as much as twice the price for the basic raw materials that Courtaulds could buy elsewhere. I remember that those charges have never been refuted. That makes me frightened about giving I.C.I. a greater monopoly.
Before the Order goes through, the Minister ought to make quite clear, first, that I.C.I. is not asking for something to protect an inefficient production and, secondly, that the farmers will not be saddled with having a subsidy which is really passed on to I.C.I. Until I have 477 that assurance I shall not be prepared to vote for the Order.
§ 7.36 p.m.
§ Mr. Julian Snow (Lichfield and Tamworth)
I do not often find that I can agree with a speech made by a Conservative hon. Member, but I must say that I could not disagree with a single word that was spoken by the hon. Member for Louth (Sir C. Osborne). However, there are one or two small additional points I wish to make about this Order.
First, I think that this is a singularly unfortunate time to burden the British farmer with this sort of imposition. His Price Review wage cut—if one may call it so—amounts this year to £11 million. I have seen a rather curious argument that that should be equated with an anticipated increase in income of the same figure, £11 million. Surely our objective is to increase the prosperity of our farming industry. I cannot think of any worse way of setting about that than to agree to this sort of Order.
We also see in the newspapers that it is proposed to cut down imports of butter from the Continent. We are talking about the farmers and their interests tonight, but should we not sometimes think about the consumer? In the event, it is the consumer who pays, through the farmer, to the monopoly interests of I.C.I. Because we are to cut down butter imports from the Continent, the price of United Kingdom produced butter is to go up. This must be a reflection of the sort of working of operational costs to which the British farmer is subjected.
I suggest that it is the duty of this House to see that the British farmer is given every facility and is not made to pay outrageous prices for an ordinary commodity which, as has been shown tonight, the Irish farmer is getting more cheaply and which I.C.I. is exporting more cheaply than the price it charges the farmer in this country.
The hon. Member for Louth said he wondered whether the production costs of I.C.I. were not the result of inefficient production from outdated plant, and so forth. I ask the Minister what steps have been taken to find how unreal—if they are unreal—the export prices of East Germany are and how much they are the product of an artificial economy. 478 From what I can gather, I do not think that it would be very easy to find the actual costs of production in East Germany, but, if our economic research methods are so poor that we cannot find the answer to those questions, it is time that we woke up.
There is far too much hiding behind the refuge of high prices abroad. This happens about Japanese production. We hear about the low wages which are paid in Japan, and so forth. We shall hear a lot more about this sort of antidumping proposal because of the lobbying which goes on by self-interested producers in this country. We must give a good, cool, hard look at some of the production efficiency of firms abroad. That would be in the interests of this country rather than accepting, apparently without question, the sort of thing that we are being asked to pass tonight.
§ 7.40 p.m.
§ Mr. Denys Bullard (King's Lynn)
I support the Order because I believe that my hon. Friend the Parliamentary Secretary to the Board of Trade has gone into the question carefully in the inquiries which he has made before bringing it forward and that he has established that this sulphate of ammonia is being dumped. I am against dumping and, therefore, if it is being dumped, I am in favour of the Order.
I have an idea that the main content of this sulphate of ammonia is nitrogen, which comes largely from the air, whether in East Germany or over here. There is enough air in Britain for the sulphate of ammonia for British firms to be made here, given proper circumstances, rather than made in East Germany and imported.
There are, however, one or two things about the Order which give rise to interesting thoughts. The first is the point which the hon. Member for Lichfield and Tamworth (Mr. Snow) has mentioned, namely, the difficulty of establishing the cost of production in Iron Curtain countries. This is a problem which we have very much encountered in the importation of fruit products, pulp in particular, from Iron Curtain countries.
It seems to have been rather easier for my hon. Friend to establish that the material to which the Order relates 479 is being sold beneath the cost of production than it has been in the case of various fruit products which affected rather less powerful producers at home than the producer who is affected in the present instance.
§ Sir C. Osborne
I agree with my hon. Friend that it is difficult to establish the price at which commodities are produced in the Iron Curtain countries, but the first stoppage of supplies of sulphate of ammonia to this country was by West Germany and Belgium, which are this side of the Iron Curtain. My hon. Friend's argument does not run.
§ Mr. Bullard
Sulphate of ammonia and nitrogen products generally come from various other European countries as well as Eastern Europe.
I was comparing the ease with which the present case seems to have been established and the difficulty which most agricultural and horticultural producers seem to experience in establishing a case for anti-dumping duties. In other instances, when anti-dumping duties have been asked for but have not always been granted, I have always found that before action has been taken there has been a considerable fall in the home price. In this case, I am not aware that there has been any considerable fall in the home price of sulphate of ammonia. Therefore, although I support the Order, it does not in any way justify the price policy which the home manufacturers of sulphate of ammonia and other nitrogenous fertilisers are following.
It would be a good thing if we could be assured that when they have this anti-dumping duty our home producers of sulphate of ammonia, which I very much want to see produced in this country, will set about reducing their prices to the British farmer.
§ 7.44 p.m.
§ Mr. Sydney Silverman (Nelson and Colne)
I hope that the hon. Member for King's Lynn (Mr. Bullard) will not think it disrespectful if I say that I find it a little difficult to reconcile his argument with his conclusions. If all the objections, questions or doubts that the hon. Member has about the Order are well-founded—and I am persuaded that they are—that should lead him to oppose the Order rather than to support 480 it, as the hon. Member said he would do. I quite understand that the hon. Member, like many of us, is not against the principle of anti-dumping legislation, but that does not mean that one has to support every Order that is proposed. One has to look at them to see that the conditions laid down by the Statute apply.
I find myself, embarrassingly enough for both of us, no doubt, in enthusiastic agreement with the speech of the hon. Member for Louth (Sir C. Osborne). Before I say why, however, I ought to declare my interest. It is a purely political interest. I am not a member of anybody's board of directors. I am not in business, I do not trade, I have no interest of that kind in any sort of way.
My political interest arises from the fact that I was one of a number of hon. Members of this House who had the temerity to go to Moscow in April, 1952, on the occasion of an international economic conference. There were four or five hon. Members from this side of the House and on the other side there was at least the hon. Member for Skipton (Mr. Drayson). There may have been one or two others who were associated with it in some way but who did not actually go to Moscow. That was a very important occasion.
In so far as there has been any improvement in international politics in the last ten years, I would date it from then, because there is no surer way of getting round political difficulties, antagonisms and suspicions of one sort and another than by developing trade on a basis that is profitable and advantageous to both sides. That is a good thing to do and not a bad thing, whether one's politics are sympathetic to one side or antagonistic to the other or whatever they may happen to be on general principles.
What puzzles me about the Order is this. To justify an Order, as I understand it, one has to show not one thing but two things. It is necessary to show, first, that the competition is unfair in that the price at which the goods are imported bears no reasonable correlation with the cost of production, so that the competition that is brought about by the goods being brought into the country when the same product is produced here is unfair competition. Even if that is proved, one has 481 not proved enough. It is necessary to prove one other important thing, that is, that, having shown that the price is uneconomic, one has to show in addition, separately from that, that it is in the national interest to prevent the commodity from coming in.
As I followed the Minister's speech, his case seemed to me to break down on both points. On the first point, he lamentably failed to show that there was any unfair competition involved, either by reference to the price at which the goods are offered or by reference to the price at which, without losing money and with making a reasonable profit, the principal industry competed with in this country could sell the same goods.
I do not know many of the facts. I am taking them from what the Minister said and from the other things that I have heard in the course of the debate. It does not seem to me that any harm would be done to I.C.I. by this amount of competition at this price. Moreover, the more it is said that it is difficult to establish the costs of production in the country of origin, the more one is confessing that one has not made out the first leg of the argument, namely, that it bears no proper relation to the cost of production. Unless one can satisfactorily analyse and assess the original cost of production, one does not begin to establish that the price is not a fair one.
If it is said that we cannot afford to take risks, and we will assume that because the foreign price is lower than I.C.I.'s price therefore the competition, although effective, is unfair, even then it is necessary to establish the second leg of the argument that it is in the national interest to make the Order. Why is it in the national interest to make the Order? Who will gain by the making of it? What national interest, as distinct from sectional interest, will be served by it? The Minister was not very effective in his attempt to say why. Indeed, he did not attempt to say why; he merely said that it was not in the national interest. He gave us no reasons for thinking so. He did not tell us what national interest was being injured by the situation with which this Anti-Dumping Order is to deal. He did not say what national interest was being preserved by it.
482 The Minister told us something about I.C.I. It seems to me, however, that on the history of the matter, generally, I.C.I. is perfectly capable of looking after itself industrially without bringing in adventitious political aids. I.C.I. does not seem to be in any difficulty. I do not know whether the Minister was offering I.C.I. this anti-dumping Order as a kind of consolation prize for not succeeding in taking over Courtaulds. If he was, it does not seem to me to be enough.
§ Mr. Silverman
I am obliged. I will not pursue that matter.
If one is left to wonder what national interest is being adversely affected in this way, one is driven into an area which, I know, the Minister would agree to be an improper area from the point of view of this legislation, namely, a political area. It is possible to argue, although certainly I would not myself accept the argument, that it was against the national interest to trade with East Germany or with any other Communist country.
Certainly that is not the Government's position as a whole, and certainly one suspects that there is a pull-devil pull-baker going on in the Government, as there is in a great many other matters, too. In this instance, however, it is between the President of the Board of Trade and the Lord Privy Seal, who on this whole matter seem to me to speak not merely with different voices but with voices that do not harmonise. It is a discord, a conflict, and they seem to be arguing when they are the Board of Trade that trade is good, no matter who it is with, as long as it is on fair terms, advantageous and profitable; and, in so far as they are not the Board of Trade but the Foreign Office, they have to consider what may be thought about it in Washington and in Bonn.
The question of what may be thought about it in Bonn is, however, either irrelevant or tells the other way, because I understand that Bonn has no reluctance in trading with East Germany either in these products or in any other. Bonn is doing very well out of it and will do even better if the Board of Trade 483 goes on making any more of these antidumping Orders.
It does not seem to me to be in the national interest from a trading point of view to diminish the advantages in our own country and to raise the price of these products to our own citizens in order to help Bonn to reap a double advantage, one political and the other industrial and commercial. It does not make sense.
We shall all be willing to give the Parliamentary Secretary leave to reply to the debate. He cannot speak a second time without leave, but we shall be grateful if he tries to clear up the situation, because in many places—certainly in the House of Commons, and in the country and the world—the Government are making themselves ridiculous by their ambiguity. People do not understand why British common sense has now reached a stage when it regards cutting off one's nose to spite one's face as good politics and good industry. We are in that position.
The Minister has not made his case. Not one speech has been made in support of him. There is one promise to vote for him, but the speech of the hon. Member in question was not in support of the Minister and contained as many doubts about the Order as have been voiced by anybody else who has spoken in the debate. I hope that the Minister will reconsider it.
§ 7.55 p.m.
§ Mr. G. B. Drayson (Skipton)
Before I proceed with my speech I must declare an interest in this matter. The hon. Member for Nelson and Colne (Mr. S. Silverman) has reminded the House that ten years ago we were together in Moscow examining the possibilities of increasing East-West trade. My interest is that a firm with which I am associated are the importers from Eastern Germany of sulphate of ammonia. They are also the importers of East German potash, which was referred to by the right hon. Member for Battersea, North (Mr. Jay). The right hon. Gentleman also said something about the general position at Leipzig, with much of which I do not disagree.
When the hon. Member for Nelson and Colne and I were in Moscow together, he made what I considered at 484 the time to be a number of very wild statements about the possible volume of future business which could be achieved between the Soviet Union and Great Britain. However, as the years have gone by the figures which he mentioned then have proved to be a gross underestimate, because ten years after the event East-West trade has developed to a level where it now plays an important part in the British import and export programme. This has been acknowledged by every Minister and Foreign Secretary during the last ten years.
I usually go about with a small library of quotations from Prime Ministers, Foreign Secretaries, Ministers of State and others, supporting this objective of increasing East-West trade. I sometimes quote them when I am abroad. One which always comes to my mind is a letter from a senior Minister saying, first, that trade with East Germany is on all-fours with trade with the Soviet Union and, secondly, that far from Her Majesty's Government wishing to discourage East-West trade they will do all they can actively to support and promote it.
Where do we go from there? As my hon. Friends have said, we want to get as much of this trade as we can. If we do not, we can be certain that Western Germany will step into the breach. I congratulate my hon. Friend the Member for Louth (Sir C. Osborne) on his first-class speech. He mentioned the problems of Courtaulds in the past and the high price they had charged for some of their products.
§ Mr. Drayson
I am sorry. Ten years ago I was connected with another Order introduced in the House. It was not an anti-dumping Order. It was introduced by Sir Hartley Shawcross, as he then was, following a memorandum I sent to him when he was President of the Board of Trade. I refer to Statutory Instrument No. 1019 of 1951 entitled "Import Duties (Exemptions) Order ". I was then able to prove conclusively to the Minister that Courtaulds and British Celanese were charging far too much for the artificial silk waste they were selling to the 485 British textile industry. As a consequence we were unable to compete in world export markets. So Sir Hartley Shawcross suspended the 9d. a lb. import duty from 14th June, 1951, until the end of the year. This allowed six months for Courtaulds and British Celanese to adjust their prices so as to be more competitive with world prices.
§ Mr. H. Rhodes (Ashton-under-Lyne)
That is not correct. The import duty was cancelled because there were not sufficient quantities available in this country to textile manufacturers. It was waived so that more fibres of this nature could come into the country. It had nothing to do with the price here. Courtaulds were the cheapest producers in the world and, in my opinion, they had a very fine sense of public responsibility.
§ Mr. Drayson
I cannot entirely agree with the hon. Gentleman. I consider that this was my Order, introduced because of my memorandum. The President of the Board of Trade wrote to me at the time and told me that he was introducing this Order following the representations I had made. He repealed the silk duty of 9d. per lb. previously charged on such waste and reimposed it at the beginning of 1952.
I want to say something about the cavalier way in which the Order we are asked to approve tonight was introduced. The application was made in July last year. Interested parties were able to submit their respective cases to the Board of Trade. They did so. They were told that the matter was being considered. Nothing was heard about this project from July, 1961, until half-past three in the afternoon of Friday, 2nd March, when a Press statement was made. Firms which were interested were telephoned by newspaper men who said, "We know that you have an interest in this subject. Have you heard about it? What are your comments?" My firm immediately contacted the Board of Trade and said, "Can you tell us something about an anti-dumping Order which is supposed to have been introduced this afternoon? Some Press handout has gone out from the Board of Trade". The reply was, "Yes, there is a letter in the post telling you about it".
486 That letter would have arrived on Saturday morning when all offices are closed. It would not have been opened until early on Monday. Already there were ships loaded with this produce coming across the Channel. Why should firms which had been bringing in cheaper sulphate of ammonia and helping British agriculture and mixers be treated in this way? I have never heard of such a disgraceful state of affairs. I said at the time, "This is absolutely monstrous". When the Barley Order was introduced, firms were at least given notice. They were given the opportunity of completing their existing contracts. Yet barley was doing far more damage. This cheap sulphate of ammonia was conferring a benefit. Barley imports were doing far more damage to British agriculture.
On Friday, 2nd March, or Saturday, 3rd March, businessmen and Members of Parliament were just about to embark for the Leipzig Fair, where British industry was spending £500,000 on the British Pavilion, and stands with over 260 of our major firms exhibiting. They were supported by the Federation of British Industries, with representatives of the London Chamber of Commerce there. Then somebody comes along and refers to this as red trade and suggested that we should not do it. The Minister has much to answer for because of the way in which the Order was introduced, penalising firms which have done their utmost to support him in his export drive and in many other ways.
What are the facts about the importation of fertilisers from Eastern Germany? I think I can say that I was intimately concerned with the Monopolies Commission Report on the fertiliser industry, because I was a party to the discussions which took place in Eastern Germany, which resulted in an independent source of potash coming to this country. Paragraph 702 of the Report says:We have commented on the beneficial effects of competition from East Germany in recent years.Paragraph 657 of the Report says:The large increase in the scale of rebates in recent years, which is admittedly prompted to a great extent by competition from East Germany and has had the effect of reducing Potash Limited's average net selling and buying prices….487 I am very pleased to put these matters on record once again. Paragraph 667 says:the principal effect of the rebates has been to reduce the average net selling price of potash in order to meet East German competition.I should like the price of sulphate of ammonia to the farmer in this country to come down in order to meet this East German competition. The paragraph goes on to say:Both the competition and Potash Limited's reaction to it are to be welcomed.And in paragraph 619 we find—The effects, in recent years, of competition from East Germany are such as to suggest that a greater degree of competition between Potash Limited's suppliers would be beneficial to United Kingdom buyers.I am not ashamed of having been intimately associated with this transaction. It has saved British farmers, in view of the vast tonnage of potash coming into this country, literally hundreds of thousands of pounds. It has cost the West German Government and the West German potash syndicate probably millions of pounds. I suppose that is why they dislike my activities so much and enlist the support of certain newspapers against it. I am not ashamed of having been a party to the breaking of the potash monopoly, and I will stand up anywhere and defend what I and my firm have done.
As to the supply of sulphate of ammonia, this year before this Order became operative 19,000 tons were imported from Eastern Germany. When I was in Leipzig I had discussions with I.C.I.'s representatives and directors from the Leuner chemical works where this is manufactured. It was agreed that only 15,000 tons would be brought in during 1962–63. This is approximately 3 per cent. of this country's total requirements, yet I.C.I. has asked for a sledgehammer to crack this tiny nut of 3 per cent. which competition it says it cannot face.
§ Sir C. Osborne
To put this matter into its proper perspective, I remind my hon. Friend that I.C.I. exported about 150,000 tons in the same period at the same low price.
§ Mr. Drayson
I have other examples. I am very glad that my hon. Friend gave examples of quotations which he knew had been made by I.C.I. in the last 488 twelve months. I understand that the production of the Leuner works is rather similar to that in this country—about 800,000 tons—and they have 200,000 tons available for export.
I want to look at some other prices which I understand have been quoted recently by I.C.I. At the moment Holland is offering sulphate of ammonia at £10 7s. 0d. a ton f.o.b. and I.C.I. I believe has tendered in India for 20,000 tons of sulphate of ammonia at £10 5s. 0d. f.o.b. in bulk. The fact that it is able to charge such a high price in this country is due undoubtedly to the fertiliser subsidy that the farmers are alleged to get from the Government. The Price Review contains this item—"fertiliser subsidy £33 million". I should like to have a break-down of exactly how much of this goes into the pockets of farmers and how much into the pockets of the manufacturers. The figure for sulphate of ammonia alone is possibly 700,000 to 800,000 tons, on Which I.C.I. is probably taking about £4 million. I.C.I. is taking £5 a ton out of the £8 subsidy and is leaving the farmers with £3, or much less.
We have just had a Supplementary Estimate for agriculture of £79 million, for which we willingly voted, but the farmers have again said "It is not going to us but to the butchers and middlemen." Today we are discussing an Order affecting fertilisers and it has been shown conclusively by my hon. Friend the Member for Louth and others that the farmers are not getting the full benefit of the subsidy. It is going into the pockets of I.C.I. and other fertiliser manufacturers—probably £16 million of it.
It is time that we had an inquiry into the cost of production of sulphate of ammonia in Britain. This brings me back to the question of trade in general and I.C.I. in particular. I have with me a copy of this week's Chemical Age which contains a photograph of members of the staff of I.C.I. in Leipzig shaking hands with Herr Weiss, the Deputy Minister of Foreign Trade. I suppose it can be said that they are smiling. They might be described as adopting a sycophantic attitude to Herr Weiss. The magazine states:I.C.I. does £5 million worth of business a year in Eastern Europe.489 I am not surprised that they are smiling. I.C.I. also gave a reception in Leipzig, which I attended. It was held in the new town hall in, I think, what is called the "Hunters Room", complete with trophies on the walls, and paintings of hunting scenes, tail-coated waiters serving gin and tonic and whisky and soda—smoked salmon, slices of sausage, and even caviar—that sinister commodity.
Of course, the shareholders of I.C.I. were paying for this reception, and I have no doubt that they were pleased to do so, for their company is doing £5 million worth of business in Eastern Europe on their behalf. One bit of business I.C.I. is not doing. It is not importing East German sulphate of ammonia and that is perhaps why I.C.I. must come to the House and convince the Minister that its interests are being seriously damaged by the 3 per cent. in question.
It was agreed in Leipzig that the East German Government would not increase their exports beyond a figure which was acceptable to I.C.I. I.C.I.'s representatives said, at that point, "What can we do to get this Order rescinded? We do not want it now". I formed the impression they thought it was all a big mistake. This brings us back to the question of whether or not there is something political about it all. Is this the sort of double-talk that the hon. Member for Nelson and Colne mentioned? This Order, I feel, will cost I.C.I. a great deal more than the amount of profit it hopes to make by selling an additional 15,000 tons out of its production of 800,000 tons of sulphate of ammonia on the home market.
It is an abuse of this House for an Order like this to have been brought forward. I am sorry for the Parliamentary Secretary, of whom I am fond, that he had to make the sort of speech he did. It contained all those phrases about "national interests", "grave damage" and so on, but it was not very convincing. It has been established beyond doubt that it is not the farmers of this country who are deriving the main benefit from the fertiliser subsidies and I hope that the Government will seriously look at this matter in the future.
The Government have introduced this Order at a time of year when sulphate of ammonia is most expensive. The mixers 490 —the people make the compound mixes—have been relying on getting fertiliser from Eastern Germany at a competitive price. When one must add £4 duty and freight charges there is not such a tremendous amount in it. But these people, the mixers, had been relying on a competitive product in their mixes. They are now surprised to find that this source of supply has suddenly been cut off and they must go cap in hand to I.C.I.—the agents for the British Sulphate of Ammonia Federation—and ask for a few tons. March is the time of year when the price of sulphate of ammonia in bulk is £18 2s. 6d. Had the Order been introduced in September the price would have been £17. In June and July the price is about £16 12s. 6d. This is when the manufacturers want to get their goods out of their factories. Storage is a problem, and if they can persuade the mixers or farmers to take fertilisers earlier in the season a discount is given.
As I say, we are forcing these independent mixers, who have tried to stand up against I.C.I., to go cap in hand and ask for a few tons of sulphate of ammonia. For that reason the Order is not only discourteous to the shippers but also to the mixers. The customers have certainly not really suffered any material damage, although they will suffer as a result of the Order.
What does the Minister mean when he talks about "the users"? Who are these users who are complaining? I have a letter from the Ministry which states:This threatens material damage to the British industry.It goes on:After taking account of all the evidence and having given full consideration to the representations made and of the position of the users in this country …But the users are the people who put this stuff on the land. They make up the compound mixture and sell it to the farmers at competitive prices. I do not think that their interests have been considered.
I could say a great deal more on this subject but suffice it to say that I am extremely sorry that the Minister has seen fit to bring in this Order. In the light of future events, I am sure it will be found to have been a great mistake.
§ 8.18 p.m.
§ Mr. Marcus Kimball (Gainsborough)
The hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) said that he found it an embarrassment to find himself in such support of my hon. Friend the Member for Louth (Sir C. Osborne).
§ Mr. Kimball
However, I wish to support the remarks made about increasing trade with Communist countries, particularly by methods of this kind. At the same time, when I saw the Order, I shared the feelings of many people that in any trade with Communist countries we must remember that trade is a political weapon and that the destruction of our trade here is a real aim among Communist countries. For that reason, we must be certain of their costing and methods of production.
§ Mr. S. Silverman rose—
§ Mr. S. Silverman
Will the hon. Gentleman bear in mind that if he really is in favour—and I accept his sincerity when he says that he is—of developing trade with the Communist countries, he will find it difficult to do that and to bargain with them if an attitude of complete suspicion exists and if their objective in trading with him is not to be destroyed. They realise, as we do, that in spite of all the differing ideologies, trade is very necessary.
§ Mr. Kimball
As I said, I was merely voicing the feelings of many people. It was distressing to hear my right hon. Friend the Member for Skipton (Mr. Drayson) inform the House that I.C.I. does not want this Order. I hope that the Board of Trade will make a clear statement on this and say whether the remarks of the hon. Member for Skipton are true or otherwise.
I would like to know for how long the Order is to be continued. It is dated to start on 3rd March. Does it come up for renewal each year or does it go on until the House decides to rescind it? Having heard the remarks of the hon. Member for Louth and other hon. Members I feel that the Order should be with-drawn 492 and not put into operation until we have a little more information. I sincerely trust that my hon. Friend will answer the questions which have been put during the debate.
As the next-door neighbour of my hon. Friend the Member for Louth, I do not want to be disloyal or appear to have any political split in Lincolnshire, but I would not support him in voting against the Order. We are all aware of his feelings about I.C.I. and other matters, but I think that the case he made was a case for the abolition of the fertiliser subsidy as we know it and not a case against this anti-dumping Order.
Hon. Members have pointed out how large a part of the Annual Price Review is formed by the fertiliser subsidy—£33 million this year or nearly £41 million if the lime subsidy is added. There is doubt about how much of that goes to the benefit of the farmers. But that is not a matter to be discussed this evening, although it is of interest to many of us who are interested in agriculture.
§ Mr. Charles Loughlin (Gloucestershire, West)
Assuming that I.C.I. has a monopoly in this commodity, is it not possible that the price will go higher and that in consequence the subsidies to farmers will go higher, so that we will have a vicious spiral? Because of that should we not take into account the issue of these subsidies in the context in which we are discussing them tonight?
§ Mr. Kimball
In fact, the price of fertilisers has fallen over the last few years. The increase in the subsidy is not because of an increase in price, but because of an increase in the use of fertilisers. Those of us who buy fertilisers have found that the price has gone down considerably—possibly because of the component parts coming from East Germany and other countries—but that is a fact that we must bear in mind. I hope that the Parliamentary Secretary will carefully consider this matter and will give us a convincing answer if he expects us to support the Order.
§ 8.22 p.m.
§ Mr. J. M. L. Prior (Lowestoft)
I did not intend to speak when I came into the Chamber to listen to the debate and I dare say that by the time I have finished what I am going to say I shall 493 wish that I had not spoken. I shall be the only Member so far to support the Government on this issue, with the notable exception of my hon. Friend the Member for King's Lynn (Mr. Bullard). I do so on straightforward grounds. It is fantastic that hon. Members representing the farming community should come here to support efforts to prevent the dumping of foodstuffs in this country and on another occasion should criticise the Government for imposing anti-dumping duties against the import of ammonium sulphate just because that is not in the interests of the farming community. Opposition to the Order is illogical on those grounds alone.
Some hon. Members have talked about I.C.I.'s monopoly in this country, but I do not believe that I.C.I. has a monopoly in fertilisers. Nitrogen fertilisers can and do come from Italy and Holland and the result of that over the last two or three years has been to force down the price of nitrogen fertilisers considerably. It has been said that the fertiliser subsidy goes into the hands of I.C.I., but that is not borne out by the Report of the Monopolies Commission. Over the last two years, at any rate, we have had a reduction in the fertiliser subsidy which has created more competition and also helped to bring down prices.
My hon. Friend the Member for Skipton (Mr. Drayson) said that we were losing a lot of money which was going into the pockets of I.C.I. and that that would be prevented if the products of East Germany were allowed to come in. He went on to say that this year we would have agreed to the import of only 15,000 tons anyway, which is about 3 per cent. of total production. He can have it one way, but he cannot have it both ways. Bringing in 3 per cent. will not have any great effect on the price of fertilisers or on the subsidy paid to British farmers.
§ Mr. Drayson
My point was that the overall figure for the total consumption of sulphate of ammonia at a subsidy of more than £8 a ton ran into many millions of pounds. I was saying that that went to I.C.I. rather than the farmer.
§ Mr. Prior
I do not agree. It is all very well to have a marginal amount of sulphate of ammonia coming in at £12 a ton, but we will not get all the sulphate 494 of ammonia we want from all over the world at £12 a ton. I accept that my hon. Friend the Member for Skipton and my hon. Friend the Member for Louth (Sir C. Osborne) are well briefed on this issue, but I presume that I.C.I. are having to sell surplus tonnage to Ireland at a low price simply because it is purely surplus tonnage, and that in all probability, if we were not importing a few thousand tons from Eastern Germany at £12 a ton, I.C.I. would not be selling a few thousand tons to Ireland at £12 a ton. The position is ridiculous.
For hon. Members representing farming constituencies to come here and criticise the Board of Trade for introducing this anti-dumping legislation is extraordinary and fantastic. The Board of Trade could not have been much slower about introducing the Order. I am not patting my hon. Friend on the back about this. The Board of Trade took nine months to reach a decision, which is about the sort of time it takes when someone asks it to deal with agricultural problems. Yet hon. Members say that the decision was taken overnight. I think that far too much notice has been given. If this Order was to be introduced at all, I would have liked it to have been slapped on in about three weeks rather than nine months. One would have much more faith in antidumping legislation if that sort of action were taken. I am quite sure that the investigations were thorough—all too thorough knowing how hard it is to get the Board of Trade to put on any antidumping duties.
I give my full support to the Order, although I hope that my hon. Friend will be able to tell us the answers to the questions which have been put which have not had a shred of argument to support them.
§ 8.27 p.m.
§ Dame Irene Ward (Tynemouth)
I have found the debate interesting and stimulating, although I have to apologise for not having heard the Minister. I did not expect that the Order would come on so early and so I did not hear his argument for its introduction.
I went to Leipzig last year, and I was glad to do so. I went particularly because I wanted to see what the British contribution was. I always want to see what we have to offer abroad, and I was 495 very glad to be given the chance. The British contribution was very good indeed and I was fascinated when I went to the Steel Pavilion and saw what our big steel manufacturers were showing. I was not so pleased with the arguments put forward by the West German Government, although they are, of course, always entitled to say what they think. When I walked into the Steel Pavilion, the first thing which I saw was the Krupps exhibit, an enormous hull of a ship. I went to Leipzig with the idea of trying to get some shipbuilding orders for this country. It is tremendously important that our trade should be as free as possible. [Interruption.] I cannot enter into details about the farming industry, because I have not a farming community in my constituency, or at least only a very small one.
I am getting awfully tired of hearing that prices are going up. I am only too thankful when I hear that some prices might come down. I cannot help feeling that some interests in this country always want to keep prices up. If I.C.I. had to sell its surplus production to Eire because of the volume of imports into this country from Eastern Germany, I do not see why it did not enter into competition in this country and reduce the price of its products here. That would have been a very good and stimulating form of competition. There is no need for I.C.I. to sell it outside this country. In the discussions in the Committees on which I sit—and I sit on quite a number—we are always talking about rising prices. This seems to suit certain people. As I say, I am only too glad When I hear that prices are to be reduced for a change.
I often find myself in agreement with my hon. Friend the Member for Lowestoft (Mr. Prior), but not with the hon. Member for Nelson and Colne (Mr. S. Silverman) or, perhaps, with my hon. Friend the Member for Skipton (Mr. Drayson). However, on this occasion I agree with the hon. Member for Nelson and Colne and with my hon. Friend the Member for Skipton but not with my hon. Friend the Member for Lowestoft, who pointed out that the Board of Trade had taken nine months to introduce this Order. I suppose that that was because it did not suit the Board of Trade to introduce it earlier. I understand that 496 the reason why sulphate of ammonia has been imported from Eastern Germany, for I do not know how many years, is that there was a shortage of it in this country. When it suited us we allowed it to come in. When it suits I.C.I., it comes in. When it does not suit I.C.I. it says that it should not come in.
I should like to have all the facts put before me properly. Perhaps my hon. Friend the Parliamentary Secretary did present the facts properly, but I do not think that he can have done because many new points which required answers have been raised since he spoke. Can my hon. Friend proceed on the basis that most people in this country would like to hear that some prices are coming down. I do not think that a little competition in this sphere would come amiss. I do not feel like supporting the Order at this stage unless we have a much better explanation about why it is necessary. If it is necessary, why did the Board of Trade wait nine months before introducing it? If it is necessary, it should have been introduced much earlier.
As I have said, I was glad to have the opportunity of going to Leipzig. Many people should see a great deal more of the world before they start talking on things about which they sometimes have not much knowledge. I do not know whether we shall have a vote on this, but I shall take a great deal of convincing that after nine months this Order is necessary. It is not that I have not a great affection for I.C.I., but, occasionally, it wants a bit of a crack on the head as well.
§ 8.34 p.m.
§ Mr. N. Macpherson
By leave of the House, may I respond at once to the invitation of my hon. Friend the Member for Tynemouth (Dame Irene Ward). My hon. Friend the Member for Lowestoft (Mr. Prior) rather took the words out of my mouth. It is true that we in the Board of Trade are under constant pressure to protect industry and agriculture from dumping. When the Government do so, I should like to think that they deserve and will receive support. On the other hand, the House does not readily listen to a long exposition of an affirmative Order in the first place. I therefore respond willingly to the invitation to speak again, and I am grateful 497 to the House for its agreement that I should do so.
I recognise that the House is not only entitled to look very closely at antidumping Orders, but that it would not be doing its duty if it did not do so. I hope that I shall be able to convince the House that this Order is justified, even though most of the speeches have been critical of it.
Proposals for anti-dumping duties are not laid lightly before the House. They are not proposed with the object of interfering with ordinary commercial competition, or to raise a barrier to trade on fair terms with the countries concerned. But, when it is established after proper investigations that certain imports are threatening material injury to a British industry, that industry can reasonably look to the safeguards which the anti-dumping legislation was designed to provide. I hope to satisfy the House that these safeguards are required in this case.
May I, at the outset, apologise to the House for a misstatement in my earlier remarks. I said that the Press notice was issued on 27th April. It was actually issued on 2nd March, 1962. I looked by mistake at the Press notice for 1960 on West German and Belgian ammonium sulphate instead of at the Press notice on East German ammonium sulphate.
I do not complain in the slightest of the way that the right hon. Member for Battersea, North (Mr. Jay) probed this matter. Of course, in dealing with East Germany the situation in respect of this Act is bound to be difficult. I shall come to that shortly in my speech. The first point made by the right hon. Gentleman was that there was some suggestion that we were trying to dissuade and discourage trade between the two countries. I assure the House that there is no reluctance to trade with East Germany.
§ Mr. S. Silverman
Does the Parliamentary Secretary realise that there is a conflict between what he is saying and what the Lord Privy Seal said the other day in a very similar connection? If there is a conflict between the Foreign Office and the Board of trade which cannot be resolved, why not ask for the Home Secretary's assistance, which the Government have done in other respects?
§ Mr. Macpherson
There is no conflict between what the Lord Privy Seal said and the attitude of the Board of Trade. I have the remarks of the Lord Privy Seal here if anyone would like me to quote them. He said, in effect, that those who go either to trade or to visit are liable to be used for political purposes. He was merely giving a warning that that was so.
I was about to refer to the trend of trade. Imports from East Germany in 1958 amounted to £3,407,000, and in 1961 to £6,694,000. Exports amounted to £2,278,000 in 1958 and to £8,221,000 in 1961. This rapid increase certainly does not bear testimony to any desire of the Government to interfere with trade. There is no boycott, but we are in the difficulty that there are no direct relations between the two Governments.
I come to the second point of the right hon. Gentleman's speech—the dominant position of I.C.I. I think that it would be to the advantage of the debate if I were to say something about the structure of this industry. It consists of two parts. One side is the amount of sulphate of ammonia produced as a by-product by the National Coal Board, the Electricity Board, steel works, coke ovens, and so forth. The other side is the synthetic process such as is used by I.C.I.
The fact is that the synthetic process is such that it is uneconomic to operate a plant at less than full capacitly. It is generally more economic to export any surplus over what is required in the home country than to operate a plant at half cock. That applies generally, and it is a fact that prices in European producing countries with synthetic processes are very much on a level with each other, but when they come to dispose of their surpluses outside their own countries they enter into very keen competition with each other, and that forces the prices down.
If we were to allow our own production in this country to be disrupted and our major producers to be forced out of production, what would happen is quite clear: at some times when there was surplus capacity and surplus production in the world we should be able to obtain our supplies at very low prices, but at other times, when there was a shortage in the world, we should have 499 to pay very high prices indeed. It is normally accepted by industrial countries which also have agricultural interests that they should produce their own sulphate of ammonia and that they should have a synthetic process capable of matching that requirement, taking the production of by-products of sulphate of ammonia from the various plants into account.
The I.C.I. acts as the selling agent for the British Sulphate of Ammonia Federation. Indeed, it not only acts as the selling agent, but produces about 70 per cent. of the Federation's total output. The two together have not an entire monopoly of the production of sulphate of ammonia in this country but between them they produce about 90 per cent. There are some 35 byproducts producers who are members of the British Sulphate of Ammonia Federation.
It is a fact that the I.C.I. commands a virtual monopoly in this country, from the literal meaning of the word, of the selling of sulphate of ammonia, and that is why the Monopolies Commission was invited to look into the activities of the supply of chemical fertilisers. In paragraph 651 of its Report the Monopolies Commission said:We would not consider ourselves justified in regarding the level of profits achieved in recent years as unduly high.Since then, I am glad to tell my hon. Friend the Member for Tynemouth, prices in this country have come down on two occasions.
But it does not follow from this that we should allow the industry in this country to be disrupted, and that was why in 1960 we took the view, on very much the same grounds, that there was dumping from West Germany and from Belgium and that it would be right for us to take action. The action which we then took resulted in agreement by these two countries to increase the price, but the difficulty is that if we were now to allow dumping from East Germany, obviously the Belgians and the West Germans would begin to wonder whether they ought to reconsider their decision to increase the price and whether they ought to send their surplus products to this country.
§ Mr. Macpherson
I agree with my hon. Friend the Member for Skipton (Mr. Drayson) that prices vary throughout the year. They start at the relatively low level of just over £16 in June, and they rise to their highest level at this time of year, but at that level of price, and taking account of the sales abroad, the I.C.I. are certainly not making an excessive profit. Indeed, it is on home sales, the Commission found, that I.C.I. was not making excessive profits. The Commission said that the level of profit achieved in recent years was not unduly high.
Then I am asked: why is it I.C.I. can sell at such low prices—for example, to the Republic of Ireland? The answer is, of course, the one I have already given, that the company is in competition abroad and prices are extremely keen, and competition is extremely keen, and those prices have to be matched. It does not follow necessarily that the company is selling at a profit abroad. [HON. MEMBERS: "Dumping."] Not dumping, because, of course, there is no synthetic production of sulphate of ammonia in the Republic of Ireland and the Republic has to import fertilisers, and, of course, the lower the prices at which they can import, as they have no industry of their own with which to compete, the better for them.
§ Mr. Macpherson
£10 f.o.b. prices. I understand there is an enormous deficiency of fertilisers in India, and it is obviously doing the Indians a very great service indeed to be able to export to them at a low price.
§ Mr. G. B. H. Currie (Down, North)
Does my hon. Friend appreciate that this really does impose a most unfair burden on the farmers of Northern Ireland who are in competition with the producers in Southern Ireland? Does he realise—I dare say that he does, because of the demands of affairs of State—that it really will be extraordinarily hard to explain to the farmers in Northern Ireland why 501 they should have to pay between £6 and £8 a ton more than those with whom they compete?
§ Mr. Macpherson
Well, the farmers in Northern Ireland do get a share of the fertiliser subsidy. [Interruption.] It simply is not true that I.C.I. receives a subsidy from the taxpayer. The fertiliser subsidy is paid to the farmers, who buy their fertilisers at no more than the economic price from I.C.I. and from the other manufacturers as well, but who get them at a cost to their own pocket of considerably less than the economic price.
§ Mr. Drayson
My hon. Friend was quoting from paragraph 651 of the Monopolies Commission's Report, but he did not complete it. What is said here, on page 207, is thatWe believe that I.C.I. has acted with a sense of responsibility up to the present".
§ Mr. Drayson
1959. I think that that suggests that the Monopolies Commission had some misgiving whether the company would continue to do so in the future. It went on to say thatwe would view with some disquiet the possibility that in this subsidised market the company might in future achieve profit levels higher than in recent years and perhaps above the average for manufacturing industry generally.Can my hon. Friend give us some concrete details about the level of profits on this particular commodity, and say whether they are above the average of those of manufacturing industry generally?
§ Mr. Macpherson
All I would say to my hon. Friend is, first, that since that date, as I have already said, there have been two reductions in prices, and the price has been reduced by about £1.
Perhaps I could draw attention to the fact that paragraph 649 of the Report—and I am sure my hon. Friend must be aware of this—makes a comparison between the profits on the sale of fertilisers and those in the manufacturing chemical and paint industries. It shows that the profits on fertilisers are not out of line with other profits. These profits are calculated on the basis of historical costs, which is not the way in which I.C.I. calculates its profits.
502 I come now to the point raised by my hon. Friend the Member for Louth (Sir C. Osborne). I am sorry that he is not in his place. He asked whether we were bolstering an inefficient industry. At present, I.C.I. is spending about £6 million on improving its plant at Billing-ham. There is no question of I.C.I. not being forward-looking or progressive.
The farmers expect to make a fair return and they apply for dumping duties, and I do not think they should deny a fair return to others. My hon. Friend the Member for Louth said that prices had not come down by nearly as much as they would have done if importations had been allowed. That may well be so, but what is the good of crippling our home industry to allow other countries to dump in this country? We must maintain a sound industry in this country and have a steady level of prices.
The duty of £4 per ton to which my hon. Friend referred has been in force since 1935. A figure of £4 per ton in 1935 was a different kind of protection from £4 per ton today. There is a great deal less protection now than there was in those days.
§ Mr. A. Lewis
During his speech the hon. Gentleman mentioned £10, £16, £18 and £20 as the price per ton of sulphate of ammonia. Prices have fluctuated both on the export and the home market. What does the hon. Gentleman consider to be a reasonable price? At what price would he sell this product? I hope that he will give us this information so that we can decide whether the imports are being sold at a cut price rate.
§ Mr. Macpherson
The whole purpose has been to maintain prices at a reasonably stable level in this country. I have said that prices have been reduced twice, and that the price is comparable with that in other producing countries abroad. Every country needs to dispose of its surplus production.
I was surprised that my hon. Friend the Member for Louth quoted an article from the Financial Times, but did not seem to understand its purport. If we want to maintain reasonably fair prices and give a reasonable level of profit to our producers and thus enable them to increase their efficiency, we must ensure 503 that our home production is not damaged by dumping. That is one reason why we introduced the Customs Duties (Dumping and Subsidies) Act, 1957.
In answer to the hon. Member for Nelson and Colne (Mr. S. Silverman), it is not only on home prices that under the Act we are able to estimate whether there is dumping or not. The hon. Gentleman may know this, but he did not say so. Section 7 (3) of the Act says:If it appears to the Board of Trade that goods of that description are not being sold in the said country, or not in such circumstances that the fair market price can be determined"—which is, of course, the case in the Communist countries—… the fair market price shall be determined by the Board by reference to any price obtained for goods of that description when exported from the said country …That is what we have done. We are quite satisfied that this matter has been fully investigated and that damage is threatened. I do not say that it actually occurred; it does not need to occur. But I hope I have made it plain that it is in the national interests that damage should not occur. I hope that the House will accept the Order.
§ Mr. Macpherson
I am sure that my hon. Friend would accept that a matter of this kind should be very fully investigated.
§ Mr. Macpherson
I made the point earlier that in dealing with Communist countries there are special difficulties. I hope that my hon. Friend is now satisfied that this matter has been fully investigated. In some cases it is possible to reach a conclusion very quickly, but not in all. The nine months is merely evidence that the matter has been fully investigated.
§ 8.56 p.m.
§ Mr. Jay
If I may speak briefly again by leave of the House, in our opinion the Minister has totally failed to discharge his responsibility of defending the Order. In particular, he has given no evidence at all that any damage is threatened to the national interest except from competition with I.C.I. Therefore, I should like him to think again, withdraw the Order now, consider it and investigate it fully, and come back here when he really has some serious arguments to present to us. If he is not willing to do that, we shall feel bound to divide the House.
§ Mr. James Callaghan (Cardiff, South-East)
Are we not to have some consideration of the proposal made by my right hon. Friend the Member for Batter-sea, North (Mr. Jay)? The Leader of the House is with us this evening. There has been some very damaging criticism about the Order from both sides of the House. It was not our intention to divide against the Order, but my right hon. Friend has suggested that further consideration should be given to the matter and perhaps some further arguments should be put. I ask the Parliamentary Secretary, or the Leader of the House, whether it would not be appropriate at this stage to withdraw the Order and bring it forward again when it is possible to answer the points which have been raised.
§ Mr. Macpherson
If I may speak again by leave of the House, I think that the vote, if it comes to a vote, will show whether or not I have answered the points satisfactorily. I have done my best to answer all the questions raised. I think I have satisfactorily shown that there has been dumping and that damage is threatened to the industry. I have tried to make it clear that if that damage eventuated it would be against the national interest.
§ Question put:—
§ The House divided: Ayes 125, Noes 96.505
|Division No. 133.]||AYES||[8.58 p.m.|
|Agnew, Sir Peter||Baxter, Sir Beverley (Southgate)||Bourne-Arton, A.|
|Aitken, W. T.||Bidgood, John C.||Box, Donald|
|Balniel, Lord||Biffen, John||Boyle, Sir Edward|
|Barber, Anthony||Biggs-Davison, John||Braine, Bernard|
|Barlow, Sir John||Bishop, F. P.||Brewis, John|
|Batsford, Brian||Black, Sir Cyril||Brown, Alan (Tottenham)|
|Buck, Anony||Hill, Dr. Rt. Hon. Charles (Luton)||Prior, J. M. L.|
|Bullard, Denys||Hill, Mrs. Eveline (Wythenshawe)||Profumo, Rt. Hon. John|
|Burden, F. A.||Hill, J. E. B., (S. Norfolk)||Pym, Francis|
|Campbell, Gordon (Moray & Nairn)||Holland, Philip||Redmayne, Rt. Hon. Martin|
|Carr, Robert (Mitcham)||Hollingworth, John||Rees-Davies, W. R.|
|Chataway, Christopher||Hornby, R. P.||Ridley, Hon. Nicholas|
|Cihchester-Clark, R.||Hughes-Young, Michael||Ridsdale, Julian|
|Collard, Richard||Hurd, Sir Anthony||Scott-Hopkins, James|
|Cooke, Robert||Irvine, Bryant Godman (Rye)||Seymour, Leslie|
|Corfield, F. V.||Jackson, John||Shaw, M.|
|Costain, A. P.||James, David||Shepherd, William|
|Coulson, Michael||Johnson, Dr. Donald (Carlisle)||Skeet, T. H. H.|
|Curran, Charles||Johnson, Eric (Blackley)||Smith, Dudley (Br'ntf'd & Chiswick)|
|Dalkeith, Earl of||Kaberry, Sir Donald||Smithers, Peter|
|Deedes, W. F.||Kerr, Sir Hamilton||Speir, Rupert|
|Donaldson, Cmdr. C. E. M.||Kimball, Marcus||Steward, Harold (Stockport, S.)|
|du Cann, Edward||Langford-Holt, Sir John||Stoddart-Scott, Col. Sir Malcolm|
|Duncan, Sir James||Leather, E. H. C.||Storey, Sir Samuel|
|Elliott, Capt. Walter (Carshalton)||Leavey, J. A.||Summers, Sir Spencer (Aylesbury)|
|Errington, Sir Eric||Leburn, Gilmour||Taylor, Edwin (Bolton, E.)|
|Farey-Jones, F. W.||Litchfield, Capt. John||Taylor, Frank (M'ch'st'r, Moss Side)|
|Finlay, Graeme||Loveys, Walter H.||Temple, John M.|
|Fisher, Nigel||Macleod, Rt. Hn. Iain (Enfield, W.)||Touche, Rt. Hon. Sir Gordon|
|Fraser, Ian (Plymouth, Sutton)||McMaster, Stanley R.||van Straubenzee, W. R.|
|Gilmour, Sir John||Macpherson, Niall (Dumfries)||Vane, W. M. F.|
|Glover, Sir Douglas||Manningham-Buller, Rt. Hn. Sir R.||Wakefield, Sir Wavell (St. M'lebone)|
|Goodhart, Philip||Mathew, Robert (Honiton)||Walder, David|
|Goodhew, Victor||Matthews, Gordon (Meriden)||Walker, Peter|
|Gower, Raymond||Maydon, Lt.-Cmdr, S. L. C.||Wall, Patrick|
|Grant, Rt. Hon. William||Mills, Stratton||Wells, John (Maidstone)|
|Green, Alan||More, Jasper (Ludlow)||Whitelaw, William|
|Gurden, Harold||Noble, Michael||Wolrige-Gordon, Patrick|
|Hamilton, Michael (Wellingborough)||Page, Graham (Crosby)||Woollam, John|
|Harris, Reader (Heston)||Pannell, Norman (Kirkdale)|
|Harrison, Col. Sir Harwood (Eye)||Pearson, Frank (Clitheroe)||TELLERS FOR THE AYES:|
|Harvey, John (Walthamstow, E.)||Pitt, Miss Edith||Mr. Peel and Mr. McLaren.|
|Hendry, Forbes||Pott, Percivall|
|Allen, Scholefield (Crewe)||Hill, J. (Midlothian)||Paget, R. T,|
|Awbery, Stan||Hilton, A. V.||Parker, John|
|Bacon, Miss Alice||Holt, Arthur||Pentland, Norman|
|Beaney, Alan||Houghton, Douglas||Price, J. T. (Westhoughton)|
|Bence, Cyril||Howell, Denis (Small Heath)||Randall, Harry|
|Bennett, J. (Glasgow, Bridgeton)||Hoy, James H.||Rankin, John|
|Blackburn, F.||Jay, Rt. Hon. Douglas||Redhead, E. C.|
|Blyton, William||Jenkins, Robert (Dulwich)||Roberts, Albert (Normanton)|
|Bowden, Rt. Hn. H. W.(Leics, S. W.)||Jones, Dan (Burnley)||Robertson, John (Paisley)|
|Braddock, Mrs. E. M.||Jones, Jack (Rotherham)||Ross, William|
|Brockway, A. Fenner||Jones, J. Idwal (Wrexham)||Silverman, Julius (Aston)|
|Brown, Thomas (Ince)||Jones, T. W. (Merioneth)||Silverman, Sydney (Nelson)|
|Callaghan, James||Kelley, Richard||Slater, Mrs. Harriet (Stoke, N,)|
|Cliffe, Michael||Kenyon, Clifford||Slater, Joseph (Sedgefield)|
|Craddock, George (Bradford, S.)||Kerans, Cdr. J. S.||Smith, Ellis (Stoke, S.)|
|Davies, C. Elfed (Rhondda, E.)||Lawson, George||Snow, Julian|
|Davies, S. O. (Merthyr)||Lee, Frederick (Newton)||Spriggs, Leslie|
|Dempsey, James||Lewis, Arthur (West Ham, N.)||Symonds, J. B.|
|Diamond, John||Lubbock, E.||Taverne, D.|
|Dugdale, Rt. Hon. John||McCann, John||Taylor, Bernard (Mansfield)|
|Ede, Rt. Hon. C.||McKay, John (Wallsend)||Thomas, George (Cardiff, W.)|
|Edwards, Rt. Hon. Ness (Caerphilly)||MacPherson, Malcolm (Stirling)||Thomas, lorwerth (Rhondda, W.)|
|Fernyhough, E.||Mallalieu, E. L. (Brigg)||Thompson, Dr. Alan (Dunfermline)|
|Finch, Harold||Manuel, Archie C.||Timmons, John|
|Fletcher, Eric||Mapp, Charles||Wade, Donald|
|Fraser, Thomas (Hamilton)||Mason, Roy||White, Mrs. Eirene|
|Galpern, Sir Myer||Millan, Bruce||Williams, W. R. (Openshaw)|
|Cooch, E. G.||Milne, Edward||Willis, E. G. (Edinburgh, E.)|
|Gourlay, Harry||Mitchison, G. R.||Woof, Robert|
|Hamilton, William (West Fife)||Monslow, Walter||Yates, Victor (Ladywood)|
|Hannan, William||Oram, A. E.|
|Hayman, F. H.||Oswald, Thomas||TELLERS FOR THE NOES:|
|Herblson, Miss Margaret||Owen, Will||Mr. Charles A. Howell and|