§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. I. Fraser.]
§ 10.38 p.m.
§ Mr. Ronald Russell (Wembley, South)
The subject I wish to raise on the Adjournment tonight is that of the removal of the 15 per cent. ad valorem duty on imports of certain canned fruits, chiefly apricots, peaches and cherries, canned in water, under Statutory Instrument No. 188, of 1963.
I begin by thanking my hon. Friend the Minister of State, Board of Trade, for being in his place to reply to the debate. The proposal that the duty should be removed was first made in the summer of 1961. I then wrote as chairman of the Commonwealth producers' organisation to the Board of Trade stressing the danger to certain Commonwealth producers of the removal of this duty. I had a reply from the present Minister of Pensions and National Insurance, my hon. Friend's predecessor, that the Board would take Commonwealth interests into account if the Board ever reached the stage of taking action. Action was taken on 29th January of this year when this Order was made. I am wondering whether full account was taken, not only of the recent history of the imports of these canned fruits from Commonwealth countries, but of their future prospects. Australia is the country chiefly concerned. Canada also comes into the picture to a lesser extent.
In recent years the exports from Australia, mainly of canned peaches, have been abnormally low. In 1954 the peach growing regions of the Goulburn Valley and the Murrumbidgee irrigation area suffered disastrous floods. The orchards were replanted on a vast scale in 1955. The first of this replanting did not come into bearing until 1961. Now there is a dramatic increase in the production. In 1962 the crop was more than 50 per cent. above the average for 1959, 1960 and 1961. The 1963 crop is expected to show a further 25 per cent. increase. By 1968–69, I am informed, the output of peaches is expected to be more than double that of 1960. Was this 1242 increase taken into account when the duty was removed?
Then there is the position of Canada. The importance for Canada is that for years dollar restrictions stood in the way of exports of canned fruit to this country in any way whatever. Only in 1959 was the trade in fruit reopened. Canned cherries is the item with which I am mainly concerned, one of the ingredients of fruit salad affected by the Order. At present our imports of canned cherries from Canada are only a fraction of our total imports of canned cherries, in fact less than 3,000 cwt. out of a total of 30,000 cwt. in 1962. Imports of canned peaches and pears, for example, are far below their pre-war level, especially below the peak year of 1938. In 1938 we imported 4.7 million lb. weight of canned peaches. In 1959 it was only 986,000 lb. Corresponding figures for canned pears were 20 million lb. in 1938 and only 2¼ million lb. in 1959. There are other examples of how Canada has never recovered her pre-war market, and Canadians do regard, whether rightly or wrongly, that sort of level of imports as their rightful share of our market.
I gather that the duty was removed in the interests of United Kingdom canners who import peaches, apricots and cherries canned in water and then re-can them for sale as fruit salad in syrup. Some of these imports come from Australia and Canada, others from Spain and Italy. Formerly the latter paid 15 per cent. duty until the Order was made. Now they come duty-free, thus abolishing the Commonwealth preference. I understand that the end product of the canners meets competition, namely the fruit canned in syrup, which is also imported from Spain and Italy. It gets in duty-free, except for the sugar content under a particular item of this tariff, with which I will deal in a moment.
I wonder if the matter could be put right when an opportunity occurs, perhaps, say, during a future round of tariff negotiations, possibly by combining and averaging these present somewhat complex rates of duty on foreign mixed fruit and, if it is legal, to do so under G.A.T.T.—restoring the preference on fruit canned in water. I appreciate that G.A.T.T. lays dawn preferences which must not exceed the level of 10th April, 1243 1947, but I do not think anything is stated about reimposing one if one has been taken away.
It is difficult to find a more complicated or confusing item of tariffs than that numbered 20.06, on pages 71 to 73 of the list. I will quote the items. It is a complicated business and begins:Fruit otherwise prepared or preserved whether or not containing added sugar or spirit:(A) Unmixed fruit containing added sweetening matter:We come to the next set, which goes on:
- (1) Apples
- (2) Apricots; peaches; pears
- (3) Cherries:
- (a) Not stoned:
- (i) In a solution of sulphur dioxide and sugar
- (ii) Other
- (b) Stoned
- (4) Ginger."We next come to the heading stating:
- "(5) Grapefruit
- (6) Loganberries
- (7) Oranges, clementines, mandarins and tangerines:
- (a) Pulp not containing the peel
- (b) Other
- (8) Pineapples
- (9) Other."(B) Mixed fruit containing added sweetening matter:This covers part of the imports of fruit from Spain and Italy. It goes on:Fruit salad (not including mixed fruit pulp) containing not less than four separate descriptions of fruit, in which each of at least four descriptions constitutes at least 8 per cent., and no one description represents more than 50 per cent., by weight, of all the fruit in the mixture:That is by no means the end of it, because it continues:(a) Where not less than 80 per cent. by weight of all the fruit in the mixture consists of all or any of the following fruits, viz.: peaches, nectarines, pears, apricots, cherries.That is just one item, and it adds:(b) Other(2) Other.Finally, it states:(C) Other:I cannot think of anything more confusing, particularly in the use of the sort of double negatives in the "mixed fruit containing added sweetening" matter. I hope that it will be possible to simplify this item. It must be one of the most complicated things in the whole of the tariff schedule.
- (1) Apples
- (2) Apricots, peaches or cherries, including the pulp thereof, in water, canned
- (3) Grapefruit; orange, clementine, mandarin or tangerine pulp not containing the peel
- (4) Strawberries
- (5) Other."
It is now in our own interests, particularly since the breakdown of the Common Market negotiations, not to eliminate or weaken Commonwealth preferences in any way. Instead we should return to the Montreal Declaration of four-and-a-half years ago, for at the Commonwealth Economic Conference held there this sentence was included in the Report:Commonwealth preference has been of mutual benefit and we have no intention of discarding or weakening it.I regret that the Order which has reduced these preferences has at least weakened the system a little more. In the interests of the Commonwealth and our export trade—because, after all, Commonwealth preferences are a reciprocal arrangement—I believe that a policy of maintaining preferences is sound and I hope that the Government will do their utmost to maintain and, if possible, restore them on this particular item.
§ 10.50 p.m.
§ The Minister of State, Board of Trade (Mr. Alan Green)
My hon. Friend the Member for Wembley, South (Mr. Russell) has drawn attention to some objections to our removal of import duty on certain canned fruits and, to put the matter in perspective, I should like to describe very briefly the grounds for our decision. I appreciate that my hon. Friend started from Australia, and I am sure that he will bear with me if I start from the home base.
The British canning industry was originally established to can domestically-grown produce which was, necessarily, a seasonal occupation. I need hardly emphasise that fruits and vegetables canned fresh have comparatively short seasons, and perhaps the main problem of all canners has been to ensure that their plant and employees are in as continuous economic use as possible—and I appreciate that this applies to other canners overseas as well as to those at home.
1245 While plant can be left idle—there is no problem there—employees have to be paid and, therefore, the canners have to find productive work to fill the gaps between fresh crops. Over the years, they have found that their best solution was to turn over, in these gaps, to the re-canning of fruit imported in bulk containers, either as separate fruits or, in combination with certain fresh fruits, as fruit salad. In recent years, however, competition, particularly in fruit salad, has reduced market prices to a level which made these activities unprofitable, and the canners had to cast about for means of improving their situation.
They discussed their problems with the Board of Trade, and we had to point out to them that while they could apply for an increase in their protection against imported fruit salad, the duties were bound against increase in the G.A.T.T., which would be a substantial obstacle to success, This is one of the difficulties we run up against. The alternative was to ask for the removal of duty on the materials which they necessarily imported and, in the end, the canners decided that this offered the best chance of improving their position and they asked for the free-listing of peaches, apricots and cherries, canned, in water.
The application was, as usual, advertised, and was very fully examined by the Board of Trade. There were certain domestic objections to it but, in the end, the Board decided that the canners had established the injury that they were suffering, that the removal of the duty would significantly improve their position, and that the duty had no domestic protective function.
In the course of our examination, we looked into the interest of Commonwealth suppliers. Our statistics do not distinguish the quantities of these particular fruits canned in water, which are imported, but it was clear by inference, and from the evidence of the trade, that only the most insignificant quantities could come from the Commonwealth. Since, while enjoying a preference of 15 per cent. these countries had, for whatever reason, not supplied us with these necessary materials, we considered it reasonable to ask them to forgo the preference on materials that they were not, in fact, supplying.
1246 When we consulted them, South Africa, Australia and Canada all objected to the loss of the preference, on the main ground that it might prejudice their sales to us of fruit canned in syrup. But we pointed out to them that we could not regard this as a legitimate objection. The justification for preference is that it gives Commonwealth suppliers an advantage over other overseas suppliers, and it was certainly not intended to confer an advantage over our domestic producers. Since these countries did not supply us with the type of fruit which we wished to free-list, we did not believe that they could properly object. I should say that the margin of preference was guaranteed only to South Africa, and she accepted our arguments while maintaining her right to claim appropriate compensation in any future trade talks.
The special point that my hon. Friend has made, that Australian production of peaches and apricots was increasing substantially, following flood damage in 1956, and that she should be able to supply greatly increased quantities in the future, was not brought to our notice until a few days before the necessary Order was laid before the House. But I think we can fairly maintain that in questions of this sort one needs to look at actual experience rather than hopes or forecasts of what may happen in some years' time. To base action on hypothesis is not always profitable.
We have indicated our willingness to discuss the matter with Australia, if in practice there is evidence that she suffers loss as a result of this free-listing, although we have had to say that it would be very difficult to reinstate the preference. This is another point which I think my hon. Friend raised.
My hon. Friend also raised—
§ Mr. Russell
What does my hon. Friend mean by "very difficult"? Does he mean that it would be impossible under the G.A.T.T.—that there would be so many objections?
§ Mr. Green
There would certainly be a great many objections. To reinstate a preference once dropped would put us into the position of reintroducing a new preference. We have had to tell the Australians that there would be difficulty in doing it.
1247 My hon. Friend had some remarks to make on the complications of the Customs and Excise tariff. He armed himself with the proper document and I have armed myself with it. It is quite true that the heading, particularly in 20.06, looks complicated. This is because of the necessary wording of the subhead. I am sure that my hon. Friend will bear in mind that the tariff has evolved over the years as a result of a variety of decisions on particular cases, but that we do not change it unless a case is made out on domestic merits by representative interests. The tariff is a domestic matter.
I think it follows that because there has been this evolution there has been a considerable amount of sub-dividing, so that it does not necessarily follow that the matter has become complicated, complex and difficult to understand. Perhaps on this account the only thing I can say to my hon. Friend tonight is to offer him the opportunity, as perhaps the best 1248 resolution of this complaint of complexity, to come to see me, if he wishes, when I will gladly consider his constructive suggestions for simplification. But I hope that when he comes he will bear in mind that the wording used in the subheads is the product of evolution and not the product of deliberate complication. If, perhaps, my hon. Friend would like to take me up on that I shall be very happy if he will bring with him two wet towels which we will both wrap round our heads to help us come to a solution on the point.
I hope that the House will agree that it was right to do what we could to help the very difficult position of the canners bearing in mind that we did take account of Commonwealth interests even though we considered them to be outweighed by the merits of the case for free-listing in this matter.
§ Question put and agreed to.
§ Adjourned accordingly at one minute to Eleven o'clock.