§ Order for Second Reading read.
The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dun-woody)
I beg to move, That the Bill be now read a Second time.
The main purposes of the Bill were summarised by my hon. Friend the Financial Secretary when he moved the Ways and Means Resolution on 13th March. Before I explain these purposes in more detail, perhaps I could make a few remarks about the international rules on anti-dumping and on the principles of our legislation.
To avoid undue interference with the development of international trade, protection against dumping is subject to certain rules which are laid down in the G.A.T.T., and the 1957 Act is based on these rules. Dumping is defined in a specific way. In the usual technical sense of selling for export below the home price, dumping is a fairly common practice, and not necessarily, or even normally, objectionable; though, of course, it may be if it is believed to be causing or threatening the domestic industry with material injury.
Before action can be taken against dumping or subsidisation, the Board of Trade must be satisfied on three counts: first, that the imports are dumped or subsidised; secondly, that the dumping or subsidisation is causing or threatening material injury to a British industry; and, thirdly, that such action is in the national interest. Under this last head, we have regard, among other things, to the interests of the British consumer, who may himself be a manufacturer or exporter.
During the Kennedy Round of trade negotiations, the British Government tried to secure the agreement of many member-countries to the full and more uniform application of the G.A.T.T. rules. The major participants finally agreed on a code which goes a long way towards meeting this objective.
868 The code should help our exporters of goods to countries that have signed it, and these include the United States, Canada, all the E.E.C. countries, most E.F.T.A. countries and Japan. Perhaps I may give a few examples
Our exporters to the United States have complained for many years about the indefinite and sometimes very lengthy period during which Customs appraisement can be withheld for goods provisionally assessed as being dumped. The resulting uncertainty has frequently inhibited and sometimes killed export trades from Britain and other countries to the United States. The code will limit such provisional action in normal cases to a maximum of three months and will impose restrictions on the ability to take retrospective action.
Our exporters to Canada have complained for a long time about the semiautomatic imposition of anti-dumping duties on goods of a kind made in Canada and alleged to be dumped. Acceptance of the code will require Canada to amend her anti-dumping legislation so as to have regard to material injury before taking anti-dumping action.
The E.E.C. countries have very recently adopted regulations for action against dumping and subsidisation which follow the code very closely indeed. Under the Bill, as under the 1957 Act, we shall be able to take action against subsidised goods in the same way as against dumped goods. In practice, subsidisation usually leads to dumping as well and it may be easier to take action against the dumping. To simplify matters here I will refer only to anti-dumping, but this should be taken to include action against subsidisation as well.
Most anti-dumping applications involve a conflict of interests, domestic producers, on the one side, and domestic consumers and international considerations, on the other. It is quite impossible to please all of the people all of the time, but we have tried to be fair all round. We consider it is in our own interests that the international rules should be observed by as many countries as possible, and it follows that we must abide by the rules ourselves even though they do not please everyone.
It has been the Board of Trade's policy, and this is now embodied in the code, 869 normally to require applicants to make out a prima facie case before a full investigation is undertaken. We recognise that it is often extremely difficult for a domestic industry to obtain proof of dumping and we do not expect it of them. All the Board of Trade require of applicants is reasonable prima facie evidence.
Once the Board accepts a case for full investigation, the Board takes on itself the burden of proving whether or not dumping is, in fact, taking place. This generally requires a detailed and accurate comparison between the overseas exporters' home price and the export price of goods comparable with those made by the United Kingdom industry. If necessary, our officials visit the exporters in their offices overseas for detailed inquiries on the spot.
The Board also requires prima facie evidence that the alleged dumping is causing or threatening material injury to the British industry. This evidence is often more readily available to the industry, but it sometimes appears unable or unwilling to provide it. Indeed, some firms still argue that the Government should act on evidence of dumping alone, but, as I have explained, this would be against our general interest as a great exporting country and it would be inconsistent wilt our international commitments.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
Is the hon. Lady aware that under the new code, as well as the generally accepted interpretation of Article 6 of G.A.T.T., the need to prove material injury was relevant only in the case of dumping from another G.A.T.T. member? I understand that the Board of Trade has always extended that so that it applies to dumping from any country. Can the hon. Lady give the explanation why the burden of proof on the applicant should be as severe in the case, shall we say, of dumping from an Iron Curtain country as, quite rightly, dumping from a G.A.T.T. country?
The hon. Member knows that this is a very interesting point. The Bill includes certain provisions which will assist us, for instance, where we are endeavouring to get evidence, particularly in cases of centrally controlled economies, and these will deal 870 with many of the cases concerning Iron Curtain countries.
§ Mr. Jenkin
With respect, the hon. Lady has directed her mind to the other leg, whether or not there is dumping, and we shall no doubt be discussing that. My question—and I shall be grateful for an answer, because it concerns many industrialists—is: why does the Board always require the same proof of material injury in the case of dumping from a non-G.A.T.T. member as in the case of dumping from a G.A.T.T. member?
If the hon. Gentleman will forgive me, this will be fully covered in the summing up that is to be undertaken by my hon. Friend the Minister of State. I think that he will find the answer to his question.
I have already said that the Board also requires prima facie evidence that the alleged dumping is causing or threatening material injury to the British industry. This evidence, as I have said, is often more readily available to the industry, but it sometimes appears unable or unwilling to provide it. I have already said that dumping in the technical sense is going on much of the time. We cannot take action against dumping unless it is causing or threatening material injury and unless such action is in the national interest.
The value of our administration of the Act to our manufacturers supplying the home market must be judged not only by the number of Orders imposing duties but by its effect as a deterrent. Since the Act came into force, we have received just over 100 formal applications for action under it—that is, on average, about 10 a year. Anti-dumping duties were imposed by Order in 12 cases. Satisfactory assurances were received from exporters in lieu of duties in 19 cases; and a number of other cases were withdrawn by the applicants during the course of our investigations because the applicants had reached agreement with the exporters concerned by which the dumping was eliminated or reduced. In some cases exporters in other countries have been deterred merely by the submission of an application to the Board of Trade—
§ Mr. Charles Mapp (Oldham, East)
I thought I heard my hon. Friend aright 871 in saying that a number of applications had been withdrawn because agreement had been reached that dumping had been eliminated or reduced. If there is a measure of discretion, the dumping is not disposed of. Dumping is either dumping or it is not. To accept a halfway stage is something which avoids the main principle.
I hope that my hon. Friend will forgive me when I say that, while I do not dispute that, there were a number of times when the Act acted as a deterrent. We should not underestimate the value of the Act's effectiveness. Exporters in other countries have been deterred merely by the submission of an application to the Board of Trade and have voluntarily adjusted their prices so as to eliminate dumping. The fact that such adjustments and assurances receive less publicity than formal duties and rejections of applications makes people underestimate the effectiveness of the Act as a deterrent to materially injurious dumping.
I turn now to the Bill. With one exception, our procedures under the 1950 Act are already broadly in line with those in the anti-dumping code to which we shall now be paying strict regard. The main feature of the present Bill is to provide for this exception by giving the Board of Trade wider powers to take provisional action in appropriate cases in the interests of our domestic industries. The Government stated in the National Plan that they would consider the amending legislation that is now before the House.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
The hon. Lady said the 1950 Act. Did she mean the 1950 Act, or the 1957 Act?
I beg the hon. Gentleman's pardon, I meant the 1957 Act.
Once a formal application is made, our investigations must be thorough to do justice to all the parties concerned and this inevitably takes time—60 per cent. of the cases take six months or more. The provisional powers we are now seeking in Clause 1 of the Bill are designed to prevent serious injury being caused during our investigation. For reasons 872 of policy and of practical administration, we intend to take provisional action only sparingly and only where there is particular need for it. That is the object behind the wordsin the circumstances it is expedientin Clause 1(2). This is in line with the views of industry and agriculture. The C.B.I. regards such action as desirable in appropriate cases and the N.F.U. has not suggested that the Government should use the additional powers frequently but want them because of their potentially deterrent effect on sporadic dumpers, especially of seasonal products.
There are two main categories of cases for which we shall consider action. The first is where there is a real danger of forestalling, that is to say, of importers seeking to bring in relatively large quantities for stock-piling in anticipation of an anti-dumping duty. The second concerns products, mainly in agriculture, where trade varies greatly with the time of the year. In these cases, the period taken by a full investigation may mean that remedial action in the shape of a definitive anti-dumping duty comes too late to influence trade at the important time. We shall normally require applicants to make out a prima facie case to our satisfaction of dumping and, under Clause 2(3), of material injury—or the threat of it. We shall also require applicants to show why provisional action is particularly needed in their case.
Provisional action will be in the form of a provisional charge to duty imposed by a preliminary Order subject to the negative Resolution procedure. The provisional charge will be equal to the estimated margin of dumping. The Schedule provides that the importer may meet the charge by giving security to the satisfaction of the Commissioners of Customs and Excise. We consider that this will effectively counter the suspected dumping during the period of investigation. For practical reasons which we can explain more fully in Committee, Customs and Excise will require, save in exceptional circumstances, that the security is by deposit of money.
At the end of the provisional period, if our investigations confirm that dumping has been taking place and, in accordance with Clause 2(4), has caused material injury to a British industry, a retrospective 873 Order will be made which will be subject to an affirmative Resolution of the House. The Order will impose a definitive antidumping duty as from the date at which the preliminary order came into effect. If the definitive duty exceeds the provisional charge, only the latter will be levied for the provisional period. If the provisional charge exceeds the definitive duty the excess will be refunded.
The important thing is that no one will be asked to pay duty for a period earlier than the one for which the provisional charge will already have been imposed and no one will be asked to pay more duty than the provisional charge, on goods imported during the provisional period. Importers will therefore know the full extent of their potential liability to a definitive duty and will already have given full security in cash for it. This is not retrospective action as it is normally understood.
In accordance with the code, the provisional charge to duty will normally last three months. However, Clause 1(3) will allow us to extend it by a further three months. This is required partly to meet a special provision in the code which we do not expect to arise much in practice. But it will also enable us, should we consider it expedient, to extend the provisional period more generally to six months in cases involving only countries who do not adhere to the code. This is part of the answer to my hon. Friend. This will give us more time to complete our full investigation, and will also give us more discretion in the case of countries which have not signed the code and which take anti-dumping action freely against our own exporters.
I have referred to Clause 2(3) and (4). Clauses 2(1) and (2) set out more clearly but do not change in any other way the provisions relating to G.A.T.T. countries which are already in the 1957 Act, in the complicated proviso to Section 1(1). We can therefore repeal the proviso by Clause 2(6).
The second main feature of the Bill relates to countries with centrally-planned economies, Clause 3(2). Dumping exists when goods are being exported to Britain at prices below their fair market price. To determine the fair market price under the present Act, the Board of Trade normally has regard to the domestic 874 selling price of comparable goods in the country of origin. Failing this, they fall back on the cost of production or the price of that country's exports to a third market. None of these methods is really satisfactory for countries with centrally-planned economies since they operate artificial and sometimes multiple exchange rates and their export prices do not necessarily bear any relation to domestic costs.
We are, therefore, seeking discretion in this Bill to use another method for establishing the fair market price for goods from these countries. This is by reference to the price of similar goods exported to the United Kingdom by another country, normally a market economy country, with appropriate adjustments to make the comparison a fair one. Such a comparison is substantially the same as the one the Board of Trade already make when considering complaints from our industry against low-priced imports from Eastern area countries in the context of our bilateral trade agreements with some of these countries. These agreements reserve to us the right to impose quota restrictions in certain circumstances. The new powers will make it easier for us to protect by means of anti-dumping duties British industries that make out a case for action. Such duties are more in keeping with current trends in our trade with Eastern area countries than the quota restrictions which are now being progressively eliminated.
I should make three points clear. We shall normally wish to have reference to the lowest but still representative un-dumped price of comparable goods from a market economy country. Secondly, in accordance with our practice ever since the 1957 Act was introduced, we shall normally continue to apply the material injury criterion to non-G.A.T.T. countries. This is because it would be unwise to interfere with trade by anti-dumping measures unless the dumping was in fact causing or threatening material injury. Thirdly, while we hope that these new powers will benefit aggrieved industries, we shall of course also need to continue to have regard to our general trading relations with the Eastern area countries concerned. The other changes proposed in Clause 3 are minor adjustments only and can best be dealt with in Committee.
875 Finally, Clause 4 of the Bill. Under the present Act, we have powers, subject to the negative Resolution procedure, to reduce or revoke anti-dumping or countervailing duties but not to suspend them. It may happen that, when an Order imposing a duty is in force, conditions change so that, for example, the balance of national interest may be temporarily altered against the duty. Or there may be changes in the supply and prices of imported goods which affect dumping or material injury in ways which leave it unclear whether and for how long the new conditions will persist. In such cases, it would be useful to have powers to suspend the duties for a comparatively short period and to end the suspension as soon as the change in conditions is reversed, without the need for full reinvestigation. We do not expect the period of suspension under Clause 4 to be more than a few months as a rule and never more than 12 months.
I hope that, with these explanations, the House will pass this small but useful Bill.
§ 7.20 p.m.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
The House will be grateful to the Parliamentary Secretary for her very full and lucid explanation of the Bill which, as she said, is a small Bill. However, although its scope is limited, it represents an important extension of the powers of the Board of Trade to ask Parliament for Orders to protect British industry and agriculture against dumping. We tend to concentrate more on the industrial aspect, but I believe that the agricultural and horticultural aspects are no less important.
Even though the Bill is relatively limited, the House would be right to view it in the context of the general world trade situation. I hasten to echo the words of the President of the Board of Trade when, at the end of the questions which followed his statement on the proposed acceleration of the Kennedy Round, he declined to go so wide on the subject that, as he said, it would mean starting a general debate which would last for hours. I do not think that anybody wants that on this Bill, and I therefore will do no such thing. But it is right to make two or three relevant points by way of introduction to the Bill.
876 As the hon. Lady said, the Bill is the direct result of the inclusion in the Kennedy Round of Annex D, which is the anti-dumping code. The Kennedy Round was the sixth in the series of G.A.T.T. conferences which have taken place since that body was set up and it represents a notable milestone in the development of international trade, leading, as we hope it will, to a remarkable liberalisation of world trade. The talks which ended last June were, in this context, unique in their scope and complexity and in some respects represented a major departure from what had gone before in that much more attention was given to non-tariff barriers—of which, in a sense, this is one example—and to agricultural trade and the economic problems of developing countries.
Although those were formidable tasks for the negotiators, it is a matter of congratulation that they found time to reach agreement on what is a relatively minor matter in the context of the whole agreement—the detailed rules spelling out the implementation of Article 6 of the original G.A.T.T. treaty, which dealt with dumping and subsidies. It is right to pay tribute to the officials—both male and female—of the right hon. Gentleman's Department, who made a notable contribution to that progress. That has been well recognised in industry and it is right that that tribute should be paid.
Secondly, the main intention of Annex D was not to enlarge the protection which the anti-dumping code gave to the nations but to define it and in some cases to restrict it. Without doubt, some countries have interpreted Article 6 in a broad and liberal manner, and exporters from Britain have found themselves facing an interpretation of the antidumping provisions which differed markedly from the rather more restrictive interpretation in force in this country. For that reason the form of the agreement was necessarily restrictive. But the Bill which we are considering is for the most part enlarging.
It is right that the form of the agreement should be restrictive because Governments need no encouragement whatever to indulge in protectionism of one sort or another. The pressures are always there. When I was in the United States I met some of this pressure in the steel and textile industries, and I 877 realise what we are up against. It is right to resist those pressures. They exist, but in many cases they are being effectively resisted. I quote one statement made on the subject by the President of the United States:Protectionism is rearing its ugly head in the form of certain quota Bills now before Congress, trying to take care of each Congressman's district, and when we begin to think more of our districts than we think of the country we are likely to get into trouble.This is a phenomenon to which we are not wholly strangers in this country. Perhaps some of the speeches which we shall hear later in the debate will be evidence of similar pressures here. But it is right from this House to welcome the President's statement and the very strong resistance which the whole American Administration put up to the proposals which were before Congress last autumn. No pretext is more plausible or more respectable to back up a case for protectionism than an allegation of dumping.
It is for this reason that it is necessary to define extremely narrowly the conditions in which an anti-dumping duty may be applied. It is also right in this context to say that this country has no need whatever to stand in a white sheet. Our record is one of strict, some argue unnecessarily strict, interpretation of Article 6. So it is that in the Bill we find that the provision is enlarging. Two points to which the Parliamentary Secretary referred expand and widen the powers of the Board of Trade to impose anti-dumping duties. In a sense it is unfortunate in that the first step which the Government and the country are to be seen to be taking publicly in the implementation of the Kennedy Agreement is a slight—it is a very slight—permitting of additional restrictions on trade. But I believe that the President of the Board of Trade has given us sufficient prophylatic as a protection against any such accusations by what my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) described as the constructive initiative which he announced on 14th March. Rather the Bill should be regarded by other countries as a measure of the self-imposed restraint which we in Britain have hitherto put on the use of Article 6 of the G.A.T.T. agreement.
My third point is that it could be argued that the changes are justified on 878 their own merits to bring United Kingdom law into line with the international convention on dumping. But I believe that it goes further than that. It must be seen to be part only of the wider agreement reached at Geneva, and acceptable only if regarded as one element in the whole convention signed by the parties last year. It is important that other countries should not see the Bill merely as evidence of an eagerness on the part of the United Kingdom to seize an opportunity to raise new barriers, but rather should regard it as an earnest of our intention to fulfill the whole agreement.
The truth is that anti-dumping becomes important only as tariffs and restrictions of all sorts are lowered on the movement of goods. Therefore, far from being a protectionist Measure, as some might seek to represent it, I believe that the Bill can be taken as a guarantee of our wish to fulfil the full terms agreed in June last year.
It is not always easy to persuade industrialists and trade unionists that freer trade and tougher international competition is, and must be, in our own long-term interests. Yet that must be true. It is entirely right that, at the same time, we should be able to assure them of adequate protection against what is, basically, unfair competition, which is what dumping represents. This is really the basic justification for a code of antidumping practice.
I turn now to the Bill. The hon. Lady suggested that it was foreshadowed in the National Plan, but the reference to it was a bit vague there. The first real indication we heard that the Government had actively under preparation a Bill of this kind came when the President of the Board of Trade wrote to Mr. Lewis Wright, the General Secretary of the Amalgamated Weavers Association, on 28th September, 1967, after a delegation had waited upon him and had put to him their grave fears about threats to the textile industry. Dumping had been the subject of one of their complaints, and in his letter the right hon. Gentleman assured the Amalgamated Weavers Association that the Government always stood ready to take effective action against dumping. He ended that paragraph by saying:Meanwhile, the Government is pushing ahead with a new Anti-Dumping Bill.879 That was the first any of us had heard about it, and I made it my business to find out whether anything else had been said. But no; that was the announcement to the world that a new Bill was forthcoming—a strange place to find such an announcement, but none the less welcome for that.
The hon. Lady explained the details of the Bill in the simple and unvarnished prose we have come to expect from her. As she said, two main changes and a lot of minor improvements are made. The first main change is that, for the first time, there will be power to impose a provisional duty, there having been power hitherto to impose only a retrospective duty. The second deals with the question of determining fair market price in Iron Curtain countries or countries where there is essentially a controlled economy.
There can be little doubt that the severest weight of criticism against the Board's administration of the existing Act has been directed to the damage which can be done, and undoubtedly has been done, by the dumping of imports during the period of investigating an allegation of dumping made by an industrial or commercial interest in this country. This has certainly applied where specialised high-value commodities have been dumped. It is relatively easy to forestall, to use the Parliamentary Secretary's own word, by bringing in quantities sufficient to last for two or three years, thus substantially defeating the object of the anti-dumping duty. It has applied also to seasonal goods in many sections of agriculture. By the time the allegation has been made out, the whole purpose of it has passed and the damage has been done.
In some cases, one has had just a continuing pattern of importing, which has been bad enough, but in other cases there has been a deliberate attempt to anticipate the effect of the anti-dumping duty by getting the goods in before any order could be made. In this way, the delay—necessary delay, perhaps—in the course of thoroughly investigating an allegation, has entirely defeated the purpose of the application and irreparable harm has been done. In such circumstances, people in industry have felt that the Act has entirely failed in its purpose and have been pretty cynical about it.
880 The reason has been that the 1957 Act was interpreted by the Board of Trade very narrowly. The Board has always interpreted the word "satisfied" as meanning "completely satisfied", and room for a prime facie case, which the hon. Lady mentioned, was never allowed. Other countries have applied far less stringent conditions. They have readily applied provisional duties, they have suspended appraisal, and have undertaken all the devices which have enabled them to delay entry of the goods subject to an application.
Some years ago, representations on this subject were made by people in industry and in agriculture, and it was right that the Government should act. We now have Articles 10 and 11 of the Convention spelling out what is permissible. However, I have one or two points to make about this, as it is an important matter. Article 10(a) reads:Provisional measures may be taken only when a preliminary decision has been taken that there is dumping and when there is sufficient evidence of injury".In the Bill, there is a greater divergence than that, if I may so call it, in the burden of proof required of an applicant. Clause 1(2) has the words,…if at any time it appears to the Board of Trade, on the facts so far before them, that the conditions of section 1(1)(a) or (b)…are fulfilled".When one turns to material injury, on the other hand, one finds different words in Clause 2(3):…a provisional charge to duty shall not be made unless the facts so far before the Board of Trade indicate that the effectis such as to cause material injury.
Do those differences in wording imply a difference in the burden of proof? There is no such implication in Article 10(a) of the Convention, yet it is quite possible that, following a test similar to the one I mentioned a moment ago—that "satisfied" must mean "completely satisfied"—the Board of Trade will tend to interpret those two requirements, one regarding dumping and one regarding material injury, as calling for a different burden of proof, as justified by the difference in language. Perhaps the Minister of State will deal with that in reply.
The Parliamentary Secretary referred to the last few words of Clause 1(2),in the circumstances it is expedient to impose such a charge".881 She did not make entirely clear the circumstances in which a provisional duty would be refused on the grounds that it was not expedient. She told us that, where there was any question of forestalling or where there was any question of seasonal goods, a provisional duty would be imposed, and for that we are grateful. But is that as far as it goes? Are not the Government prepared to have regard to imports coming in at a continuous rate, with no evidence of an accelerated rate such as might justify a charge of forestalling but which, nevertheless, could do irreparable damage to the firm as a result of the dumping ultimately proved.
What are the factors which will weigh with the Board of Trade in deciding whether it is expedient to impose a provisional charge? Dumping and material injury must be prima facie established, but the Board of Trade has limited its own power to make a provisional order by the use of the word "expedient". I mean no disrespect when I say that the Minister of State must go a little further than the hon. Lady did in explaining how that limitation is to be interpreted.
The retrospective duties imposed—strangely, they come in subsection (1), and the provisional duty is covered by subsection (2), and one might have thought that it would be the other way round—are a little obscure, but the case seems to be this. Let us suppose that a provisional duty of 5s. a pound is imposed. After investigation, it is found that a duty of 6s. a pound would be appropriate. The Board of Trade is limited as regards the retrospective period to 5s. a pound. On the other hand, if the figures are the other way round and 6s. is imposed as a provisional duty but, in the event, 5s. a pound is charged, the 5s. a pound stays for the retrospective period as well.
§ Mr. Jenkin
The hon. Lady says that it would be repaid. There is no provision in the Bill for payment; it is merely a bond. Perhaps that word ought to be in inverted commas, but I see what she means. In each case, it is only the lower rate of duty which can 882 be applied to the period before the making of the final order.
This new power is welcome. It brings us into line with the international Convention and puts us on a parallel with other countries which have in the past operated the existing powers rather less stringently than we have. As other countries bring their laws into line with the Convention, reducing the liberality with which they have interpreted G.A.T.T. provision, that will in turn help our exporters.
The second main change is the determination of a fair market price where the country of origin operates a centrally controlled economy. There have been two difficulties. First, such economies do not operate on a market basis, and therefore there is no market price in the sense that we understand it. Second, as the Parliamentary Secretary said, exchange rates are often highly artificial.
There is the further difficulty of establishing any sort of cost information that means anything. Perhaps this is best illustrated by a case about which I have had correspondence with the Board of Trade, concerning allegations of dumping Russian watches. I have seen the Board of Trade trying to grapple with the problems of investigating a wave of dumping from an Iron Curtain country.
The right hon. Member for Sheffield, Hillsborough (Mr. Darling), whose departure from the Front Bench opposite many of us on this side of the House sincerely regret, dealt with this in a letter to me on 24th April last year. Because it sets out so clearly what the Board of Trade's practice is, it might be right to read it to the House. He said:We normally prefer…in such cases the easier and quicker course of considering any allegations of disruptive trading in the context of our current import quota arrangements with the country concerned.In considering such allegations, we base our decision on a comparison of the landed price, not including duty, of the goods about which the complaint is being made, with the ex-works prices of comparable British products and the landed prices of comparable goods imported from other market-economy sources.That practice is almost exactly what the Bill now proposes should be made statutory. Apparently the Board of Trade has had no difficulty in applying such a procedure in the past without statutory authority.
883 The right hon. Gentleman went on to explain that often in international trade negotiations there are great advantages to be got for British exporters by agreeing to quotas of goods, even though they may be coming in at dumped prices. But he added:The inducement in terms of improved opportunities for British exports will have to be very substantial before we shall feel able to agree to any further concessions on watches for the Soviet Union, so long as doubt remains about the fairness of their prices.That was a very fair statement.
The British industry thereupon tried to give an indication of what would be the cost of Swiss and United Kingdom watches and the prices that must have been charged for comparable Russian watches on their import. The figures are very striking. Let us take the movements, leaving out of account the value of the case. The Swiss movements were thought to be about 38s. each, and the United Kingdom movements 33s. 10½d., whereas the Russian movements were only 12s. That shows the measure of the margin between the comparisons which the right hon. Gentleman wrote that the Board of Trade was making and the imports.
The right hon. Gentleman wrote again on 9th June:ߪRussian watches and movements are coming into this country at prices that are substantially less than those of comparable Swiss watches, or the cost of production of comparable British movements. This gives us a basis for pursuing the matter further with the Soviet authorities, which we intend to do shortly.This the Board of Trade did, but it got nowhere. All information from the Russians on costs was refused. So, to the surprise and chagrin of the industry, in January the quota for Russian watches was increased by no less than £100,000. Yet earlier the right hon. Gentleman had admitted that the goods were being imported at prices substantially lower than those of comparable Swiss or United Kingdom watches.
I apologise for having described this instance at some length, but it clearly illustrates the difficulties in such cases.
§ Mr. Mapp
I think that I am right in thinking that watches are manufactured in the hon. Gentleman's con- 884 stituency, though I may be wrong. In any case, his argument is in effect that Russian watches are coming here at prices substantially lower than those at which we can produce them or import them from Switzerland. Is the hon. Gentleman arguing from this that there should be special arrangements to deal with this problem, because so far legislation has not dealt with this point, as far as I know?
§ Mr. Jenkin
The hon. Gentleman has anticipated the point I was about to make. Perhaps I should reassure him. As far as I know, I have no watch manufacturers in my constituency, and I am not guilty of those district pressures to which the President of the United States referred in the excerpt from his speech which I read a short while ago.
I believe that this case illustrates the limited value likely to be obtained from Clause 3(2), because that provision appears to have been exactly what happened in the case of the Russian watches, and yet the Board of Trade thought it right to increase the quota from £400,000 to £500,000 a year. I can well understand the indignation and sense of helplessness which the industry felt when it was confronted with that information.
The only thing that this new power does is apparently to provide a short-cut assessment of costs. What we are entitled to require, not ask, of the Board of Trade is that the power will be used, if dumping of the sort I have illustrated in the case of Russian watches is shown, as was admitted by the right hon. Gentleman. We require that an anti-dumping duty shall be imposed, and that the interests of one British industry shall not be sacrificed to those of an entirely different British industry—in the case 1 have mentioned it was to be clothing and footwear—in an attempt to increase bilateral trade with Iron Curtain countries. We shall not convince industries that trade is fair where that sort of thing is done and no action is taken.
It will be necessary to interpret the provision about "identical or comparable goods" with a reasonable degree of flexibility, but once the dumping has been proved, it is essential that, provided material injury is also proved—and the Board of Trade has always said that it requires this—the duty is imposed, The 885 Board of Trade should not take refuge in the hope of increasing bilateral trade agreements of this sort. One should not adopt towards this matter an unduly timid or legalistic approach. The Minister of State must say how the Board of Trade will in future operate the provision and give some indication to industry that there will not be a repetition of the kind of handling of the matter we have seen in recent months.
Finally, I have two general points about the Bill. Perhaps I should again make perfectly clear the question I put to the hon. Lady while she was making her speech, because it is a point which many industrialists find very puzzling. The G.A.T.T. rules require not only that dumping should be proved but that material injury should be proved. This does not apply to countries which are not members of G.A.T.T., and yet the Board of Trade has apparently always required the same burden of proof of material injury in respect of dumping from non-G.A.T.T. countries as it has in the case of dumping from G.A.T.T. countries.
To the extent that other G.A.T.T. countries apply different rules and draw a distinction in respect of where the allegedly dumped goods are coming from, that has put British industry at a disadvantage. The Minister of State owes it to the House to explain why there should be this, as it were, voluntary imposition of an additional restriction on the operation of the rule. Is the onus as stringent as many industrialists believe it is? Perhaps there is a case here for requiring the same evidence of injury, but not going as far as the G.A.T.T. requirements indicate.
The second point is about agriculture and horticulture. I put it with great hesitation because it is a subject on which I cannot claim to speak with any authority, having not a single farmer in my constituency. We must recognise that in this sphere an anti-dumping duty may in itself not be enough to achieve the stabilisation in the home trade that we all wish to see. I believe that the effective answer to the large quantities of dual priced goods which are coming or are threatening to come into the market and engulf or swamp it must be that we should go over to a full-scale system of import levies. I leave it to those of my 886 hon. Friends who have much greater knowledge of the matter than I have to elaborate on that, and merely assert that in the context of agriculture I do not believe that the Bill will solve the problem. At best, it is only half a safeguard.
The Kennedy Round marked a big stride—not perhaps a giant one—in the growth of international trade, and it has been followed by a number of constructive initiatives both by this country and by the Common Market. It all now depends on the United States, and we are awaiting and watching with great interest what happens there. The forces of protectionism are undoubtedly very strong. On the other hand, there are those who see the danger. Meanwhile, the United Kingdom is taking a leading part in the start on the elimination of non-tariff barriers. We have always operated the dumping code strictly. The Bill should not be taken as an indication that we shall cease to do that.
With that, I can say that we welcome the Bill. We shall examine it in detail in Committee, but see no reason why it should not be given an unopposed Second Reading.
§ 7.52 p.m.
§ Mr. Charles Mapp (Oldham, East)
I have listened with great care to the contributions on both sides. The contribution by the Parliamentary Secretary was more or less as I had expected, but one comment stuck in my mind and about which I am concerned. She said, in effect, that the main difference that the Bill brings compared with the practice of legislation previously is that it confers wider powers in respect of provisional powers. I accept that, but if that is the march of progress I am sorry that it is not a little quicker.
I am concerned about the administration of this legislation-to-be. The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) had a wonderful detachment about the rôle of the policeman. But the policeman in this case is Britain. I expect that policeman to deal with what are trading offences in the way that a policeman should.
I also noticed that the hon. Gentleman identified a case of importation at less than the market price from an Iron Curtain country. But he did not think 887 of dealing with the same problem in respect of trade with the rest of the world. I have a feeling that later in the debate he will not be supported in regard to the agricultural industry—he made that caveat himself—nor will he be supported by the industry in the North-West which has been pretty well crucified over a number of years.
My view is that industries of that kind—I am not unknowledgeable of the claims of the agricultural industry, having been born in the countryside—are entitled to the protection of the policeman. In a number of instances we feel that the policeman has lacked powers or in some cases lacked vision to see what has been happening.
I want to trace for the House how the Bill comes before us. I think I should not be out of order in referring to Command Paper 3347 of July last year, which says, in paragraph 32, on page 14:For example, the Code requires that applications for anti-dumping action must be supported by evidence of material injury to domestic producers.I want to develop what injury is and who domestic producers are, and I also want to refer to the users of dumped materials.
I was surprised—though it is in alignment with the speech from the Opposition Front Bench—to notice that paragraph 33 says:It will not be necessary to amend United Kingdom legislation in order to comply with the Code.But here we have amending legislation, and from the contribution by the Parliamentary Secretary I can only think that the amending legislation is to deal purely and solely with the provisional powers that seem to be necessary.
The White Paper goes on to describe in some detail, in effect, what will be the background to this Bill, and it is in the light of that that I want to comment. Article 2, on page 38, headed "Determination of Dumping", says that for the purpose of the code a product is to be considered as being dumped if it isintroduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.888 So we are here back to the problem of a like product.
Over the last 12 months an undue quantity of yarn has been imported into this country. I have found out how it has happened. Most of the evidence that I have been able to find shows that the kind of yarn as produced in Portugal—it has now fallen away—and that the materials ultimately made from that yarn are not normally saleable on the Portuguese market. Therefore, the next problem is: what is a fair price to determine the market position?
To take the matter a little further, this yarn was derived from raw cotton grown in the Portuguese colony in Africa. The Portuguese Government have made special financial arrangements which involve the growing of raw cotton in Africa for export to Portugal, and these represent a built-in subsidy. This seems self-evident to the traders in Lancashire and it is self-evident to me, but the problem of proving this kind of thing is a matter of the vision of the policeman and on the side of whose law he is operating.
A good deal of evidence was produced to the Board of Trade from the industry as a whole. The flow of that traffic has largely reverted to normal now. I will not go into detail about how that has happened, except to say—I put this point very pertinently to the Minister—that I believe it was the case that another E.F.T.A. country was subject to the same excessive import flow from Portugal as ourselves and the traders in that country threatened to take the abnormal importation of the material to the courts. It was felt that the Portuguese Government were a little unsure whether a case could be sustained against them. This synchronised with the British Government's action. I am not happy that this horse-trading should take place. Dumping is either established or it is not. Lancashire thinks that there has been a large measure of dumping in recent years.
As distinct from machinery, moto cars, and 99 per cent. of the things that we use, imported textiles do not show their precise origin. Nobody is able to identify from the article itself what its origin was. The Shirley Institute, in Manchester, was recently asked if its scientists could decide the origin of an article. It was unable to make any conclusive statement about the country of 889 origin. Lancashire is interested in the Bill and it will be disappointed if the result is that provisional powers are taken and nothing done about the general position.
In Article 2(a) and 2(b) of Cmnd. 3347 there is a determination of what constitutes dumping. In Article 2(b) the words are "like product". What are like products? As I proved in the case of Portugal, it is unlikely that they are products like those which might be required in the sophisticated British market. There is little market in India and Pakistan for the textiles from those countries which reach Britain.
What is "injury"? The Lancashire trade has for long been upset because the industry, through its central body, has not been recognised as the party producing evidence of injury. We have often had to return to one producer. In an industry which is widespread and probably over-fragmented, how can a trader in Burnley, Oldham or Bolton, who is concerned merely with his own product, establish injury to himself? He knows that the yarn industry extends right across the North-West. His own injury may appear to be minimal, but over a period of time there may be a loss of confidence not only in him but in the industry generally and his chances of being able to obtain finance to expand will be small. He will be more likely than not to be open to a take-over or face bankruptcy.
It is all very well for hon. Members representing affluent parts of Britain who have not to deal with problems of declining industries to talk in idealistic general terms. I do not assert that we want the policeman to stop the process of rationalisation in the textile industry. Rationalisation there will have to be. All we ask is that, if it has to be rationalised, the rules of cricket on the importation of the industry's main raw materials should be reasonable and we should not have to face dumping as we know it.
The Minister mentioned a Canadian experience, which was apparently referred to in the Geneva discussions. This experience was within the knowledge of the Cotton Board two or three years ago. Allegations were made about it, but we were unable to produce the kind of evidence which the hon. Member for 890 Wanstead and Woodford said was necessary. Since then, it has apparently been established. With the setting up of the Imports Commission, there is now much better policing. It required an expression of opinion on both sides of the House to enable us to reach the stage when that policing is taking place, but even more policing is required.
The Trade Descriptions Bill will, if enacted, enable dumping to be more easily identified. Over a period of time we knew of textiles passing from Eastern countries to Canada and being absorbed in the Canadian market at Canadian prices and an equivalent amount of Canadian production being sent over here at Far Eastern prices, or with only a small margin to make the business worth while.
Both sides of the industry in Lancashire—the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) will support me in this—want to ensure that the Bill, small as it may be, will do a job. I want to be sure that the industry will be recognised and respected as able to make charges about dumping. If I thought that the position would be that individual firms had to make charges about dumping, I would vote against the Bill tonight.
Greater use should be made of our commercial representatives abroad so that we know what is happening overseas. Sometimes it falls to me and to some hon. Members opposite to get information about what is happening overseas, information which appears not to have been gathered by our commercial representatives. For instance, last June the Australian Government declined to accept Hong Kong shirts on the ground that the price was subnormal. The hon. Member for Wanstead and Woodford argued the same thing about Russian watches. Regardless of whether it is the Russian Government or entrepreneurs in Hong Kong, India, Pakistan or Canada, if Britain allows our industry to run down and become a ready-made market for the world's operators it is obvious that the places I have mentioned will so arrange their production that this velvet cushion can absorb what they produce.
What are price undertakings in this context? In business, a price undertaking means that if one is a good boy one will 891 be paid X for a period of time. I regard price undertakings as nothing more than an interim price until such time as more permanent arrangements are made. They are useful so long as there is controversy, but they often lose their validity when the controversy ends.
Provisional duties can be arranged if dumping has been proved, but in Lancashire there have been one or two recent examples of stuff coming to Salford or Liverpool docks and being taken over by the Customs people and sold on the British market. I understand that provisional duties will obviate that. Hitherto, the British market has had to absorb these imports and, incidentally, the Government have been the means by which these imports have been absorbed. If necessary, they ought to be sent back. All I am asking is that the policeman here should do his job.
Some time ago, the Chancellor of the Exchequer took notice of the world's opinion about our export rebate scheme and withdrew it, presumably because we were open to some objection about dumping. On the other hand, I gather that if the United States becomes more reactionary about certain tariffs, this weapon might be taken back into our armoury. This is a long way from proving dumping in the strict sense with which we have been concerned this evening. I have quoted examples from Canada, Ireland and Portugal, but there are hints of a great deal of dumping from Austria.
Both sides of the textile industry in Lancashire would like some assurances. They would like to be assured that the civil and Customs service in this country are fully alert to the present problem and to the opportunities which the Bill will confer. They want close and understanding contacts between their representatives and the Government. British industry should not be asked to prove dumping 101 per cent. After all, to some extent this is a matter of looking after the interests of the country as a whole, and the Government ought to be disposed to act sympathetically not only for the textile industry, but, later possibly, for agriculture and horticulture.
I hope that my right hon. Friends are alert to these problems. There is the great problem of rescuing the textile industry. It must be improved in a number 892 of ways, including reorganisation, but many incidental things would be helpful. One of them would be for the Government to deal with dumping vigorously. Another is to improve trade marking, and progress in that direction is likely to be recorded.
I hope that the Minister of State will take account of the apprehensions of the textile industry and make sure that the Bill provides the necessary powers. However, the most important thing is not legislation as such, but the application of drive and vigour in its administration where it matters.
§ 8.15 p.m.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
I welcome the Bill as far as it goes, but I find it disappointing in a number of respects. Successive Presidents of the Board of Trade, irrespective of party, have completely deformed the 1957 Act. The hon. Lady the Parliamentary Secretary peppered her speech with references to applicants making out their case to applicants proving this and satisfying the Board of Trade that. Nowhere in the Bill is there anything about applicants. This is an entire hallucination imported by successive generations of Presidents of the Board of Trade. They have quite deliberately turned an intransitive into a transitive verb. They have turned an obligation on the Board of Trade to satisfy itself into an obligation on mythical applicants to prove a case to the Board of Trade.
The only reference to applicants in the 1957 Act is in Section 3, which says:If on an application so made the Board of Trade are satisfied that the export price of the goods in that country with the amount of the duty added to it exceeds the fair market price of the goods in that country, the Board shall notify the Commissioners of Customs and Excise of the amount of the excess, and the Commissioners shall remit or repay the duty up to that amount.There is nothing in the Bill about applicants. It is unforunate that there should be imported into this new Bill an old bad habit, the bad habit of the impotent Board of Trade incapable of reading the figures which it publishes itself about what is going on, so that unless some applicant to whom there is no statutory reference draws its own attention to its own figures, it exists in a state of ignorance of them. I find this profoundly distressing, entirely unnecessary and completely avoidable.
893 When, over the years, hon. Members from either side of the House have drawn examples of dumping to the attention of Board of Trade Ministers and have given evidence of it, time after time Ministers have said that they have not had an application for an anti-dumping duty from somebody representing the industry affected. But there is no statutory necessity to have such an application. When the facts are presented in the House, the Minister retires behind the mythical defence that he has no power to act until the applicant proves a case.
I hope that the Minister of State, for whom I have the greatest respect, will nail this one for good and all and will say that when the Bill is passed, as I trust it will be, he will enforce the Act and will not surround himself with restrictions which he has not put into the Bill or asked the House to accept.
§ Mr. Gordon Oakes (Bolton, West)
I agree entirely with what the hon. Gentleman says. Would he agree with me that Ministers have a further get-out when they say that if Members will supply them with evidence of the dumping, they will take appropriate action? How can any hon. Member know the conditions prevailing in a given country? It is the duty of the Board of Trade to know that.
§ Mr. Maxwell-Hyslop
I entirely agree, and I am most grateful to the hon. Gentleman for emphasising that. No one is or should be in a better position to know what is going on in another country than the President of the Board of Trade and his Ministers. If he does not know what is coming into the country, he should sort out his Department, because it is not doing its job properly.
I agree that many statistics are inadequate. For instance, there is the fact that the Board of Trade does not know—it claims that it does not have the figures—what is the export-added value ratio for various classes of manufactured goods. I asked a Question about this last week when it was claimed that the Board did not know. I do not know what could be more important to know than that.
For heaven's sake let us keep this as the Bill says it is, an intransitive condition. The Minister must be satisfied—no one else has a duty to satisfy him. I hope that the Minister of State can give us that 894 assurance. The second omission which I hope to see rectified is the question of material injury to the taxpayer who, believe it or not, exists. It is a ground for imposing anti-dumping duty if the material is being exported at an artificially low price and if material injury is caused or threatened to established industry, or is such as to retard materially the establishment of an industry in the United Kingdom.
What about the poor taxpayer who may suffer as a result of dumping? In many areas of agriculture, we still have a deficiency payments system. If the average market price, on the rolling average, is such that a subsidy is currently being paid, then the initial effect of dumping, by depressing prices, would be to injure the taxpayer, because it is the taxpayer who will then face a Supplementary Estimate as a result of the unexpected subsidy that has had to be paid. Yet there is no provision here to protect the taxpayer against material injury, actual or threatened. That is something which I, and, I hope, all Members, would welcome.
I would not have it thought that because it is the taxpayer who suffers the initial injury as a result of dumping where there are rolling average deficiency payments, the British agricultural industry does not suffer, too, in the long run. Of course it does, particularly under the standard quantity system, because it tends to have its standard quantity reduced at the next Review. That is always very much more remote and the temptation to the Minister, when faced with Polish eggs pouring into a country which is already producing more than 99 per cent. of its own fresh egg consumption is to say, "Ah well, there is a deficiency payments system, so it does not do material harm to the industry." We know that it does material and long-term harm to the industry, and it also does material harm to the taxpayer. It is a legitimate interest of Members who do not represent farming constituencies, because we certainly represent taxpayers.
To what extent does the Bill apply equally to Crown Colonies and Protectorates as it does to foreign States? I am sure that there is an easy answer to this, but there would be merit in placing on the record whether there is any diminution in its effect, between Crown Colonies4 895 and foreign States. I welcome the Bill because we all know how difficult it is to establish the representative price of a commodity produced in a country which does not have a normal market system, or where that system is distorted by rationing of one kind or another. The Bill goes a considerable way to untie the Minister's hands in that respect.
Finally, I exhort the Minister of State to pay more attention to anticipating injury, rather than waiting until the injury has occurred. We have to undo the injury done to the British producers, whether agricultural, taxpayer or whatever else. One will not undo the damage subsequently, by putting an import duty on dumped produce. One does not undo the damage caused to industry, which can include the shattering of confidence in its long-term development, in this way. It is not undone by waiting until the injury is caused and then putting on an import duty.
For these reasons I welcome the Bill as far as it goes, but I hope that the Minister of State will give serious consideration, before the Committee stage, to strengthening the Bill in the ways that I have suggested, first of all by stating publicly that this myth about applicants having to satisfy him is indeed a myth and is dead and buried in this House tonight. Secondly, he should make it quite clear in the Bill—and this would necessitate the addition of a subsection—that material injury to the taxpayer because of our subsidy system would also fulfil the second requirement which is necessary to impose anti-dumping duties. With those comments I give a hearty welcome to the Bill.
§ 8.25 p.m.
§ Mr. George Lawson (Motherwell)
I have to say right away that I have a constituency interest in this Bill, and I make no pretence about objectivity, such as the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin), although I can be as objective in matters of this kind as most others. I represent a constituency where a very large number of alarm clocks are made. They are not made solely in my constituency, but in practically only two areas of the country.
It is interesting that this industry, together with the watchmaking industry, 896 was brought into existence as a result of wartime experiences, when we had virtually no such industry. In an earlier day we made watches and clocks, but had virtually lost the skill, and special efforts were made to establish an industry here, to put Britain in a position where it was not so completely dependent upon foreign sources as we had come to be. The industry has been in serious jeopardy because of the unregulated dumping going on over a considerable period of time. I see my hon. Friend the Member for Brecon and Radnor (Mr. Tudor Watkins), and I am sure that he wants to say something on this.
Since early 1963, together with my hon. Friend the Member for Dunbartonshire, West (Mr. Steele), who has another of the clock-making industries in his constituency, I have on a number of occasions approached various Board of Trade Ministers on this problem. Our experience was always that the onus was thrown upon the complaining firms to produce evidence. We were subsequently told that the firm need not prove it absolutely, but that evidence should be submitted sufficient to establish at least reasonable ground for the contention. Then it would be investigated. But any evidence which came to my notice did not satisfy me that those investigations had been carried out with the thoroughness which I should have expected of our country in a matter of this kind.
There was one occasion—in fact, it was about the only occasion—when a substantial piece of evidence was brought to my attention of the kind requested by the Board of Trade. This evidence was produced by trade union officials who went to an East European country and sought to discover what was happening. They had to do a fair amount of guesswork, but the guesswork seemed to me, and to others who knew about these things in this country to be fairly sound. The union of my hon. Friend the Member for Paisley (Mr. John Robertson), although clocks are not manufactured in his constituency, was very much involved in this matter. The general secretary of the A.E.U. sought to produce evidence on it. It seemed to me rather absurd that our country could do nothing unless private individuals produced evidence of dumping, and yet that was repeatedly the situation which we found.
897 I remember my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) saying to me that the law in this connection was no good; it was rotten. But what was said in the letter which the hon. Member for Wanstead and Woodford read surprised me because it did not fit in with our experience—and I say "our experience" because I was not alone in this—in trying to have something done to protect an industry which seemed to us to be in serious jeopardy.
One could expect no private concern, or even a group of private concerns, to be in a position to get the information which our Government could obtain. The issue is not free trade versus protection, as perhaps it used to be in the past. Governments are competing with Governments, countries are competing with countries, and there can be no doubt that in most, if not all, countries a variety of means are found to push the business interests of those countries. Many of those means are not fair if we measure them by what we would customarily consider to be fair.
I recognise that this nation, perhaps more than any other, lives by trade and that we must be fair. Nevertheless, need we be more than fair? Need we bend backwards always to be so scrupulous that there can be no pointing of the finger at us? My impression has been that those to whom I have spoken—Ministers and those advising Ministers—have been concerned about doing nothing which could result in criticism of this nation. That is all very well if other nations do the same.
My hon. Friend the Member for Oldham, East (Mr. Mapp) talked about a policeman. It is no good having a policeman for one country unless other countries do the same; or if other countries do not do the same, our policeman should be informed and should be prepared to take any necessary action. I do not suppose that we shall ever be able to stop these things, and I am all for any liberalisation that can be achieved, but it must be done on the basis of "or else".
Governments and nations are involved in this matter. Governments are trying to strike bargains and to reach agreements on fair practices. It is no good saying, "We will observe the agreements of G.A.T.T. and bind ourselves to 100 per cent. observance of those agree- 898 ments" when we know it is not being done elsewhere. This becomes a bargaining question. In the past—and I hope that in future this situation will change—if the trade unions merely argued a case without having any power to their elbow, namely, the right to withhold their members' labour, in most cases they got nowhere. If we insist merely on arguing, and allow all sorts of practices harmful to us to be engaged in, we shall get nowhere. We should be ready, if the occasion demands, to use our power as a nation which imports a vast quantity of goods.
This is a very powerful lever which we have. Why should we always be so much concerned with the argument that it will damage us if we take reciprocal action? We can take reciprocal action, and I hope that we will do so, if we feel that various things which are detrimental to our interests are being done.
To come to the point made by the hon. Member for Wanstead and Woodford, it is absurd that we should bind ourselves to observe agreements which have not been, and are not being, observed by certain other countries or that we should, for example, impose upon ourselves the limitations of G.A.T.T. in respect of the Soviet Union, the East European countries or China. China was very much involved at one time with the commodity with which I was concerned. Those countries are not in the least concerned about G.A.T.T. They are concerned with using their power as a State to push their separate interests in this way.
From that point of view, we have to recognise that this is a different world. It is not a world of free trade versus protectionism. It is a world in which Governments are involved. I would like our Government to recognise this to be true and to act honestly. Where we are not being dealt with honestly, however, let us also use what power we have. Do not put our manufacturers in the position where the onus is always upon them. One would almost think that they were committing a crime or doing something reprehensible when they complain that dumping is taking place and doing them great harm.
The question of material injury has been a large part of the argument. I 899 very much accept the point put by the hon. Member for Wanstead and Woodford. It is quite wrong, in the interests of a second industry or group of industries, to act in ways which result in injury to another industry, as could well be the case.
We are often told that bilateral agreements have been entered into, that we have agreed to allow certain imports and that there will be a certain amount of exports. That may have nothing to do with the injury which has been wrought on a particular industry. When an industry such as the clockmaking industry, at a time when more and more clocks are being bought, not only stands still but even declines, this surely must be evidence of material damage being done to the industry.
We have to think in terms of the interests of our industry. Let us put this first, not in the sense that we will go out and adopt all sorts of reprehensible practices, but, recognising the situation in the world today, say that industries must be backed by Governments and that we are backing our industries. Do not let us put them in the position always of having the onus of proving every little iota before action is taken.
One doubts whether any action is taken. I am expecting that, from the Bill, we will now be in a position to take action which will ensure that the clockmaking industry—and I hope that we will be hearing from my hon. Friend the Member for Brecon and Radnor about the watchmaking industry, as well as others—finds itself secure and is able to go ahead and expand. I shall be disappointed if this is not done.
§ 8.40 p.m.
§ Mr. Charles Fletcher-Cooke (Darwen)
The hon. Member for Motherwell (Mr. Lawson) has made an excellent speech. Indeed, there has been a consensus of excellent speeches in this debate. The hon. Member for Motherwell was right to say that this is not a free trade world. It is a world of very ugly autarchies, much uglier than the old capitalist private venturer freebooter world, because these autarchies we are contending with are much more powerful, much more ruthless and much more unscrupulous.
900 Therefore, I support the hon. Member and all those who have spoken in trying to bring to the Board of Trade, which is a splendid and honourable but somewhat 19th century institution, an atmosphere of urgency, now that we are in the second half of the 20th century, and that rather lofty judicial attitude which the Board of Trade preserved in the past must, I think, go—and is, I believe, going.
I have detected even over the last year, from letters one gets from the Board of Trade, from remarks which are made from the Government Front Bench, a recognition, at long last, that it is not enough for the Board to act as a lofty neutral in these matters, but that it has to take positive and early assistance to the British trader and to British industry. It has to take the initiative in the matter and not act merely as an umpire, as it has so often done in the past. That is why I welcome the speech of the hon. Member for Motherwell and also that of his hon. Friend the Member for Oldham, East (Mr. Mapp).
The 1957 Act I always regarded as a weak Act, made weaker by the method of the administration, and, in so far as this Bill strengthens it, it is, of course much to be welcomed. It does not strengthen it very much. I think that is because, as is common knowledge, in the Kennedy Round negotiations the Board of Trade view, if I may so put it, prevailed in the world against the system of anti-dumping which many other countries such as Canada had previously adopted.
Before the Kennedy Round negotiations at Geneva recently a great many of us advocated that we should adopt what is broadly and roughly called the Canadian system; that is to say, the system by which a consignment of goods coming into a country should carry with it a statement or a statutory declaration or an affidavit, something of that sort, declaring positively that there is no element of double pricing, that, allowing for carriage, insurance and freight, the price is the same as it would have been if the consignment had been sold on the domestic market. This was the requirement of the Canadians which they always insisted upon, and, I always thought, 901 rightly insisted upon. However, I understand that at Geneva their system was condemned, and that our somewhat easygoing system was that to be adopted universally.
One of my questions to the Minister of State is: to what extent have other countries adopted the system which was laid down at Geneva recently and which is immortalised or enshrined in the Articles which we are provided with? To what extent, for example, has Canada waived her requirement, which she used to have in the past, as regards an affidavit or statutory declaration, and to what extent has she come into line with the Board of Trade philosophy which prevailed at Geneva? I think that we are entitled to know that if we ourselves are to miss the opportunity which this Bill provides for adopting a stricter system.
For in our system there are many weaknesses still. They are weaknesses which the hon. Member for Oldham, East mentioned. They are weaknesses of definition. What is "injury"? What is "material"? Above all, what is an "industry"? The words are "material injury to an industry". The Articles emerging from Geneva include the fourth Article which gives the definition of an industry, or purports to do so, but, in fact, is does not give us much help.
For this is no academic point. This is a problem which emerges frequently in the textile industry. Has the injury to be to the textile industry as a whole? Do we define the industry as the whole textile industry, or do we break it up into greater and lesser parts? Is it enough to prove that it is damage to the weaving industry, or is it enough to prove it is damage to one particular form of weaving? What is an industry? It is not defined in the articles, but this has often been used in the past by the Board of Trade as a reason for not taking action.
The Board says that dumping may injure the doubling industry, or the doubling part of the textile industry, but it does not damage the textile industry as a whole. Indeed, to a certain extent, it assists the other parts of the textile industry. It gives them a cheaper raw material on which to work, and it therefore means that the other and larger sections of the textile industry will flourish 902 as a result of cheap imports. We cannot say that shows material injury to industry.
So far as I know, no attempt has been made to clarify or define what is meant by an "industry" in the amending legislation. It is a problem that has been acutely exciting complicated industries. I have no doubt the same thing occurs in the agricultural industry, certainly it does in the textile industry. I should not be surprised to hear that it does even in the watch-making industry.
We would like to know from the Minister of State whether that problem is now solved to the satisfaction both of Governments and of British industries and, if not, what their proposals are for solving it. Was it raised at Geneva? How was any attempt to clarify it at Geneva received by the other high contracting parties? Did we press our case as we should have pressed it, that an industry should be defined pretty closely and narrowly? Otherwise, the dumper will do what he has so often done in the textile industry, which is to take each section of the industry and knock them out severally. This has happened over and over again. He takes one section of the textile industry, concentrates on that, knocks it out and then moves on to the next one. I do not find in the Bill any better or more understandable definition of the word "industry" than that which gave us so much trouble in the 1957 Act and previously.
For that reason, I am not sanguine about how the Board of Trade proposes to administer this legislation in the future. It all depends upon administration, as the hon. Member for Motherwell so rightly said.
May, I nevertheless, say that there has been better policing at the ports in the last few months, if not in the last year. We in Lancashire have been very pleased. I do not know whether the import committee of the Textile Council is responsible, but many cases have been stopped which a year or so ago would have slipped through.
For example, a consignment of goods was stopped at the ports which was labelled as coming from Denmark, but which, in fact, came from Portugal. I would like to know whether it has been seized and will be sold by the Board of Trade at a ridiculously low price, as 903 used to happen. I hope not. I hope that it will be sent straight back to Portugal where it came from and where it should be returned. Perhaps the Minister of State might tell us what has happened to this consignment, which has excited a good deal of interest and commendation in Lancashire but will certainly receive its execration if it is sold by auction at the lowest possible price, thus defeating the whole object of the exercise.
If I may look for a moment at the Bill, Clause 2 is rather cagey about what it actually does, in what respect it amends the proviso to Section 1 of the 1957 Act. All that the Explanatory Memorandum says is that subsections (1) and (2) of Clause 2 clarify the provisions relating to G.A.T.T. countries now incorporated in the proviso to Section 1(1) of the 1957 Act, and this proviso is repealed by Clause 2(6). I am a little suspicious of the word "clarify". My own view is that it does alter the provisions quite considerably, and I am glad it does.
But I would want to know exactly in what respect. It may be that the Minister of State would rather not say so too loudly or publicly on the grounds that it might otherwise be held by mischievous persons to conflict with the new Kennedy Round arrangements. That may be the explanation of the word "clarify" in the Explanatory Memorandum and, if it is, I shall understand. If it is not, one would like to know exactly how it tightens up Section 1 of the 1957 Act, the proviso to which is now to be repealed.
We will continue to chase the Board of Trade over this matter of rapid, effective and substantial help to all sections of British industry. It is not enough to expect the applicant to prove everything of his own motion. It is not enough to expect him to prove material injury to the whole industry, because the whole industry is much too big a unit for this purpose and ought to be defined more closely. It is time that the Board of Trade took the initiative and, if necessary, even without complaints and applications from industry, operated the new powers which it is adopting and which we are all very glad to see.
§ 8.51 p.m.
§ Mr. Gordon Oakes (Bolton, West)
I hope that my hon. Friend the Minister 904 of State will note the remarkable unanimity with which hon. Members on both sides of the House regard the Bill. We all welcome it and the intention behind it. However, we all have the utmost suspicion that the Board of Trade will not operate the Measure to its full powers.
The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) and my hon. Friend the Member for Oldham, East (Mr. Mapp) said a great deal about the textile industry, much of which I would like to have said. However, I will not delay the House by going over the ground again. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) made an excellent speech. Most of us thought that he would address himself to agricultural problems but, instead, he dealt not only with those but with the widest possible problems.
I, too, would urge my hon. Friend to realise how frustrated hon. Members feel when they are told in answer to Questions that there have been no applications for anti-dumping action to be taken, or, worse still, when they are asked to supply highly technical evidence of market prices in foreign countries, bearing in mind taxes and administrative costs to the Board of Trade, when it is the Board's job to know that information via our consular offices in those countries.
The Bill can give the Board of Trade the power to take steps pending a final investigation. There have been clear cases of dumping where action could have been taken but where it was not taken because to do so would have been attempting to lock the door after the horse had bolted. That is no longer the position. The Board will now be able to take provisional action while the evidence is being found, and I urge my hon. Friend to take immediate action if he finds that the dumping of clocks, agricultural produce or textiles has occurred.
I, too, was alarmed to hear my hon. Friend the Parliamentary Secretary say that dumping may be eliminated in certain circumstances and reduced in others. There is no question of reducing dumping. Agreement was reached between the countries. There is no question of saying, "If you reduce the level of dumping or raise your prices a little, we 905 will let in your goods." The Board of Trade must not operate in that way. There is complete unanimity on this matter between both sides of the textile industry, who work very well together. If the Board of Trade were to operate in that way, the fears of both employers and unions would be justified.
Like the hon. and learned Member for Darwen, I wonder what is meant bycause or threaten material injury to an established industry…Does it mean a whole industry, does it mean a firm, does it mean a section of an industry? Most important of all, what will the Board of Trade construe as "material injury"? I hope that, having got the powers to take immediate action, we do not get stalling about whether the injury will be a material injury to the industry.
Most of the countries from which we strongly suspect that dumping of cotton textiles takes place, either long-term or sporadic, are members of G.A.T.T. Portugal, India and Pakistan are members of G.A.T.T. Therefore, that Clause will be in operation in each case.
I put to the predecessor of the President of the Board of Trade the position in the United States, which is also a member of G.A.T.T. I pointed out how rigorously it enforced its regulations concerning the textile industry. I understand that it requires a certificate from its consul in the country of origin to accompany the consignment of goods stating clearly the average market price of the goods in that country. That must be of inestimable assistance to the Customs' officers of the United States when deciding whether dumping of any given goods is taking place. They have a document before them which serves as a yardstick when a consignment is coming in, instead of having to make inquiries through the embassy or, worse still, wait for complaints to be made. I commend that system to my right hon. Friend, and ask him to consider whether it would work in this country.
The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) said that there had been a self imposed restraint by the Board of Trade in adopting the provisions of the 1957 Act. That is a kind way of putting it. To the textile industry, that self-imposed restraint 906 seemed very like sitting doing nothing and letting the goods come in without taking any action.
I welcome the Bill most warmly, but I want to reinforce what has been said by all hon. Members who have taken part in the debate, many of them from cotton constituencies. Many of us, like my hon. Friend the Member for Rochdale (Mr. McCann), who is listening most interestedly to the debate, but who, because of the conventions of the House, cannot enter into it, feel that if the Board of Trade will work the Bill with the power we are now giving it can be of benefit to British industry.
§ 8.58 p.m.
§ Mr. Michael Jopling (Westmorland)
I apologise to the Parliamentary Secretary for missing the first few minutes of her speech, but a shattered windscreen on the M1 delayed me longer than I expected.
We have had a most interesting debate. I cannot remember a debate on the Second Reading of a Bill where a Department bringing the Bill forward was so roundly criticised and had such great distrust poured upon it by back bench Members on both sides of the House.
I want to devote my remarks to the way that dumping affects agriculture. Dumping has brought a long saga of problems. It is a constant sore to the industry. It has affected it in many ways with many different commodities in recent years. It has been a constant trouble with eggs and butter from Iron Curtain countries, and, more recently, other commodities, such as wheat, have presented problems.
Concerning the Iron Curtain countries, I very much welcome the provisions of Clause 3(2), which allow the Board of Trade to make comparisons with similar goods from other countries arriving at a fair price. I hope that this will put a realistic price into the market when assessing whether products from Iron Curtain countries are dumped.
This is most unsatisfactory legislation because it is not backed up by firm intent by the Board of Trade. Time and time again the Board of Trade has let us down in administering the legislation. A classic example of this, a quite disgraceful example, was seen last year when eggs were dumped on our market. Even the 907 President of the Board of Trade admitted that they were being dumped, but he was not prepared to do anything about it. If anything could underline more clearly the weak attitude which the Board of Trade has consistently shown towards dumping, that seems to do so.
There seems to be a basic divergence between the Board of Trade approach to dumping and the interests of others in the country. I hope that the Board will show more good will in its attitude to dumping in future. As my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said, it is quite unfair to put the whole onus on applicants to make a case. There is the Board of Trade, a vast Government office, which we expect to look after the national interest. We do not expect it to sit back paying lip-service to the evils of dumping and doing something about it only when it is firmly forced to do so, and even admitting that dumping is going on and refusing to do anything.
I realise that agricultural products form one of the most difficult spheres in which to detect dumping. Because so many countries subsidise and support their agricultural industries, it is extremely difficult to come to a proper price and to make a proper assessment of whether dumping is happening. We are in a serious situation at the moment, and in the months and years ahead we shall have much greater problems of dumped foodstuffs than we have had in recent years. I shall quote a few examples of problems which I think lie ahead of us. I hope that legislation will meet them, provided there is good will and that some form of action is taken by the Board of Trade in administering the legislation.
My first example is that of butter. There is an ever-increasing mountain of butter in Europe. We are told that there are 150,000 metric tons in stock in Europe. It has been estimated that that stock will rise to three-quarters of a million metric tons in the next three or four years. We have managed to stop up one loophole of dumped butter which glories in the name of "butter oil", but we are likely to have great threats to our market here of dumped butter from Europe unless the Board of Trade is willing to act.
908 There is the problem of dried milk powder. In some countries in Europe a very heavy subsidy is given to the industry. We are told that in Austria £100 a ton is paid, and in France, the Milk Marketing Board tells us, the subsidy is around £200 a ton. Dried milk powder coming from other countries in Europe to the United Kingdom has done great damage to our milk industry. In 1961 our producers had 62 per cent. of the dried milk market with something like 25,000 tons. In 1966 that had dropped to only 19,000 tons, 45 per cent. of the market. The Board of Trade has refused to take action, although it has been clear that material damage has been done to our industry. Austrian dumping alone has caused an £8 million loss to our home industry in the last few years.
I can do no better than quote the White Paper produced last year by the Ministry of Agriculture when we were beginning to contemplate joining the E.E.C.:Manufacturing milk prices average about 21d. per gallon and are determined by a world market on which a good deal of produce is dumped and subsidised.Everyone is aware of the dumping, but there is no determination in the Board of Trade to do anything about it, although in many cases provision exists for action to be taken.
I turn, finally, to a problem which is already affecting our industry and which is likely to affect it even more in the next few months—the great amount of French wheat which is poised over our market. It has caused serious damage already to the wheat trade of our country. In Europe there is an enormous restitution payment on exports of wheat. In the last few months it has almost reached 55 dollars per metric ton. These exports have gone all over the world. This is one of the great dangers of the E.E.C. restitution system, in that the restitution is equal to the import levy, and where there is a product far more of which is exported than is imported, that comes to a form of export subsidy.
In France in recent months the restitution of £22 or £22 a ton has been more than the price at which the commodity has been bought on the open market. It seems clear that the E.E.C. restitution payments system has caused enormous 909 damage to our market. If Ministers at the Board of Trade care to speak to the corn trade in the country they will be told that in no uncertain terms.
The E.E.C. rules make it much easier for them to subsidise such exports as these, and it is particularly easy for France to flood the world markets with a commodity such as wheat when the other five countries of Europe are contributing far more to the guidance and guarantee fund than is contributed by France. These exports of wheat have ruined our market and caused great losses to many farmers and corn merchants. The criteria for making a levy are well known, and I believe that most of them have been broken in respect of French wheat. It is clear that the export price of wheat is below the free market price in France. In France wheat is changing hands at about £40 a ton, and it is being sold at about £20 a ton. This has done material damage to our market. It is all very well for those farmers who made forward contracts for wheat at fixed prices; they are doing rather well. But it has caused very serious losses to farmers and to the corn trade where people have sold wheat on open contract.
I come back to the excellent speech of my hon. Friend the Member for Tiverton. He spoke of the national interest and of the taxpayers' interest. Material damage is being done to the taxpayers' interest by the French wheat being exported to this country. Indeed, it might easily require a Supplementary Estimate for the wheat deficiency payment.
We on this side believe that it is essential to move to a levy system for agricultural imports, but I shall not go into that argument now. The Minister of Agriculture has announced that he is contemplating raising the minimum import prices of cereals by the equivalent of the devaluation. We do not regard that as the right way to do it. First, it gives a free gift to the exporting country, whereas we could well do with the balance ourselves. Second, the minimum import price does not offer a flexible enough way to control dumped imports. It would be far better done through the levy system which we on this side suggest.
910 I shall say no more now. I have given three concrete examples of the great dangers likely to affect our agriculture during the months ahead, and I have cited what is happening in regard to wheat which is already being dumped. A great deal of good can be done by the existing legislation to protect our industry from dumping, but when the Ministry has shown itself—I do not necessarily blame the party opposite for this, because I do not believe that our Ministers were much better—consistently weak-kneed and lacking in resolution to implement legislation of this kind, we shall not get very far.
Like my hon. Friend the Member for Tiverton, I hope to hear a firm assurance tonight that the days of weakness are over and that we are to have strong action in the future.
§ 9.12 p.m.
§ Mr. Tudor Watkins (Brecon and Radnor)
It is my privilege, as Chairman of the Specialist Committee on Agriculture, to have as one of my colleagues and members of that Committee the hon. Member for Westmorland (Mr. Jopling), and I warn the Minister of State that, if the hon. Gentleman is likely to be as persistent in his questions and advocacy on this matter as he is in the Select Committee, note had better be taken of what he says.
I usually speak on agriculture, and I might well have joined the hon. Gentleman in what he had to say, but I wish to take up what was said by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) about one feature of the Bill. On behalf of my constituents, I pay the hon. Gentleman a tribute for raising the question of the import of Russian watches. I had originally intended to come to the debate and to listen to what the Front Bench speakers and other hon. Members had to say, but, now that the hon. Gentleman has raised the matter of Russian watches, I urge my hon. Friend the Minister of State not to think that, because the hon. Member for Wanstead and Woodford raised the matter first, there is no validity in what he said.
I endorse the hon. Gentleman's complaint. This is an important matter 911 generally nowadays, and it is of particular significance for my constituents. In Clause 1(2) we find the words,that the effect of the dumping…is such as to cause or threaten material injury to an established industry".I think that I am the only Member of Parliament who has a watch-making industry in a super-development area. I know how essential it is that the question of imported Russian watches should be looked at again. It has been looked at often enough, and I shall not now go through the correspondence, which I have had the privilege of seeing, with the British Clock and Watch Manufacturers Association. I am in constant touch with the watch factory at Ystradgynlais, a very important factory providing a great deal of employment.
I am raising the matter now because in that valley, as the Parliamentary Secretary knows probably better than the Minister of State up to now, there is unemployment of between 6 and 7 per cent. We have had three collieries closed, and over the past few years there have been redundancies in the watch factory itself. There has been short-time working to the extent of workers being out one day in six. I admit at once that the difficulties are not all due to the importation of Russian watches, but this has a psychological effect on the people who are interested in the future of the industry in Ystradgynlais.
The industry came there after the end of the war, and I pay tribute to the late Dr. Hugh Dalton and the late Sir Stafford Cripps for their efforts in bringing it there. I hope that as a monument to them the factory will go on for ever. It gives employment to disabled people, which is very important in that locality. Unfortunately, owing to unemployment, the people who bring the income into most of the homes in the area are now the womenfolk employed in that factory. It produces a large number of apprentices, and the other week I was privileged to be at a ceremony at which certificates were presented to the apprentices, young men from the locality who have the advantage of obtaining a good training to make this industry continue.
But we have been concerned recently because of the increased quotas of watches 912 and watch movements. Movements are perhaps more important than the watches, for the total amount allowed in is far greater, and very little notice is given to the industry beforehand. There has been a great deal of discussion about this. I have been with deputations to see Secretaries of State for Wales, first my right hon. Friend the Member for Llanelly (Mr. James Griffiths) and then my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes). They have always assured me that they have made representations to the Board of Trade, and in addition they have made representations to the Ministry of Technology. I appreciate the point of view of both those Departments, particularly the Board of Trade, that we cannot very well completely stop the importation of watches. I am a firm believer in East-West trade, but I wish that it were in a commodity other than watches. Having been in the Soviet Union myself, I am sure that it could do with quite a number of commodities—not only those which we are selling it at present.
§ Mr. Patrick Jenkin
Has the hon. Gentleman thought of trying to enlist the help of the Secretary of State for Defence? Has he thought of the argument that if our watch and clock industry is run down too far the British defence programme will be severely jeopardised by the absence of an industry to make timing mechanisms for bombs, mines and so on?
§ Mr. Watkins
I am very grateful for that new idea, because I thought that I had tried everybody. But first I shall see if I can get an assurance from my hon. Friend the Minister of State that he will reconsider this matter.
A case can be put up by the Board of Trade. I shall not go into all the details. It would be unwise for me to do so, and I should not like to discuss openly in the House correspondence which has been going on with the officials of both Departments, but I suggest that there is a spirit of non-co-operation on giving full information about the costs of watches coming into this country. We are not receiving co-operation from the Soviet Union at present.
A similar thing happened with Czechoslovakia some years ago. That country was dumping bicycle hubs in the United States at one-third the cost of producing 913 them at the Perry chain factory at Caerbont in Abercrave, and the result was that the factory had to be closed.
I hope that my hon. Friend the Minister of State will look again at the watches question. He may say that the Board of Trade has examined it and done everything possible, but I hope that it will think again to see whether anything can be done, because I am very concerned about the future of the watch factory in my constituency which I have mentioned.
§ 9.20 p.m.
§ The Minister of State, Board of Trade (Mr. J. P. W. Mallalieu)
In general, the House has welcomed the Bill. I was very grateful for the manner in which the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) made his opening remarks. The Bill has been approved by, I think, every hon. Member who has spoken. Where the criticism has come has been on the past and present administration of the Board of Trade and about the doubts which hon. Members have about its resolution in the future. Indeed, it has been fascinating to me to hear the many tributes of warm admiration to the Board of Trade being coupled with such total suspicion of both our motives and our abilities.
It is natural that industries in this country should suspect a Department which has to have regard to the position of the consumer, the importer and the exporter. But looking back over the record of the present and immediately preceding "weak-kneed" administrators at the Board of Trade, I find the record on the whole remarkably good.
Since our anti-dumping legislation came in, in 1957, we have taken a good deal more anti-dumping action than has been suggested by any hon. Member tonight. I know that a straightforward comparison between actions taken by us and those taken by other countries may well be misleading, but, for what the comparisons are worth, we have taken antidumping action ten times in the last five years, and this is substantially more than the rest of all the other European countries put together.
We have imposed as many formal antidumping duties as has the United States, and its investigations are every bit as good and as thorough as ours are. 914 Admittedly, this does not take into account the deterrent effect on imports into the United States of the withholding of Customs appraisement for a lengthly period while investigations are taking place, but here the anti-dumping code will, I think, bring about substantial improvements.
Besides the actual measures bringing in anti-dumping duties, it has been possible on many occasions—I shall mention one or two of them—to bring about the desired results by other methods. The mere mention that an investigation is taking place sometimes has the effect of producing second thoughts on the part of the exporting country and producing the effect that we desire. On a number of occasions, too, we have quietly made direct approaches to the Governments or industries in exporting countries which seem prima facie to be causing disruption in this country or to be dumping, and as a result of those representations the position has been remedied.
A mass of points have been raised in the debate. Some of them are, I think, matters of administration, and some may well perhaps best be handled in Committee. Without seeking to delay the House unduly, I will deal with many of them.
I, like everybody else in the House, enjoyed the speech of the hon. Member for Tiverton (Mr. Maxwell-Hyslop) and thank him for his nice reference to myself. He and others asked why the Board of Trade insists on people rather than itself producing the evidence. There are two reasons for this. First, if the Board of Trade has to investigate every product, or at any rate every group of products, that come into Britain and find, first, whether the price is right in terms of dumping and, secondly, whether the effect is wrong in terms of disruption, we shall have to recruit into the Department the hordes of civil servants who the Tory Party and my hon. Friends are continually begging us not to recruit.
There is an even more potent argument. Article 5(a) of the new code specifically lays it down thatInvestigations shall normally be initiated upon a request on behalf of the industry affected, supported by evidence both of dumping and of injury resulting therefrom for this industry.We in the Board of Trade do not confine our thoughts to applications which are 915 made only by a trade association. They could well be made by individual firms. As to "material injury", it is not that the injury must be to the whole of an industry. It could very well be to a section of an industry.
The hon. Gentleman also raised the interesting question of injury to the taxpayer. It is very difficult to meet this point. The code and G.A.T.T. lay down that injury in these terms must be caused to the domestic producers of the like product. Therefore, under international agreement it would be difficult for us to consider the taxpayer in that context.
§ Mr. Maxwell-Hyslop
Is the Minister bound to apply the code to countries which are not signatories to G.A.T.T.? Many of the complaints which have been made in the debate apply to countries which are not signatories to G.A.T.T. Why, therefore, does the code tie the Minister's hands vis-à-vis such countries?
§ Mr. Mallalieu:
I should have to have notice to give a full answer to that question, though I will certainly try to obtain the answer. In certain respects we are not tied by the code to dealing with countries which are not signatories to G.A.T.T., as the Bill tends to show.
§ Mr. Patrick Jenkin
I support my hon. Friend in pressing the Minister. This was the precise question I put to the Parliamentary Secretary. The second time I put it, when I think she understood what I was getting at, she said that the Minister of State would deal with the matter later. I must ask the Minister to give us an explanation. Why are the same rules applied to imports from non-G.A.T.T. countries as are applied to imports from G.A.T.T. countries?
§ Mr. Mallalieu
I was about to deal with that issue, which the hon. Gentleman has raised very forcefully. I thought that the hon. Member for Tiverton was dealing with an even wider issue.
The reason we have regard to material injury with non-G.A.T.T. countries is that in our judgment it would be unwise to interfere with trade by anti-dumping legislation unless the dumping is in fact causing injury. We think that because trade between this country and countries of the Eastern bloc is, thank goodness, expanding very rapidly and we think that 916 it would be wrong to apply one set of criteria to the G.A.T.T. countries and another set to the Eastern European bloc when trade is expanding at its present rate.
§ Mr. Lawson
My hon. Friend will agree that there are marked differences about what constitutes material injury? I was speaking about the clock industry which has been materially injured by dumping from Eastern European countries. From what my hon. Friend has been saying, it seems that he attaches more weight to an expansion of trade than to the proper protection of an industry in this country which is being injured.
§ Mr. Mallalieu
I can assure my hon. Friend that I should not be allowed to forget clocks. The issue has been put extremely forcefully in the debate and I propose to deal with it in a moment.
My hon. Friend the Member for Oldham, East (Mr. Mapp) was worried about the imports of a product for which there was no direct comparison. The code provides that in the absence of such a like product another product which, although not alike in all respects, has characteristics closely resembling that of the product under consideration, may be taken for comparison. The nearest possible comparison is used.
My hon. Friend the Member for Motherwell (Mr. Lawson), my hon. Friend the Member for Brecon and Radnor (Mr. Tudor Watkins) and the hon. Member for Wanstead and Woodford all referred to the import of clocks. This new legislation may be extremely helpful. In the past, when representations were made to the Board of Trade it was as difficult for us as for the industry itself to find out exactly what were the costs of production and the domestic selling prices in countries in Eastern Europe, particularly Soviet Russia. Because of that difficulty, we are now proposing to make it possible when trying to decide whether dumping is taking place to make a comparison with the prices at which similar products from other countries are being sold, comparing those prices with those of a product from a centrally planned, centrally controlled economy.
I cannot say for certain that when the Bill goes through the import of clocks 917 and watches will be caught, but I can give my hon. Friend the Member for Brecon and Radnor the assurance that, provided the industry maintains its application and will provide, as best it can, evidence for a prima facie case, we shall most seriously look at it again.
The hon. Member for Wanstead and Woodford queried the word "repaid". He thought that exporters to this country would have only to put up a bond. In fact, my hon. Friend said that they would have to put up hard cash. Therefore, repayment comes in that. The hon. Gentleman also queried the use of the word "expedient". If there is a continuing importation of heavily dumped goods, we shall consider the advisability of taking provisional acton. But we shall need to be satisfied that that is happening.
The hon. Member for Wanstead and Woodford also made play of the fact, as he thought, that the first mention of the Bill, which he welcomed, was made to a trade union. I have just considered that point. I thought that he was wrong, and in fact he was. The first mention of it was made by the late President of the Board of Trade—[HoN. MEMBERS: "Former".] I beg the pardon of my right hon. Friend the Member for Battersea, North (Mr. Jay); he is very much alive—in answer to a Parliamentary Question on 4th August, 1966.
The hon. Gentleman referred to some differences in the wording. I am advised that these are due to some curiosities in the wording of the 1957 Act which I do not understand. However, what is important is that those differences will not make any difference whatsoever in the administration of the Act.
§ Sir Douglas Glover (Ormskirk)
Would the hon. Gentleman explain why, as he says, he does not understand the Act? How can he give the House an assurance such as that?
§ Mr. Mallalieu
I understand that there are differences, but I cannot see why they should make any difference to the administration of the Act, and our intention, I state categorically, is that they will not do so.
The hon. Member for Westmorland (Mr. Jopling) made a number of criti- 918 misms about how anti-dumping legislation had been used, or not used, in dealing with agricultural products. The facts seem to be reasonably clear. Over the 11 years during which the present Act has been in operation, we have dealt with 34 cases concerning agricultural products and foodstuffs. One of them was withdrawn. Seven were rejected at the initial stage because there was not even a prima facie case of dumping and material injury. Of the 26 cases fully investigated, anti-dumping duties were imposed in two instances and satisfactory undertakings from the exporters were obtained in seven more.
During the last three years there have been only three applications, which surprises me, relating to primary agricultural products. Two were in respect of imports of chickens and duck meat from Denmark, and the third related to imports of eggs from various countries.
Following our investigations, the Danish Government agreed to restrict exports of chicken and duck meat to a level which would not cause material injury to the British industry. As to eggs, about which the hon. Gentleman felt strongly, we found that the effect of the imports, although they produce a disturbing pattern on the market, were not such as to cause or threaten material injury to the British producers. However, we have since had talks with the supplying countries about the level of their shipments of eggs to Britain in the first part of this year. As a result, the imports are expected to be lower than they were in the first half of last year.
Many hon. Gentlemen have raised points about the textile industry, including my hon. Friends the Members for Oldham, East, Bolton, West (Mr. Oakes) and the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). During the past year I have had to bear a major part of the tremendous criticism about dumping textiles. I know enough of the industry from years gone by, and from my present job to realise that there are immense difficulties facing Lancashire as a result of cheap imports.
In trying to assess the material injury here, we may have to judge the effect of imports of a particular fabric on the profitability of the total home production from the looms used to produce this 919 fabric. This is because the firms concerned cannot always provide the financial information we need about the sales of one particular fabric woven on looms that produce a wider range.
We should not exaggerate the difficulties caused to Lancashire through dumping. Three cases have directly affected the Lancashire industry last year. In two of them, all the evidence produced to us suggested that the industry's difficulties were due, not to dumping, but to imports of goods with low production costs. In the third case, concerning rayon yarn from Austria, we rejected the application formally, that is to say, we did not impose a duty, but we approached the Austrian exporters, and on both amounts and price we got assurances, and are making sure that they are kept, which prevented material injury from developing on a large scale.
§ Mr. Fletcher-Cooke
Has the Board of Trade ever imposed an anti-dumping duty applying to textiles in the whole of its history?
§ Mr. Mallalieu
That is probably what has happened. We now have an Imports Commission and if the House will accept that, under international agreement the evidence in the initial stages must come from the industry itself, I would urge the Commission to give the evidence to us at the first moment that it feels that it has such evidence of dumped goods which are causing material injury.
§ Mr. Oakes
This is the point that most hon. Members were making. My hon. Friend said that the industry should go to the Board of Trade. Will not the Board look into this itself and find out what dumping is taking place? On the point that he has just made about Austria, may I ask my hon. Friend whether it is a fact that the Board of Trade says to Austria, "If you dump a little less it is all right"?
§ Mr. Mallalieu
I tried, however briefly, in the opening parts of my speech to deal with the point that under international agreement, apart from the 920 difficulties that the Board of Trade, with a comparatively small staff, would have, it is necessary for the industry itself to produce prima facie evidence. Once that been done, however, and we have the prima facie evidence, the Board of Trade steps in with its own teams.
It may be some reassurance to the House about the willingness of the Board of Trade to do what it says it will do that, despite the clamour for reductions in the numbers of civil servants, we have increased the number of those teams in September and we propose to increase them further once the Bill has been passed. Once the prima facie evidence has been produced, the full investigation will be done as quickly and as thoroughly as we can. [An HON. MEMBER: "Too late."] The whole point is that there are provisional powers to deal with this.
§ Mr. Speaker
Will the hon. Member please speak up? The reporters are likely to have difficulty in hearing him.
§ Mr. Mapp
If the Minister is saying what I was articulating before—that if the industry, as distinct from an individual firm, is able to establish a prima facie case as we understand the meaning of those words in the courts—do I take it that if that is done, my hon. Friend is saying that the establishment of guilt will in future be a matter for his Department?
§ Mr. Mallalieu
It will in the future as it is at present. It will then be for the investigating teams of the Board of Trade to take up the matter in cooperation with our friends abroad and to establish the guilt or innocence, as the case may be.
I hope that that somewhat inadequate reply to a wide-ranging and extremely interesting debate—
§ Mr. Mallalieu
Whether it is inadequate, the hon. Member cannot judge because he was not present to hear the debate. I hope, however, that my reply will meet some of the fears which have been expressed. I assure the House that 921 both under the existing legislation and under the proposed new legislation, where we consider action to be justified we shall certainly take it.
We have, or we will have under the Bill, the provisional powers which will make good what, in my opinion, was a serious defect in the previous legislation. I have told the House of our intention still further to increase the investigating teams. With those assurances both about the qualities of the Bill and of the spirit in which it will be administered, I hope that the House will now give us the Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).