HC Deb 14 June 1968 vol 766 cc601-13

Not amended (in the Standing Committee), considered.

11.50 a.m.

The Minister of State, Board of Trade (Mr. J. P. W. Mallalieu)

I beg to move, That the Bill be read the Third time.

The Bill gives us new powers to deal with dumping which have been generally agreed on both sides of the House. If I am in order, I would congratulate the Committee, which I was able to attend only for a few minutes, on the speed with which it dealt with the Bill.

Of the new powers, the first is the one which we shall now have to take provisional action in cases where it is needed to prevent serious injury while a full investigation of the facts is made. The power will be especially useful in dealing with any attempts to rush in goods in anticipation of an anti-dumping measure, and it should be of equal importance in dealing with threats to our agriculture and horticulture where demands are seasonal and where an attempt is made to rush in products which may have the effect of causing material damage. The second new power is one to deal with abnormally low-priced imports from eastern countries and, plainly, it is desirable in our own interests to have the power.

The main criticisms have been not so much about the Bill as about the actions or alleged inactions of the Board of Trade in the past. We did not get any bouquets for the actions that we have taken, and there are many, particularly in respect of the chemical industry. Naturally enough, there were complaints from agricultural and horticultural interests and from the textile industry that we have not been sufficiently active. The reason for it is that, where we have not taken action, the industries concerned have not established a case, given the conditions under which dumping can be defined. But I assure the House that, once the conditions are met, the Board of Trade is ready to take whatever action is called for. We have every intention of using the powers sought in the Bill to give proper protection to our industries and our agriculture against dumping or subsidisation which is causing or threatening to cause material damage to our own interests. The Bill will help us to move much more quickly in the future than we have been able to in the past.

With that brief explanation, I ask the House to give the Bill a Third Reading.

11.55 a.m.

Mr. Peter Blaker (Blackpool, South)

As we have made clear at earlier stages of our consideration of the Bill, we on the Opposition benches welcome it and hope that it will be speedily put on the Statute Book.

We welcome it for two reasons. The first is that it gives effect to the antidumping code agreed in the Kennedy Round, which is broadly similar to our existing code and which we believe will be of advantage to us because other countries which have been rather "trigger-happy" in taking anti-dumping legislation in the past will now be obliged to conform to the code.

Our second reason for welcoming it is because it enlarges the Government's power to take anti-dumping action by the imposition of provisional duties and, in addition, it sets up a statutory method of establishing the fair market price in relation to goods from countries with centrally-controlled economies.

There are two main questions which I would put to the Minister. The first of them relates to the provisions about imports from what, in effect, are Communist countries. I shall be interested to know how the Bill will work in practice and how the Board of Trade intends to use the powers given to it.

On Second Reading, my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) referred to a letter that he had received from the right hon. Member for Sheffield, Hillsborough (Mr. Darling) when he was at the Board of Trade. It dealt with the practice which the Board of Trade adopts in relation to allegations of disruptive trading by Communist countries. Perhaps the House will bear with me if I read an extract from it, because it is relevant to the point that I want to make.

The letter 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. Secondly, to make the point clear, it is necessary to refer to a Written Answer which my right hon. Friend the Member for Bexley (Mr. Heath) gave when he was President of the Board of Trade in 1964. Dealing with the same point about imports from countries with centrally-controlled economies, he explained the intentions of the then Government about the liberalisation of certain categories of imports from Communist countries which were prepared to agree to certain arrangements. He said that he would sanction the liberalisation of such imports … only if the countries concerned will ensure that their goods enter the United Kingdom at prices which are not disruptive," —[OFFICIAL REPORT, 28th January, 1964; Vol. 688, c. 38.] That is the relevant point.

Of course, a price which is disruptive is different from a price which represents dumping when one considers imports from Communist countries, since there may not be dumping in the technical sense because the price fixed by the controlled economy for its own domestic sales may be so low as to be unrealistic.

I understand that assurances were given to the Federation of British Industries as it was then, about the practice which would be adopted in the event of allegations of disruptive trading by Communist countries. The Federation was assured that the Board of Trade would not adopt any rigid criteria such as material injury in reaching decisions on allegations of unduly low-priced imports from those Eastern European countries which accepted the conditions attached to liberalisation. Thus I am informed that was the understanding of British industry that it would not be necessary to establish material injury in this context, and it is my understanding that British industry has not received any notice of any change in this respect. Therefore, it was rather a surprise to me when the Parliamentary Secretary, in Committee, said: Under the disruptive trading arrangements, regard must still be had to material injury.… I hope that the Minister will clear up the position when he replies.

Clause 3(2) deals with the establishing of the fair price in relation to imports from Communist countries. It makes statutory a test similar to the test quoted in the letter from the right hon. Member for Sheffield, Hillsborough (Mr. Darling) from which I read an extract. What puzzles me is that the hon. Member for Exeter (Mrs. Gwyneth Dunwoody), in Committee, said that the British manufacturer will be better off under the Clause than he has been in the past. If the statutory test in Clause 3(2) is more or less the same as the test which has been applied in the past, as explained by the right hon. Member for Hillsborough, how will the British manufacturer be better off?

Secondly, if it is necessary to show material injury if proceeding under the Bill, about which there is no dispute, but it is not necessary to show material injury if proceeding under the bilateral trading arrangements, how can the British manufacturer be better off in that case?

Thirdly, the hon. Member for Exeter said: This subsection will enable us to establish such a case and, therefore, take anti-dumping action by duties, which are becoming more appropriate to our trading relations with the Eastern bloc countries."—[OFFICIAL REPORT, Standing Committee E; 7th May, 1968, c. 46.] I should like the Minister to explain why the Government believe that duties are becoming more appropriate. That statement by the hon. Lady implies some change in Board of Trade policies. I hope that we can have a clear statement about what the Government intend. Is it the Government's intention still to deal with allegations of disruptive trading by the Communist countries in the context of our bilateral trading arrangements?

I believe that British industry would be far from satisfied with a situation in which material injury had to be established in cases in which goods from Communist countries liberalised from quota were sold at unduly low prices in the British market. If it is the Government's intention to rely solely on the statutory provisions and to continue to insist that when they are doing so material injury must be shown, I cannot see how British industry will be better off.

The second main subject with which I wish to deal is the clause which gives the Government power to make a provisional charge once a prima facie case of dumping and of material injury has been established. As the Minister made clear, this is particularly relevant in relation to farm produce. When talking about that, I must declare an interest. I welcomed very much the mention made by the Minister about agriculture and horticulture. He rightly said that one of the problems in this case is the seasonal nature of the trade. But it is not only the seasonal nature of the trade that is relevant, nor is it only a question of giving the Government power to forestall exporters who might rush in with dumped exports in anticipation of action by the British Government. The problem is more serious than that, and it is getting worse.

The dumping of agricultural produce in this country which is now going on has, I believe, reached the level of a scandal and an outrage. The fact that most of the dumping countries are our friends does not, in my opinion, make it any better. For example, the subsidy on French cheese is more than twice as much as its price when imported into the United Kingdom. The price in the Common Market is £528 per ton. The price when imported into the United Kingdom is £182 per ton. So the subsidy is £386 per ton.

I could give figures of similar magnitude for dumping by half a dozen other countries. As I say, the situation is getting worse. All this is happening at a time when the Government have called for more home beef production which, as they have recognised, means more milk, because one cannot have one without the other, and when our own production of liquid milk and milk products taken together is less than our total imports of milk products. It comes at a time when the Government are calling for extra efforts to improve our balance of payments.

The situation is also serious in relation to cereal imports. French wheat is imported into this country at a price which is half that at which it sells in the Common Market. That is simply because of the Common Market system of subsidies.

It has become clear that the Common Market countries are prepared to use their guarantee system in such a way that they will undercut us in our own market without limit. This creates a new and serious situation which will continue to get worse unless the Government take action. I believe that it is long past the time when they should have done so.

Three tests are required to be satisfied before anti-dumping duties can be imposed. First, there must be dumping. The Ministry of Agriculture, in a White Paper last year dealing with entry into the Common Market, admitted that dumping was taking place in relation to dairy products. The situation has got worse since then. Austria, which supplies half our whole milk powder imports, subsidises them by over £150 a ton. Imports of milk powder from Austria have gone up from 2,300 tons in 1961 to 12,100 tons in 1967. Belgian butter is subsidised to the extent of £636 a ton. These figures relate to the period January to March this year. The position has deteriorated since then.

The second test is material injury. It seems clear to me that there must be material injury to producers of all kinds of dairy products, because the subsidised imports reduce the full price which the dairy fanner receives and, in a more direct way, the manufacturers of milk powder and cheese, for example, are adversely affected by cheap dumped imports. The Milk Marketing Board estimates that, assuming present prices for skimmed milk powder are held for the rest of the year, the market losses in 1968–69 on United Kingdom skimmed milk powder will be about £3¼ million.

Concerning cheese, which is in a worse situation still, Australian cheese has recently been reduced by £30 a ton, and English cheese prices are naturally expected to decline in consequence. If the fall averages £30 a ton for the year, which gravely underestimates the likely decline, the market loss on United Kingdom cheese will be about £3½ million.

As a result of devaluation, cereal producers could have expected an increase in cereal prices, but producers who sold wheat forward in, say, November, on an open price contract are getting less now than they would have got if they had sold at that time. This is because of dumping. This is making nonsense of the establishment of a home grown cereals authority, and it is making nonsense of the incentive which the authority gives to growers to store their grain.

We are now almost at the beginning of a new cereal year, and the Government have done nothing so far to remedy that situation. As a result of their dilly dallying, the whole 1968–69 harvest season for British cereal growers will be at best confused, and at worst chaotic. There is no doubt that this situation causes material injury to British cereal growers, for reasons which were explained in Committee, and into which I need not go again today.

The third test is that it should be in the national interest that anti-dumping duties should be imposed. It is true that the main dumping countries are our friends, and it is also true that they import a lot of our manufactured exports, but I do not believe that there is any advantage for this country in being spineless and not standing up to dumping of this outrageous kind. Nor do I believe that there would be a serious risk of retaliation if we acted reasonably to protect ourselves in this situation. Most of the countries which are dumping agricultural produce have a favourable balance of trade with us.

The continuation of the present situation is of no advantage to the British consumer. It does not seem that lower import prices for agricultural produce are reflected to any significant extent in the high street. Nor can it be in the long-term interest of that consumer that British producers of grain and dairy products should be seriously damaged. Nor is it in the interests of the taxpayer that vast sums should have to be paid in deficiency payments on grains as a result of foreign dumping.

I believe that something must be done. We have made it clear that we would deal with these problems by a system of variable levies—

Mr. Speaker

Order. The hon. Member must talk about this Bill and not another one. We are on Third Reading. We cannot discuss alternative methods of tackling the problems which the Bill tackles.

Mr. Blaker

Mr. Speaker, I accept your Ruling. I was simply making the point that it was a pity that this method had not been adopted by the Government. It remains the fact that they have denied themselves this weapon, and, therefore, they must look to the other methods which are available to them.

I hope that they are doing this. I hope that the Minister can assure us that the Government will take action, because the present situation is that this country has become the world's biggest dumping ground for agricultural produce from many countries. I hope that the Minister will tell us how the Government propose to deal with this situation, and when, because action is needed, and needed fast.

12.15 p.m.

Mr. A. H. Macdonald (Chislehurst)

I do not want to be too specific during this Third Reading debate, so I shall just say that I am thinking in particular of the pulp and paper industry, following representations made to me by a firm in my constituency.

I understand that before the Bill was introduced the procedure was that if a firm or industry made a complaint alleging dumping it was necessary for the firm or industry to make out a prima facie case and submit it to the Board of Trade. In other words, the Board of Trade did not itself take the initiative in the matter, and I think that that is reasonable. But I understand also that it was necessary for the firm or industry making the allegation to substantiate it in some detail, and in some cases that was rather difficult because it did not have the facilities or resources to make the necessary inquiries abroad.

Can my hon. Friend assure me that the Bill will give the Board of Trade authority to be more forthcoming than it has been in the past in assisting firms to make inquiries once a prima facie case has been established, and that if it does, the Board of Trade will exercise that power in such cases?

12.16 p.m.

Mr. Richard Body (Holland with Boston)

We welcome the Bill, but we regret that it does not go far enough to support agriculture. This is still our greatest industry, yet it is the one which is most vulnerable to dumping. As my hon. Friend the Member for Blackpool, South (Mr. Blaker) said, we are the world's biggest dumping ground for agricultural produce.

Dumping tends to be seasonal. The result is that produce, particularly from Europe, has been coming to this country over a period of a few weeks and there has never been time for any of the existing legislation to be used to deal with the problem. Prompt action is necessary to check the dumping of farm produce. The Bill goes some way towards doing that, but it does not go nearly far enough, and we must therefore regard the Bill as no more than a stop-gap measure until such time as the President of the Board of Trade and the Ministry of Agriculture, Fisheries and Food introduce a system of variable import levies and thereby have true control over the import of foodstuffs.

There is no reason why we should not be able to produce in this country three-quarters of the temperate foodstuffs which we consume, but I doubt whether the Bill will do anything to encourage farmers towards that end. It is too late in respect of a number of commodities.

To single out one, potatoes are perhaps the most important crop grown in Lincolnshire and East Anglia. This year growers have increased their acreage of early potatoes by 5,000 acres, yet this week we are importing huge quantities of "earlies" at a derisory and dumped price. I am told that this week some early potatoes are leaving the farms at £10 a ton, which is a ludicrous price, and one which will put most growers out of pocket, yet potatoes from Cyprus and other countries are still being allowed to come in. One estimate which I have is that this year 500,000 tons of potatoes fit for human consumption will not be sold for human consumption. This is a huge amount, and results entirely from the Government allowing potatoes to come to this country at a time when we are quite capable of growing our own. It is an absolute tragedy that there should be such a waste of food.

The Bill is also largely too late to deal with the egg-dumping problem. This matter has been raised on many occasions in the House and we have been repeatedly told by the Government that only 2 per cent. of our eggs are imported. The important fact is that this 2 per cent. importation is seasonal—it comes in a certain period of the year, forces down egg prices, and causes a great loss of profit to farmers. I hope that the Board of Trade will bear in mind the fact that the import of egg products lept by nearly 300 per cent. recently. Farmers cannot compete against this sort of thing.

My hon. Friend referred to the question of dairy produce. Here again there is need for urgent action by the Government. They should check the dumping of dairy produce. Europeans have cottoned on to the idea of manufacturing English-type cheese and exporting them to this country with a subsidy of £386 a ton. Our farmers cannot possibly face that kind of unfair competition.

We are spending about £3 million a day on imported food. This is a severe strain upon our balance of payments. Much of it could be saved by increased production by our own farmers. They are willing to do it, and they will do it if they can have confidence. But they will never have confidence unless the Government introduce a Measure more severe than this to check dumping and unfair competition from abroad.

12.22 p.m.

Mr. Mallalieu

I should like to deal—

Mr. Speaker

The hon. Member can reply to the debate with the leave of the House.

Mr. Mallalien

I ask the leave of the House, Mr. Speaker, and hope that it is granted.

I want to deal with some of the points which have been raised, and first with the problem referred to by my hon. Friend the Member for Chislehurst (Mr. Macdonald), namely, that of the pulp and paper industry. I assure him that we ask an industry only to provide prima facie evidence of dumping or of material injury. Once that has been established it is the duty of the Board of Trade to accept the full burden of proving whether or not dumping is taking place. But we expect the industry concerned to make available all the facts about its own activities in order to support the contention of material injury. The Bill makes no particular change in this regard; once a prima facie case is made out, we already have the duty of proving the full case.

There is some difference, to the extent that we have latterly had an increase in staff available to investigate prima facie cases, and I hope that, as a result, examinations will be carried out more speedily in future.

Both the hon. Member for Blackpool, South (Mr. Blaker) and the hon. Member for Holland with Boston (Mr. Body) expressed great anxiety about the position concerning various agricultural and horticultural products. They probably both recognise that the provisional action powers contained in the Bill will strengthen the arm of the Board of Trade in dealing with cases where there seem to be both dumping and material injury. I can assure them that we shall use these powers effectively and rapidly, provided always that the industry concerned comes to us at the earliest moment with all the evidence it has.

As for cheese, we have been having discussions with the Milk Marketing Board and the National Farmers' Union about the general problem, but recently, at any rate, there has been no application from these bodies for anti-dumping or countervailing measures. Again, I would point out that if the industry will do its part we shall do ours.

The hon. Member for Blackpool, South asked how our interests would be better provided for under the Bill in dealing with possible dumping from countries of the Eastern European bloc. In the past we have dealt with such imports in the context of our bilateral agreements. I believe that the hon. Member is under some misapprehension in this respect. In taking action under the bilateral agreements we take notice of the question whether or not material injury has been caused. I am advised that that has been the practice for many years. If any confusion has arisen as a result of correspondence which I have not seen, I should like to clear it up. The fact is that material injury is a factor to be considered under the terms of the bilateral agreements.

Mr. Blaker

I am obliged to the Minister for dealing so clearly with this point. Can he say whether it has been a practice to apply the material injury test with the same severity in the case with which he is dealing as it has been applied when action has been taken under statutory powers?

Mr. Mallalieu

I understand that that is so. Not only the actual causing of material injury but even the threat of material injury has been a factor for consideration. The situation in respect of material injury will be precisely the same under the Bill as it has been in the past, but the new method of comparing prices for anti-dumping purposes will make severe action much more likely and much easier in the future.

In spite of the strictures of the hon. Member for Holland with Boston concerning the shortcomings of the Bill I understand that even he welcomes it as a step forward, and I gather that that is the general opinion of the House. As I did in the Second Reading debate, I give the House the assurance that if a prima facie case is made out we will, as speedily as possible, try to get the facts to establish a full case and, if a case is established, we shall act. In the meantime, if there is disruption or material injury we shall use the provisional powers with great vigour.

With that explanation I hope that the House will give the Bill a Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed.