§ 11.27 p.m.
§ The Minister of State, Board of Trade (Mr. Edmund Dell)
I beg to move,That the Import Duties (General) (No. 3) Order 1968 (S.I., 1968, No. 643), dated 22nd April, 1968, a copy of which was laid before this House on 26th April, be approved.The purpose of this Order is twofold. First, it reimposes import duties on some types of exposed cinematograph film within a general class from which duties were removed in 1965. Secondly, it makes a highly technical amendment to the definition of the term "light oils" for the purposes of the Import Duties Act, 1958.
I deal first with the question of films. The main object of the Import Duties (General) (No. 1) Order, 1965, was to eliminate the duties on 16 millimetre "reversal original" film. This is a film bearing positive prints, used to produce copies for projection but not in itself normally used for projection. Because it is difficult to distinguish reversal original from other types of positive film, that 373 Order defined the film more comprehensively asfilm of a width of 16 millimetres, with double perforation but without sound track of any description.As a result, both reversal original film and other types of film ready for projection became free of import duties. When the Order was made there was no evidence of any large trade in film of this type ready for projection.
Representations have, however, been made to the Board of Trade by U.K. film producers and processors that, since the duty was removed, there has, to their detriment, been a large increase in imports of a type of film covered by the present Order. This is silent cinematograph film, 16 millimetres wide, bearing two 8mm. frames alongside each other. Before being used for projection, it is split into two separate 8mm. films. It is commonly called "double 8" film and is mainly used for "home movies" after being slit on arrival in this country into two films which are only 8mm. wide. These imports are not reversal original film for which the 1965 free-listing was intended.
After considering these representations and the comments of other interested parties who responded to the Board of Trade's public advertisement of that case, the Board of Trade has concluded that it would be right to reimpose the duties on film of this type.
It was not the purpose of the 1965 Order to remove the duties from film which, with virtually no processing in this country, would be used for projection. If film 8 mm. wide is imported with a single 8 mm. frame on it, or 35 mm. film is imported with four 8 mm. frames across its width, it already attracts the rates of duty which the new Order reimposes on double-8 film. It is inconsistent that double-8 film should be duty-free.
These duty-free imports have been competing with 8 mm. cine film made in this country by British film producers and with 8 mm. prints made by British film laboratories, with a consequential loss to them of processing work. The increased use of 8 mm. film has called for capital outlay by United Kingdom laboratories, aid their investment has been put at risk by the growing volume of im- 374 ports. They are at a disadvantage as compared with their main foreign competitors—the Americans—who have a larger home market and lower raw material prices. The United Kingdom industry makes a worthwhile contribution to our foreign exchange earnings, and a general deterioration in their position could affect exports. Other major film producing countries—the United States of America and certain Common Market countries—levy import duties on this type of film, even though in America particularly their producers probably stand in far less need of protection.
In the light of all these considerations, the Order reimposes duties on such film. The full rate of duty will be 1d. per linear foot, but imports from the Commonwealth Preference Area will be charged at 2/9th d. per foot. Under the Kennedy Round Agreement, these duties will be reduced from 1st July to 0.85d. and 0.19d. per foot. Imports from the E.F.T.A. countries and the Irish Republic will continue to be duty-free. Its purpose is simply to reverse a part of the 1965 Order which has had consequences which were not then foreseen.
The Order also makes a small amendment to the Tariff to take account of a change in the definition of light hydrocarbon oils in the Customs and Excise Act, 1952. This definition was slightly modified by the Finance Act, 1967 to exclude certain kinds of oil from the light oil classification of duty for revenue purposes. This is a purely consequential amendment, to incorporate this modified definition in the United Kingdom tariff. The effect of this amendment upon import duty chargeable under the import Duties Act is insignificant. Although theoretically it could lead to a small increase in the protective duty chargeable on certain limited categories of goods containing hydrocarbon oils, this is most unlikely to happen in practice. It is, indeed, likely that there will be no change or even a small reduction in the protective duty charged.
The need to amend the tariff to reflect this revised revenue definition has provided an opportunity to introduce a definition by reference in such terms that no further amendment will be required if at any future time it should again prove necessary to modify the term "light oils" 375 for revenue purposes in the Customs and Excise Act.
§ 11.33 p.m.
§ Mr. Peter Blaker (Blackpool, South)
I accept the Minister of State's statement that the part of the Order dealing with light oils is largely of a technical nature, and I have no points to make on what he said in that regard. I want to raise a few points on the other part of the Order which has as its purpose to reverse in part the Import Duties (General) (No. 1) Order, 1965. It is the Government's case that the primary intention of that Order was to remove duty on reversal original film which is suitable for producing copies but not suitable for projection itself. But, because of the difficulty of distinguishing this type of film from other types of positive film, the Order of 1965 removed the duty from all positive 16 mm. film with double perforation but without a sound track. As far as I can discover, the reason for the form that Order took has not previously been explained to the House. It was certainly not explained in the Explanatory Memorandum attached to it, but I fully accept the Minister's statement of the reasons.
The Minister added that certain interests which have been adversely affected claim that there have been increasing imports of double-8 positive film, and he said that this is mainly used for home movies. A key point is that it is imported in a form for use for projection without significant processing. This means that less work remains to be done by people employed in the industry in this country.
Can he give the House some figures about the growth in the domestic market for positive double-8 film since 1965? Can he say what percentage of the market was taken by imports in, say, 1964 and 1967? My second preliminary question relates to consultation. As the Minister said, the Board of Trade advertised that notice of the application for reimposition of the duty, and objections were received. Eventually the Department took the decision embodied in the Order. Obviously, it cannot reveal details about that applicants or the objectors, but I should like an assurance from the Minister that he feels that all the relevant 376 interests have been consulted and had an opportunity of expressing their views.
In general, I believe that any increase in tariffs or the restoration of tariffs should be looked at with a very jealous eye and is to be regretted, unless there are strong reasons. Such moves are contrary to the general trend towards lower tariffs in the world, which I welcome and which I think the country in general welcomes. An increase in tariffs increases costs to the consumer.
It is against that background that I should like to consider the reasons the Minister gave for the Government's action. I think that there are broadly four. The first is that it may encourage foreign film producers to allow copies of their films to be made by British laboratories, whose raw material costs are higher, thus providing employment for British processors. The second is that increasing duty-free imports are damaging to the interests of British producers. These are protectionist arguments. Why did not the Government foresee them when they made the 1965 Order, which is not very long ago? Should it not have been possible then to foresee the developments which have taken place and to take account of those arguments?
The third reason is that it was not the main purpose of the 1965 Order to remove the duty from films for immediate use for projection. If that is so, the question arises of why the Order was framed in such a way that it had that effect. The existence of double-8 film was known in 1965, although imports were not very great. Does this not show a lack of foresight by the Board of Trade at the time? Should it not have been possible for it to make the distinction that it is making now? One of the reasons for the comprehensiveness of the 1965 Order, I understood, was that it was felt to be difficult to distinguish reversible original film from other types of positive film, but a method of making that distinction has been found in this Order. Why should it not have been found at that time?
The fourth argument is that 8-mm prints of film of 16-mm are already dutiable. Much the same comments apply to that argument as those I have just deployed. In addition, were not 8-mm films dutiable in 1965? If that is so, 377 why was this not considered a good reason for retaining the duty on double-8 positive films?
Do all these points now show either lack of foresight in 1965 or a change of policy in a protectionist direction by the Government? I do not think this is a significant move towards protectionism but is an attempt to remedy something mistakenly done in 1965. If I am right in that, the Government must accept responsibility for the lack of foresight shown ar. that time.
§ 11.42 p.m.
§ Mr. Dell
I am glad that the hon. Gentleman is not reading too much into this very small Order dealing with a relatively small point. He asked about the size of the United Kingdom market for 8-mm film. I cannot give him a figure for that or for the imports of 8-mm film because there is no individual category in the tariff which would show it. But the applicants estimate that imports are running at the rate of several hundreds of thousands of £s annually within the whole of the category.
We also know that imports in this category rose about 31 per cent. in 1967 as compared with 1964, and that, during that same period, the value of our imports from the United States, whence most of the double-8 film comes from, although European film is included, showed a substantial increase.
The substantially increased use of double-8 positive film in the last few years is partly due to technological developments in the projection of small film and partly because, since February, 1965, such film has entered duty free.
The hon. Gentleman asked whether all the relevant interests have been consulted and whether I am satisfied that due account has been taken of the representations made. I believe that all the relevant interests have been consulted and that the judgment represented in this Order is right. The hon. Member went on to say, and I agree, that the increase in tariffs should be looked at with a jealous eye. In this case there is an anomaly in 378 that double-8 film was, up to 2nd May duty free, whereas 35-mm. film with four 8-mm. frames serving the same purpose paid duty as did 8-mm. single-frame film.
The duties which are being restored merely bring double-8 mm film into line with what is in fact the same material. The duty will be reduced in the Kennedy Round.
If the hon. Member fears too much protectionism in the restoration of this duty I would be bound to point out that the United States of America protects its industry and the European Economic Community protects its industry at almost precisely the same level as we are proposing. It seems reasonable that our industry should have the protection that the American and European industries have.
The hon. Member suggested that an adequacy of foresight would have prevented us removing this duty in 1965 and in that case we would not have to restore it now. The hon. Member knows that we have a procedure in respect of these changes in duty. We advertise the intention and we take note of the representations which are made. The 1965 Order was advertised and no representations in respect of double-8 mm film were received. The people who have made representations to us now on this subject say that they did not see the advertisement and if they had they would have objected. In fact we went through the procedure and received no objections.
There is also the point about technological developments which have probably increased the use of double-8 film. If the applicants had made representations at the time, they would have been considered and it may be that a different definition would have been used in 1965. However, we are taking this opportunity of correcting a mistake made in 1965.
§ Question put and agreed to.
That the Import Duties (General) (No. 3) Order 1968 (S.I., 1968, No. 643), dated 22nd April 1968, a copy of which was laid before this House on 26th April, be approved.