§ 1.33 p.m.
§ Mr. William Whitlock (Nottingham, North)We turn now from the intensely human problem rightly raised by the hon. Member for Oxford (Mr. Woodhouse) to consideration of another problem which is bothering people who work in the small but important industry largely centred in Nottingham but with centres in other parts of the country—the lace industry.
Under the Customs Duty (Dumping and Subsidies) Act 1969 the Department of Trade and Industry has power to impose customs duties over and above the 901 normal duties on goods which are regarded as having been dumped in this country. For the purpose of the Act imported goods are regarded as having been dumped
if the export price from the country of origin is less than the fair market price …in that country.I wish to show that this legislation is completely useless in the circumstances facing the lace industry. I believe it to be the case that officials of the Department of Trade and Industry have conceded that this is so. The legislation can be used only in those cases where a foreign manufacturer or an exporter is constantly and over a long period of time selling goods in this country at prices which can be established to be below the price at which identical goods are being sold in the home market of the exporter or the manufacturer, and where this can be demonstrated to be to the detriment of the relevant industry in this country.
For example, if a Japanese car manufacturer sold a particular model of car in Britain more cheaply than the same model was being sold in Japan, there would be a prima facie case for the Department of Trade and Industry to consider whether anti-dumping duties should be imposed on that model. Of course there would be discussions with the Japanese manufacturer and the Japanese Government before any anti-dumping duty would be imposed. It would be a simple matter to establish the relevant prices of cars here and in Japan, since the cars would be on sale to the public in both countries. Even so, a great deal of time would go by before duties could be imposed while the Department of Trade and Industry first examined the consequences for the home industry of what was going on, and held discussions with the Japanese.
Lengthy though the procedure might be in that example, it is all a relatively simple state of affairs compared with the situation one meets when considering dumping in the lace industry. Much of the dumping in that industry concerns patterns or designs which are not being sold by the foreign exporter on his own home market. For the most part, it is impossible to compare prices here with the prices in the home market of the exporter, since there may be no home 902 market in that exporting country. Further more, the bulk of the foreign lace sold here is sold to manufacturers for use in garment making and trimming, and it is not possible to see clearly and readily the price which is being offered here. The British manufacturing buyer is not likely to disclose his purchase price, and the fact that he is purchasing at low prices can be seen normally only from the price that he is prepared to pay for comparable British goods.
Recently a great deal of Austrian Raschel lace has been coming into this country, and its price is clearly low. Offers of comparable British lace at completely uneconomically low prices have been rejected by British garment makers. The Austrians do not have a garment industry and they export the vast majority of their products. One cannot therefore obtain, for the purpose of comparison, a price at which Raschel lace is sold on the Austrian home market because there is no home market. The comparison required by the anti-dumping legislation cannot be made.
If one could find positive evidence, rather than rely on logical inferences drawn from British garment makers' purchasing policies, that the prices at which Austrian lace is being sold here are abnormally low, the Department of Trade and Industry would presumably pursue the matter through governmental channels with the Austrians.
But, apart from the fact that this positive evidence would be difficult to come by, the process of pursuing the matter internationally would be a long one. However expeditious Her Majesty's Government might be in pursuing the matter, it is hardly likely that the Austrian Government would act with similar speed. It may be that I am maligning the Austrian Government. In any case, the Austrian lace manufacturers would not be likely to be in any great hurry to provide damning evidence on their own production costs.
To a lesser extent, the dumping of foreign lace consists of surplus stocks that foreign producers sell on their home markets, but those are just as troublesome to the British industry. Another problem is that the volume of imports of dumped lace varies from time to time and the country of origin changes at 903 intervals. Occasionally, the American lace industry has a long run of production of certain lines and then proceeds to dump its surplus in this country and elsewhere. Difficulties are now looming for the British lace industry because dumped lace from Scandinavia is coming in.
So the problem goes on changing in pattern from time to time in such a way that our cumbersome anti-dumping procedures are totally unable to cope with the situation. The extent of the intrusion of the dumped lines is impossible to determine from Customs returns partly because of the misdeclaration of goods and partly because there are so many different types of lace which are not separately classified in Customs returns.
It will be seen from all this that by the time a case of dumping has been produced and agreed by the British Government fashion changes will undoubtedly have changed lace patterns and lace types and designs, so that the antidumping duty then imposed will be completely meaningless because the foreign exporters to this country will long ago have switched to other alternatives. So the whole abortive business would have to be gone through again if anyone considered that there were any point in going through this whole useless procedure.
I understand that our anti-dumping procedures will be changed in 1977 because of our entry into the Common Market. The Under-Secretary may well argue that the problem is best left until then. If that is the Government's view, I cannot agree. Why do we need to be so subservient to the countries of the Common Market, or any others? Other countries have anti-dumping legislation that is much more effective than ours and they will not permit within their home markets the unfair trading that creates such difficulty for our industries, the lace industry and others. Why can we not as quickly as possible thrash out a procedure which is good for Britain and Britain's industries and use it as a base from which to agree possible future Common Market legislation?
It is time that we started to call the tune on matters like this instead of supinely accepting Common Market arrangements and struggling to change 904 them afterwards and ending up with a procedure which has regard only marginally to Britain's difficulties. Why do we have to behave all the time as though we were poor cousins taken in out of the cold and gratefully accepting scraps from the rich man's table?
What we need, and need urgently, is a simple procedure so that in cases where the prices of imported goods are not published and there is a clear inference from purchasing policies that those goods are coming into the country at abnormally and uneconomically low prices the Department of Trade and Industry would be able to call for documentary evidence within a limited time from both importers and the relevant British industries as to the cost of production of comparable goods. If that evidence supports a prima facie case of dumping, anti-dumping duty should be imposed forthwith for a period of six months, the onus being on the importer to demonstrate that the goods are not dumped.
I therefore suggest the following procedures. First, if an industry produces documentary evidence that the goods are being sold in the United Kingdom more cheaply than similar goods are being sold in the exporting country, appropriate duty should be imposed immediately for a period of three or six months so that the impact may be assessed. This should take care more effectively and expeditiously of those cases where the surpluses of another country are being dumped, as for instance American products to which I referred earlier.
Secondly, where it is not possible or practical for an industry to produce documentary evidence of the relative selling prices, but where evidence can be produced showing that United Kingdom products are reasonably priced but are being constantly rejected in favour of imported goods which are similar in all material respects, including quality, so that the inference is that the imported goods are cheaper, the importer should be required by the Department of Trade and Industry to produce evidence within 14 days of the duty-paid bonded prices. Should a comparison of those prices with production prices by the United Kingdom industry give rise to a reasonable assumption of dumping, the appropriate antidumping duty should be imposed immediately for a period of three or six months 905 so that the issue may be examined in detail.
The important and attractive lace industry is being seriously affected by dumping practices such as those I have described, and so are other consumer industries. In place of the ponderous, ineffective procedures of the present arrangements, let us have something that works and that takes care of Britain's interests as effectively as anti-dumping procedures take care of the interests of the industries of other countries.
§ 1.47 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)During the day we have debated national problems concerned with North Sea oil and the disabled, and we now turn to a small, industrial and perhaps even local problem, which is none the less as important to those concerned as the widest national problem. I immediately accept that.
It is interesting that, as the Member for Honiton, I should be replying to a debate concerned with lace. Honiton is a revered place and name in lacemaking—lace made by hand and lace of the most intricate and ancient patterns. I therefore have pleasure in being able to say that I understand the problems outlined by the hon. Member for Nottingham, North (Mr. Whitlock).
With my background—I spent part of my life in the fashion industry, where one has to meet problems of patterns and designs, seasonal changes and the disposal of stocks considered no longer attractive to the ladies this season, although they were last—I am able immediately to sympathise with the problems that the lace industry faces. The hon. Member will know that the lace industry has been discussing with the Department the possibility of seeking action against imports under the provisions of the Customs Duties (Dumping and Subsidies) Act 1969—an Act passed by the Labour Government of which the hon. Member for Nottingham, North was a member, so that not all the criticism he makes falls on the present Government.
This Act empowers the Department to impose anti-dumping duties, if it considers it is in the national interest to do so, on imports into the United Kingdom 906 that are found to be dumped, as defined in the Act, provided the Department is satisfied that the dumping is causing or threatening material injury to a British industry.
The word "dumping" is closely defined in the Act. Where, in the ordinary course of trade, there are domestic sales of identical or comparable goods in the exporting country, on the basis of which the fair market—or undumped—price can be assessed, dumping means exporting to Britain at prices lower than those obtained by the exporter for similar domestic sales of such goods. The hon. Gentleman says that this definition is not applicable in the circumstances he has quoted.
That is the normal definition of dumping. If there are no such comparable domestic sales on which a comparison can properly be based, dumping is not impossible of definition, as the hon. Gentleman suggested. It is defined either as exporting to Britain at prices lower than those at which the exporter sells identical or comparable goods to other countries, or exporting to Britain at prices below costs plus reasonable profits. In the former case comparability can be difficult, because in certain areas people are producing patterns and styles for specific markets. It may be that certain patterns and styles produced for the British market would be different from those produced for the French, German or American market. My Department realises that.
With imports into the United Kingdom from state-trading countries the Act also provides for a finding of dumping if the price of these imports is lower than that of imports of identical or comparable goods from other countries after making necessary adjustments. This definition of dumping is based on the definition in Article VI of the General Agreement on Tariffs and Trade and on the Anti-Dumping Code which has been signed by the United Kingdom, the original Community and its member States, as well as by other countries, such as the United States and Canada.
The definition of dumping in the Community's Anti-Dumping Regulation is similar, being also based upon Article VI of GATT. Perhaps I can deal with the point made by the hon. Gentleman when he suggested that we could not do 907 anything until 1977. That is a nonsense. We believe that we have to keep this matter under review the whole time. It is wrong to imply that it is because of our joining the European Community that the Government cannot or will not take action. Initially, the definitions were nothing to do with the EEC. They came from GATT. Thus, quite apart from the domestic matter of changing our legislation, we could not widen our definition without departing from the provisions of Article VI in GATT and the Anti-Dumping Code.
In any case, we are now bound to consider this matter. The Community has agreed to this definition. As a major exporting nation—and this covers all our exports—it must be very much in our interest that there should be clear-cut international rules to ensure that antidumping action is not taken by other countries against our exports unless there are good and acceptable reasons for it. Naturally, we must abide by the same rules. It is sometimes said that we abide by the rules, but other do not. If we were to break the rules it would not help us in seeking to obtain world-wide agreement on exports.
We remain able to take national antidumping action under our own legislation against dumped imports from any country outside the Community, except where common agriculture policy products or the interests of a Community-producing industry are involved. At the end of the transitional period all antidumping action against dumped imports into the enlarged Community will be taken on a Community basis, under the EEC Anti-Dumping Regulation. It is as well to get that on the record. During the transitional period the Department will always be ready to investigate complaints by British industry of dumped imports from countries outside the Community, supported by the necessary prima facie evidence of dumping and resultant material injury or the threat thereof.
We do not expect proof of dumping, only prima facie evidence, and we are very willing to advise industries on the preparation of anti-dumping applications. We are also ready to advise them on the formulation of complaints to the Commission about dumped imports from 908 other member States of the enlarged Community. Although the hon. Gentleman has talked only about Austria he will know that there can be problems with Germany and other counries.
In the present instance my officials have been in touch with the Lace Federation. Three of my officials attended a meeting of the federation in April. They explained carefully how dumping was defined in the legislation and what information was needed to substantiate an anti-dumping application. So far, the industry has not produced the requisite factual information. I am sorry that I have to say this. From such information as has been given it does not look as if the practices complained of constitute dumping as defined in the Act. The problem, as I understand too well, is that the industry is subject to fashion changes.
Producers of all fashion garments, at home and overseas, sell off at low prices stocks or lines which have gone out of fashion. As I have said, in the fashion industry a manufacturer goes to the wall twice a year because of the need to sell off these lines.
§ Mr. WhitlockThe problem of meeting changing fashion needs is faced by other countries. The Minister has talked about the GATT arrangements and has spoken of the need for clear-cut international agreement. Is it not the case that other countries have much more effective antidumping procedures than ours to deal with the problems I have highlighted?
§ Mr. EmeryWe have to consider whether, because of the changes in fashion, the disposal of stock is really dumping. No evidence has been produced that these out-of-date patterns are being exported to Britain at prices lower than those at which manufacturers sell them domestically at the same time. Unless this is the case, there is no dumping within the meaning of our antidumping legislation or, as far as I am aware, within the meaning of antidumping legislation anywhere in the free world.
As to any other action that we might take against imports, we are, as the textile industry is aware, prepared to consider proposals for the negotiation of new import restraints with exporting countries. This applies to any sector where 909 the domestic textile industry believes that there is a risk of injury to that sector serious enough to warrant an examination. In considering such proposals we should have to consider our overall international position as one of the major exporters in the world.
I have tried to deal not only with the questions raised by the hon. Gentleman but with the overall position. I see the difficulty of making comparisons, but I have tried to show how that can be overcome. If the hon. Gentleman has evidence of misdeclarations of goods on Customs and Excise declarations, I hope that he—or the industry—will let me have it, because that is part of the evidence that I do not have at my disposal, and would be delighted to have.
Much as I sympathise with the difficulties facing the industry, I cannot offer encouragement to the idea that antidumping rules can be changed as suggested by the hon. Gentleman. However, if, within the rules, there is a case to be made—and I have outlined how it can be made—and fully substantiated, my Department and I will be as helpful as humanly possible to this old and very necessary part of British industry.