HL Deb 18 February 1958 vol 207 cc766-75

2.58 p.m.

Order of the Day for the Second Reading read.

LORD MANCROFT

My Lords, this Bill is an unexciting but important measure. It is designed to bring up to date the statutory foundation for the United Kingdom protective tariff. It is over twenty-five years since our general protective tariff was established, and Parliament has not since had an opportunity to consider as a whole the legislation which governs the tariff. As a consequence the legislation has, like Topsy, "just grow'd"; there are five major Acts, and almost a hundred other statutory provisions. These laws are now almost unintelligible—even to the pundits. The first and main purpose of this Bill is therefore to clear away this "legislative jungle". A glance at the repeals in the Seventh Schedule to this Bill, a real "dog's dinner" of a Schedule, if ever there was one, will show what I mean. There is an overwhelming case for replacing this mass of legislation by a single measure which will simplify and bring up to date the structure of our protective tariff.

The Bill has two other important purposes: to give a clear authority to re-cast our present complicated tariff in a new, complete and simpler form—known as the Brussels Nomenclature, which is an international vocabulary for the tariff mystique; and to lay down permanent arrangements for dealing with tariff applications. The Bill itself does not charge protective duties or change their present rates, but it does provide powers to impose duties or to change them. In essence, therefore, the purpose of the Bill is consolidation.

But inevitably, given the passage of time since the enactment of the various tariff measures which it is designed to replace, it must be more than that. Though some of the present duties go back to the First World War, the general framework of our protective tariff was laid down in 1932. This country, as your Lordships will remember, was then in the throes of an acute economic depression with a tragically high rate of unemployment. The Government of the day decided that a general protective tariff was necessary, primarily to assist the transfer to this country of work which was being carried out abroad.

The action taken in 1932 is now, of course, a matter of history. In the first place a general ad valorem duty of 10 per cent. was imposed by the Import Duties Act on all foreign goods not specifically exempted. In addition to this general duty, substantial duties were imposed—adapted to the need to protect different industries—by Orders made under that Act. Thus we were able to give worthwhile Imperial preference (and, over a very wide range of goods, valuable rights of duty-free entry) to our friends in the Commonwealth. Following the Imperial Economic Conference at Ottawa in that year, the "Ottawa" duties were imposed in order to give further Imperial preferences to the Commonwealth.

It is not the object of this Bill to upset what was done in 1932 or since. Why then, it may be asked, is there any need to change the present provisions? The answer, of course, is that conditions have changed and it is therefore necessary to change the provisions. Full employment is now a fact, and all Parties are committed to maintain it. We no longer need to express our tariff legislation in the restrictive terms which were appropriate when the creation of jobs at home had to be a major object of tariff policy. It would obviously be wrong and anachronistic to maintain those words in the 1932 legislation which, in practice, required those responsible for framing tariff policy to regard the creation of jobs in particular industries or particular areas as an end in itself. But this, of course, does not mean that employment considerations will be ignored, or even discounted, in the process of framing tariffs. On the contrary, Clause 1 of the Bill empowers protective duties to be imposed "in the national interest", and it is clearly in the national interest to maintain full employment in the economy as a whole.

There is another fundamental change in the situation since the early 1930's which requires some modification of existing tariff legislation. It can no longer be said, as the 1932 legislation said, that it is in the national interest to restrict the import of goods into the United Kingdom. The leading trading nations now recognise that one of the solutions for their economic ills lies in the direction of expanding world trade. We need the maximum flexibility in our legislation so that we can continue to play a full part in any international negotiations for the reduction or stabilisation of tariffs. But there will be no dismantling of our protection without compensation. In general, existing tariffs and preferences will be maintained except where we can hope to gain substantial advantages for United Kingdom industry in negotiation with other countries or where, after inquiry, there is clearly a case for change. In framing our tariff policy we also need to take advantage of every chance of maintaining and promoting our export trade, of achieving the most efficient use of our resources at home—this means, of course, increased technical efficiency—and of serving the legitimate interests of consumers. These, very briefly, are the considerations which the Government now apply, and which have been written into Clause 1 of the Bill.

Looking into the future, we have had another major point very much in mind in drafting this legislation. As your Lordships know, we hope to negotiate a free trade area with other European countries on industrial products. This issue does not arise directly in relation to the Bill. This is not a "Free Trade Area Bill". The Bill has, however, been drafted in such a way that the powers conferred on the Government to adjust tariff rates should be generally adequate to enable this country to participate in a European industrial free trade area.

So much for the general philosophy underlying this tariff structure Bill. I now turn to a number of more concrete matters. The first is that, as I have said, it is not the object of this legislation to change existing tariff rates. If this Bill is passed, one of the first jobs will be to introduce a new tariff, reproducing the substance of the existing duties. This will be expressed in an internationally-agreed form, the Brussels Nomenclature, to which I have just referred.

The new tariff will come into effect on January 1, 1959, but it is important that traders and others should become familiar with it as early as possible. It is therefore proposed to lay Orders introducing the new tariff in June of this year and to publish an advance print in July. The Government have published a White Paper setting out the advantages which we see in this form of tariff. The present customs tariff is not set out as a single list of goods with their appropriate duties; in fact, it consists of a number of separate lists. These reflect the piecemeal way in which the various duty systems have been introduced. An importer who wants to know how much duty he is required to pay on a particular article cannot be sure that he has found the answer when he sees a description covering it; the article may also be liable to duty under some other part of the tariff. The Bill sweeps away these separate and overlapping protective duty systems and replaces them by a new comprehensive duty charging system. In the new tariff, each article of commerce will be classified in one place and in one place only. This will be a great advantage to importers and others, and will save them a lot of office work.

The details of the new tariff have been discussed with all interested parties. I do not think there is any objection to what is proposed in detail. Indeed, my impression is that, but for a score or so of duties which are still under discussion, the many hundreds of trade associations who have been consulted not only concur in but positively—and in many cases emphatically—welcome what Her Majesty's Government are proposing to do.

So much for existing tariff rates and the new tariff. I now turn to the third main object of the Bill: that is, to lay down permanent arrangements for dealing with applications for changes in duties. Before the Import Duties Act, 1932, we had no general protective tariff. That Act imposed a general duty of 10 per cent. ad valorem, and left it to an independent Committee established under the Act, the Import Duties Advisory Committee, to make recommendations for the erection of a more detailed tariff adapted to the needs of particular industries. At the outbreak of war in 1939, the operations of this Committee were suspended under emergency legislation, and since the war the functions of the Committee have, in effect, been undertaken by the Board of Trade.

We cannot now go back to an independent body which will make recommendations. The conditions governing changes in our protective tariff are quite different from those before the war. Internationally, the trend is towards reducing barriers to trade. The United Kingdom, together with the leading nations of the world, have made important contributions by reducing tariffs on a large number of items. In all we have undertaken that the duties on about half of the items in our tariff will not be increased above stated levels. In return for these concessions, which successive post-war Governments have considered worth while, our export trade enjoys tariff concessions and other advantages in the principal markets of the world. To hand over to an independent body the responsibility for decisions on tariff applications would, in effect, mean delegating responsibility for tariff policy. A recommending body would therefore be impracticable to-day.

When this Bill was first introduced in another place it proposed the establishment of a body to examine the facts relating to tariff applications, but not to make recommendations. While it was generally accepted that we could not go back to a body like the pre-war Committee, it was argued that it would be better to have no body at all than a "halfway house" of the type that was originally proposed. The Government accepted this argument and the Bill, as now drafted and as now before your Lordships' House, places upon the Board of Trade the responsibility for dealing with all stages of tariff applications.

Broadly speaking, the Board of Trade propose to continue as they have since the end of the war. What they have done seems to have met with the general approval of industry. Applications will be made to the Board who will sift out the non-starters after a preliminary inquiry. Where an application is worth full investigation, they will advertise it so that all concerned are aware of it and may make any objections or comments in writing or orally. After weighing up all the evidence, the Board of Trade will decide whether to make a recommendation to the Treasury. If the Board do so, an Order will be laid to implement it. Clause 4 of the Bill requires the Board of Trade to lay annual reports before both Houses on the exercise of powers with respect to import duties, both their imposition and relief from them.

I should next like to say a few words about Imperial Preference. It is, of course, the Government's policy to promote the maximum possible development of trade between Commonwealth countries. The Bill fully safeguards our powers to continue the existing Commonwealth preference system under which, on a mutually advantageous basis, the countries of the Commonwealth (including the United Kingdom) enjoy preferential tariff advantages in each other's markets. The United Kingdom's part of the bargain is to admit most Commonwealth goods free of duty, and to maintain duties on certain foreign goods for the benefit of Commonwealth producers. The Government do not propose to depart from these long-established arrangements.

Apart, therefore, from the imperative need to unravel the existing legislative cat's-cradle, the purpose of this Bill is to give us a new tariff instrument which will do three very important things. First, it will enable a Brussels-type tariff to be introduced, which will save a lot of paper work and a lot of quill-driving for both industry and Government. Secondly, the new legislation will make clear to industry at home and to our friends abroad the general principles by which the Government's tariff policy is guided. Thirdly, it will clear the way for the major enterprise of the negotiation and implementation of an industrial free trade area with Europe which, as the Government have made clear on other occasions, represents a major object of United Kingdom policy. Though the present Bill is necessary on other grounds, I have no hesitation in saying to the House that without a measure of this kind we could not, in practice, embark on a free trade area if, as we all hope, the efforts of Her Majesty's Government to negotiate one prove successful. My Lords, I beg to move.

Moved, That the Bill be now read 2a.—(Lord Mancroft.)

3.15 p.m.

LORD PETHICK-LAWRENCE

My Lords. I think I was still at school when Gilbert wrote in Iolanthe the famous lines: …every boy and every gal That's born into the world alive Is either a little Liberal Or else a little Conservative! It was somewhere about the same time that Benjamin Disraeli, speaking of Protection, said that it was "not only dead but damned." I, as a faithful "little Liberal," took the very strong view about Free Trade which I am not quite sure whether the Liberal Party still hold or whether they are still divided upon it. But we are living now not in the end of the nineteenth century; we are living in the second half of the twentieth century. A great deal of water has flowed under the bridge since Benjamin Disraeli's famous remark. This Bill is a sign of what has happened.

I think anyone reading the Bill rather casually may imagine that we are creating and giving to the Treasury, on the recommendation of the Board of Trade, some wide new powers, and I can imagine persons who object to delegated legislation thinking that a very heinous offence. On studying the Bill more carefully and reading the debate on the Second Reading in another place, a Member of your Lordships' House will no doubt realise, even apart from the descriptive speech of the noble Lord who introduced the Second Reading in the House this afternoon, that the Bill is very different from what it appears to be. Apart from this change in nomenclature, which everyone I think must welcome, whatever their views on Free Trade or Protection, the Bill makes little real, effective change in the control of the tariff-making machinery of this country.

The noble Lord referred in his speech to Clause 4, in which the Government have to lay before the House of Commons the details of any use that has been made by the Treasury of the powers conferred upon it in this Bill. But of course the really important part is Clause 13, subsection (4). The power to which the noble Lord referred was annual, of course; this one is not annual: Where an order of the Treasury under this Act imposes or increases any duty of customs, or restricts any relief from duty under section five of this Act, the statutory instrument shall be laid before the Commons House of Parliament after being made,… and then it proceeds with the usual particulars. That certainly means that the Treasury have not absolute power to create new legislation or impose new tariffs; it really does rest with the House of Commons to decide whether any proposals for increasing tariffs shall or shall not become the law of the land.

I think that that is the sheet anchor of those who do not want to see devolved legislation coming into effect, because if any duties are passed by the Treasury in an Order based on recommendations of the Board of Trade, they will not become permanently effective until they have sanction at any rate by the Negative Resolution Procedure, in the House of Commons. It is because that is embodied in the Bill that we on these Benches, following the lead of our colleagues in the other place, take no exception to its passage into law. I do not know what will be the attitude of noble Lords on the other side of the passage that divides us. They may still take the purely rigid Free Trade point of view and oppose the Bill. That is for them to decide. But we shall not oppose the Second Reading. I understand that on these certified Bills there is no effective Committee or Report stage; but, of course, we shall examine the Bill in considerable detail before we reach the Third Reading, and if there should be any further important points that we want to raise on that occasion we shall bring them to the attention of your Lordships' House. My Lords, with those few words I think there is nothing further that I need say with regard to the Bill.

3.21 p.m.

LORD SHEPHERD

My Lords, I wish to make two apologies for speaking this afternoon. First of all, what I have to say is strictly not within this Bill, though if I am pressed I think I can be covered by the Fifth Schedule to the Bill, which relates to drawback orders. My second apology is to the noble Lord, Lord Mancroft, in that I have not given him notice of a rather technical point. I do not ask for an answer, but I hope that he will pass on to the appropriate Minister what I have to say.

As we well know, goods come into this country which eventually will be re-exported. These goods do not incur duty charges. Duty is paid when they are brought into the country, but is refunded when the goods are re-exported; or the goods can be brought into this country and kept in bond. This is a very good arrangement, but I believe that it is being abused by certain Continental manufacturers, to the detriment of this country and its export trade.

Let me give an example. As we know, trade with Japan is extremely difficult; it is governed by import licences and currency restrictions. Every year the Board of Trade negotiate agreements with the Japanese Government, and I believe that this year there was an allocation of approximately £30 million for British textiles, a part of which was for cotton goods. It has come to my knowledge that certain Continental manufacturers are shipping goods into this country against orders they have received from Japan. There is no licence and currency available for those manufacturers, but what they are doing is to send the goods into this country with no country of origin stamped on the goods. The goods are then being re-exported from this country by traders using British invoices, and using the allocation of sterling which is for goods manufactured in this country; they are using this money to cover their own exports to Japan.

I do not know whether I have put the case quite clearly to the noble Lord, but I believe that what is going on is to the detriment of the British exporter and manufacturer. I was told only yesterday that there is a suspicion that this sort of business is going on with Scandinavia: that goods from the Continent are being brought into this country and are being re-exported to Scandinavia. If this practice does exist—and I believe it does, because I have been asked to do the very same thing in business—I think the Government should look into the matter and put a stop to it.