HL Deb 21 June 1968 vol 293 cc1091-8

2.42 p.m.

THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN)

My Lords, before I explain the purposes of the Bill, I should like to say a few words about the international rules on antidumping and on the principles of our legislation. "Dumping" is used colloquially as low-priced competition, but it is defined in the GATT and in our own legislation in a specific way, either selling for export below the home price, or—if that test cannot be applied—selling for export to one country at lower prices than to other countries, or selling at below cost of production. Dumping as so defined is not necessarily objectionable, though it may be if it is believed to be causing or threatening the domestic industry with material injury.

Under the 1957 Act, the Board of Trade must be satisfied on three counts before action can be taken against dumping or subsidisation. First, they must find that the imports are dumped or subsidised within the meaning of the Act; secondly, that this is causing or threatening material injury to a British industry; and thirdly, that such action is in the national interest. During the Kennedy Round, the agreement of many member-countries of the GATT was secured to the full and more uniform application of the GATT rules.

Our procedures already comply generally with the requirements of the Anti-Dumping Code, but in one respect our present powers are not so wide as the Code permits. 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. Once a formal application is made, our investigations must be thorough in fairness to all concerned and this inevitably takes time-60 per cent. of the cases take six months or more. The provisonal powers we are seeking in Clause 1 of the Bill are designed to prevent serious injury being caused during our investigations. For reasons of policy and of practical administration, we intend to take provisional action only in cases of real necessity. This is in line with the views of industry and agriculture. One main use of these additional powers will be to deter dumping of seasonal products. We shall also wish to consider action when there is a real danger that importers may bring in large quantities for stockpiling in anticipation of a duty.

We shall normally require applicants to make out a prima facie case to our satisfaction and to show that provisional action is required in their case. Such action will be in the form of a provisional charge to duty imposed by an Order subject to the Negative Resolution procedure. For practical reasons, Customs will normally require the security to be paid by deposit of money. At the end of the provisional period, if our investigations confirm dumping and material injury, a retrospective Order will be made which will be subject to an Affirmative Resolution of the House. If the definitive duty exceeds the provisional charge, only the latter will be levied for the provisional period, and if the provisional charge exceeds the definitive duty the excess will be refunded. Importers will therefore know the full extent of their potential liability and will already have given full security in cash for it. This is not retrospective action in the ordinary sense of the word. In accordance with the Anti-Dumping Code agree in the Kennedy Round, the provisional charge to duty will normally last three months, though Clause 1(3) will permit it to be extended by a further three months. Clauses 2(1) and (2) set out more clearly but do not change in any other way the provisions relating to GATT countries which are already in the 1957 Act in the 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. None of the methods of determining a fair market price under the present Act is satisfactory for such countries since they operate artificial exchange rates and their prices do not necessarily bear any relation to domestic costs. We are therefore seeking discretion in the Bill to use another method by reference to the price of similar goods exported to the United Kingdom by other countries with appropriate adjustments to make the comparison a fair one. 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 and such duties will be more appropriate than the quota restrictions which are now being progressively removed.

In accordance with long-established practice, we shall normally continue to apply the material injury criterion to non-GATT countries. This is in the interests of both our consumers and consuming industries and our general trading relations with the countries concerned, which are growing export markets. I think the House will generally agree that it would be unwise to take anti-dumping action unless the dumping were causing or threatening material injury. The other changes proposed in Clause 3 are minor adjustments.

Clause 4 of the Bill would give us powers to suspend duties. At present we have powers subject to the Negative Resolution procedure only to reduce or revoke duties, but circumstances could arise where it would be useful to have the new powers. We do not expect the period of suspension to be more than a few months. I beg to move that the Bill be now read a second time.

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

2.49 p.m.

LORD DRUMALBYN

My Lords, I am afraid that I have been on my feet too often to-day. However, I should like to thank the noble Lord for his exposition of this Bill. It gives me pleasure to come to a Bill which I can unreservedly support. I think the Government are to be congratulated on taking this action. They are to be congratulated on bringing to a conclusion the negotiations on the Kennedy Round which helped to bring about the condition of this Bill. I do not want to discuss this in any detail to-day. I entirely agree with what the noble Lord said about the need to retain the material injuries provisions; although I think it is fair to say that we should very much like to get a recognition from other countries of the desirability of this in their case also; so that they would not apply dumping duties unless there are material injuries. This, however, is not a matter for us to legislate on; it is a matter for them, and I hope that they will do it.

My Lords, also, plainly, the point of national interest should not be forgotten. This has to be taken into account whether or not there is material injury to a particular industry. There is only one point to which I should probably like to return at the Committee stage, and that is the retrospective action when a duty is finally imposed as against a provisional duty.

LORD BROWN

My Lords, my understanding is that this is a Money Bill, so that I shall shortly be moving that there shall be no Committee stage. In case the noble Lord is reserving some of his comments for such a stage I thought that I ought to warn him.

LORD DRUMALBYN

My Lords, I am obliged to the noble Lord; I should have recollected that. Perhaps I may put the point briefly in this way. Clause 2(4) refers to the imposition of a duty to take the place of the provisional order that will have been made. Before that, as the noble Lord explained, and as I understand it, the importer will simply have given security for the duty but will not have paid the additional duty imposed by a provisional order. There is a curiosity here, in that the words, "or threatened" do not appear. Clause 2(4) says: An order shall not be made imposing a duty on goods of any description retrospectively by virtue of section 1(1) above, unless the Board of Trade are satisfied, as regards importations made during or before the period of the provisional charge, that the effect of the dumping or of the giving of the subsidy has been such as to cause material injury to an established industry in the United Kingdom. I do not quite understand this, because if a provisional charge has been made, I do not see how material injury could be occasioned. I presume the importer will have increased his price by the amount of the security that he has had to pay in respect of the duty he may have to pay in the future when an order is finally made.

Moreover, it seems to me, from experience, that it would be difficult to see what the effect is and I should have thought that the words, "or threaten" should have been included so that the subsection would read: …has been such as to cause or threaten material injury to an established industry in the United Kingdom. The harm might not yet have been caused, but it might well have been threatened; and it might be threatened very considerably if the order were not made at all. Looking at it merely from that point of view I think it is necessary to take account of whether injury is threatened if no such order is made. I hope that I have made the point clear. It is the one doubt I have.

The rest of the Bill seems more or less all right, except that I should like to ask this question. When we are dealing with countries which form part of a trade bloc, like the E.E.C., I take it that we shall deal with them as separate countries and not as a bloc; so that if we are to impose a duty on goods of a particular kind coming from one country then, in general, one would have to inquire from the other countries whether they objected to the imposition of the duty. I take it this would be so in regard to E.E.C. Clearly, my Lords, this is not so applicable in cases where there are blocs, and I wonder whether we ought not to make provision in the Bill for those circumstances.

My Lords, the other point referred to by the noble Lord related to Clause 3(2) which deals with countries where, as a result of Government monopoly of control, a fair market price cannot be appropriately determined in accordance with that clause. I wonder whether the noble Lord would comment on this point? It is already the practice so far as treaties are concerned, and has been for some time. Does the noble Lord think that it is going to be easier or more difficult to negotiate treaties now that this is part of the law of the land? Because as soon as it is made statutory, you lose a certain amount of flexibility of negotiation. If you make it statutory, then whoever is negotiating will say, "Well, this is part of the law of the land and there is not much good arguing about it." On the other hand, one loses a little flexibility. I am sure that the noble Lord will consider this point, and I merely wish to make the point that, so far as some of the Iron Curtain countries are concerned, to my certain knowledge this has already been included in one treaty and I daresay that it has been included in others. It seems to me that that is the only possible way in which we can safeguard the interests of our home producers, and indeed the producers in other countries, from whom we import. As I have said, I can give an unreserved welcome to this Bill, and I congratulate the noble Lord on having brought it in.

2.56 p.m.

LORD BROWN

My Lords, if I may I will answer the noble Lord's questions. He hoped that other countries would bring in the same criteria of material injury as we have done. The fact is that the countries which are accepting the Kennedy Code, if I may refer to it in that way, will be bringing in this criteria because it is part of the Code. Unfortunately, some countries have not signed that part of the Kennedy Round; namely, Australia, South Africa, Austria and Portugal. There are others, but those are the countries which are causing anxiety. We hope that one day they will come into the fold. I regard it as a rather sad part of international negotiations that some countries are allowed to get the main benefits of a wide international agreement without signing all parts of it. That has always seemed to me to be a grave anomaly, but apparently in times gone by it has not been the custom of Government to regard this with great seriousness. I voice this anxiety myself.

My Lords, the complex situation to which the noble Lord has called attention relates to the basis upon which injury to British industry will be judged when in fact, as a result of introducing a provisional charge, the situation in which injury might have been said to arise will have been changed to one where no injury arises. That was the point he was making. This question of judgment as to the injury arising will all the time have to be based on the situation pertaining prior to the introduction of the provisional charge. This must be so. One cannot thereafter take this attitude.

LORD DRUMALBYN

My Lords, may I make the point quite clear? Suppose that the import in question was of a periodic character, and suppose that a provisional order was made in regard to this product, and that shortly before the end of the period a large consignment of the goods arrived. Obviously, they could not possibly have caused material injury by that time, but they could have threatened it. This is the point I had in mind, and I wonder whether it would be reasonable, inasmuch as the goods will have come in before the end of the period, although they have not actually caused injury, to apply the duty to those goods. But, as I understand it, that is not possible as the clause is drafted.

LORD BROWN

My Lords, I think I can reassure the noble Lord on this point. The difficulty in drafting has been to make sure that we can take action where it seems to be appropriate, yet at the same time avoid putting ourselves in a situation where some British industries or firms are irresponsibly demanding this action from us, not on the basis of proof of material injury but, in some cases, because they are being out-quoted by a competitor who, without dumping, is quoting lower prices. The noble Lord knows that this occurs.

I have read with a great deal of attention the Reports of the debates in Committee in another place, and I realise that the complexity of drafting was considerable. I noted the explanations there given, and I think I can assure the noble Lord that we have put ourselves possibly in the best position in which we could get when between two fires: one, the anxiety to be able to do what is appropriate, and the other, to avoid putting ourselves in the position when we might have to take action when in fact we did not have reasonable assurance that material injury was taking place, in which case of course we should be outside the Kennedy Code on dumping. So I think that I can reasonably reassure the noble Lord on these grounds.

On the third point the noble Lord raised, I am sure that the interpretation of this would lead us to regard E.E.C. not as a bloc—in other words, we should be dealing wih separate counties in E.E.C. in relation to making arrangements under this Bill.

On the fourth question the noble Lord raised, about the Eastern bloc, Clause 3(2) does no more in the way of change than to give us a situation which we have not had before, and in which we should be able to use as a criterion of dumping from Eastern European countries, where they have controlled economies, the fact that imports coming into this country from other countries are at a consistently higher price than those coming in from Eastern Europe. In taking account of this criterion, we cannot take even the middle prices of other countries, but have to base our comparison with the prices from Eastern European countries on the lowest undumped prices from those other countries. This is a new situation. It gives us an extra degree of freedom in negotiating with Eastern Europe which will be extremely useful. I think that this may be the outcome of this Bill. It will not decrease our flexibility in dealing with Eastern European countries. It will certainly have the effect of making us a little more daring in getting rid of quotas, which are extremely bothersome to negotiate and to maintain, and some times very unfair, and substituting other means of preventing our industries from being damaged by imports from these countries. I hope that these explanations are adequate, and that your Lordships will now feel able to give this Bill a Second Reading.

On Question, Bill read 2a: Committee negatived.

House adjourned at four minutes past three o'clock.