Dáil Éireann debate -
Wednesday, 4 Mar 1931

Vol. 37 No. 8

Imported Woollens and Worsteds—Financial Resolution.

The Dáil went into Committee on Finance.

Minister for Finance (Mr. Blythe)

I move:—

(1) That sub-section (1) of Section 1 of the Finance (Customs and Stamps Duties) Act, 1929 (No. 5 of 1929), shall, in respect of woven tissues imported into Saorstát Eireann on or within three years after the 5th day of March, 1931, be construed and have effect as if the words "two shillings" were inserted therein in lieu of the words "two shillings and six pence" now, by virtue of sub-section (1) of Section 23 of the Finance Act, 1929 (No 32 of 1929), contained therein.

(2) That sub-section (1) of Section 23 of the Finance Act, 1929, shall not apply to any woven tissues to which the foregoing paragraph of this Resolution applies.

(3) That it is expedient in the public interest that this Resolution shall have statutory effect under the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

An application was made last year by the Irish Woollen and Worsted Manufacturers' Association to have the customs duty on woollens and worsted tissues modified by limiting to tissues of a value not exceeding 1s. 6d. per square yard the exemption which now applies to tissues of a value not exceeding 2s. 6d. per square yard.

The application was referred to the Tariff Commission on the 16th April, 1930, and notices were published in the daily papers on the 19th April. Notices of opposition were lodged by the Irish Free State Wholesale Clothiers' Association, the Merchant Drapers' Association, and by one Dublin firm. The Commission has since been engaged in considering this application. It has held fifteen sittings and of these six were open to the public and a large number of witnesses have given evidence.

Eight or nine witnesses gave evidence on behalf of the Woollen Manufacturers' Association, four on behalf of the Irish Free State Wholesale Clothiers' Association, and three on behalf of the Merchant Drapers' Association of Dublin. The Tariff Commission, after considering the evidence submitted on both sides and all other material available to them, have made their recommendations. This Report will be available for Deputies tomorrow or next day, so I will quote only a little out of it now. The Commission find that while the Irish woollen mills might provide the quantity of cloth required for the clothing manufacturers they could not supply the cloth required in the number of varieties, both as regards type of cloth and pattern, which would be necessary, and they come to the conclusion that if the application were granted the wholesale clothiers, in order to meet the demands of their customers in style and finish of the cloths, would have no option but to continue to import the greater quantity of the cloths they would use, and the addition to their working costs represented by the duty which they would have to pay would seriously impair their ability to compete with imported made-up garments. It is further stated in the Report:—

The Saorstát cap manufacturers would be similarly situated because the applicants did not exhibit any sample of cloth which would be suitable for general use in the capmaking industry. Indeed, one of the applicant witnesses stated that it was questionable if the orders which would be given in this country for cap cloths would justify the expenditure by any of the woollen mills of the capital required for the installation of plant for the manufacture of such cloths.

In our opinion, therefore, the case for a modification of the tariff fails in so far as it is based on the claim of the applicants to be able to meet the reasonable requirements of the readymade clothing and cap manufacturers for cloths which they can profitably make up into garments and caps for general wear.

Having dealt with the situation as affecting the merchant drapers the Commission proceed to consider the question of price and they state:

Since we reported on the original application of the Woollen and Worsted Manufacturers' Association for a tariff on woollen and worsted tissues, there has been a very considerable fall in the price of virgin and reclaimed wool. This fall has been reflected in the prices of finished piece goods, with the result that some cloths are now being imported duty free which are of such type and quality that they would have been so priced as to bring them within the scope of the duty at the time when the exemption limit of two shillings and sixpence per square yard was adopted. During the hearing of the present application the applicant association did not advance the lower price of wool, and consequent reduction in the prices of cloths, as an argument in favour of a modification in the exemption limit. In a letter which they addressed to us in September, 1930, they adduced this factor, among others, as an argument for the abolition of an exemption limit based on prices. Such a modification of the tariff is, however, outside the scope of the present application.

We have considered the possibility of relating a price exemption limit for cloths to the prices quoted from time to time for wool. In the manufacture of cloths to meet the Saorstát's requirements, there are used very many classes and grades of virgin and of reclaimed wool, the prices of which do not fluctuate uniformly as between the different classes and grades. It would, therefore, be necessary to determine what particular classes and grades should be selected to form the basis of an index as to prices. Further, buyers of cloth would be in a position to defer placing orders when a raising of the exemption limit was to be anticipated because of a rise in the price of wool, and to place orders and take delivery in advance of the usual time when the lowering of the limit, consequent upon a decline in wool prices, was to be expected. Such practices would seriously detract from any advantages of relating the exemption limit to wool prices. It must also be borne in mind that wool prices represent but one of the many factors which enter into the costs of production of woollen fabrics. These are the most important of the numerous considerations involved in the application of a sliding scale to a price exemption limit for cloths, and we are satisfied that the adoption of such a course would be impracticable because of the administrative and other difficulties to which we have referred.

There is, however, no doubt that, because of the very marked and continuous decline in the price of most wool which has occurred from the time of the imposition of the present exemption limit of 2/6 per square yard, cloths of a quality which we thought, when presenting our Report No. 4 (Supplementary), might reasonably be subject to duty, are now imported duty free because their value has fallen below 2/6 per square yard, and that, therefore, the Saorstát woollen manufacturers are not protected to the extent which we considered desirable. It seems to us that, in the circumstances, it would be fair and equitable to adopt a lower exemption limit and, accordingly, we have to consider what value would be fair to the woollen manufacturers without imposing hardship on the users of low grade cloths, namely, the wholesale clothiers, cap makers and merchant drapers.

There is no reliable guide as to the actual effect which the fall in wool values has had on the prices of piece goods. From such information as we have been able to obtain during the course of our present inquiry, it would appear to us that cloths which cost about 4/- net per square yard in May, 1929, are now being sold at approximately 3/3 net per yard, and that, accordingly, the wholesale clothiers and cap makers have recently been able to purchase the bulk of their cloths at prices not exceeding 3/3 net per trade yard, or, say, 2/- per square yard. We think, therefore, that the lowering of the exemption limit to 2/- per square yard, which we now recommend, would place the Saorstát woollen manufacturers as well as the wholesale clothiers, cap makers and merchant drapers in the same position as regards the tariff on woollen and worsted piece goods as they were in when the tariff, in its present form, was imposed in May, 1929. We are unable to make any reliable forecast as to the course which the prices of wool and cloths will take in the future and consequently we must base on general considerations our conclusion as to the duration of the new exemption limit which we have recommended. In view of the evidence submitted to us with regard to the circumstances in the industries and trades concerned in the present application we feel it is unlikely that conditions will alter to such an extent within the next few years as to render necessary a further revision in the tariff at an early date. Accordingly, we take the view that the exemption limit of 2/- per square yard should be applied immediately and should continue in operation for a period of three years.

As I have already stated, the entire report will be in the hands of Deputies in a day or two. Having read the pertinent paragraphs from it, I formally move the resolution.

Mr. Lemass

As the Minister has said, we will have another opportunity of considering the resolution when it comes up on Report by which time we will have received the report of the Tariff Commission upon this application. At the same time, I do not think that it would be right for us to let the motion go through at this stage without drawing attention to some important facts relating to it. The Minister has informed us that the Tariff Commission decided that the application of the woollen millers should be rejected on the grounds on which they made it, namely, that there should be an inducement to the ready-made clothing manufacturers to buy the products of Irish mills rather than to use imported materials. The Tariff Commission have, apparently, decided now that although the woollen millers here are in a position to supply the cloth required by the clothing manufacturers in the quantities that they need they are not able to supply all the variety of patterns which the clothing manufacturers regard as necessary in their business.

Apparently the Tariff Commission have come to the conclusion that because the woollen manufacturers cannot supply that variety of pattern they should not be engaged in the business of producing cloth of this kind at all. Deputies will remember that the Tariff Commission sat for three years considering the original application of the woollen manufacturers and, as a result of three years' deliberation, they produced a report which recommended that the exemption limit should be not 2s. or 2s. 6d., but 1s. 6d. per square yard, a figure to which the woollen millers now want it restored. In order to off-set any disadvantage which that tariff might have placed on the clothing manufacturers they recommended an increase in the tariff on ready-made clothing from 15 to 20 per cent. In making that recommendation they said that they hoped that the manufacturers of ready-made clothing would not be adversely affected, that the manufacture of cloth from reclaimed wool would be encouraged, and that the poorer class of consumers would not have to pay higher prices for their clothes. They did not realise any of their hopes.

Within a very short time after the Dáil had implemented its first recommendation the Tariff Commission was hastily summoned together again to reconsider it, and as a result of that reconsideration it decided to amend its original recommendation in three particulars, one particular being this matter of exemption limit, which the Commission suggested should be raised from 1/6 to 2/6. Meantime some of the Irish woollen millers had installed machinery for the manufacture of the cheaper grade cloths required for the ready-made trade. When they had the machinery installed they were deprived of the advantage of the original tariff, and found that the increase in the exemption limit meant that they were as open as before to competition from England. In that situation the woollen millers again went to the Tariff Commission with this application, that the exemption limit should be reduced to the figure at which the Tariff Commission itself originally placed it.

Now, the Commission decided that that cannot be done, not because they do not think that the woollen millers cannot supply our requirements in such cloths, but because they are not, they tell us, in a position to supply us with fancy patterns which some people need. After three years' consideration, in 1928 they were quite satisfied that the mills would be able to deal with that situation. What has induced them to change their minds since? In any case, it should obviously be the duty of the Government to give the woollen manufacturers the necessary encouragement, the necessary grip upon the market, to enable them to improve the quality of their products and to increase the number of varieties that they can produce. It is not going to remedy the situation to allow foreign cloths to come in untariffed. If the difficulty which the Government are anxious to get over is that of the ready-made clothing manufacturers, then that difficulty could be overcome in the way suggested by the manufacturers and in the way agreed to by the woollen millers—by increasing the duty on ready-made clothing to 30 per cent., as the ready-made clothing manufacturers asked.

The Tariff Commission seem to consider themselves in duty bound never to recommend the granting of any application that comes before them. When the first report was published the ready-made clothing manufacturers asked an increase of duty on ready-made clothing. The woollen millers were agreeable to the granting of that application. The Tariff Commission, instead of granting that application, gave what nobody asked for, an increase in the exemption limit. Now when that mistake of the Tariff Commission is sought to be remedied they have refused to remedy it. It is true that they are reducing the exemption limits, but they are not altering the measure of protection afforded to woollen millers. The reduction in the exemption limit effected by this recommendation is merely a consequence of the fall in prices in the last twelve months, but really the degree of protection is unchanged. We think that the Tariff Commission made the first mistake in their original report when they recommended a mere five per cent. increase in the duty on ready-made clothing. They made a second mistake in May, 1929, when they recommended an increase in the exemption limit. They are making a third mistake here now in not granting the application of the woollen millers that the exemption limit should be reduced to 1/6.

This arrangement is going to please nobody or to benefit nobody. It is a mere attempt on the part of the Government to pretend to be doing something when, in fact, they are doing nothing. I think, in fact, the Government might have considered the objections to this method of granting exemptions. We do not know whether prices are going to fall or to rise, and it may be necessary for the Tariff Commission to come together again in six months or nine months' time in order to vary the exemption limit in consequence of a rise or fall in prices. All these reports from the Tariff Commission, and all the various resolutions that have been brought in here by the Government in relation to the woollen duty are mere attempts to evade doing the obvious thing, increasing the protection of the ready-made clothing manufacturers. Because this is a step in the right direction we will support it, but we would like to make it clear that we are doing so without any enthusiasm whatsoever.

Mr. Geoghegan

I am glad that a further opportunity will be available to discuss this revision of the tariff on woollens. I am sorry to have to croak but if I were to say that I were satisfied with this revision that is now about to take place, I would not be voicing the feelings of a very large number of workers in the town of Athlone. It is the nearest approach to a large industrial town in my constituency. In it there are many men out of employment. There are many others who are likely to be thrown out of employment by reason of this disappointing report. It will be to them a bitter blow. They were optimistic enough to think that a coercive case had been made for reducing the limit of exemption to eighteen pence. I think the Minister stated that this argument about the fall in the price of virgin wool and reclaimed wool and the consequent fall in the price of British cloths, was not advanced in the original application. That, I am sure, is so, but whenever it was advanced it was very important, and was thought by the workers to be a very weighty argument. If in February, 1929, 1/6 per square yard was thought to be the highest limit of exemption that the woollen industry would bear, the trend of prices of cloths, consequent on the fall in the price of wool would certainly indicate that 1/6 ought not to be exceeded in 1931. I feel that if the Minister has power to refer this matter back to the Commission he ought to avail of that power. If the Minister makes a representation to the Commission, I would suggest that a reasonable matter for their reconsideration would be the "stress" which they have given to the question of variety of cloths and patterns; on reconsideration they may feel that perhaps they have over-emphasised that objection and under-estimated the force of the argument based on the fall in the price of cloths.

I am speaking, of course, more or less out of a brief. I have no personal knowledge of the woollen trade but, so far as I can understand this industry, it is unlikely that within any reasonable limit of time our Irish woollen manufacturers can possibly compete with large British manufacturers as regards number of varieties and choice of patterns. It is quite a different matter when the Commission was convinced, as I think they were convinced at one time, that Irish mills could not provide the quantity necessary for the clothing manufacturers' needs. I think if Irish mills can provide the quantity of cloth at reasonable prices that really in the present state of unemployment, and in the present financial condition of this country, far too much force has been given to this lack of varieties and patterns.

As I understand the statement of the Minister it is not suggested that Irish manufacturers do not provide quite a large number of varieties and patterns, it is merely that in an appeal to mere ideas of fashion they cannot compete with British manufacturers. I hope, either as a result of further discussion of this matter or perhaps before the further discussion takes place, something will be done by the Government to induce the Commission to reconsider the whole matter, and to accede to the very reasonable request made by the woollen manufacturers. I say that in the interests of the manufacturers, but I say it even more emphatically in the interests of the ordinary workers and operatives in these mills and in the interest of the country generally.

Mr. Blythe

I do not propose to enter on this matter at any length at this stage. We will be better able to discuss it when the report is in the hands of Deputies. I think when Deputies see the report they will recognise that, as the facts are, it would be difficult if not impossible for the Commission to have gone further than they did go. This will give protection for very nearly all the cloths that any of the manufacturers would be willing to make. When I am talking about the kinds of cloth I am referring really to the price. Deputy Lemass stated more than once that the clothiers had suggested an increase in the tariff on ready-made clothing, and that the woollen manufacturers had agreed to that. Naturally the woollen manufacturers would agree to it, if it would help them. But the woollen manufacturers and the clothiers are not the only people concerned. The ordinary members of the community have to be considered just a little. There is, no doubt, that if the tariff on ready-made clothing were made high enough we could tariff all woollen goods without injuring in any way the clothing industry. But if there was a substantial increase in the tariff on ready-made clothes there is no doubt that portion, and, perhaps, ultimately all, of that tariff would fall as a burden on a class of people in the community that is not the richest class, which has to wear ready-made clothes. Generally the fact that the clothiers and the woollen manufacturers are agreed is no argument at all for proceeding with the tariff. On the other hand, it is not possible to put up the woollen tariff regardless of the interests of the clothiers, because as Deputies know, from the point of view of employment the clothiers have the more important industry of the two, and if we had a substantial increase of employment in the weaving industry, and were to lose more employment in the clothing industry, it would be of no advantage to the community.

Resolution agreed to.

The Dáil went out of Committee.

Resolution reported.

Report Stage ordered for 11th March.