I move:—
That Dáil Éireann approves the trade agreement between the Government of Ireland and Great Britain which was signed in Dublin on the 31st day of July, 1948, and copies of which were laid on the Table of Dáil Éireann on the same date.
This agreement, which was signed last Saturday by Mr. Atlee, the British Prime Minister, on behalf of the Government of Great Britain and by myself on behalf of Ireland, can be described as a graft or modification of the trade agreement of 1938 which was entered into by the British and Irish Governments. The conditions in which the agreement of 1938 was negotiated and entered into and the conditions subsisting as at the time when the present agreement was negotiated and entered into were fundamentally different in very many respects. In 1938, although the war clouds were gathering, fairly normal economic conditions subsisted nevertheless in the world. There had, of course, been abnormal relationship in economic matters between this country and Great Britain for some six years prior to entering into the agreement of 1938 by Ireland and Great Britain. The trade agreement of 1938 was one of three agreements which were brought before the Dáil and subsequently ratified by it. That trade agreement was recommended to this House by the then Minister for Industry and Commerce, now Deputy Lemass, as an agreement which was, I think, entirely unconnected with the other two agreements.
The agreement was stated by him to be one which stood on its own; another agreement put an end to the financial and economic disputes which had been going on between the two countries for some six years prior to the agreement. The trade agreement was recommended to the Dáil and to the country by the then Minister for Industry and Commerce on its merits, having no relation to or connection with the economic war. The agreement was entered into between Ireland and Great Britain in just the same way as any agreement entered into between two international States. Deputy Lemass then warmly recommended the acceptance by the Dáil and by the people of the trade agreement he had negotiated or helped to negotiate. If the warmth of his recommendation of that 1938 agreement was then justified, or has since been justified by the results, there can be no doubt as to the warmth of his acceptance of the present agreement which I have the honour to recommend to the Dáil and to the people to-day, because in every respect the present agreement represents a marked advance on the proposals embodied in the trade agreement of 1938. In recommending this agreement to the Dáil and to the people, there is no necessity for me to overstate the advantages which will be derived from its operation in future or to exaggerate the benefits which we believe we have secured under it. We have, I think it can be contended, secured for the first time in our history a guaranteed market at remunerative prices for every species of agricultural produce which can be produced on the land of Ireland. We have assured for our farmers stability in that market, in our best market, at remunerative prices, and we have not merely maintained our powers of protecting, safeguarding and advancing our own industry, but we believe that we have increased those powers and the weapons necessary to secure the rights of our industrial concerns and to increase further industrial productivity in this country.
As I have stated, the conditions which exist now and which have existed for the past six months or more are totally different to those which existed in 1938. Conditions in international trading at present and for some time past are vastly different to what they were in 1938. In the intervening ten years a complete metamorphosis has been effected in world conditions, world trading and in the methods adopted in connection with the maintenance and advancement by each nation of its own international trade. Those conditions had, of course, to be met with and taken account of by us in our negotiations and conclusions.
Before I give the House some detailed consideration of the specific agreements that have been entered into, I would like to direct the attention of Deputies and their earnest consideration to some of the conditions subsisting at the time we entered into these negotiations and concluded this agreement. In 1938 we had a position where the great industrial nations of the world were in active competition with each other for the world markets. Ordinarily, competition regulated prices and quantities and international trade generally, and in that year and for some years previously the purchases on these international markets were made by private buyers and the inter-action of the ordinary economic forces resulted in the necessity for persons selling their goods having to face free competition. In these particular conditions, tariffs, quotas, quantitative restrictions, and all the other paraphernalia of industrial competition had free play and were of full importance.
All these conditions of international trade in this part of the world have now changed. There is no longer free competition; there is no longer the position where private buyers are buying in the markets or private sellers selling in the markets. The position has been reached that bulk purchasing has taken the place of private buying In Great Britain, with which we are most immediately concerned, the Ministry of Food purchases in bulk all the goods entering into Great Britain which are required for feeding Britain's population. The Ministry of Food purchases in bulk on behalf of the State all the requirements of the State. In those conditions, the question of tariffs ceases to have the same importance as it had before. The last Government, when they negotiated the 1938 agreement, were very largely concerned with preferences and tariffs for our agricultural and industrial goods. We were faced with and we will have to face the position that what matters most are prices and quantities. So far as it was possible for us, we had to get from the one purchaser which now exists in Great Britain the best price for our industrial and agricultural products that we could obtain and entry into the British market at the best possible prices and under the most favourable circumstances for the great bulk of our industrial exports.
In 1938, the main object of the negotiators of that agreement was to secure free entry on the British market for our industrial and agricultural products. It was not without its irony that, although Article 1 of the agreement of 1938 appeared on its face to give that free entry for our industrial and agricultural products, the apparently clear meaning of that Article has not been conceded in practice for some time past.
The contention was put forward that, although a free entry was guaranteed under Article 1 of the 1938 agreement, that free entry only referred to such goods as were allowed by Great Britain to be exported from Ireland into Great Britain. At all events, I shall have a few remarks to make on that article later on and I refer to it here incidentally merely to draw attention to the two main purposes which were stated by the then Minister for Industry and Commerce to be his objects and the objects of the then Government in negotiating and securing the trade agreement in 1938—to secure free entry to the British market for our industrial and agricultural products and to ensure the right of the Irish Government to take measures, by way of tariffs and other restrictions, to protect our native Irish industries. Those were the first two objects and, as was stated here, in the making and acceptance of the trade agreement those two objects had been achieved.
We, of course, wish for the fullest freedom of entry for all our products at present into the British market. We also desire to maintain our right to protect our Irish industries. We were, however, faced with a difficulty which the last Government had not to face, the difficulty in connection with the changed circumstances due to world conditions, bulk purchasing succeeding private buying, free competition gone, tendencies towards freer international trade and the fact that in the intervening period since the war the trend of world ideas on world trade has undergone a very substantial metamorphosis. It would perhaps not be true to say that the general trend of economic thought is towards free trade, but I think it is true to say that the push for many of the great nations trading in the world is towards freedom of trade.
In pursuance of their desires, these countries, particularly the United States of America and Great Britain, have entered into international commitments limiting their powers of putting on tariffs, quotas and other quantitative restrictions, freezing tariff rates and preferential rates of duty, and other matters of that kind, and also endeavouring to set and settle, if possible, certain principles which will govern and regulate international trade as between them.
That trend found its most significant expression from our point of view in two international agreements, one of which was negotiated last year and one this year. The first was the general agreement on trade and tariffs which was concluded at Geneva last year and was entered into, I think, between 21 States. This country was not a party to that agreement, but Great Britain was. We have to keep very firmly in our mind in connection with any negotiations which we carry on in reference to our trading that at some time it may be to our advantage to adhere to that general agreement on trade and tariffs to which up to the present moment we have not in fact adhered. We have, unfortunately, also to take into account the fact that Great Britain is a party to that and that that agreement entered into last year at Geneva by Great Britain has by its provisions an impact of an important character even on the 1938 agreement as it stood before we negotiated a modification of the agreement which is before the House to-day.
The second international trade agreement which may have important consequences from our point of view is what is known as the Havana Charter. The Havana Charter for an international trade organisation was drawn up this year and we had a representative there who signed on behalf of this country. That Havana Charter, of course, at the moment is not binding upon this country, nor have we adhered to it or adopted it. But, the principles embodied in that charter, even though they are not binding upon us, and in the Geneva general agreement on trade and tariffs have their effect on any parties negotiating an international trade agreement to-day. We have, as it is important that I should state here at the outset, a very great interest in the Geneva agreement, the general agreement on trade and tariffs, because of its effect on our potentialities in reference to protection of our own industries and in reference to such agreements as we have with Great Britain for free entry into their market and such agreements as we have or may have with Great Britain for free entry of her products into our market Great Britain is our most important customer. The main effect of that general agreement for trade and tariffs which was signed last year at Geneva is to prevent any margins of preference existing as on April, 1947, from being increased, and any new preferences from being created. We being a State associated with the States of the British Commonwealth, have, and must continue to have, the greatest possible interest in the preferences and margins of preferences that have been given and accorded between the States who are associated in that community of nations known as the British Commonwealth of Nations. We must take note, therefore, of the fact that under this Geneva agreement margins of preferences cannot be increased and new preferences cannot be created. We must see that, so far as possible, the preferences which we secure by virtue of our association with those States and by our international agreements with the State members of the British Commonwealth of Nations are not adversely affected.
The Geneva agreement prevents Great Britain from increasing rates of duty on goods of non-Commonwealth origin without at the same time increasing to a corresponding extent the rates of duty on Commonwealth products of the same character. In practice this means that if at any time in the future Great Britain should decide to exclude undue imports of non-Commonwealth agricultural products it may be necessary for her to depart from the conditions of free entry which Commonwealth countries and Ireland at present enjoy. Consequently, although the trade agreement just concluded gives Ireland contractual rights to duty free entry for all agricultural products, the Irish Government has made the British Government aware that if circumstances should arise they will be prepared to give sympathetic consideration to the waiver of Ireland's rights to free entry to the extent necessary to counter competition harmful to the interests of Ireland no less than to the interests of Great Britain. That position is strictly reciprocal, should we find that, in respect of goods to which we have granted free entry here from Great Britain, it is necessary for us to increase the import duty on goods coming from countries other than Commonwealth countries in order to protect our markets from being flooded with those goods or for other reasons. If we increase that duty at a time when we have become parties to the Geneva agreement then it will be necessary for us, if we are parties, to increase correspondingly the rate of duty against British goods. We would take into sympathetic consideration the difficulties thereby created for Great Britain. As I say, the obligations that arise from this Geneva agreement are strictly reciprocal. All, so far as we are concerned, that is involved in the matter by way of obligation upon us is that if Great Britain finds herself in the position I have indicated we will give sympathetic consideration to her difficulties.
The matter has been still further complicated by an international agreement which Great Britain entered into with the United States of America— Article 9 of the loan agreement between Great Britain and the United States of America. Before that loan was negotiated Great Britain, in order to curtail dollar expenditure, had been endeavouring so far as possible to take her imports from soft currency countries as distinct from those areas where the currency was against her, namely, hard currency areas. As a result of this Article 9 of the loan agreement, Great Britain was required to apply non-discrimination in its import policy so that it would not be possible for Great Britain to grant import licences for goods from soft currency areas unless, at the same time, similar import licences were granted for similar categories of goods from hard currency and dollar areas. That affected this country to the extent that Great Britain was unable to take from Ireland goods of categories which, if taken generally, would involve a draw on her dollars and hard currency reserves. Those were considerations which affected us in our negotiations with Great Britain and which rendered it difficult for Great Britain to give concessions which we asked for and to which we believed we were entitled and which, in fact, Great Britain was willing to grant if she could but was prevented from granting by her international commitments over the last few years. These international commitments had resulted in the situation where practically the entire of our industrial exports from this country, certainly for the last 12 months and probably for longer, were denied entry into Great Britain except under an import licence which was granted very grudgingly and only in respect of very limited categories of goods.
The third big change which has taken place in the intervening years from 1938 to 1948 has reference to our adverse trade balance. When the 1938 agreement was being negotiated the adverse trade balance between this country and Great Britain was such as not to cause any anxiety or certainly very little anxiety. In the intervening period the adverse trade balance has gone to an extent which must cause anybody who thinks about it for one moment or who looks at the figures the utmost alarm for our economic and financial stability. The balance of payments between this country and Great Britain has, in recent years, become completely disordered. When we took office some months ago and became aware of the actual position in regard to the adverse trade balance and the nature and the alarming extent of that adverse trade balance it was one of the problems that gave us the greatest possible cause for dismay. We felt that it was essential, if this country was to retain its economic stability, that steps must urgently be taken to redress that adverse balance of trade and to try and restore order into our disordered balance of payments. That was one of the big factors that we had to keep before us during our negotiations with Great Britain. I am glad to say that we have been able to achieve agreement, embodied in the agreement that is before the House, as to the methods by which we will be enabled to deal with that very alarming and very urgent problem.
The next factor that operated was the position that was in existence in connection with supplies. In 1938 the markets of the world were, speaking generally, buyers' markets. In recent times, and while we were negotiating, the world markets were sellers' markets. In 1938, when goods were on offer, it was possible for Ireland when negotiating a treaty to use our willingness to buy certain goods from Great Britain and certain categories of industrial products as a bargaining counter. The situation is now reversed. The goods which we need, and urgently need, for the maintenance of our economy are extremely scarce and in many instances impossible of procurement. What was in 1938 a bargaining counter has now become a concession to be sought. We could undertake in 1938 to buy certain goods from Great Britain instead of buying them elsewhere, and use that undertaking for the purpose of getting advantages and preferences for our own products and for our own exports. We are now in the position of being short of materials and capital goods—coal, steel, cotton, yarn, machinery and other commodities. Instead of agreeing to buy these goods from England as against some other country and so using that as a bargaining weapon to extract from Great Britain concessions for our products, we were in the position of having to seek for these urgent requirements for our own industrial economy. In addition to that, very considerable changes have taken place in the value of money. The purchasing power of money has fallen to a very considerable extent, and where in 1938 a particular protective tariff was adequate to protect an industry here that tariff can no longer be said to be sufficient for the purpose for which it was originally imposed. Those, in general, were the conditions we had to face in negotiating this agreement.
In the agreement as finally settled and signed these difficulties are reflected and, I believe, very largely resolved. The first article of the agreement deals with our agricultural industry. It is hardly necessary to restate what has been asserted so often, and which is a fundamental plank in the policy of this country, that our agricultural industry is the basis of the entire prosperity of this country; and that, unless we have a prosperous agriculture, we cannot have a prosperous industrial economy. It was, therefore, our desire and our main effort to secure for our farmers free entry at remunerative prices to the British market for all our agricultural products. This agreement in Article I and its annex secures for our agricultural industry a prospect of such a prosperity as that industry has never known before. It assures for the farmers that they can now settle down to work in the sure knowledge that they have four years at least, and probably an indefinite period, during which to plan their industry; that they can export everything they can produce or grow upotheir lands; and that every single item of that produce and that growth can be exported to Great Britain at remunerative prices. In so far as there was any clog upon our agricultural industry by the 1938 agreement, that is all removed.
In Article 1 of the agreement the desire of both Governments is stated and clearly expressed. The wish of the Government of the United Kingdom is stated to be to obtain increased quantities of cattle, eggs and potatoes and to resume as soon as possible the traditional imports from Ireland of bacon, butter, fat sheep, lambs and other agricultural products. Great Britain is, therefore, desirous of taking as much of our agricultural produce as we can ship, and the agreement provides that those products that are exported to her shall be taken at prices which will remunerate our farmers for their labour. The agreement also recognises the desire of the Irish Government to increase our exports and to provide increased supplies of foodstuffs to the United Kingdom.
There is an annex to the agreement into which I do not propose to go in detail. The Minister for Agriculture will, if necessary, give a complete explanation of every detail in that annex. It is sufficient, I think, for me to say that the annex to the agreement sets out the arrangements which will govern the quantities and prices during the next four years of our principal agricultural products—our principal exports to Great Britain of cattle, carcase meat, canned meat, poultry, eggs, bacon, butter, fat sheep, lambs and potatoes. With regard to cattle exports, I would like to make just one or two comments by way of explanation.
The general desire in this agreement is to achieve at the earliest possible moment the position where we will be able to export to Great Britain at least as much as we exported before the war. In 1930 we exported 294, 193 fat cattle and 424,359 store cattle, a total of 718,552 to Great Britian and the six north-eastern counties. In 1939 we exported only 133,907 fat cattle and 565,850 store cattle, making a total of 699,757. In 1947 we exported 51,915 fat cattle and 336,492 store cattle, a total of only 388,407, which is about half what was exported in 1930.
What this agreement, therefore, envisages is that we should export fat cattle to the extent of more than three times the number exported in 1947 and store cattle to the extent of one and a half times the number exported last year. The decrease in our export of cattle was due to a number of causes into which it is not necessary now to enter. It was due to the lack of feeding-stuffs. Possibly it was also due in very large measure to the bad price which was being given for our cattle on the British markets. We have got rid of that bad price. We have got rid of all obstacles to the Irish farmers exporting to the full limit of their capacity all the cattle that they can produce at remunerative prices.
When we were elected as the Government there was a somewhat extraordinary position existing in reference to the prices that were given for our fat cattle and the prices that were procured on the same market by cattle bred by the British farmer. The position as regard that was that we had the custom of sending over to Great Britain, two months before the cattle were slaughtered, store cattle which were fattened and finished on the lands of Britain. These cattle, which might be conveniently referred to as Anglo-Irish cattle for the sake of contrast and to make the position clear, were sold; they were of the same quality, in every respect the equal of cattle bred, born and finished in Ireland—Irish cattle fattened in Ireland. The Irish animal and the Anglo-Irish animal stood in the same market, in the same condition and in the same class, but the Anglo-Irish animal secured differntial treatment to the extent of 5/- per live cwt. a greater price than that given for the Irish animal.
