Dáil Éireann debate -
Thursday, 13 Nov 1952

Vol. 134 No. 11

Control of Imports (Cotton Yarns) Order—Motion of Approval.

Mr. Lemass

I move:

That Dáil Éireann hereby approves of the undermentioned Order made under the Control of Imports Acts, 1934 and 1937:—

Control of Imports (Quota No. 49) (Single Cotton Yarns) Order, 1952.

This is a new quota affecting single cotton yarns. The House is aware that the development of the cotton-weaving industry has been encouraged by various import restrictions and other measures for a number of years past. That industry has now reached the stage of development at which its capacity is equivalent to about 40 per cent. of our requirements. The development of the weaving end opened up the possibility of getting into the spinning end as well. A beginning was made by a Midland firm shortly after the end of the war and with the opening of a new spinning mill in County Cork in the last few weeks there are now four such concerns in the country, capable of producing between them practically the whole of our requirements of the coarser type of yarns and aiming to extend, as time goes on, into the finer kinds.

All the evidence available to me supports the view that the yarns which are being produced by these home spinners are fully satisfactory in quality and that under normal conditions of trade they are competitive in price with yarns produced in Great Britain. There are, however, certain disadvantages suffered by them arising out of the way the trade is organised. As the House may be aware, the raw cotton market in Britain was nationalised and a situation exists there in which the yarn spinners can draw their supplies of cotton more or less on a day to day basis, whereas the spinners here have to buy substantial quantities of cotton ahead. Our spinners have an advantage arising from that situation when the price of cotton is going up, because, having to order ahead, they will always have the cotton stocks at less than the market price, whereas the British spinners, buying on a day to day basis, will have to pay more.

Mr. Dillon

That is always on the assumption that the price of cotton is going up.

Mr. Lemass

Yes. Our spinners are at an advantage when the price is going up but at a disadvantage when the price is going down. It is because of the fluctuation involved in the cotton price and the possibility of further fluctuation, that it was decided to impose these quota restrictions, so as to prevent a situation arising, when the price of cotton was falling, in which supplies of yarn could come in in substantial quantities to the temporary disadvantage of our own spinners— since to get the advantage of their efficiency it is necessary to keep them in continuous production, without periodic interruptions.

The imposition of that import control over cotton yarns was an easy step to take, having regard to the demonstrated efficiency of our home spinners, the fact that their prices are fully competitive and because it gives the necessary encouragement to them to expand their capacity. Already a number of these spinning firms have made arrangements to expand their capacity. Of course, the market for cotton yarn in this country is still expanding. As the weaving end of the cotton industry grows, so also will the market for yarn; and I am hoping that in the course of the next couple of years there will be a further and considerable expansion in various branches of the cotton weaving industry and when that occurs there will be scope for further production in the spinning end. I think that we have every reason to be satisfied that this cotton spinning industry has been undertaken here by firms of proven efficiency and that they are doing a very good job; and that is why I confidently recommend approval of this Order.

Mr. Cosgrave

Am I to take it from what the Minister has said that it is proposed to let in the balance, that is, 60 per cent., that is not manufactured here, while production remains at existing levels?

Mr. Lemass

As we have not got the precise information about the market requirements for cotton yarns—we have for some other goods—we are fixing quotas for the time being on a three monthly basis, so that any errors we may make in estimation can be speedily rectified.

Mr. Cosgrave

I would like to say this—but maybe this particular Order is not one to which this remark applies peculiarly—that my experience in the operation of these Quota Orders is that those who are large importers have a substantial quota which is based on a datum year or datum period, while others are given a quota based on the minimum that is given to new entrants. That works in such a way that it precludes new entrants from ever getting a substantial share of the trade.

Mr. Lemass

It does not arise in this case in the same form as it would arise in others. The only people that require cotton yarn are the cotton weavers.

Mr. Cosgrave

I think it is a matter which should receive attention.

Mr. Lemass

I may say we have been able to get complete agreement with everybody on this.

Mr. Cosgrave

On this particular one?

Mr. Lemass

Yes.

Mr. O'Gorman

Do I take it that when the four Irish companies are in full production any further importation of spun cotton will be prohibited? When the Irish needs will be met by the output of Irish firms, do I understand that the Minister will prohibit any further imports?

Mr. Lemass

Generally speaking, that is so. The Deputy will understand that one of those cotton spinning firms while working now upon the coarser types of yarn aims to concentrate at a later stage upon the finer types. We will always have to keep track of the requirements of every type of yarn to ensure that the activities of the users will not be restricted. We are hoping that the development of the weaving end will keep a market for yarn well in advance of the capacity of the spinners so that they will always have that encouragement to expand production.

Mr. O'Gorman

The Minister can be assured that the output of the particular company will be the best and nothing but the best both in regard to coarse and fine yarns.

Mr. Dillon

I should like to ask the Minister a few questions. The word "economic" appears to have lost all meaning. If by "economic" you mean that the articles are produced at the same quality and for the same price as they are produced in Lancashire, such a contention is fantastic. They are not, and they never will be, in Ireland. No rational person could expect the cotton industry, catering for a potential market of 3,000,000 souls, to produce cotton textiles as cheap——

Mr. Lemass

Cotton yarns. We were producing these cotton yarns cheaper.

Mr. Dillon

Nobody in this country goes around chewing cotton yarn. They use cotton textiles for thread, and it is nonsense to say that a cotton industry, catering for a potential market of 3,000,000, will ever produce cloth of the same quality and at the same price as a cotton industry catering for 100,000,000 to 400,000,000 people, the British cotton industry being one of the largest exporting cotton industries in the world. I do not know what the Minister means by economic.

Mr. Carter

The British cotton industry is not the biggest industry.

Mr. Dillon

When Deputy Carter intervenes on the question of economics comprehension boggles.

Mr. Carter

The Deputy should look up the matter again.

Mr. Dillon

With Deputy Carter, I agree to differ in the spirit of bland charity engendered by my somewhat triumphant electoral proof this afternoon. I am in a very good humour. The second point I want to make to the Minister is that I really think the time has come when the Minister should institute some public inquiry into the quality of sewing cotton which is being manufactured here at the present time. I know that, for a period, manufacturers had special difficulties. The comparison between the ordinary 120 yards reel manufactured by the J. and B. Coates combine of Great Britain and the ordinary 110 yard cotton reel manufactured by the Westport branch——

Mr. Lemass

This does not affect thread at all. It is a single yarn.

Mr. Dillon

I know. Perhaps they will plead it is. Something ought to be done to require of them a quality equality with the standard available elsewhere. The Minister says that the position of the British spinner is more advantageous because he has a stabilised price. He also says that our fellows admit they have an advantage if the price rises, but a disadvantage when the price falls. If they enjoy the advantage of a rise in prices common prudence would suggest to them that they ought to take precautions against the fall in prices. We are going somewhat far in our solicitude with these poor darlings if Oireachtas Éireann requires the consumer in this country to insulate them against any of the impacts of the climbing market. We stand by and tell everyone to accept the consequences of the rise in price. The most any man can expect is to say: "I enjoyed the rise and I will endure the fall".

Mr. Lemass

What I said is: that "when controlling the importation of the cotton we will endeavour to maintain the Lancashire level of prices all the time".

Mr. Dillon

Even when the price is rising and when the price is falling?

Mr. Lemass

Yes.

Mr. Dillon

I do not know why we should follow if we are not going to operate the British Ministry of Supply system. It is perfectly easy for a manufacturer—it is the universal practice—to regulate the prices of his finished produce not by the current price of cotton on hands but by the current price of cotton on the cotton market. If he determines to manufacture 10,000 yards of a certain commodity he will go to the spinners and seek the yarn. The spinner will quote him a price which he can hedge on the cotton market. I think that is a good system. Does not the Minister think it a good system also?

Mr. Lemass

Yes, but the Deputy will appreciate the difficulty we have in deciding whether a price is reasonable or not. I have said before—I repeat it now—that I will always be reasonably satisfied with the price if it is the same quality for quality as that in Great Britain.

Mr. Dillon

Surely a safe way to ensure that is so is to fix a reasonable tariff of 15 per cent. or 20 per cent. and take off the restrictions and say to the manufacturer: "You say you can produce at the same price as the English. Will 20 per cent. protect you?" If he says "no," I would say "very well."

Mr. Lemass

I do not want a tariff on a type of yarn that has not yet been produced. There is an infinite variety of them.

Mr. Dillon

Could the Minister not put on a tariff?

Mr. Lemass

No. He will have to pay under a tariff but not under a quota.

Mr. Dillon

The manufacturer may not have to pay it but the fellow down the line will have to do so. The Minister would get a better system of price control if he said to the manufacturers: "Do you hold yourselves out as being able to match the British price? If so, I will give a tariff of 25 per cent." If the cotton textile people came to me and said they did not want that and that their prices would have to be 15 to 20 per cent. above the British price I would say: "That is all right. We will give you a tariff for 40 per cent." Then you had an automatic price control functioning round which no person could get. Once you install a man in the security of a quota there is no system of price control which will effectively keep prices at the proper level. Bear in mind that an essential element in the price is quality and unless one is all one's life in a trade one cannot bring the two factors, the price and the quality, into a price equation so as to get a true relation.

Mr. J. Brennan

I would ask the Minister if he would continue to give the same due consideration to imports that are necessary for the production of articles for export as he has been giving in the past. There are many firms producing goods for export who are sometimes at a disadvantage of procuring the exact type of thread in order to conform with the pattern already submitted for export. I would like the Minister to facilitate those people in order that the continuity of the business would not be broken.

Mr. Lemass

That is ordinarily done by special licences which are a more convenient arrangement, but, under the operation of all these Orders, it is possible for somebody to bring in goods for re-export after processing here. That, however, is a rather elaborate procedure, and as a rule it is more desirable to short circuit the procedure, where it is thought necessary, by giving the ordinary import licence.

Question put and agreed to.