Dáil Éireann debate -
Tuesday, 21 Jun 1966

Vol. 223 No. 6

Control of Imports (Amendment of Quota No. 3 and Revocation of Quota No. 4) Order, 1965: Motion of Approval.

Minister for Industry and Commerce (Dr. Hillery)

I move:

That Dáil Éireann hereby approves of:

Control of Imports (Amendment of Quota No. 3 and Revocation of Quota No. 4) Order, 1965.

I have circulated a memorandum explaining the background to this Order.

The Free Trade Area Agreement with Britain provides for the removal of a number of quotas against goods of United Kingdom origin and their substitution with duties. Some quotas will be removed immediately on the 1st July, 1966, and others will be retained for varying periods. One of the quotas retained for two years is that on leather footwear. This is retained to meet the wishes of the manufacturers.

The quota restrictions on rubber and plastic footwear were removed with effect from the 1st January, 1966. The rubber footwear quota included slippers and the manufacturers of slippers wished to retain quota protection for a further period. This was done by altering the scope of the leather footwear quota, which is being retained for two years, to include slippers. Plastic footwear, which formerly was included in the leather footwear quota, was removed from it and, thus, no longer has quota protection. If there is any other information required by Deputies, I shall let them have it.

Mr. Donegan

This Control of Imports Order is a very necessary piece of legislation as far as the footwear industry is concerned, but it is wise at this stage to examine very briefly the present situation in the footwear industry, as this quota and the remainder of them, of which this is obviously a forerunner, will affect the industry. In my constituency about half the footwear operatives in this country live and work. I am sorry to say at this time that a very great number of them, mainly in the town of Dundalk and some of them also in the town of Drogheda, are on short-time; they are working three days per week. This would be a serious situation if there was to be no change in the future as far as tariff or quota protection is concerned but, unfortunately, those of us who have studied the free trade negotiations which were carried on and the eventual agreement which emanated know that in June, 1968, all quotas on footwear must disappear. In face of the fact —and I quote an old figure because I have not got a new one—that only approximately 24 per cent of our footwear is exported and 66 per cent is consumed at home, it is quite clear that unless we can increase our exports spectacularly before the 30th June, 1968, then our footwear operatives and the factories in which they work will be in a very serious position indeed.

I am aware, from recent reports available to us, that there is an improvement in exports. How this is possible at the present time with short-time in the footwear industry is something I find difficult to comprehend. I do not know whether or not the Minister has any information on that but, unless he has some particular information I have not got, I am sure he will find that difficult to comprehend also. But it is true. There must be a very definite effort to increase the exports still further. The two items of choice and price which will come upon us on the 30th June, 1968 are items which will mean, inevitably, the loss of some of our home trade. There might be some amongst us who would be naïve enough to suggest that we all ought to be patriotic and buy Irish but, while that might hold for some of us, for a great number of our citizens I am afraid that will not hold and they will buy on price and on choice. In fact, it is also true to state that in many cases they will not be told by the suppliers of footwear whether or not the article offered is of Irish manufacture.

Therefore, a very serious situation faces the industry because we could not hope to hold the high percentage of our total production which is home trade in any article of wearing apparel or indeed of human consumption because choice exercises a very definite preference for one type of thing or another, or one design or another.

In the case of footwear the vast number of articles which can be offered to a prospective buyer means that with the influx of British shoes here, the range will be widened to a very considerable degree. That, of itself, would mean that less of the home trade would fall to us. But if you add to that the fact that the price of some of the imported articles offered may be lower than the price of our home trade articles, then it seems to me our home trade is the one which will suffer. That is not the only difficulty we have of the attack on a vast expansion in our export trade. I hope that we can do it but it seems to me that if we have increased our export trade in recent months—as we have—then we are, perhaps, in a position of having too great a production potential within the industry. I hope this is not true but if we are capable of producing more shoes than we can export and more shoes than we can use at home, then there must be very great changes or, otherwise, the 30th June, 1968, will find us in a sorry state indeed. I do not want to be the harbinger of bad news, particularly when it would affect a very large number of people within my constituency but it would be like sticking one's head in the sand like an ostrich and not taking any account of the portents if we did not point to the fact that, before we reach this stage of the 30th June, 1968, we have short-time in the industry and that this has been occasioned while exports have been increasing.

I should like to have from the Minister clarification on a point to which I think I know the answer. That is the question as to whether or not leather shoes with rubber or composition soles—I do not refer to slippers, I refer to, shall we say, walking shoes—are included in the quota section or in the duty section. That is something which should be clarified. I think they are in the quota section for leather shoes but I would wish to see the matter clarified. I agree with the Minister's statement in his explanatory memorandum that "these arrangements have been agreed with the British Authorities and are in accord with the Free Trade Area Agreement". I think, at the same time, the fact that the deadline and the guillotine is 30th June, 1968, is a sobering thought. That is something the Minister should dwell on as far as hopes for industry are concerned and perhaps he will give his hopes for the expansion of industry, or at least his hopes in defence of every job that exists therein, when he is replying to this debate.

Mr. Treacy

It is now very apparent that the boot and shoe industry, with which this measure seeks to deal, is one of the most vulnerable in respect of the inroads that can be made in any industry in the context of free trade. That being the case, it is all the more desirable, and indeed necessary, that all possible steps be taken to safeguard the industry and the workers employed therein.

This measure gives notice of the intention to abolish the quota system and to replace it with a tariff system. It refers to the various types of footwear manufactured in this country and indicates that the manufacturers of one particular type of footwear, namely, rubber or plastic footwear, have indicated a preference for the levy system in their particular category. They asked that quota restrictions on their type of products should be terminated and a duty substituted and this is now being done with effect from 1st January this year.

In thinking in terms of free trade, we have striven to convey to the Minister and his predecessors the desirability of safeguarding this industry and continuing the quota protection for so long as possible in order to assist the boot and shoe manufacturers to complete the task of re-adaptation which they have embarked upon and which is not as yet completed in very many instances.

Our advice is to hasten very slowly in respect of the removal of this protection by way of quotas in particular because there is evidence that the industry is not as yet ready for the excruciating experience with which it will have to contend in freer trading circumstances. It would be all right if this industry were going to gain something by free trade with Britain or free trade with the countries of the EEC. But he is a very foolish man indeed who does not realise that the highly efficient manufacturers of Britain and the Continent are capable of flooding our market, capable of dumping here a sufficiency of goods and commodities which would last a year out of what was for them a week's production. If we do not slow down this process of dismantling this protection, it is evident to us that industrial graveyards will result. Even at the present time, in the boot and shoe industry in particular, there is evidence of firms throwing in the towel even before the battle has commenced.

We have the fact that within the past few weeks two very old and well-known boot and shoe establishments have closed down, one at Carlow and the other at Birr. As one who worked in the boot and shoe industry, I realise full well what this means to the operatives in the boot factories in these two towns, Carlow and Birr. These are men and women who have given the best years of their lives to the boot and shoe industry. They are highly skilled craftsmen and women, many of whom have reached advanced years and are very largely unsuitable for alternative employment. Indeed, in respect of the two small towns to which I refer, there is no alternative work available for them. To my knowledge, many of them have been forced to emigrate. These are portents, Sir, of things to come. An obligation devolves upon the Minister to realise the social consequences that flow from the closure of such factories.

Here we have some hundreds of boot and shoe operatives thrown on the unemployment scrapheap without any alternative employment in these particular towns, and with no golden handshake either. Indeed, the manner in which the Carlow factory in particular was closed down gives cause for great anxiety, because the union concerned would not accept redundancy in the form laid down by management and management, which even repudiated the recognised principles of seniority of service when it comes to laying off staff, peremptorily closed down the factories and removed the machinery so as to make it impossible for successful negotiations to take place or production to continue. This rash decision, this disregard for men and women who gave such long, loyal and devoted service——

An Ceann Comhairle

Is this relevant?

Mr. Treacy

I am speaking about the protection of this boot and shoe industry.

An Ceann Comhairle

I do not think the merits or the demerits of the particular action in respect of the closing down of particular firms are very relevant here.

Mr. Treacy

I do not propose to dwell in detail on this subject, except to point out the necessity for such a measure and the continuation of such a protection measure at a time when boot factories are, in fact, closing in this country and men and women being disemployed. I sincerely hope, therefore, that the Minister will give special attention to this problem and do all he can to ensure that production recommences at the Birr factory, or that he will strive to find some alternative means of employment for those unfortunate boot and shoe operatives who have lost their livelihood in Carlow.

It is a matter of some wonder to us why we should be so anxious to rush into free trade with Britain or the Common Market because the balance of trade between ourselves and the Common Market in particular is completely adverse. We bought some £40 million worth from the countries of the EEC in one year, and we sold to them in return only £8 million worth of goods. In other words, for every £5 worth we bought from the countries of the EEC they bought only £1 worth from us in return. We cannot see what advantages are to be gained by such a movement towards freer trade. In respect of the British economy, let me reiterate that the gigantic forces in Britain, when the barriers are lowered, are capable of wreaking disaster on our economy.

If we are to commit ourselves to this exercise, the Minister should deal in his reply with the problem of dumping. This is one of the ingrained fears of industry. Without an adequate system of protection against dumping, it is quite evident to us that the highly efficient manufacturers in Britain, with whom we are now embarking upon free trade, are quite capable of overcoming, not the quota system because it is limited to a certain number of goods, but the tariff system. Irrespective of how high the tariffs may be fixed, these manufacturers will be quite able to overcome them, and by dumping hundreds of thousands of pairs of footwear here, they could dislocate the native industry. It is a well-known truism that it is too late to apply antidumping regulations when dumping has, in fact, taken place. The damage is done at that stage, and it is difficult to retrieve the industries that have fallen by the wayside. Effective antidumping legislation is required to ensure adequate protection for the home trade.

In this measure it is proposed that the quota system which the boot and shoe industry has enjoyed over a long number of years will be discontinued. Instead of having a quota system, a duty will be applied. That duty will be 36 per cent ad valorem, or 6/- per pair of imported footwear. To my mind, that is excessively low. At present there is evidence of British manufacturers selling off dated lines of footwear at virtually give-away prices. It strikes us in the industry that 6/-duty per pair is something that they could easily get over. Some of the more unscrupulous of them may be prepared to get over this duty, however high it is put, even at a loss, in order to get a foothold in this market of ours.

This duty of 36 per cent ad valorem, or 6/- a pair, which is to come into operation in July, 1968, will be reduced by 4½ per cent per annum, and by 8/- per pair of footwear between 1968 and 1975, when the duty will have disappeared altogether, and we will then have completely and utterly unfettered free trade between this country and the United Kingdom. While I am pleased to see the quota system being continued for another two years, I am concerned about what will happen after that when the duty replaces the quota.

At present the quota is very high and it makes for competitiveness amongst Irish manufacturers. The quota for imported footwear for 1964 and 1965 was 165,000 pairs. Now, 82,500 pairs is fixed as the quota for the half-year to June, 1966. It would seem then that the quota for 1966 will be the same as it was for last year, and for 1964, when it stood at 165,000 pairs. This does not take into account the very many thousands of pairs of footwear which are brought into this country by way of licence granted by the Minister to traders and wholesalers who may require particular types and standards of shoes which allegedly are not manufactured here.

I want to ask the Minister to have regard to the increasing quantities of footwear imported by way of licence. It seems to us that many of these licences are secured on a pretence and that the footwear which many allege cannot be made here can and should be made here. Our manufacturers are quite capable of making shoes of the standard and style required by anyone in this country. There should be no grounds for the issue of licences of this kind at all.

I have said that we are concerned about the advent of free trade for our boot and shoe industry. The Committee on Industrial Organisation have investigated this industry, and have indicated in no uncertain terms that in the event of freer trading circumstances, and this most assuredly takes in Great Britain, no fewer than 1,000 operatives in the boot and shoe industry will lose their jobs, and, if the adaptation measures which the CIO recommended were not adopted, a further 1,000 operatives would lose their jobs. This then comprises one-third of the whole labour force in the boot and shoe industry. The boot and shoe industry comprises some 6,000 persons. It is true to say that it produces 97 per cent of the home requirements and that it distributes £3,500,000 in wages here every year. Last year it exported 30 per cent of its products.

The industry is one which has proved itself to be both competent and efficient. It is a great national industry which is surely worthy of protection and of being afforded every opportunity of equipping itself and readapting itself for the sterner competition with which it will have to contend in the years ahead.

In case I might be regarded as expressing a biased viewpoint with regard to the attitude of the industry towards free trade, I would like to quote from the Report of the Footwear Adaptation Association, Third Annual Report, 1965, page 15 under the heading "Free Trade with Britain". I quote from that Report:

The leather footwear industry gained nothing from the Free Trade Area Agreement with Britain; on the contrary, we stand to lose a substantial and growing share of our home market to imports over the next 10 to 15 years.

This is the considered opinion of the Adaptation Council of the Boot and Shoe Industry. I feel, lest I might be unfair to them, that I should complete the paragraph. I quote again from this Report:

Nevertheless, from the beginning of the negotiations, the Council supported, in principle, the idea of a trade agreement. We did this on the assumption that the Irish Government would succeed in negotiating reasonable terms for the protection of the Irish footwear industry during the transition period, and that there would be adequate protection against dumping.

This measure also breaks with the principle of the quota as far as the industry is concerned. It concedes the principle of the duty and tariff system to the rubber and plastic footwear section. I accept the Minister's statement that it was at the request of the manufacturers of those particular types of footwear but I must advert again to a comment in this Report:

In view of the increased use of plastic and other man-made materials, in footwear uppers, the Council considers that it would be more logical and more satisfactory that the footwear industry (with the exception of the sector making wellingtons and over-shoes) should be treated as a single industry for the purposes of protection.

The industry desires one method of protection, if at all possible. It states further:

In the years ahead, it is probable that the footwear ranges produced by all Irish footwear factories will contain footwear of both leather and man-made materials.

My wish then is to express our pleasure that the quota system will continue for another two years and the hope that the Minister is not fully committed to the abolition of the quota at the end of that period but rather that the situation will remain fluid and flexible so that we may have a closer look at the industry and satisfy ourselves that it is ready for dismantling of the quota system and its replacement by a duty.

I have already expressed our ingrained fears at the abolition of the quota and the imposition of the duty because a duty is relatively easy to overcome. It may well precipitate an avalanche of dumping here and the quick dislocation and virtual annihilation of many of our industries. We should then have increased unemployment in the boot and shoe industry and wholesale redundancy. There is evidence of that at present in Carlow and Birr, and this is happening in circumstances in which as yet there is no system of adequate compensation for those redundant operatives and no recognition by the employers or the State of services rendered over a life-time.

It is a particularly unchristian approach that workers should be discarded as mere items of refuse. That is why it is so important that the much-lauded proposals in the manpower policy in respect of training, compensation and re-absorption in alternative employment, should be implemented as soon as possible. I again appeal to the Minister to do everything in his power to resolve the sad situation of Birr while there is still hope and not to allow the highly skilled craftsmen and craftswomen of this particular town to be lost to this great industry.

The Minister should find some ways and means of rehabilitating the industry, helping it on its feet, and giving it a new lease of life. While Carlow is more difficult, in the sense that the machinery has been taken away, the Minister should do everything possible to bring to Carlow some new enterprise which will absorb the unfortunate men and women who have lost their employment through the closure of this long-established factory.

I hope the Minister will give us his views on pending legislation involving proposals he may have for dealing with the colossal problem of dumping. I hope he will also tell us whether we are finally committed to the complete abandonment of the quota system in 1968, after which we must move on in trepidation to 1969 when duty will replace the otherwise adequate safeguard to this most important industry.

Mr. Ryan

I share with Deputies Donegan and Treacy an anxiety that this proposal is being discussed at a time when this long-standing industry is going through a difficult time and when people in the industry are full of anxiety, stimulated not by the disappearance of two factories but by the onset of the Free Trade Area. This measure is simply one of many similar ones which will have to come before us for consideration in the light of free trade conditions and it is unfortunate that so many people in the House are not fully informed about the direct consequences on various industries of these proposals.

We must accept in good faith what has been put to us by the Minister because we must take it that the Minister, in turn, has been informed by the industries concerned. It is with some interest we note that one section of the boot and shoe manufacturing industry wishes to have quotas replaced by tariffs right away while another section wishes to have quotas retained for two years. Why there should be any difference in their desire is something which does not readily strike the uninformed and we should appreciate any assistance the Minister can give us in this respect.

One of the less desirable consequences of quotas is the system which operates whereby licences are issued to a limited number of people who do not, in fact, import all the shoes they are permitted to import under the licence but rather farm out or sell portion of their quota to other people. This situation of one parasite making profit out of another parasite has caused an artificial price for many imported shoes. This, in turn, of course, has operated to the advantage of Irish manufacturers because while the goods were supposed to be imported free of duty under licence or quota, the considerable profits made by the licence holders or by their sub-licences has meant that before shoes reach the retail shops a number of parasites have made considerable profits on the articles which, in turn, have been passed on to the consumer. With the disappearance of quotas, it would appear that privately imposed taxes will go and be substituted by the State tax and this may be preferable to the extent that if a tax is imposed by the State it may be beneficial to the public.

I wish to express concern that it is becoming next to impossible to obtain leather soled shoes for children. In the past month I have been informed that in future no leather soled shoes will be manufactured in this country for children. I should like to hear that is not so because the medical profession are of the opinion that children can be given a more firm grip with leather soles than with shoes which have rubber or soft composition soles. If we provide our children only with composition shoes or shoes with rubber soles, any deformity in the children's feet or legs will be simply translated into the shoes and will not be corrected by the shoes.

That may well be beyond the limited scope of this Bill. It may not be something the Minister can control by the imposition of quotas as an alternative to tariffs or vice versa, but it is something I should like the Minister and the contacts he has to bring before the boot and shoe industry. I may have misunderstood Deputy Treacy but it appeared to me that he seemed to think quotas and licences are two different things. Perhaps he is right but as I understand it quotas are the amounts allowed to be imported under licences.

Mr. Treacy

There are special licences apart from quotas. I mentioned certain types of shoes not made here.

Mr. Ryan

I speak as one of the unfortunate consumers. The shoe industry is one which has had to fight hard during the years against the unreasonable and unjustified prejudice of many people who believe the Irish article is inferior to the imported one. This still applies to several different goods manufactured here but I think it has applied with a larger degree of unreason to boots and shoes. This has led the industry here carefully to conceal the fact that they have been made here. Some of these shoes are exported because they are of a sufficiently high standard. Some of the shoes bear no indication that they were made here, but rather the reverse. They may bear the name of some English or American firm. The manufacturers are careful to conceal the fact that they have been made in Drogheda, in Carlow or in Dublin.

I can only hope that the oncoming of the free trade area will encourage our people to think afresh and while they may not necessarily buy an article simply because it is Irish, that they will take a pride in Irish workmanship and not allow this stupid prejudice which has operated in the past to continue. I have been told by some people in the retail end of the shoe business that they have had on occassions customers coming in saying they do not buy Irish shoes. On being offered Irish shoes they have been quite curt and rude in rejecting them and willing to take other shoes offered. Those other shoes were, in fact, made in Ireland but were of the kind which did not bear an indication that they were made in the Emerald Isle. Those retailers told me they had no complaints coming from the people who bought the shoes which had not on them an indication that they were made in Ireland. I suggest that this is a simple test of the quality of Irish shoes. In the instances I have mentioned it may have been applied dishonourably but it showed that good Irish shoes can be sold despite unreasonable prejudice.

The only thing which compels us to accept this measure is that apparently it is in accordance with the wishes of the people in the industry. They have suggested that it is the best way to meet the arrival of the free trade area. We hope all goes well with them in the future because they deserve well.

Dr. Hillery

This is not a motion proposing that we should enter the Free Trade Area. This we dealt with earlier in the year. The motion deals with arrangements for the footwear industry arrived at after consultation with the industry in its various branches. Doubts have been expressed about this industry. It remains to be seen how valid the arguments are that were put up, the fears that the industry cannot survive in competition.

I believe that this is one of our industries that through its whole history has developed from a very small industry in the twenties, in the beginning of this State, to one supplying the bulk of the home market last year, plus about £3 million of exports. This is an industry that has proved in competition in the export market that it can meet the best put up by other manufacturers.

At the same time, all the footwear markets are going through a difficult period. This is not to say that our manufacturers cannot compete with others. They have successfully comreasonabl peted in the export market. I might add that their adaptation procedures are well advanced. I have every confidence in their capacity to increase their market when the general picture of markets for footwear improves in Britain as well as here.

The question of Carlow and Birr was raised as if competition from abroad had caused their troubles. Free trade has not arrived yet and the competition from abroad is quite limited. It is about three per cent of the market. It is not fair to link in these problems with the coming of free trade. This is ordinary competition in the home market.

Mr. Donegan

Would it be overproduction on the home market?

Dr. Hillery

As I say, the footwear industry is going through a difficult period here and in Britain.

Mr. Donegan

Yes, but we apparently have more capacity to produce than we need.

Dr. Hillery

That is so, but I think we have a capacity, if the market improves, to win our share and more than our share of it. Our industry has proved this.

Mr. Donegan

What about the share of the home market we are going to lose?

Mr. Treacy

Would the Minister say what he intends to do?

Dr. Hillery

We are exporting ten times as much as we are importing. This is a good industry that is able to compete in the export market. It has adapted well. After that, we have to have faith in it. In free trade, we cannot go around telling workers that they cannot compete with workers in other countries. Everything in this industry says that it will succeed. At present, the industry here and in Britain is going through a difficult period.

A question was raised about leather shoes with rubber soles. Any leather in a shoe, I gather, brings it within the leather quota. The quota, which will be retained for two years on leather footwear, will be replaced by a duty which will be rather high—36 per cent or 6/-per pair, whichever is the higher. This was arrived at by a close examination carried out by the Industrial Development Authority. There was no picking of figures out of the air. This was a thorough examination. It was calculated that this would be a good protection and, as Deputies know, the protection will gradually be reduced.

In the matter of dumping, legislation is ready. It is being produced. I had hoped to have it introduced in this session of the Dáil. It will not now be introduced in this session because of consultations which have to take place. The legislation has been prepared in consultation with a variety of interests, including the Federation of Irish Industries and has all the necessary components to make it effective and to protect our industry against dumping.

Deputy Treacy said that licences for unusual types of shoes outside the quota were issued when somebody alleged that he could not get the shoes here. These licences are issued only when cleared by the local manufacturers.

Mr. Treacy

In every case?

Dr. Hillery

That is my information. That is the rule. I agree with Deputy Ryan about the standard of Irish shoes and that is why I am confident of their ability to compete. I will make inquiries as to the question he raised about the availability of leather-soled shoes.

Mr. Ryan

For children.

Dr. Hillery

For children. The difference between the requests by the two sections of the industry—the leather footwear people asking that the quota be kept on for two years and the rubber footwear people asking to have the quota removed at once and replaced by a duty—is explained in this way. As far as I know, the quota in the rubber range was not across the wide range of shoes available in rubber but the quota was being used to get in the better paying types so that the market for the less valuable types was left to the home manufacturer. He is in a better position if the quota disappears and he is dealing with a duty.

Mr. Ryan

Will he not have to compete in future?

Dr. Hillery

He will have to compete in future. The Deputy will see that if we have a quota which does not go across the whole range but takes the better part of the market in the value of the shoes, then he is at a disadvantage. If he is meeting a duty across the whole range, he is confident that this is the way he can best deal with the situation.

Question put and agreed to.