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Dáil Éireann debate -
Tuesday, 20 Feb 1968

Vol. 232 No. 9

Imposition of Duties (Dumping and Subsidies) Bill, 1967: Second Stage.

I move that the Bill be now read a Second Time.

The purpose of this Bill is to set up machinery to prevent the entry of goods into this country at dumped or subsidised prices. It is not the object of the Bill to provide further protection for Irish producers, as the word protection is ordinarily used. To counteract dumping is the more important object of the Bill, since the danger from subsidisation is more remote.

Neither dumping nor subsidisation may be wrong in itself, but may justly be objected to when it injures a manufacturing or agricultural industry by infiltration into the home market. The home market may also be threatened by fair competition or by imports from low cost countries. From the point of view of the Irish producer it is all the same whether he loses his market because of fair competition, low cost imports, dumping or subsidisation, and for this reason producers are apt to complain of dumping when they find that imported goods of the kind they produce themselves are being offered at prices which are lower than their own. Most of the complaints of dumping which my Department has received in recent years have been of this kind, and investigation has shown that the charge of dumping could not be substantiated.

There has been little danger of dumping, so far, in this country, because of the high tariff protection. The exporter of dumped goods has to lower his prices so as to absorb these tariffs and, for this reason, dumping in Ireland is not in general an attractive proposition. If, however, prices of Irish goods are unnecessarily inflated to take advantage of the tariff protection, the producers concerned run the risk of losing the home market, either through fair competition or through dumping. Apart from this, as our tariff protection is reduced because of international agreements, the danger of dumping will increase and so, in order to make provision for the years ahead, it is necessary now to introduce effective, flexible and acceptable anti-dumping legislation. The powers which the Government already has under the Imposition of Duties Acts can be and have been used to counter dumping. These Acts, however, were designed to facilitate the imposition of protective tariffs and are not ideally suitable as anti-dumping measures. Duties imposed under these Acts do not bear on their face any indication that they are anti-dumping duties. The Acts, moreover, are not sufficiently flexible and were not designed to conform with the accepted methods of dealing with dumping or subsidisation.

It is internationally agreed that countries are entitled to take action against dumping or subsidisation and there is also a fair measure of agreement about the kind of action which may be taken. Of particular concern to this country are the principles contained in Article VI of the General Agreement on Tariffs and Trade (the GATT) and the Agreement circulated in June, 1967 on its implementation. Member-States may sign this Agreement if they wish to do so. A number of them, including Britain, have already done so and it is probable that Ireland will also wish to sign it. This anti-dumping code of the GATT is of importance to us, first of all, because we have now acceded to the GATT and, secondly, because it is provided in the Free Trade Area Agreement with Britain that both countries will observe Article VI in their anti-dumping measures.

Dumping may take place for different reasons. A manufacturer may overproduce and find himself with large stocks. He does not wish to tie up his capital in holding these and so he has to sell them, even at a loss. He cannot afford to damage his home market by unloading the goods there and for this reason he dumps them in another country. A manufacturer may also dump for the purpose of destroying an industry in another country, by taking away its market. He calculates that he will then have the market to himself and can recoup himself by stepping up his prices. Dumping may also be motivated by political purposes. A country may not be able to attack industry in another country by direct dumping, because the country is protected by anti-dumping legislation, but it may be able to attack that country's markets in third countries. The kind of dumping most difficult to counter is sporadic dumping, the sudden unforeseeable and massive importation of goods at dumped prices. The peculiar difficulty of dealing with this kind of dumping is that the damage has been done before action can be taken.

The fact of dumping is determined by setting the prices at which goods are offered for sale in the exporting country, at any point in the chain of distribution between factory and consumer, against the comparable prices at which these or similar goods are offered, at the same point, for importation into the importing country. The prices at which local producers offer their goods for sale are not relevant to the question of dumping. Accordingly, in the Bill two prices are defined, the fair market price (in section 3) which is, in effect, the home market price in the exporting country and the export price (in section 2) which is in effect the comparable price at which the goods are offered for export to this country. If the fair market price is greater than the export price then there is dumping, and the difference between the two prices is the margin of dumping.

The Bill provides for the setting up of a Commission whose members will be appointed by the Minister for Industry and Commerce and by the Minister for Agriculture and Fisheries.

This Commission will investigate all complaints of dumping and will make a report to the appropriate Minister. It will be the task of the Commission to establish whether or not there has been dumping and, if there has been, to ascertain the fair market price and export price and, then, the margin of dumping. The Commission will also investigate whether any dumping which has taken place has caused material injury to an Irish industry and this aspect of the dumping will be considered at the same time as the dumping itself. It is not enough that there should have been dumping. It must also be established that this dumping was injurious. This is a very important principle in the GATT code on anti-dumping legislation.

What I have just said needs some modification with respect to third country dumping. It is in accordance with the GATT code that anti-dumping measures may be applied if dumping attacks the market of another country in this country, even though it does not injure a domestic industry. Provision is made for this in section 14.

It is only in the case of certain evidence to be provided by the Revenue Commissioners that the Commission will have power to require the production of evidence. In general there is no compulsion on any person or firm to give evidence to the Commission or to appear before it. This also is in accordance with the international code. At the same time the decision as to the fair market price and the export price will be made by the Commission, though provision is made for an appeal to the Minister.

A distinctive feature of the Commission is that it will have power to effect the refund of any duty which has been paid in excess of the margin of dumping. Governments and Ministers of State are liable to be suspected abroad of using anti-dumping legislation for the purposes of concealed protection. It is desirable, therefore, that the Government's intention, which is also a principle of the international code, that anti-dumping duties in any particular case should not exceed the margin of dumping, will be carried out by an independent body.

Power is also provided whereby the appropriate Minister may impose provisional duties on the recommendation of the Commission. These duties are provisional in the sense that they have later to be confirmed by the Government. If they are not confirmed, any duties collected will have to be refunded. The purpose of these provisional duties is to guard the market while the Commission is carrying out its investigation into a complaint of dumping, and such duties would not be recommended by the Commission nor imposed by the Minister unless this action was considered necessary.

Power is also provided whereby the Government can impose anti-dumping duties, which will be effective from the date of their imposition, or can confirm provisional duties, so that such duties will, in effect, be retroactive to the date of the imposition of the provisional duties.

All duties imposed under the Bill will be duties of customs and will be administered by the Revenue Commissioners.

Another important feature of the Commission is that its deliberations will be carried out in private and that information given to it will be treated as confidential, if those who give the information so desire. This provision, which is contrary to the practice in some countries, is designed to protect the interests of those who have to meet an allegation of dumping, and to encourage them to lay all the facts before the Commission.

It will be noted that there is special provision in the Bill (section 17) to safeguard the glass bottle industry against dumping. The reason for this is that this industry is peculiarly exposed to the danger of being very greatly injured or destroyed by sporadic dumping. A single consignment of goods could cause the industry to close down its furnaces and this in turn might force the one firm engaged in the industry into liquidation. It is not the intention that the safeguards provided in this section, for this one industry, will be extended to any other industry.

The duties which are imposed for the purpose of counteracting the effects of subsidies given in other countries are known as countervailing duties, and these duties will be imposed by the Government. It will not be part of the function of the Commission to make recommendations in respect of countervailing duties or to examine matters relating to subsidisation as these are more appropriate to the Government. The Minister, however, will be able to consult the Commission. It should be noted that anti-dumping and countervailing duties are not additive, so that if an anti-dumping duty is imposed to counter dumping, the same element of dumping may not, at the same time, be countered by a countervailing duty, even though the dumping is the result of subsidisation. There are provisions, also, parallel to those for anti-dumping duties, for the refund of countervailing duties to the extent that these exceed the amount of the subsidy.

The Bill also provides for the imposition by the Government of a retroactive levy. This levy, which is not a customs duty, may be imposed only on goods to which a provisional duty applies, but may be charged on any such goods which were imported during a period of 90 days before the date on which the provisional duty was imposed. The purpose of this provision, which is in accordance with the international code which was circulated in June, 1967, is to deal with sporadic dumping, and certain conditions have to be fulfilled before the Government can impose such a levy.

The Bill also provides for penalties for giving false information, for the making of regulations by the Minister and for the power of the Revenue Commissioners to require information. Those and other provisions of the Bill require no comment at this stage.

I believe that the proposals of this Bill will give us adequate powers to deal with dumping and subsidisation while at the same time observing the international code, of which I have already spoken.

We on this side of the House agree that this Bill is necessary.

It is opportune to say that it is a sign of the times. We have seen the problem in Dunlops of Cork, where many people were put out of employment and there did not seem to be anything that could be done for quite a while. One of the points of the Anglo-Irish Free Trade Area Agreement was that there would have to be consultation on such matters with Great Britain which shows how government of this country is moving from Dublin to Westminister. Nobody can live on an economic island in the sense that one can live on a geographical island. As we tend to come closer to the greater States of Europe, we have no choice but to prepare ourselves for that eventuality.

Certain dumping is quite impossible to control. Dishonest and illegal dumping is impossible to control in the sense that those who send the goods here do not write down the correct amount on the invoices and the handbacks are impossible to control. Such a procedure is unlikely in the case of exports of large companies but, in the case of exports of certain trading companies and their reception here, there is a very great danger that dishonesty and illegality may occur. If such occurs, it is difficult, except by evidence of the price charged to the consumer here, to find the real import price. Very often, the extra profit can, in great part, be skimmed off by the operator. The person here who buys the goods finds himself with a very slight advantage. Therefore, the commission would have very little evidence on which to proceed with anti-dumping legislation while, at the same time, our industries would be hurt. We have acceded to GATT and we have signed the Anglo-Irish Free Trade Area Agreement. That means that, as well as the benefits, we have accepted the responsibilities and are prepared to go with whatever their line of country may be.

If one reads down through this Bill, one will find that many provisions are related to the Anglo-Irish Free Trade Area Agreement and to GATT. In other words, it is not a Bill "off-the-hook". It is a tailor-made Bill. It is a Bill made by a tailor who has had to cut his cloth according to the international agreements and who has had to fit the suit to the body before him.

There are companies here which cannot exist under free trade, It is unwise, in a House such as this, to make even any suggestion of what or who they are but it is not irrelevant to remark that the result of a ten per cent reduction in duties has produced, for one company here with a product for which it has complete exclusivity—it is not the glass bottle industry—a reduction in its net profit of almost 50 per cent. The implication I read between the lines in the annual report was that further reductions that must come under the Anglo-Irish Free Trade Agreement will spell if not the finish at least great difficulty for that industry.

There is an opportunity to adapt or to cover a complete line of goods. The industry being a small unit, one can decide to produce just one unit of goods. This is done. It is done, perhaps, with the co-operation of the exporting company that might be putting the company in question to the wall. For many of our companies here, however, that is the only hope. The defensive measures I spoke about on preceding legislation are highly important. This Bill proves we are no longer expanding sales and establishing new industries. It proves we are in the trough of the waves in defending existing industries and existing jobs.

There is also a problem here which is not mentioned in the Minister's speech, the problem of the processing industries. I refer to the industries here that process products—very often for re-export—produced within the country by another industry or imported. This is a most complex situation. If we do not allow goods in at a very low price to the first processor, who passes them on to the second, we may find the second processor in grave difficulty.

I am aware of this problem. I am being deliberately careful not to indicate the field of activity concerned because it would be wrong and improper if I were, in any way, to create difficulty for any industry within the country. The whole spirit of this Bill is the imposition of duties to prevent dumping goods which are meant to be consumed here. There is this question of re-export and it is one at which we have to look. Without criticising, but just to get the facts straight, the necessity for the Commission is a direct result of the fact that we have signed the Anglo-Irish Free Trade Agreement and joined GATT. It is necessary now that not only should justice be done by the Minister for Industry and Commerce, but, because of our international relations and our future trading, that justice should be seen to be done.

When the workers in Dunlops were in difficulty, the Minister will agree, he had the duty and responsibility of making this known to his counterpart in Britain so that under the Anglo-Irish Free Trade Agreement, he could move and place for 18 months anti-dumping control on the importing of tyres. This is just a fact of the case, but we have a Commission now, not because the Minister's Department could not make the decisions or because the Minister could not then implement them by making his Orders but because it is necessary that our partners in GATT and in Britain can see that this was not a Minister's decision—which he could be accused of making, as he said himself, for his own purposes—but that there was a decision made by a judicial commission and one that would not be affected by, shall we say, national patriotisms or by politicians who, in their desire to help an individual industry, might set up anti-dumping legislation to make sure the industry continues. The whole policy, as announced by the Taoiseach on so many occasions, and accepted by everybody in their hearts, is towards free trade with the greater States of Europe, and including our greatest customer, Britain.

In relation to dumping, you have to think how difficult it is to define "dumping". Anybody who has been in a producing industry knows more and more that you get the situation whereby a fixed amount of goods carry your overheads and your unavoidable expenses and that the production of a further lot of goods then costs one-third or one-half what the first batch cost. This is particularly true in all the high capital industries. The glass bottle industry was mentioned and there is a section in the Bill, which I am very glad to see, to protect this company. It is true of many other things. When the Anglo-Irish Free Trade Agreement was being put through the House, there was a discussion on the fact that we had two units making electric light bulbs and employing 20 or 30 people on the production side. If it was desired to spend capital and use a type of unit, as used elsewhere, it was said that four people could produce ten or 15 times as many electric light bulbs as the 30 people could in the two units. Under free trade conditions, such a unit could not exist. This is something to which we must face up and realise. The Minister should tell us what the position is in relation to the glass bottle industry when we do meet up with free trade and how do we decide on what is the home price. The Minister has defined fair price in section 3 as the price charged to the home consumer.

Take an industry where you have a high capital input in relation to production and a low labour input and where most of the labour goes on the delivery and selling of the goods, on office staff and so on. You now get to the stage of an exercise in a balance sheet and a profit and loss account. The accountant in the case is working back from his net profit, through his profit and loss account and his trading account, to the balance sheet, rather than in the opposite way. You start off deciding what is the price of a glass bottle and in relation to a glass bottle, the price is related more to the export of glass bottles than price fixing. The price is something that can be fixed, but in free trade conditions, that will no longer apply.

In my view, this is necessary legislation but when we reach the ultimate stage of free trade within the States of Europe, those involved in these high capital industries with a low labour input, the position will be that talks, agreements, bonding together, rationalisation, take-overs and amalgamations will be the only answer for that sort of industry and you will find that the great moguls of industry in Europe will agree that the Irish unit will only supply Ireland, the Lancaster unit will supply England, the French unit will supply France and so on. That is the only picture and any other picture is an artificial one. One of the reasons for this Bill—and it is a bit late in arriving and perhaps I am guilty here—is in regard to the importation of fertilisers. We have a situation whereby fertilisers have been imported in the last few months for use in the spring season because they could be bought cheaper—and of the same quality— than those produced here. Businessmen are businessmen, and if there is one in 20 who are competitors, who takes in a boatload of fertilisers at £2 a ton less, then every one of the 19 must have it because that man is going to pass it on to the consumer at less than the others can afford. In such a situation, there is nothing that can be done. Nobody is in business for the colour of anybody else's bright blue eyes. A businessman has to pay his staff, pay his directors, set aside something for development and so on, and in such a situation dumping exists. The Minister is late as far as the spring is concerned in introducing legislation to stop the dumping of fertilisers. I am guilty myself of bringing in a boatload. I had to.

I thought we had done that already elsewhere.

It arrived.

The Deputy got it?

Yes. I have dealt with this question of the fair price and the fair market price. I just want to sum up by saying that it is quite simple to take the price of a ton of wheaten meal and say what the fair market price is because the price of what goes into it is perhaps 85 per cent or 90 per cent of the price and there is added the labour in producing the goods, grading, cleaning, washing and all the rest, and the capital cost then of the product itself; but if you have this industry which takes in a very low raw material at one end and spews electric light bulbs or glass bottles out at the other end, the great cost is the capital cost of the machine that spews them out at the other end.

I want to say that this definition in section 3 of home price is just a copybook exercise. If there is a product competing against them, if instead of electric light bulbs you have fluorescent tubes, then if there is this alternative product, it is possible to have some control on the cost charged to the producer. Largely with the high capital industry and low cost raw material industry, the position is that the price charged to the consumer at home is the price he will pay; that is what makes it extremely difficult to decide when a thing is dumped or when it is not dumped. The Minister did not mention quotas, and of course quotas are part of the Anglo-Irish Free Trade Agreement. Perhaps the Minister would indicate what our present situation is on the reduction and elimination of quotas because, as in the footwear industry, quotas will give complete protection as long as they exist.

This is necessary legislation: it is a sign of the times. It is a defence of jobs. It is something the Minister very properly had to do. However, it does not mean that there is anything wonderful here for the Irish worker or the Irish industrialist. It merely means that we are tidying up, trying to keep the job right, and that we are going to have a difficult time doing it.

I agree with Deputy Donegan that this is necessary legislation which the House should have no difficulty in passing.

Hear, hear.

But I am not as sure as Deputy Burke obviously is that it will be as effective as we would hope it would be. The big difficulty is that dumping has to be proven before action can be taken. This came up in the discussions under the Anglo-Irish Free Trade Agreement, that no action can be taken unless it can be proven that dumping is taking place. This will be one of the biggest problems, even though the Minister spells out how it is proposed to apply the acid test to it. The price on the home market compared with the price here, that might seem to be a fairly good rule of thumb, but is it the proper way to do it? For instance, certain factories in Britain at the present time are producing materials for sale on the home and export markets, and those factories are able to run only about nine months of the year; they have to keep staff and everything else, and overheads have to be carried. If production continues, it will pay them to sell very much under the normal price, at cost, what they are producing during the off season. In that case if you take the home market price and compare it with the price here, it is extremely difficult to prove that there is dumping.

The Minister has referred to sporadic dumping. This is one of the things that will cause a very big headache. I am glad the Minister has made provision that even those who do seem to get through the screen can be caught under the 90 days clause, but it may not be possible at all to deal with those, if the dumping is only sporadic. If somebody takes in a consignment of materials from abroad at dumped prices and unloads it on to the market, it will be very hard to deal with the situation. The Minister may say: "That is OK, because there are only one or two consignments". But this can happen again and again all over the place.

I have no objection at all to the measures which are proposed in this Bill. The only thing is that the working of the regulations which are suggested will be very difficult. With the dropping of the tariff barrier over the years, the Commission will be very busy, because, despite what the Minister may think, we know at the present time that dumping is taking place. Dunlops of Cork have been instanced here, and Deputy Donegan mentioned fertilisers. The big trouble is that dumping is happening and, if it continues to expand following the further reductions in tariffs, the Commission which will be set up will have a very busy time attempting to produce the necessary evidence so that action can be taken.

I quite agree—I would not say "tailored" is the correct word—that the Bill had to be confined within certain limitations both in relation to GATT and the Anglo-Irish Free Trade Agreement. We understand that, and the fact that there was in existence a set of regulations from which we could design this legislation was a help rather than anything else. I would be very much afraid, however, that as the years go by, people will be complaining about the activities of the Commission or of the Government under this sort of Act, because they will feel that if a foreign article is being sent into this country at a lower price, they should be entitled to buy it. Do not let anybody tell me they will not buy it, because we have evidence already that if there is good material in the article, the natural thing is to buy it before the home-manufactured article.

I do not know how far it is intended to proceed with this, or if there are some lines of goods which might be excluded. We had the story during the war of a certain firm in this city who got in a line of goods and sold it and there was a tariff put on which prevented anybody else from getting the same type of goods in. This firm made a hefty profit out of this sort of thing. That could happen again, and I am quite sure the Minister would not desire that it should happen. As I say, we have no objection to the passing of this Bill. We feel it is necessary. The only thing about it is that, if it had been introduced earlier, it might have saved the trouble which the Minister had to go to in the one or two cases which have already come to his notice.

I welcome this Bill. The Minister has made an intelligent approach to a very serious problem, a serious problem for our country, for our workers and for our manufacturers. I attended a deputation to the Minister for Industry and Commerce on this matter recently. Other Deputies who have spoken have referred to the Bill as being tailormade. Every piece of legislation passed in this House has some reason. The reason for this legislation is the protection of the workers and our industrialists. As far as I can see, the provisions in this Bill are made in conjunction with other member countries. It is very hard sometimes to prove that there is dumping, but we are led to believe that this can be done by large foreign industries that are exporting goods to this country and have a huge output. If they make a big profit on 90 per cent of a line and dump the remainder they can injure our small industries. That is what we have to guard against. This anti-dumping Bill is introduced in an intelligent way. It will help our workers and it will help our industries. I can see that it will be hard to prove that there has been dumping. The day is not far distant when a number of our small industries will have to look at what they are doing, and will have to go in more for co-ordination amongst themselves in certain competing lines. Now that they have the adaptation grants, they will be in a position to counteract much of this dumping that was going on, especially in large industries. Could they not take a reasonable profit on 50, 60 or 70 per cent of the goods they sold?

Debate adjourned.
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