I regret that the Minister for Industry, Commerce and Energy, Deputy O'Malley, is not present but I understand that he is abroad on Government business. I trust that the Minister of State, Deputy R. Burke, will convey our feelings on the question before the House.
Deputy D'Arcy and I come from two provincial towns where the tannery business has long been the backbone of industry. Those towns are Gorey, in County Wexford and Dungarvan, in County Waterford. We were shocked to learn last Thursday morning that the Irish Leathers Group had announced that there will be a major number of redundancies in both of their factories in these two towns. The factory in Gorey, I understand, is to close on 31 January 1979 with the loss of some 200 jobs. The work force of the factory in Dungarvan is to be reduced by 130 to 140 and the factory at Portlaw, County Waterford, will have a cutback in employment of 30 to 40 people. This is very serious especially in provincial towns where employment is never very plentiful and where factories like those are the backbone of the economy. The total number of redundancies in these three factories will be 370.
I believe that 1,400 people are employed in the tanning industry in the country. The present redundancies may only be the thin end of the wedge. If something drastic is not done by the Government it is quite possible that all of those 1,400 jobs will be lost. There are a number of reasons why the tanning industry in this country is in such a sorry state. The Government have the machinery to see that those difficulties are overcome. The main problem at the moment is the importation of cheap leather from Latin American countries. The produce of the factories I have mentioned as well as the other factory in the group at Carrick-on-Suir is finished leather. This company cannot compete with the South American leather which is flooding the European market at the moment because hides in South American countries like Brazil and Argentina are fetching as little as £5 each whereas in the Irish market they sell for £19 each. I believe the overheads in the Latin American countries are also much lower than here and in Europe generally.
The EEC were in a benevolent mood last year when they agreed to allow practically an unlimited amount of finished leather into the EEC generally. As a result of this generosity quite a number of tanneries in Britain and in Europe have already closed down. It looks as if very bad days are ahead for the tanning industry here unless the Government take immediate steps. Under Council regulation No. 2703/77 the EEC agreed to allow in zero duty leather from a number of countries. Amongst those countries we have Brazil, Argentina, Mexico, Uruguay, Bolivia, Chile and Columbia. The leather coming from those countries is causing the present glut on the EEC market and is jeopardising the jobs in question.
This agreement was drawn up on 11 December 1977 and is due for revision in about a month. We ask the Government to ensure that the re-negotiated agreement does not militate against the future of the industry here. A tougher line should be adopted to ensure that the amount of leather which can be imported duty free from South America is limited drastically. If that cannot be done an import duty of 20 per cent should be imposed on this leather to give our tanning industry a chance of surviving.
The EEC countries under the regulation I have referred to are allowed access to the South American market for all types of consumer goods such as cars and machinery. This is of no benefit to us as we do not specialise in that type of industrial production. The EEC may have a motive in allowing this reciprocal trade agreement but it does not benefit us at all. It is actually against out best interests. Under annex B of regulation No. 2703 those countries are allowed to export 19,864,580 units of account of finished leather duty free into the EEC. I believe 1.5 units of account are equivalent to a pound.
This is the kernel of the problem. This leather is coming in here at a price which is uncompetitive in comparison with what the Irish tanners can produce and it must be stopped. Two-thirds of the total hides in the world are not available on the free market. The Latin American countries I have referred to have an embargo on the export of hides. They have quite a large proportion of the world supply of hides and by placing this embargo neither the EEC countries nor any other country has access to that cheap raw material. On the other hand, East Europe and Russia do not allow the export of hides outside that bloc. They keep everything they produce themselves.
There is a limited free market, which means that the competition for those hides is extremely keen. This is driving the price of hides wild on the European market. I believe recently the price of a hide was as high as £22. We have very little chance while the raw material can be purchased in one part of the world for £5 and in another part for £22. Tanning in Europe has now become a non-profit making venture. Industry after industry is closing down and this will continue unless something is done immediately.
We produce a fair quantity of finished leather but we have great difficulty in selling it even if we could compete because some countries have high tariffs on finished leather. Japan, which should be a very good market for us, has a 30 per cent duty barrier, and South America, the people who are stopping us from getting at their material, have a 140 per cent import duty on finished leather. Those markets are completely closed to us. The Japanese market is vital but we cannot get after it. At the moment the only countries which are putting hides on the market are the USA, Canada, Australia and the EEC countries. The USA, Canada and Australia, unlike us, are not dependent on an export market. They have a strong home market and they can absorb quite a lot of the high production in their own countries. They have not the same kind of problem that we face in Ireland as most of our finished leather is exported.
I want to point out to the Minister some likely solutions to the problem. When the textile industry was in trouble a few years ago there was an EEC agreement known as the Multi-Fibre Agreement, which was signed in November 1977 and which set targets for imported textiles, garments and shoes. In other words, they restricted the amount of those commodities that could be imported into the EEC. We had been flooded with those products from Hong Kong, Taiwan, Japan and other Far Eastern countries but because of a strong lobby there is now a restriction on the amount that can come into the EEC. This has been most beneficial to the industries concerned, not only in this country but in member states of the EEC. We are asking that the same kind of restriction be put on South American leather.
As a temporary solution until the generous agreement negotiated last year with South America is re-negotiated on better terms, we are asking for a ban on leather imports into the EEC or that only a limited amount be let in in line with the terms of the Multi-Fibre Agreement. Short of that, we are asking that a 20 per cent duty be placed on all finished leather products from South America. In the meantime, we are asking that an interim subsidy be given to Irish tanneries to allow them to purchase hides at a competitive price vis-à-vis their South American competitors. I am asking that that interim subsidy be provided by the Government until a more permanent solution is found because if we do not get some interim measures there will be redundancies. Deputy D'Arcy and myself want to ensure that those redundancies do not materialise. We want the tannery industry to be allowed to survive and to be put in a healthy state.
It would help the tannery industry if hides produced within the EEC were not allowed out of the area. What is driving prices higher and higher is the fact that foreign countries, in particular in Eastern Europe, are purchasing hides because they have not sufficient supplies in their own countries. This is one reason why the prices are getting out of proportion.
I have listed the alternatives. We must take a firm stand on the matter if we are not to lose more jobs. I am sure the Minister for State will take account of what I have said and that, in consultation with the Minister for Industry, Commerce and Energy, he will bring the matter before the Government to make sure that the redundancies do not materialise.
