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Seanad Éireann debate -
Wednesday, 13 Nov 1940

Vol. 24 No. 27

Control of Imports (Quota Orders)—Motions of Approval.

I move:—

That Seanad Eireann hereby approves of Control of Imports (Quota No. 37) (Amendment) Order, 1940.

The purpose of this quota order is to remove quota restrictions on the import of hats of a value greater than 14/11.

Question put and agreed to.

The quota orders which are covered by motions 4, 5, 6 and 7 are, in effect, part of the one group.

Is it agreed that the four motions be taken together?


I move:—

4.—That Seanad Eireann hereby approves of Control of Imports (Quota No. 39) Order, 1940.

5.—That Seanad Eireann hereby approves of Control of Imports (Quota No. 40) Order, 1940.

6.—That Seanad Eireann hereby approves of Control of Imports (Quota No. 41) Order, 1940.

7.—That Seanad Eireann hereby approves of Control of Imports (Quota No. 42) Order, 1940.

These quota orders propose to regulate the importation of cotton piece goods of various descriptions, as set out in the respective quota orders. Quota Order No. 39 covers bed sheetings over 45 inches wide, bed tickens, mattress cloths, dungaree cloths over four ounces in weight per square yard, plain shirtings and pyjama cloths which are over four ounces in weight per square yard. The materials must contain more than 60 per cent., by weight, of cotton, and must not exceed ten ounces in weight per square yard. Quota Order No. 40 relates only to terry towelling. It covers all descriptions of terry towelling, again with the proviso that the towelling must contain more than 60 per cent. of cotton, and not exceed ten ounces in weight per square yard. Quota Order No. 41 relates to shirting and pyjama cloths over four ounces in weight per square yard which have a pattern woven in colour, but does not refer to plain shirting cloths or cloths with printed patterns. As in the case of the other two orders, the cloths must contain at least 60 per cent. cotton and must not exceed ten ounces in weight per square yard. Quota Order No. 42, the fourth of these orders, is the most comprehensive. It refers to every type of cotton and union woven piece goods which are not already covered by the three preceding orders. Again, with the proviso that such materials shall not exceed ten ounces in weight and must contain not less than 60 per cent. of cotton.

The genesis of these orders is to be found in the trade agreement made with the United Kingdom in 1938, which contained a provision that certain tariffs and duties might be referred, at the direct instance of the Minister for Industry and Commerce but at the original instance of the United Kingdom manufacturers, to the Prices Commission. When a reference of this kind was made in respect of cotton piece goods, it was intimated to the Minister for Industry and Commerce that it was possible an agreement might be arrived at between our home manufacturers and the British manufacturers which would obviate the need for putting the matter to the Prices Commission. This anticipation was well founded and an agreement was reached to which these quota orders propose to give effect. The orders do, in effect, reserve to our manufacturers practically the whole of the market of 9,000,000 square yards which they can supply from their resources. The balance of the market is virtually reserved to the British manufacturers on an understanding, which has been given effect to under the Emergency Imposition of Duties Act, that the duties hitherto enforced under these orders would be so reduced, so far as the United Kingdom manufacturers were concerned, as to afford a substantial preference to United Kingdom manufacturers in our home market. In deciding to give effect to the agreement, the Government was largely moved by the consideration that our home manufacturers were almost wholly dependent, after the outbreak of the war, upon British sources for the supply of raw materials. As a result of the agreement, we have reason to believe that they will be assured of a sufficient supply of such materials to enable them to meet all the demands the home market is likely to make upon them.

I do not wish to raise a general debate on this question because I feel that, on it, I have been completely defeated. One's whole position is one of bewilderment at the multiplicity of orders and the only thing one can do is retire gracefully from the combat and leave the field, undisputed, in the hands of the officials and technicians. One has made one's protest at the whole of this policy and there is not much more to be said. I should like to know from the Minister, however, whether, in making these orders, serious regard is had for the interests of the consumer. I quite agree that serious regard is had for the interest of the infant industries. We hear a great deal about the numbers put into employment. Senator McEllin mentioned that on the last Bill which we discussed. Does the Minister realise the reactions of these orders on the consumer, the difficulty of getting the goods in many cases, the quality of the goods he can get and the prices he has to pay? I know that this opens a very wide field and I am very reluctant to start a debate on this whole question. As the Government have now got more experience in this matter of tariff regulation, I should like to know whether the interest of the consumer is having anxious consideration. The cost of living is going up and we have a large number of people living on very small incomes. There is a duty to them, as well as to industry and labour, to see that these small incomes will purchase as much as possible.

It is a matter of regret to me, and, I am sure, to the House, that Senator Douglas is not here at the moment to express his appreciation of the Minister's remarks, seeing that he, probably, has a monopoly amongst our members of the technical knowledge in this matter. I think that, perhaps, the last speaker is under some misapprehension as to the general nature of the policy of which this particular order is an example, and I should like an assurance from the Minister that in fact—as I believe to be the case—this change in quota orders is an example of a greater liberalising of our general import policy. Am I right in thinking that, under this proposed change, we shall import a larger quantity of certain types of British goods than before, and that they will come in at a lower tariff than before? That, I believe, is the case, and therefore, from Senator Sir John Keane's point of view, this change should be welcomed. Am I right in the suspicion or belief that this proposition is an example—and a very desirable example—of the principle of friendly co-operation with Britain? I think it is, and I think the fact that it is should be emphasised. Further, I suggest that, in this whole matter of the acquisition of raw material for the maintenance of our own important industrial developments, the British appear to have been rather decent to us, especially now that they have a monopoly of the sources of supply on which the very existence of our national industries depends. If that is so, I think it should go forth from this House that they have been rather decent to us.

I doubt if any quota order or series of quota orders was the result of as much care and as much close investigation as these particular orders. In order that the problem with which they deal should be understood, it must be remembered that they do not stand alone, that on the same date and as part and parcel of the same scheme, there was a downward change in tariffs affecting most of the goods that were then tariffed. Strictly, that matter does not arise on the motion before us but it constitutes an extremely important part of the problem which was dealt with. To visualise the position properly, one has to go back to the trade agreement made between Great Britain and this country. Quite a number of detailed agreements were embodied in that large agreement, a certain number of tariffs were reduced, certain changes were made and a considerable number of specific preferences were agreed to. A considerable number of commodities enjoying various measures of protection were not specifically dealt with but provision was made by which the British Government—no doubt, at the instance of interested parties on the other side—could apply for revision of the tariffs, subject to certain general principles. In the case of cotton textiles, as I understand, an application was made or an intimation was given that an application was about to be made. I think the message was sent but was not actually referred to the Prices Commission. However, that is a detail.

Following that, suggestion was made —I do not know exactly where from— that it might be a good idea if the textile interests on both sides were to get together and see if they could not evolve proposals which would be to their mutual interest. That idea, I believe, had the approval of the Minister for Industry and Commerce at the the time, and certainly his blessing was conveyed through his officials. The first meeting took place in Government Buildings, but whether you regard it as a proper part of his blessing or not, he made it very clear that while he would favourably consider any joint proposals that might be put before him, he could not in any way undertake in advance to agree and, in particular, that he could assure us that if he saw anything which would result in any increase of price to the Irish public, we might take it quite definitely that he would not agree. So far as I am concerned, I quite accepted, and I feel that we may take it that the conference accepted, that point of view. But whether it did accept it or not, I can say, because I acted as chairman of the joint conference, that that was borne in mind all the time.

During these discussions the conference had the assistance of officials of the Department of Industry and Commerce and of the British trade representative in Dublin. Whenever asked for it, they gave assistance in many ways. But, of course, the officials were not responsible for the proposals which were eventually submitted to the Minister. The joint proposals were submitted to the Minister for Industry and Commerce, I think, in July, 1939, and were accepted by him, subject to the proviso that if he found, in actual working, that they resulted in any direct increase in price, he would feel free to take steps to discontinue them. His approval was indicated somewhere about July, 1939.

The Senator has referred to the question of increased price. Could he say whether there were also any safeguards in the matter of quality?

I shall deal with the whole question, but I may say offhand that I cannot conceive of the question of quality arising, unless Senator Sir John Keane means that you could reduce the quality and leave the price the same, and call that no increase in price. I would call that an increase in price without any question whatever, and I do not see how you could honestly do otherwise. Perhaps I ought to point out that on this occasion we are not dealing with a monopoly or a body of people amongst whom there is not keen competition. I shall come back to that in a moment.

When the general approval of the Minister was given, the details had to be worked out. That took considerable time and was done, of course, by officials of the two Departments concerned, who submitted them for criticism to the two parties to see whether, in their opinion, there was anything which in any way changed the spirit of the agreement. This agreement was based on the principles set out in the agreement between this country and Great Britain. It was accepted that reasonable and adequate protection should be given to Irish manufacturers to cover cotton textiles for the manufacture of which the Irish factories were suitable and where they could supply good quality goods to the Irish public. It was agreed generally, following again the lines of the general British agreement, that where the goods were not made here, or where the quantities were so small that they could not be made on an economic basis here, they should be bought from Great Britain and that that should be secured by means of a substantial preference.

In the working out of these principles, I think I may say that every kind of cotton textile article came up for review. It took somewhere about six months. They were eventually divided, roughly, into three classes of articles and, finally, into the four quota orders which we have here. The three main divisions were, firstly, those articles in respect of which there was capacity in the mills here to make the whole, or almost the whole, of the demand in this country; secondly, those articles in respect of which there was a substantial capacity in the country to produce the demand but not sufficient to produce the whole normal demand; and thirdly, those goods which were not manufactured here, or manufactured only to a relatively small degree. So far as cotton goods are concerned, the last category was much the largest and the vast majority of these goods have never been subjected to any protective tariff.

I do not want to tire the Seanad by going into a lot of small details, but, generally speaking, I may say that a large part of the cotton consumption here consists of printed goods which are made up for all kinds of ladies' wear, overalls, shirtings and goods which have some kind of a pattern printed thereon. They have always been free of duty, and when you add to these the goods under four ounces which, with a couple of small exceptions, have been, and still are, free of duty, you get probably 70 per cent. of the total consumption of cotton goods. I am not sure of the accuracy of my figure of 70 per cent., but it is at least far above 50 per cent. of the consumption. Under these quota orders, these bulk goods, where they were previously free of duty, remain free of duty, if they come from Great Britain; and they are subject to a preference by means of a quota, namely, Quota Order No. 42; and, by means of that quota, only a small proportion of the goods which are licensed can be imported from countries other than Great Britain. That is the method by which the preference, which was part and parcel of the general trade agreement between this country and Great Britain, operates in relation to cotton goods.

The figure fixed as stated by the Minister—I think it is 9,000,000 square yards for the quarter—was an estimate of the total consumption of these goods, with a certain percentage added so as to ensure that there would be no possible danger of anybody being refused a licence. Furthermore, it is understood that if by any chance there proved to be an error the Minister would be asked immediately to increase the quota, and I have no doubt he would do so, in order to ensure that Quota No. 42 was not in any way used as a prohibitive quota for the purpose of preventing imports. I want to emphasise that, because of certain criticisms which have been made, and which were due to a misunderstanding of the position.

As to the three other quotas, Nos. 39, 40 and 41, the goods included in No. 39, with a certain number of quite minor exceptions, are goods in regard to which it was agreed—I may say that the British representatives asked for and obtained permission fully to examine all the factories here, to see what their capacity was and what kind of work they could do; they were even invited to criticise them freely— that there was a full capacity both as to quantity and as to quality. You may take it that, with certain quite minor exceptions which more or less accidentally found themselves inside Quota No. 39, we have here a capacity to provide more than the total normal requirements of the country. I need not at the moment go into the details in regard to these goods, although I have the quota orders here. The Minister, no doubt, will give the information, and I am presuming that those who are interested are familiar with them. Quota Orders Nos. 40 and 41 deal with what I call the second class of goods to which I referred. They are goods where there is a capacity for a substantial production here, but not enough, at present at any rate, to provide the full normal consumption of the country. When the original agreement was made with Great Britain, the duty on practically all tariffed articles was 40 per cent. Under this agreement that has been reduced to 20 per cent. in the case of the goods which are under more or less restrictive quotas, that is Nos. 39, 40 and 41. In the case of the goods that are still tariffed, and that come under the wide general quota which is not restrictive, they were reduced from 40 per cent. to 30 per cent. I am most desirous that those who are interested in this question, in considering the merits or otherwise of the quotas, should realise that in this case it was found possible by mutual agreement to have a substantial reduction in tariffs over a considerable number of goods.

There are one or two matters that bear closely on this, and to which, if I be allowed, I should like to refer because of criticisms made outside. I should like to remind the Seanad that this industry is not just one of the new small industries, in regard to which we hear, I think, unjustifiably sneering remarks at times. Some of the goods made have been made in this country only during the last six or seven years, but the industry as a whole is one that goes back a very considerable time. It is in no sense small. The total number of persons employed in the factories is over 3,000, and the wages paid are in the neighbourhood of £300,000 a year, which is by no means negligible. We are dealing, therefore, with an industry in which a very considerable number of persons are interested, although I can assure you that it happens to be one of the industries in which nobody gets big dividends. It never has been a highly profit-making industry in this country, or in fact, I think, for years anywhere else; certainly not in Manchester. In this industry there is no monopoly. There might be some trifling exceptions, but as far as I know in regard to the goods covered by the three quota orders which are restrictive in no case do those quota orders protect one firm only. In each case there is competition within the quota order. In the case of No. 39 all the goods are competitive. In the case of No. 40 there are only two firms but they compete; in the case of No. 41 there are several; so that the idea which has got abroad that there is anything in the nature of a ring—I will deal with that in a moment, but I think it is more difficult on an effective quota system to work a ring than under an abnormally high tariff—is an erroneous one. In this case I happen at the moment to be chairman of the association of which all the firms are members, and I should like to take this opportunity of stating in public that I am not aware of any agreement as to price between any of the firms. A proposal which did come from one quarter some time ago that there might be price agreements was completely rejected, and as far as the bulk of the trade here is concerned there is quite keen competition in the country. The industry is quite large enough to stand that competition. I think it is particularly important that that should be understood.

When the war broke out, this agreement which had been made by representatives of British and Irish cotton textile interests had not been ratified by the Government. It had been accepted in principle, but had not been carried out. I was approached by one of the leading representatives from Manchester who had taken part in the discussions. He wrote to me and asked whether I thought the war would make any difference in the situation. I replied that I had not got the slightest idea; but said that it might be just as well if we were to suggest to our Governments that they should do nothing for the time being. Might I say, that except in so far as the question of supplies affected the issue, these quotas, taken as a whole with the tariff reductions, did not specially benefit the Irish mills. But for the question of yarns, which I am going to deal with, the Irish mills would have preferred to have remained without quotas and with the higher tariffs as they had before; but they had to meet the situation following the British agreement. They met it as a result of long discussions, and reached a compromise which they believed was a fair one, but which, because of the reasons I am now going to describe, has actually worked out to our benefit, though not necessarily from the point of view of profit.

A short time after the war broke out, it became pretty clear that there might be considerable scarcity of cotton yarns, particularly of certain types of cotton yarns, and it was also clear that Britain—Lancashire—had a virtual monopoly of those cotton yarns as far as we were concerned. It then seemed probable; after the invasion of Belgium it became certain; and our mills realised then that they had made an agreement providing for certain quotas, and if by any chance our friends on the other side chose to withhold yarns from us, or to tighten up the supply drastically, we would be in a position where we would have substantially reduced tariffs and the quotas would be useless because we would not have supplies of raw material to keep our workers going. That formed an acute problem for the industry.

Our delegates went to Manchester and, I agree entirely with Senator Johnston, we were met there in a very fair spirit. We put our cards definitely on the table and said we would not like to ask our Government to ratify this agreement, even though we admitted it was an agreement, if we were going to be left in that vague position with regard to yarns. As a result, the matter was taken up with the British authorities and the Board of Trade and it was agreed that it would not be fair if we were not put in as good a position as Manchester firms with regard to the supply of yarns. The result is—of course, no one can possibly tell what the future has for us or for anyone else —we have been able to keep going and have been able to maintain our supplies to the Irish market and, as far as I can see at the moment—of course, I am speaking now for the industry as a whole, not for any one firm—I am quite satisfied the industry as a whole will be able to supply the bulk of what is necessary as far as the goods which come under these three restrictive quotas are concerned. That position is one of very considerable importance, and it has actually turned out that, by a measure of compromise and perhaps giving up a little bit from the point of view of possible profits from tariffs— though they are always very doubtful— the industry by this agreement was able to secure a position which has worked out definitely to its benefit.

One other thing. It has been suggested in this House and elsewhere that quotas, no matter for what reason, lend themselves to rings and monopolies and plans for fleecing the public. My experience, which is not a considerable one, is that the officials of the Department of Industry and Commerce continuously have their eyes open as far as these matters are concerned. If complaints come in from consumers they are investigated, and if consumers find that under the quotas they cannot get their goods, pressure is very soon brought to bear on the Irish manufacturer to give a very good reason why. It is not sufficient to say why, but you have got to show that it is not so. Otherwise you are told almost immediately that the quota will have to be enlarged because the Government cannot possibly allow people to do without their requisite supplies. My reason for mentioning that is to show that under the quota system the Government has an absolute and perfect weapon to prevent anything of the nature of price rings, or rings to prevent the public from getting adequate supply, because they will not pay the price. They simply can open the quota, and it can be done with a stroke of the pen, and done more readily, I think, than you can change a tariff. Therefore, I personally believe that anyone who will look into the matter will realise that unless the Government and their officials suddenly went asleep—and I see no reason to think that that would happen—it would be practically impossible to get away with anything in the nature of a ring such as has been suggested in other places. But in this particular industry I can say definitely there is no ring and there is no agreement whatever with regard to price. I believe that this is an instance of the use of a reduced tariff with judicious and moderate use of quotas, by which it is possible to work trade agreements of mutual benefit, and at the same time to reduce prices. I say I think it is likely to reduce prices partly because the tariffs are down, but more because the underlying basis of this agreement was to give adequate quota protection to the articles where large quantities could be made here and to leave to the other side goods where there could only be a small quantity. That meant that the mills here, provided there is adequate trade, will be kept much busier on a smaller number of goods with the resultant cheapening in output. Anyone who knows anything about the textile trade will know that there is nothing that adds to the cost of production as much as continuous changing of articles, continuous changing of looms, having 300 or 400 looms this week and perhaps only half the quantity the next week, whereas continuous bulk trade will lead, and in certain articles has already led, to a cheapening of price.

Question put and agreed to.