Seanad Éireann debate -
Wednesday, 19 Apr 1961

Vol. 54 No. 1

Imposition of Duties (Confirmation of Orders) Bill, 1961 (Certified Money Bill) —Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. J. Lynch)

Orders made by the Government under the Imposition of Duties Act, 1957, must be confirmed by the Oireachtas in the calendar year following that in which they are made. The purpose of this Bill is to confirm thirteen Orders made under the Act during the year 1960.

Six of the Orders afforded new protection. Five others amended existing duties where experience had shown that these duties were not adequate because of increasingly severe competition from imports. Two further Orders were made because the existing duties were being evaded.

An explanatory memorandum on the Bill has been circulated to Senators. I shall, of course, be willing to give any further information or answer any questions which Senators wish to ask about the Orders.

Professor Hayes

This is a very common type of Bill. It is a Bill which, of its very nature, has to be passed. It is the confirming, as the Minister explained very clearly, of certain Orders relating to tariffs made within the past 12 months. It contains a confirmation of a variety of tariffs of a heterogeneous character from toy balloons and structural iron down to certain types of socks. I do not propose to say anything on the details but I want to refer to one general point.

We seem to be on the verge of very serious changes in the economic organisation of Western Europe, including these islands. Those changes will certainly involve free trade, or conditions approaching to free trade, in industrial products over the whole area now comprising the countries of the "Inner Six" and the "Outer Seven." We are in the process of adding, constantly and steadily, to our duties. Six of the Orders made in this Bill afford new protection to articles of manufacture which were never protected before. Five others increase the duties.

In the state of affairs where it would appear that free trade will be the order of the day, whether we like it or not, it seems extraordinary that we should do that. The present Minister and several of his predecessors and the members of the present Government have been urging industrialists to prepare for conditions of more severe competition. While that is our general principle, we have in detail and in particular, been adding to individual tariffs. That does not seem to be a method which would appear to make people happy about the competitive efficiency of our factories or their future in the conditions which seem to be in store for us. How is it we combine this kind of Bill with an expectation of conditions such as the Minister himself, as well as others, has constantly placed before us?

Dr. Sheehy Skeffington

I should like to say I find this Bill extremely disappointing for reasons that have been adumbrated by Senator Hayes. I find it very disappointing that there is not a single one of these Orders we are now asked to confirm that reduces a duty or that abolishes a duty. Every single one of them, as the Minister has been at pains to explain, results in increasing or tightening-up the protective mechanism which these duties represent.

On many occasions we have heard the Taoiseach speaking in the Dáil and outside. I remember at least two occasions during the lifetime of the present Government when he was extremely outspoken in warning the industrialists of the country that they must make themselves more efficient, that they must cease to be so dependent upon protection. He warned them that unless they increased their efficiency and, by dint of their own efforts, made themselves at least more independent of protective measures these would be withdrawn. That kind of speech whether made at a chamber of commerce lunch or at a Fianna Fáil meeting or in the Dáil gets column after column of publicity.

People then feel that there is a wind of change. They feel that the new Government mean business. They feel that the inefficient industrialists who have been oversheltered and overprotected up to now will at last understand that the Government mean business. You wait until the next imposition of duties comes in and you expect to find that the duties on certain long established industries have been either reduced or abolished. In fact, of course, what we find is that, so far as we can judge from this Bill, and from the action of the Government since it has been in power, the Government has no intention at all of implementing the threats or promises of the Taoiseach on such occasions.

I can recall complaining, in the lifetime of the previous Government, that in a Bill of this kind only three or four of the orders referred to reductions or abolitions of duties. Now I find that none at all refer to abolitions or reductions and that the trend is all the other way. I cannot help underlining the fact that there is the sharpest possible contrast between the practice of the Government in this regard and the public statements, which apparently are for the purpose of tranquillising public opinion.

Senator Hayes has expressed surprise that these duties should apparently go up at the very time when we also hear publicly that we may very soon be asked to join the European Common Market or the Free Trade Area. He puts the question with his customary innocence as to how that may be, that we are increasing tariffs and protection at the very time when we may be asked to go into the Common Market or the Free Trade Area. Of course part of the reason should be obvious. When a large retail trader intends to hold what he calls a record-breaking sale, slashing all the prices, cutting them down, he takes the preliminary precaution first of putting prices up, so that he will be able then apparenty to slash them and to take off 20 per cent. here and 30 per cent. there. Not all retailers do that, but, shall we say, it is not unknown for it to happen.

I suggest that this is the type of fraud we are now practising on a national scale, in order to be able to say when we join the Free Trade Area or the European Common Market "Very well, we are prepared for the first ten years"—or whatever the period is —"to reduce our tariff wall by ten per cent. or 20 per cent." Over a long period of years we will be gradually reducing the wall which we are now building higher and higher, in order that when we take a few stones off the top we will be able apparently to fulfil any commitments while really maintaining the precise degree of protection which our industries have been enjoying for many years. I am afraid I regard that as, and I use the word advisedly, dishonest in practice, because I feel that at the moment when we feel that very soon we will be asked to reduce our tariff walls, preliminary to that we should not be raising them higher and higher, up to 75 per cent. in many cases.

I said before, and it has been said by other Senators and by Deputies, that in a country like Ireland I can see real justification for protective tariffs to enable industries to get going. There is no doubt about it that it would be unfair to expect industries in a small country like this to produce competitively at once in the face of world competition. Consequently a degree of protection for certain selected and justified industries is warranted. What I cannot see is why the same degree of protection considered necessary in the launching years should continue to be necessary for the rest of the lifetime of the industries, if it is true, as I think it is true, that the initial years are the most difficult ones for industries launched in a country like this. The first five or ten years are the years during which the exploration of markets is necessary, the opening of new fields, the acquiring of extra skill in production, distribution, and so on. During all that period the cost of production will be at least marginally higher than it will be when that industry has increased efficiency as it must do, if it is worth its salt, in the first five or ten years. That being so it seems monstrous and indefensible that the same industry having all that experience, and the chance to be so protected, should take or be given precisely the same percentage protection year after year, five years after they have started, ten years after they have started, or 15 years after they have started, with no indication by the Minister—who is here today to give us his point of view on that—in terms of the present Bill that he has the slightest intention in regard to any one of these industries to reduce the protective barrier by as much as half of one per cent.

I read an interesting article the other day in that lively magazine Development. It was an interview with Mr. J.J. Quinn who is outstanding in the field of distribution in the grocery trade in Ireland and in Dublin in particular. He is the head of H.W. Williams, the self-service grocers, an extremely competent businessman with intiative and enterprise, and who is not content with the old humdrum methods. He is a man who has built up an immensely thriving concern on new methods. He is quoted as saying in Development that we in this country are in danger owing to the present policy—the policy I have been criticising—of overprotecting our industrialists, and in danger of “being protected from the need to be efficient.” Protected from the need to be efficient—that is the basis of the charge I would level against the Government on the head of this Bill. This Bill continues the old process, in direct contradiction of oft-stated Government policy, of overprotecting industries and protecting them from the need to be efficient. Mr. Quinn knows what he is talking about. He himself has in the past had experience of restrictive practices in the grocery trade. I can remember when the Irish Housewives' Association interviewed him in regard to his self-service grocery. The organisation of RGDATA was then insisting that he sell at the restricted resale price maintenance level. He has had experience, in other words, of being over “protected,” over protected in this case from within the trade, so he knows what he is talking about.

An Leas-Chathaoirleach

I doubt if the Senator is being relevant.

Dr. Sheehy Skeffington

I was drawing an analogy.

An Leas-Chathaoirleach

Even drawing an analogy.

Dr. Sheehy Skeffington

I was drawing an analogy between his experience of the detrimental effects of over-protection——

An Leas-Chathaoirleach

I am afraid the Senator will have to find some other analogy.

Dr. Sheehy Skeffington

I am satisfied that the point has been established and I do not intend to press it further. Mr. Quinn was speaking, as I say, with experience, and what he says is surely true. I do not think anybody here is in favour of giving that immense measure of protection to our industries, however much we may favour the industries themselves, because they are in danger of being protected against the need to be efficient, which means being protected into a state of inefficiency extremely detrimental to the country when the time comes for the Government to decide that these duties, in accordance with international agreements, must be reduced.

That is why I find this Bill particularly disappointing. After three or four years of office by the present Government, and after the very menacing speeches made by the Taoiseach and others in relation to this whole matter of protective tariffs and so on, I would have expected that at least one tariff would be at least marginally reduced. Yet the Minister says that six of them are new, five are to amend, that means to increase tariffs, and two of them are to tighten up and meet evasion. I find that profoundly disappointing. I take it that we shall have to wait until next year—I hope not beyond that— to find an Imposition of Duties Bill being brought in which will do what the Government have been loudly proclaiming they are going to do, reduce the protective tariff wall.

It should be quite possible for all of these industries which have got going to keep going with at least a smaller percentage than was necessary when they started out.

I should now like to look at the items themselves. I do not want to weary the Seanad by running down the whole thirteen items but I should like to look at one or two of them. I should like to take, first of all, a minor point and compare the Imposition of Duties (No. 87) Order with No. 97.

The Imposition of Duties (No. 87) Order is the wool wadding order. It came into operation on the 11th March, 1960. It extended the scope of the customs duty of 50 per cent. full, and 33 1/3 per cent. preferential, on wadding made wholly or partly of cotton wool or imitation cotton wool to include wadding made wholly or partly of wool. It also brought within the scope of the duty certain articles made wholly or mainly of such wadding.

We find that the Imposition of Duties (No. 97) (Wadding) Order came into operation on the 6th September, 1960. It amends the conditions that are related apparently to Order No. 87, because it introduces in relation to the customs duty previously mentioned of 50 per cent. full, and 33 1/3 per cent. preferential on wadding made wholly or partly of wool a minimum rate of 9d. full, and 6d. preferential.

I feel that within 6 months it ought not be necessary to make this kind of amending Order. It looks to me as if the first Order was drafted without sufficient attention to the conditions obtaining. I do not think it should be necessary within the same year to fiddle with these Orders, piling one on top of the other and amending one order and introducing another both of them having to be confirmed on the same day by the Oireachtas.

I turn now to Order No. 88 which is an Order that extends the scope of the customs duty of 75 per cent., full, and 50 per cent. for the United Kingdom and Canada on certain electrical accessories to include certain switches, sockets and plugs. I make the point here that this is a very high duty, 75 per cent. full and 50 per cent. United Kingdom and Canada, on items of everyday use, domestic and otherwise. I feel that this is an example of an order where the duty is too high.

Similarly, in regard to the following Order, No. 90, which amends the customs duty of 75 per cent., full, and 50 per cent. United Kingdom and Canada in order to provide for a minimum rate of duty, this is on certain hats and caps for wear by women or girls, of 15/-, full, and 10/-, United Kingdom and Canada. What I am criticising here is the level of protective duty considered necessary and which is far too high. I beg leave to doubt whether the trade requires such a high measure of protection.

I should also like to advert to Order No. 98 which refers to structural iron and steel manufactures and extends the scope of the customs duty of 50 per cent. full and 33? per cent. United Kingdom and Canada on certain articles of fabricated structural iron or steel to certain additional articles including assemblies.

I would suggest—I am open to correction on the matter—that this is a duty and an extended scope which affect very much the agricultural community. I would suggest that in relation to a great deal of agricultural buildings and sheds, this is almost a punitive duty, a protective duty which raises the price of production for the whole agricultural community. I should like to hear from Senators representing agriculture some kind of protest against this measure of protection which seems to be unwarranted.

The last Order, which is No. 99, relates to socks and similar articles of man-made fibres. It amended the customs duty of 75 per cent., full, which was not apparently enough, and 50 per cent. United Kingdom and Canada and provides for a minimum rate of 50/-, full, and 33s. 4d. United Kingdom and Canada per dozen pairs of these articles. Again it makes sure that where the imported article, whether it be from the United Kingdom or further afield, is cheap we shall ensure that the retail price here is kept sufficiently high to over-protect our home industries, and hit our consumers.

I will conclude, therefore, by stressing again the point that if a new Irish industry is unable to do with less protection after 5 years than was necessary for it in the launching years, then either it has made no progress at all in efficiency or else excessive profits to the firm are being subsidised by the consuming public, who are prevented by such protective duties as are enshrined in this Bill from buying competitively elsewhere. For these reasons I find this Bill profoundly disappointing.

Mr. J. Lynch

Let me deal first with what Senator Hayes suggested, that it was rather strange in times of free trade we should now be introducing new tariffs. I should like to point out to the Senator that, as announced in the Programme for Economic Expansion the policy in relation to tariffs is, and henceforth will be, that tariffs will be imposed only where it is reasonably anticipated that the industries they are designed to protect will survive after a reasonable period without protection. That is an over-riding principle in the imposition of tariffs at the present time and will continue to be so.

Senator Sheehy Skeffington in his able way has given only half the story. I am sure he knows as well as I do the other half. He is a man who reads much about Government administration and he must know that there is at the present time a selection of tariff reviews in progress which are provided for in the Trade Agreement with Britain. Three lists of commodities have been selected comprising five or six in each list which are under active review by the Industrial Development Authority, which is the reviewing body. In future, the British Government, the Board of Trade and the manufacturers they represent will be entitled to submit periodically such lists which the I.D.A. will have to review, having taken all the circumstances into account. I might also mention that in the context of this Free Trade Area talk, it is accepted that countries such as ours which are considered to be in the course of industrial development will be given, in any organisation they will join, either the Free Trade Area or any other economic organisation, a period longer than the developed countries to reduce and ultimately eliminate tariffs. I should mention also that even these countries that are in these organisations, the Common Market and the Free Trade Association, have tariffs and protective tariffs, some of which are higher than those operating here.

I want to reject completely the implication and indeed the stated opinion of Senator Sheehy Skeffington that this is being done deliberately to build a sufficiently high wall to give us a longer time to dismantle these tariffs. That is the kind of economic sniping that I abhor. I want to tell Senator Sheehy Skeffington that our reputation internationally, whether in political or in economic organisations, stands so high that on any occasion on which Ireland or Irish representatives give undertakings in these organisations, they were honoured to the extent that there is wide acceptance of any such undertakings or commitments given by Irish representatives in all these organisations and no amount of sniping or these allegations of fraud and dishonesty will break that reputation. I can assure Senator Sheehy Skeffington of that.

Dr. Sheehy Skeffington

The facts speak for themselves.

Mr. J. Lynch

The half facts given by the Senator half speak for the type of argument he is trying to make. If the Senator with his usual assiduity looks through the list quoted from, he will see that there is a reduction in the duty on watches from 60 to 30 per cent. The Senator comes in making an argument which is against the facts as I have just demonstrated here.

Dr. Sheehy Skeffington

In relation to one duty out of 13.

Mr. J. Lynch

I should like to say, too, that in respect of some of these tariffs imposed, and I have to refer in particular to socks, the imports which that tariff was designed against were imports from the Far East from which vast quantities of cheap socks were being imported at prices which were even lower than the manufactured price in this country. There was also a case in which hats and caps were concerned in which the tariff was imposed designed specifically against the dumping of surplus stocks from other countries into this country.

If the Senator took care to examine more carefully rather than to examine for the purpose of criticising and making allegations of fraudulence and dishonesty, and took sufficient care to present the facts in a truer light, the lash of his tongue would not have been so violent.

I do not think there are any other items in particular or in general to refer to, except to say that although there are 13 items on this list, two of them refer to the same commodity. The duty on wadding was originally imposed on wool wadding, and ultimately it was seen that all kinds of inferior stuff were being passed off as wool wadding and imported here, and the order, to be effective, required amendment. That list of 13 is much smaller than the list last year, and is one of the smallest ever presented to the House.

I should like also to remind the Seanad that only those applications in respect of which orders were made are before the House. No reference is made to the many applications that come before my Department and are rejected by my Department without presentation to the Government or are rejected by the Government. To suggest or imply that these tariffs are being imposed only to protect inefficient operation is completely unfounded. Now that the Minister for Finance has perhaps finished his Budget speech, I may be permitted to quote very shortly from it in reference to that part of his speech which dealt with the increase in our exports, industrial exports in particular. He said:

A number of the new industries established in recent years helped in this expansion. The major part, however, was played by older firms, built up initially with the help of protection on the home market and in many cases using domestic raw materials. Those manufacturers who have shown enterprise and initiative in developing an export trade deserve every commendation. We look forward to more of our industrialists following their example.

It is because I anticipate that industrialists who apply for these tariffs will follow that example that I make this proposition now to the House to give a Second Reading to the Bill which proposes the list of tariffs set out in the explanatory memorandum.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill considered in Committee.

SECTION 1.

Question proposed: "That Section 1 stand part of the Bill."

Dr. Sheehy Skeffington

This is the section which aims to confirm these orders. I should like to ask the Minister, who has just told us in his reply that the Government are convinced that a large majority of these industries, "after a reasonable period," will be capable of "surviving without protection," how soon does he think any one of them will be capable of surviving with a reduced tariff? I made a mistake and I apologise for it in relation to one out of the 13. There is in the case of watch parts a reduction in the tariff, but I feel that the burden of my case remains unanswered, and although the Minister tells us he is confident that, after a reasonable period, it will be possible for them to survive without tariffs, he does not in fact implement his belief by reducing more than one of them. All those which we are asked to confirm, with one exception, are increases or tightening up.

I should also like to ask the Minister how soon he thinks that we will have practical results from the review which he says many of these tariffs are undergoing. He seems to consider that the Seanad should be quite happy to give confirming orders increasing tariffs because they should be happy in the belief that certain tariffs are "under active review". It is said that when a civil servant tells you: "We are considering your letter," it means "We are looking for your letter," and that when he says: "Your letter is under active consideration," it means "We have found your letter." I feel that the Minister ought to add more grounds than just to tell us that these tariffs are under active review, because I remember the Minister before him, and the Minister himself, I believe, last year, telling us precisely the same thing. However, the record will show the facts.

I am not satisfied simply to pass this subsection confirming all these Orders holus-bolus, and to be told everything is all right because some of these tariffs are under review. I should like to ask the Minister: how soon does he think practical results will derive from such reviewing?

Mr. J. Lynch

Reviews in respect of tariffs normally take some months— possibly six months—because application is made through the Board of Trade to the Department of Industry and Commerce and passed on to the Industrial Development Authority. The I.D.A. have to consult the trade interests in Britain who seek the review, as well as the trade interests in Ireland who might be affected by the review.

The first list has been under consideration for something short of six months. I expect the results will be published very shortly. I cannot say exactly when, because there are many factors which have to be taken into account, such as the necessity for giving an opportunity to all affected parties, whether prospective importers or protected industrialists, to make their case. As I say, the result of the first review will be announced and published shortly and, in the meantime, the second list of commodities is being processed. A third list is already being prepared and the necessary notices requiring submissions to be made to the I.D.A. if not already sent out, will be sent out shortly.

In the case of any of the 13 Orders now proposed, I cannot say exactly when the industries concerned will be in a position to reduce protection or proceed without any protection, but I can assure the Seanad that through the machinery which is now for the first time in active operation, the system of review by the I.D.A., and the necessity in any event for these industries to make themselves competitive if they are to survive in the climate of a free trade area, or whatever form of trade association we may find ourselves in, in their own interests they will have to reduce the necessity for tariffs which means, in effect, making themselves more efficient or else cease existing.

Senator Hayes remarked that the Taoiseach and I and other Ministers have been exhorting industrialists generally and producers of all descriptions to improve their methods. We shall continue to do so and not only to exhort them verbally but through technical assistance grants and otherwise in order that they will bring themselves to the point of increased efficiency and, therefore, to the point of no longer requiring protection.

The specific answer I can give to Senator Sheehy Skeffington is, as I have said, that reviews are actively taking place and will continue to take place. The first results will be published in a short time. So far as the 13 Orders now before us are concerned, I cannot say exactly when they will be reviewed. I am satisfied that there is a prospect in a reasonable time of their not requiring protection. In some cases, by reason of the type of business with which they have to contend, the protective tariffs are necessary.

Dr. Sheehy Skeffington

The Minister has answered me satisfactorily on the question of how soon one can expect results from the first list. I am disappointed that it is only in the last six months reviews have taken place. I seem to remember that four years ago the Minister's predecessor, Deputy Norton, said that many industries were already under review. However, I am prepared to accept that there are two lists and a third coming. I accept the Minister's promise that early action may be anticipated.

I also accept that the Minister is serious when he says that many industries should be able to survive after a reasonable period without any protection, but I should like to ask him has he considered the possibility of a progressive reduction in the percentage duty applied. After all, if a duty of 75 per cent. is necessary in the early stages, it should not be too much to expect that it should be somewhat reduced, and that some day we will be able to abolish it altogether.

It does not seem to be an entirely satisfactory answer to this question: after years of practice, after years of learning and efficiency, why do you not progressively reduce the tariffs? If these industries will be able, some day, to do without protection altogether, they should be able to survive now with reduced tariff protection. I should like, therefore, to ask the Minister has he thought at all of progressively reducing these protective duties.

Mr. J. Lynch

At the moment there is no suggestion that these duties will be progressively reduced. They will have to be progressively reduced, if and when we become a member of a trade group which will require such reduction. In the meantime, any reduction that will take place, will take place as a result of the I.D.A. reviews and not as a result of an examination of each particular case, not so much to secure a mathematical reduction as to secure a reduction commensurate with the amount of protection such an industry ought to receive, and the amount of reasonable competition that must be afforded to the British concerns in particular under the trade agreement.

At this stage, I must say there is no question of a progressive reduction, unless and until such time as we will be required to do so in the context of a trade agreement. In the meantime, each reduction will be an ad hoc one and will be sufficient to allow competition from the other side and, at the same time, give reasonable protection to the industry affected. Under any trade agreement we join, of course, the ultimate aim would be to eliminate altogether any tariffs that exist at the time of our accession to any of these trade blocs.

Question put and agreed to.

Section 2 agreed to.

Schedule agreed to.

Title agreed to.

Bill reported without recommendation and received for final consideration.

Question proposed: "That the Bill be returned to the Dáil."

Mr. J. Lynch

At this stage may I correct something which I said in error a few minutes ago. I said that the reviews now taking place under the I.D.A. were the first reviews to be conducted. I have been told since I said that, that reviews were held some years ago by the Prices Advisory Body which was the reviewing body before the establishment of the I.D.A.. Those reviews were carried out without a specific request from the British. They are now carried out as a result of requests by the British, which was provided for under the recent trade agreement.

Question put and agreed to.