Dáil Éireann díospóireacht -
Wednesday, 14 Feb 1934

Vol. 50 No. 9

In Committee on Finance. - Financial Resolution.

Mr. MacEntee

I move:—

(1) In this Resolution—

the expression "preferential rate" means a rate of the duty less than the normal rate of the duty in respect of which the expression is used; references to a country to which a preferential rate applies shall be construed as referring to a country articles imported from which are chargeable with the relevant duty at such preferential rate.

(2) Where a duty of customs, imposed by an Act, resolution, or order passed or made before the passing of the Act giving effect to this Resolution, is chargeable at a preferential rate in respect of articles imported from particular countries, the Executive Council may by order do all or any of the following things in respect of articles chargeable with such duty and imported into Saorstát Eireann on or after a specified date not prior to the date of such order, that is to say:—

(a) vary (whether by addition, omission, or otherwise) the countries to which such preferential rate applies;

(b) restrict such preferential rate to articles in respect of which a specified percentage of added value arises from manufacture in a country to which such preferential rate applies, and for that purpose vary any such restriction existing by virtue of any Act, resolution, or order passed or made before the passing of the said Act giving effect to this Resolution;

(c) restrict such preferential rate to articles imported directly or by a specified route from a country to which such preferential rate applies.

(3) Where a duty of customs is imposed after the passing of the Act giving effect to this Resolution and the Act, resolution, or order imposing such duty appoints a particular rate of such duty to be the preferential rate thereof for the purposes of the said Act giving effect as aforesaid, the Executive Council may by order do all or any of the following things in respect of articles chargeable with such duty and imported into Saorstát Eireann on or after a specified date not prior to the date of such order, that is to say:—

(a) appoint the countries to which such preferential rate shall apply:

(b) vary (whether by addition, omission, or otherwise) the countries to which such preferential rate for the time being applies:

(c) restrict such preferential rate to articles in respect of which a specified percentage of added value arises from manufacture in a country to which such preferential rate applies;

(d) restrict such preferential rate to articles imported directly or by a specified route from a country to which such preferential rate applies.

(4) The Executive Council may at any time by order amend or revoke, in respect of articles imported into Saorstát Eireann on or after a specified date not prior to the date of such order, an order previously made under the Act giving effect to this Resolution, including an order amending a previous order.

It is necessary, under Standing Orders, that this Financial Resolution should be adopted by the Committee on Finance and reported before the Customs Duties (Preferential Rates) Bill, which is the next item on the Order Paper, is introduced. It is, of course, open to the Dáil to debate the principle of the Bill on the Resolution, but the House will recollect that when a Financial Resolution amending the Emergency Imposition of Duties Act, 1932, was moved, the Committee on Finance did not discuss the subject of the Resolution but postponed it to the Second Reading of the Bill. I may say that the Resolution recites briefly the terms of Sections 2, 3 and 4 of the proposed Bill, which deal respectively with (1) the variation of applicability of existing preferential rates of customs duties; (2) the appointment and application of preferential rates to future customs duties, and (3) the amendment and revocation of orders made under the Act. It is not possible to say at this Stage what the likely effect of review will be. That will, of course, depend upon the extent to which it may be found necessary to avail of the powers provided in the Bill. The only direct charge which will fall on the Exchequer under the Bill, apart from such normal charges as those for stationery, printing and publication of orders, will be in respect of such additional staff as may be required in the Department of Industry and Commerce and the Office of the Revenue Commissioners. The computation of that amount depends also upon the use which will be made of the powers which the Bill proposes to confer. I do not think I have anything to add which at this Stage would assist the House. I would suggest that, as on the previous occasion, the Resolution might be accepted so that leave to introduce the Bill might be given in due course.

General Mulcahy

Will the Minister say if the passage of this Resolution does, in fact, give him authority to change preferential rates before the passage of the Bill?

Mr. MacEntee

I should not propose to avail myself of such powers, if in fact the passage of the Resolution did confirm it. Personally, I do not think it does.

General Mulcahy

I take it that the Minister does not propose to operate any powers that might be given to him under this Resolution until the Bill has passed through all its stages?

Mr. D. Fitzgerald

This has only just been circulated, and I have been unable to read it very carefully, but we have most favoured nation arrangements with a number of countries, and under that arrangement, if any country has any preference it applies to the others, especially in relation to Imperial preference. I am not quite sure how this is going to work in relation to this matter, but it seems to me that this means that in the case of each individual country or item from that country, a special arrangement has to be made with regard to it. The ordinary system is that when a change in the minimum is made in relation to any goods, it applies to all the people who are affected by the most favoured nation clause. Could the Minister tell us how this is going to operate?

Mr. MacEntee

I suggest that we are now bordering on a discussion of the Bill, and I have already indicated that I would prefer such discussion to be postponed.

The Minister for Industry and Commerce (Mr. Lemass)

I should say, perhaps, that any country that is entitled to receive most favoured nation treatment from us would continue to receive it, and if the benefit of a preferential rate is extended to any country, it will apply to all countries entitled to receive it, so long as these agreements remain in existence.

Mr. Cosgrave

Is the intention with regard to this to vary what is called Imperial preference? That is the idea because, from what the Minister says, if any country is receiving most favoured nation treatment, and a further advantage is given to one, it must spread to all. I take it then that the purpose of this Financial Resolution and of the Bill is to vary Imperial preference solely?

Mr. Lemass

The Deputy is, no doubt, aware that this is the only nation in the Commonwealth which extends the benefit of every Imperial Preference rate automatically to all the others.

Mr. Cosgrave

I understood from the Ottawa Conference report that quite a number of concessions were granted by various countries to other countries.

Mr. Lemass

But not generally extended.

Mr. Cosgrave

I think fairly generally extended, and much more extended, I think, in so far as reference to goods is concerned than in our case.

Mr. Lemass

When I say not generally extended, it is quite clear that there is no most favoured nation treatment in operation between members of the Commonwealth. This is the only country which, in fact, extends it to all the others.

Mr. Cosgrave

My recollection is that in one particular case we gave a preference on a large number of items and received a preference, or a promise of preference, in respect of three. That is not the point I am at. The point I am at is that while we may give a lot of paper preferences, the question as to what the actual preferences are and what they amount to is another matter altogether. Our paper qualifications may be perfect from the point of view expressed by the Minister, but very imperfect so far as practice is concerned. The Minister knows quite well what I mean. Is this a variation of Imperial preference?

Mr. Lemass

Yes.

Mr. Cosgrave

Purely?

Mr. Lemass

No, not purely or impurely.

Mr. Cosgrave

Will the Minister give us some information as to what extent, outside of that, such variations are intended? I take it that such an item as coal would be involved in this?

Mr. Lemass

There is no preferential duty on coal. The Deputy will recollect the discussion we had on the report of the Ottawa Conference which was submitted to the House. At that stage and at the Conference, we intimated that the practice of extending generally to all Commonwealth countries the benefit of a preferential rate adopted by us was going to terminate so far as we were concerned, as we were the only Commonwealth country adopting that practice, and that, in future, we would grant preferential treatment only to specific countries where definite commitments to give such treatment had been entered into. In so far as we are terminating that automatic preference to Commonwealth countries, it can be said that Imperial preference is disappearing. This is the last place in which it has survived.

Mr. Cosgrave

It has survived on paper very largely.

Mr. Lemass

In reality and, very definitely, in reality.

Mr. Cosgrave

Would the Minister give us some information about the items? Surely to goodness our trade with South Africa is negligible, and whatever advantages we give there come down to a question of pounds, shillings and pence, and it is a negligible amount. Similarly, with regard to Australia and similarly with regard to Canada. The balance of trade, so far as many of these countries are concerned, is altogether in their favour even though those are negligible amounts. I suppose the Minister knows pretty well what I am driving at?

Mr. Lemass

I am not quite clear yet.

Mr. Cosgrave

I will put it quite plainly and distinctly. If this is a power which is to be exercised by two, let us say, friendly or unfriendly Governments operating at a distance of 150 or 200 miles——

Mr. Lemass

I know whom you mean now.

Mr. Cosgrave

——and making their minds clear on one item only—how one can hit the other—we are wasting time. What we want is trade. The Minister will accept that. What they must want is trade, because it is a characteristic of their history and their tradition and everything else. Are we simply going to sit down and say: "How can we hit any one of these particular items regardless of the consequences?" If we do, it is not going to end in satisfactory trade relations. After all, the bulk of our trade is still there, and if this is going to mean simply an arbitrary imposition of 5 per cent., 10 per cent., 15 per cent. or 20 per cent. additional in respect of the trade from one country, then I say that is bad business. Even on this question, supposing we exclude all the others, is there going to be no such thing as a business talk about it before it is done, or are we going to have the damage first and clear up the mess afterwards?

Mr. Lemass

It is quite clear that the Deputy misunderstands the purpose of the Bill. In so far as it has been decided to withdraw the preference heretofore extended to British goods, because of the situation existing between the two countries, that has been done. It has been done by the machinery of emergency orders or by the imposition of special duties on these goods. This Bill has no bearing on that situation. It is designed to end the anomalous position in which this country, the only one in the Commonwealth, was required by law to extend automatically to every Commonwealth country the preferences given by it to any one of these countries. We have not been able to arrange treaties on a most favoured Commonwealth nation basis with any other Commonwealth country, with one exception.

Mr. Cosgrave

Which one?

Mr. Lemass

The Dominion of Canada. On that account we are terminating the legal position which required us to give that automatic preference in accordance with the announced intention of the Government, and the practice of other Commonwealth Governments. The Bill; of course, also gives power to extend the benefit of preferential rates to non-Commonwealth countries if agreements are entered into with these countries which involve such action on our part, and if such action appears to be in our interest. In other words, we are taking, in relation to the preferential rates of duty in operation, the same powers as other Governments have.

Mr. Fitzgerald

I would take it from what the Minister for Finance said that, so far as this Bill is concerned, it does not really change the position in relation to any non-Commonwealth country. Our relations with other countries are divided into two classes —members of the Commonwealth and non-members of the Commonwealth. So far as non-members are concerned, in respect of practically everyone with whom we do any business, we have a most favoured nation agreement.

Mr. Lemass

No.

Mr. Fitzgerald

Do we do any business with any non-Commonwealth country without a most favoured nation arrangement?

Mr. Lemass

Yes.

Mr. Fitzgerald

For instance?

Mr. Lemass

France.

Mr. Fitzgerald

We have an agreement with France which includes most favoured nation treatment.

Mr. Lemass

There was a treaty negotiated but never ratified or brought into operation. There is also Poland.

Mr. Fitzgerald

Does the Minister say that we can give to Portugal a complete exemption from all taxes on imported wines from Portugal, and at the same time treble the taxes on wines from France? Is that the position?

Mr. Lemass

There is no treaty obligation which prevents us doing it.

Mr. Fitzgerald

I asked if that was the position.

Mr. Lemass

I do not think it applies to any other country.

Mr. Fitzgerald

You may not have a most favoured nation arrangement with Abyssinia, for instance.

Mr. Lemass

In fact there are quite a number of European countries that have a substantial trade here which are not entitled to most-favoured-nation rights. France is one, Czecho Slovakia is another. There are quite a number. In fact of the European countries, apart from Great Britain, doing a substantial trade with us, Germany is the only State at the moment with most-favoured-nation rights.

Mr. MacDermot

Would the Minister say if the most-favoured-nation agreements are of any practical benefit to this country?

Mr. Lemass

Some of them certainly are.

Resolution agreed to.

Resolution reported and agreed to.