Dáil Éireann díospóireacht -
Wednesday, 23 Mar 1960

Vol. 180 No. 7

Imposition of Duties (Confirmation of Orders) Bill, 1960—Second Stage (Resumed).

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

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

The debate on this Bill has been comparatively short. Questions were raised, some of a specific nature and some of a more general nature to which I think I ought to refer in my reply.

One of the specific questions raised came from Deputy Sweetman in which he made a complaint about conditions which certain manufacturers benefiting by the protection impose as far as the distribution of their goods is concerned. There is, as Deputies know, protective duty in force in respect of textile goods but there is also provision whereby a certain amount of these goods is permitted to be imported free of duty under licence. In many cases there is also attaching to the import free of duty of these goods a condition that the person importing these goods must purchase a certain proportion of similar goods from Irish factories.

The complaint made by Deputy Sweetman, so far as I could understand it, was that in some cases these factories which benefited from protection insisted that all their output should be purchased by the consuming public, by wholesalers or retailers, through one agent. I should like to assure him that there is certainly no condition of such a nature attaching to any import licences issued by my Department. If there is any restriction imposed by any manufacturer in the case of a specific item I should like to hear from him what that case is and if he gives me the necessary particulars I shall have it investigated. Even though he did not identify any manufacturer or any commodity yesterday, I did, in the time intervening between yesterday and today, try to find out whether there was any specific case in which my Department had a complaint and I could find none. Therefore, even though Deputy Sweetman is not here, I shall invite him to give me particulars of his complaint and I can assure him I shall have it investigated.

The other specific matter raised was in connection with the duty imposed last year on medicinal tablets. The duty in this case, as in most other cases, was imposed for the purpose of protecting a worthwhile Irish industry and, as in all cases, there was no prior consultation with other interests. I think the practice is well established and well understood that in the case of the imposition of a new duty there is no consultation with other interests for obvious reasons, the most obvious being to avoid attempts to stock up in advance of the imposition of the duties. The complaint was made that there should have been prior consultation with medical opinion or with pharmacist opinion but that was not done in this case either.

In cases where duties are imposed and advice of a technical or professional nature is necessary for my officials, that advice is usually available from official sources. In the case of the medicinal tablets the advice sought was from the Department of Health who have qualified medical men and qualified pharmacists on their staff who are able to give whatever advice is necessary.

The same procedure was adopted in this case as was adopted by the last Government when they imposed a duty on injection solutions. The same advice was sought and the same action was taken on that occasion. That was in 1955. There were fears expressed then from medical and pharmacist sources that there might be some hardship or that there might be some difficulty about people not getting the type of injection solution to which they were used or for which they had a preference. These fears were expressed by medical authorities and by pharmacists. In practice, however, the fears proved to be groundless. Ever since that duty was imposed no difficulties have come to the knowledge of my Department.

Similarly, in the case of the duty imposed on medicinal tablets there were fears expressed originally, largely by distributors of medical preparations. These distributors were, in the main, people who were agents of foreign companies who used export these tablets to this country. Fears were also expressed by Deputies by way of Questions put on the Order paper and supplementary questions. On these occasions I was able to assure the Deputies that no hardship was envisaged. In the event, I understand no problem that was not capable of being overcome has arisen.

One of the objections raised at that time was that the prices of Irish tablets would be higher than those of corresponding imported tablets. At the time of the imposition of the duty, the firm that made application for the duty gave an undertaking that they would not increase their prices beyond the current levels and they were able to show to the satisfaction of my Department that their prices ex-factory corresponded to the British ex-factory prices. If there had been increases in the prices of the Irish commodity over and above a reasonable amount beyond factory prices, it is something that is capable of being remedied by the purchaser himself.

I also assured the House that, as regards tablets that were not being manufactured or were not to be manufactured by Irish companies, there would be no difficulty about procuring the necessary licences for the importation of these tablets duty free. That, in fact, has been the case in general. No problems have arisen that have not been capable of being surmounted and there have been no protests from medical sources in particular. In recent months there seem to have been no complaints expressed about difficulties.

Deputy Dillon raised the problem of a person who had a preference for a particular type of tablet even though there might have been no difference— and certainly that would have been generally known—between the components of the home-manufactured tablets and the imported tablets. Nevertheless, that person did express a preference for a particular imported tablet and believed that the imported tablet was better for the ailment from which he suffered. I should like to assure Deputy Dillon that even such cases have been taken into account. There is no import duty whatever on lots of tablets up to 100. Therefore, if anybody has a preference for one tablet rather than another and finds that tablet is not being manufactured in this country, even though a similar tablet is, that person can go to his usual channel of supply and procure in lots of 100 as often as he likes, the particular tablet for which he has a preference. I think that answers any fears Deputy Dillon might have in that respect.

He also raised the question of testing and of standards. There is a system well-established in the Department of Health whereby the pharmacist staff carry out inspection of premises in which tablets are made in Ireland. The principal manufacturer here has attained a very high standard. His factory is regularly inspected and in fact he has invited medical representatives to visit the factory and they have done so from time to time. In each case, I am given to understand, they were fully satisfied with the standards maintained, with the quality of the products and with the hygiene of the premises. There are standards formally laid down in the British Pharmacopoeia and in the British Pharmaceutical Codex for medical preparations. These formulae apply here and it is an offence to sell any tablets that are identified in the Pharmacopoeia or in the Codex which do not comply with these formulae; so we can be satisfied that, in general, the question of testing and of standards is well safeguarded in this country.

Deputy Dr. Browne raised the question as to whether the drug list issued by the Department of Health of medical preparations for use by authorities under its control or under its aegis will in future contain Irish-made drugs and tablets. I have not any control over the content of these drug lists but I am informed in general that the imposition of this duty makes no difference to the practice which has obtained hitherto. In particular, I should like to comment on the point made by Deputy Russell that patients who go to dispensaries which are central dispensaries for the distribution of drugs complain that since the imposition of this duty they have not been able to get the particular tablets which they feel are best for them and which they have been accustomed to take. Again, I am told that no change has been made in the administration of the Health Acts in the dispensing and supply of particular drugs in dispensaries throughout in the country. I am also assured by the Department of Health that in so far as there is a need for a particular type of tablet which requires to be imported even though it is made here, the local health authority usually makes provision to have it available to the public.

Mr. Russell

Could I interrupt the Minister to ask does that mean that these medical preparations on which there is duty will now be available as heretofore?

Mr. J. Lynch

I understand that is the position—that no change has taken place. Deputy Ryan painted a rather eloquent picture of the adverse effects of this duty and accused me, if not the House in general, of committing murder. He conveyed that it had been proved to the satisfaction of certain medical practitioners that the same chemical or medical reaction has not been forthcoming from certain preparations in the case of Irish products. I am not aware that there has been any such case and I am reasonably certain that if there is it would have come to the public notice much sooner than yesterday. I can only assume that Deputy Ryan was making a debating point rather than stating facts. I would remind him that when making a contribution in this House he is not doing so in the atmosphere of a University debate and that the content of what he says rather than the manner in which he delivers it is what people here heed. I can only discount what he says in the absence of any proof or any experience of what he states to be the case.

To leave that for a moment, I want to answer another specific question asked by Deputy Sweetman. He asked how many persons were employed in the manufacture of the commodities covered in the Orders scheduled in this Bill. In the time available to me I have made an attempt to assess that number and I have it here as 1,532 persons. Of the 28 commodities concerned—these are manufactured in Dublin and throughout the rest of the country—the number of factories in the country other than in Dublin is 15. I think that answers Deputy Sweetman's point.

To come to the more general points raised in the debate—it was suggested that this Bill coming now when there is so much talk about free trade areas and the common market is somewhat of an anachronism. Import duties have been imposed where necessary and are being maintained where necessary for the protection of native industry against competition and in many cases against competition that is deemed to be unfair from abroad. I should like nobody to get the impression that we are in any way unique in this respect. Every country in the world has its protective code, has its tariff and quota restrictions. In fact in some respects, and certainly in the matter of quota restrictions, we are more liberalised here than most European countries. If we take imports from Britain as an example— and Britain is our major source of supply—it may be of interest to mention that only a small proportion, about 10 per cent. of all the goods coming into this country, are subject to the payment of protective duties. There are, of course, revenue duties on other goods but these are in a different category completely to protective duties and are analogous to excise duties and purchase tax which operate in other countries. As regards quota restrictions 90.2 per cent. of our imports are liberalised so that quotas or other restrictions do not apply to even 10 per cent. of our imports.

There can be no denying that were it not for our code of protection we would not, and could not have had the degree of industrialisation and industrial employment that we have achieved in the last quarter century. In that period many industries which formerly exported goods into this country—particularly British goods— have by reason of that protection policy, established factories here giving useful employment and in many cases they have found that it was good business. They found they can produce here as efficiently, and in some cases more economically, than they are able to produce in their original location.

It was complained yesterday that the maintenance of protection gives no incentive to efficiency or to the reduction of prices. This is a very old complaint. It may have been true in some cases but I think in the light of present developments it is no longer true. As the home market becomes saturated—and this point has been reached or is being rapidly reached in most cases—there is more competition internally. Therefore, that in itself tends to increase efficiency and reduce prices between one firm and another. Certainly, it tends to induce firms to seek markets abroad for their goods in order to procure the necessary expansion of their industries. The spectacular increase in our exports of industrial goods in the past twelve months, amounting to 40%, is, I think, an illustration of the truth of the assertion I make.

I should like to point out that even in the cases of industries which enjoy protection and which have virtually a monopoly of the home market, very often these are our most successful exporters. They are amongst the industries that can compete most successfully in foreign countries.

Dr. Browne

What is the need of the tariff then if they are so competitive?

Mr. J. Lynch

I shall come to that. Deputy Russell complained that the percentage of some of our tariffs was unduly high. I know he did not intend to create the impression, but the impression might be created that the prices of goods on the home market are dearer than the prices of imported goods by as much as the tariff itself. That is not true in any case. In many cases goods are available to the Irish public at prices which are equal to or only marginally higher than the prices of foreign goods on their home markets.

Mr. Russell

I think I questioned two of the tariffs on the list which both provided for a tariff of 75% and I asked could the Minister reconcile such high tariffs with efficient manufacture.

Mr. J. Lynch

I shall be able to answer that.

Mr. Russell

I do not think I commented on the actual prices at all.

Mr. J. Lynch

In some cases—in the two cases the Deputy mentioned, for instance — there are fairly high ad valorem duties and in other cases—I forget if they are on the list of duties involved in this Bill—there are relatively high minimum specific duties as well. But the necessity for that is to create protection for goods that are manufactured here on a comparatively small scale and in respect of which an unduly high degree of imports would have very adverse effects on home production. For example, in the case of textile goods — I am not suggesting there is any specific duty; there may be in some cases—one end-of-the-season clearance sale or the proceeds of one bankruptcy sale of a big foreign firm which would come in here even on payment of the duty could be put on sale at prices much lower than that at which the Irish mills could produce economically and, therefore, could come to the extent of flooding the market with what would amount to practically a year's output of the Irish mills. In such cases the consequences of unemployment would be very serious. Therefore, it is only reasonable to ensure that certain types of goods, by reason of being protected by a high ad valorem duty or a minimum specific duty, would be able to compete with such odd lots that might be put on sale in this country.

Mr. O'Donnell

Surely a bankruptcy sale would be the exception?

Mr. J. Lynch

I am assured it is not very exceptional in certain trades to have big end-of-season clearance sales. The exception would be bankruptcy sales.

Mr. Russell

A quota system would get over that.

Mr. J. Lynch

A quota system would help in the operation of it certainly. Deputy Sweetman suggested that irrespective of any international commitments there should be a gradual reduction of tariffs in any case. The policy of the Government in this respect has been clearly stated in the White Paper on Economic Development.

A quotation of the relevant extract on that will illustrate what I mean:

It is clear that there can be no place for weak or inefficient industries. Even where only the home market is involved, it must be accepted that such industries place a burden on the economy generally and render other industries less able to meet foreign competition. Hence, it must now be recognised that protection can no longer be relied upon as an automatic weapon of defence and it will be the policy in future in the case of new industries to confine the grant of tariff protection to cases in which it is clear that the industry will, after a short initial period, be able to survive without protection.

The gradual reduction of tariffs as advocated by the Deputy is an exercise that, in the context of a suitable free trade agreement, we would be quite willing to undertake. We have not found such a free trade area so far. It has been suggested that, in introducing this Bill, I might have indicated to the House what the industrial policy should be in the light of movements towards free trade in Europe. I would have thought that our position has already been made abundantly clear in this respect. It is well understood, I think, that there are, in the context of the Common Market Agreement and the Rome Treaty, no attractions for us in joining this group and in being subject to the full implications of the obligations that joining would impose upon us. Neither is there a sufficient degree of attraction for us in the Outer Seven.

I think it is generally appreciated now that the countries associated with Britain in the Outer Seven are seeking, by reason of their association with Britain, to get facilities for imports into Britain of goods on the basis that we already enjoy, and they will procure that only after a period of years and a gradual reduction of tariffs as between themselves. At present, therefore, there is no inducement or advantage beyond what we already have in joining the Outer Seven.

In the context of the complaint made originally that this policy of protection is not conducive to promoting efficiency or reducing costs, I might mention that even in the Common Market, which is an association of some of the most industrialised countries in Europe, they are seeking to establish for themselves what is known as a common external tariff so that the industries within the group will be protected against foreign competition.

In dealing with this point I would also like to refer to the fact that we are still members of O.E.E.C. and, while under the aegis of O.E.E.C. there were negotiations for the establishment of the wider Free Trade Area, we were a party to these negotiations and our special position, as examined by working party No. 23, was recognised in that whatever agreement might ultimately be made we would be entitled to a longer period over which we would be required to reduce our tariffs than the more industrially advanced countries. We, as I said, are still members of O.E.E.C. and we are a party to the new development that this organisation has under consideration.

The Twenty Nations Trade Committee will have its first meeting on the 29th of this month. That is the committee that will examine the immediate trade problems in Europe, possibly the differences, that divide the Six and the Seven, and the trade relations that will be observed at least for some period to come amongst these 20 countries. We shall be represented at that meeting and our views have been put forward to the four wise men who are undertaking a review of the construction and the future of O.E.E.C. itself as an organisation. So, to sum up, the introduction of this Bill is by no means an anachronism.

The maintenance of duties in the light of present day developments is not conducive to inefficiency. Rather, as a result of the imposition of duties which has been followed by the establishment of industries in this country to a point that manufacture for the home market has reached, or is reaching saturation point for many commodities, there is that degree of competition internally which makes for greater productivity and reduced prices. Also by reason of the necessity to seek expansion in export markets there is the further incentive to make industries more competitive, and in the recent past we have ample evidence that they are being more competitive in the realms of world competition.

Mr. Norton

May I ask the Minister one question before he concludes? He made reference to the fact that there is in operation in the Department an arrangement by which, when a person is not able to get all his textile requirements from home sources, he can be required to purchase a certain quantity of his requirements from home sources and, on the understanding that he does so, he may then obtain a licence to import the remainder of his requirements free of duty. That has been the practice in the Department and I presume it is extant today. I should like the Minister to confirm that there is no obligation on the person who gets a licence to import textile commodities to purchase those commodities from a firm dictated to him by the person who supplies the goods from Irish sources. In other words, once he buys a certain quantity of goods on the home market he is entitled to buy his imported commodities anywhere he likes, and from any trader he likes, and the supplier of the Irish goods cannot require him to buy goods from any particular supplier of the imported commodities.

Mr. Sweetman

That is the point I raised in a slightly different way. If in fact there is only one manufacturer of a particular commodity, the person concerned is bound to buy the product of that particular factory. I never suggested that there was any condition included in the Minister's licence. That is not what I said. What I said was that the person concerned is bound to buy so many yards of that particular commodity in the home market, that that particular commodity is manufactured only by one factory, and that that one factory will not sell to anyone except through one named agent and, accordingly, the person who wants to import has to purchase through that one named agent.

I would suggest to the Minister there is an obligation on him that where he is making a provision in the licence that a particular amount of one commodity is to be purchased before an import licence can be obtained, if there is only one factory producing it he must say that it must be purchased through at least such a number of agents as the purchaser may select, and the factory is not entitled to name one person through whom the order must be channelled, as is being done in this case. I did not suggest, and do not suggest, that the Minister is making it a condition in the licence. It is the factory that is doing it.

Mr. J. Lynch

I did not suggest I was making it a condition.

Mr. Sweetman

I thought the Minister thought I suggested he was.

Mr. J. Lynch

I do not know of any case in which that is being done and when the Deputy was absent from the House I invited him to give particulars of any case he knew of and I shall have it investigated. In reply to Deputy Norton, the position has not changed. There is no compulsion on anybody to buy the content of his import licence from any particular source. All the Department does, if a person satisfies it that he has bought a certain quantity of the goods from the home source, is give him a licence to import a certain other quantity of these goods and he can get them wherever he likes.

Mr. Norton

I know that should be the position but I am afraid there are rumours that that position is being abused by a certain firm.

Mr. Sweetman

I take it that the Minister's invitation to me was an invitation to anyone who has that information?

Mr. J. Lynch

Certainly.

Question put and agreed to.

Mr. J. Lynch

I would take the next Stage now, if I got it.

Mr. Sweetman

I daresay.

Committee Stage ordered for Tuesday, 29th March, 1960.