Seanad Éireann díospóireacht -
Wednesday, 1 Dec 1971

Vol. 71 No. 15

Imposition of Duties (Confirmation of Orders) Bill, 1971 (Certified Money Bill) :Second Stage.

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

Minister for Industry and Commerce (Mr. Lalor)

An explanatory memorandum has been circulated for the information of Senators.

The purpose of this Bill is to confirm five orders made during 1970, under the Imposition of Duties Act, 1957, and the Finance Act, 1962. It is a statutory requirement that such orders must be confirmed not later than the end of the calendar year following that in which they are made, if they are not to cease to have statutory effect.

The first of these orders, No. 184, was made by the Government on the recommendation of the Ministers for Finance. It provided for an increase in the excise duty on Irish wines and a reduction in the customs duty on still wines in bottle of United Kingdom origin. The effect of this was to make a fifth 10 per cent reduction in the protective differential between the customs duties on wines of United Kingdom origin and the excise duty on Irish wines, in accordance with the Anglo-Irish Free Trade Area Agreement.

The second order, No. 185, was also made by the Government on the recommendation of the Minister for Finance. It provided for the fifth tariff reduction on goods of United Kingdom origin in accordance with the terms of the Free Trade Area Agreement. In addition, the order provided for the maintenance of the special tariff concessions in favour of certain goods of Northern Ireland origin. The order also provided for the reduction of duties on certain yarns and certain knitted or crocheted fabrics in accordance with recommendations made by the Committee on De-Pyramiding of Tariff Protection, and made a number of minor changes in the customs tariff. The new rates of duty brought into effect by this order are, of course, those which appear in the standard Customs and Excise Tariff of Ireland with which Senators are familiar.

The third order, No. 186, provided for the imposition of a customs duty at rates of 40 per cent—full, preferential and special preferential—and 13.3 per cent (United Kingdom) on certain mobile home type caravans which inadvertently incurred a loss of protection as a result of the change over to the Brussels nomenclature form of customs tariff.

The fourth order, No. 187, was made by the Government on the recommendation of the Minister for Finance. The order was necessary because of the changover to decimal currency on 15th February, 1971, and it provides for the conversion to decimal form of all references to £ s. d. amounts in the tariff.

The fifth order, No. 188, provided for a reduction of 10 per cent in the ad valorem rate of duty and certain reductions in the specific rates of duty on watches of non-United Kingdom origin, with effect from 1st January, 1971. The Swiss watch industry had made representations about the high rate of duty on their products and it was decided to grant these reductions in duty.

In deciding to grant this concession, the Government took into consideration the considerable contribution which the Swiss watch industry had made to the establishment of the Swiss/Irish Horological Institute in Ireland and that the Swiss are continuing to make a substantial contribution to the Institute, which trains workers for the watch industry. The Irish watch assemblers were consulted and they did not oppose the granting of the concession. Because of our international obligations the reduction of the duty had to be extended to watches of other countries.

I shall be glad to give any further information required in connection with the Bill.

Mr. Russell

This is a simple Bill, as the Minister has said. It is a statutory enactment to confirm the imposition of certain duties which must be done before the end of the calendar year following the year in which the orders were made. Two of the orders do not greatly concern us. Order No. 186 arises because of a change to Brussels nomenclature form, and Order No. 187 is due to the changeover to decimal currency.

The other orders deserve some consideration, particularly in the light of the Anglo-Irish Free Trade Area Agreement and its effects on employment in this country during recent years. When the Minister comes to this or the other House for confirmation orders of this type, both Houses would welcome more information on the implications of the orders. The examples before us may not be particularly good ones. I have no idea of the amount of employment involved or what the effects will be of further reductions in the protective tariffs. Generally, the question of tariff reductions in the context of the Anglo-Irish Free Trade Area Agreement is one which deeply concerns every public representative and all the information the Minister can give will be welcomed by both Houses of the Oireachtas.

The orders before us are minor ones and a strong case has been made in connection with the reduction of the duty on Swiss watches. I should not like to think that because a country is making a contribution to some institution in this country it would necessarily warrant a reduction in tariffs. I note that the industry concerned in this country has raised no objections and for that reason we can accept that the 10 per cent reduction will not have any adverse effects.

Too much recourse to unilateral action in strict accordance with the terms of the Anglo-Irish Free Trade Area Agreement has been made by the Government and not sufficient concern with the sections of the trade agreement which provide for a lessening in the tempo of reductions where vital and sensitive sections of Irish industry are concerned. I have in mind industries such as wool textiles, clothing and footwear. They are examples where serious unemployment has occurred.

The Minister said, I think in the Dáil, that industries such as these suffer from cyclical depressions in any event and are subject to variations due to changes in public taste and, for one reason or another, depressions possibly in other countries. I think that where such industries are concerned it is not sufficient to say that this is something over which we have no control. Reducing tariffs in line with trade agreements such as the Anglo-Irish Free Trade Area Agreement, in circumstances far different than those that existed at the time the trade agreement was signed, is something, I think, which should be opposed by Senators and, indeed, by Deputies in the other House. I feel that we are, to some extent, accepting as inevitable the fact that tariffs must come down and therefore there is nothing we can do about it. When the present trade agreement was under negotiation, some two or three years ago now, the conditions—as I think the Minister will agree—were very much different in a number of instances to what they are today. But we still appear to continue the same tempo of tariff reductions and the dismantling of industrial protection built up over a number of years, as a matter of national policy, by successive Governments as if there had been no change at all in the circumstances.

That is quite wrong and I think it is something the Minister and the Government would want to consider very seriously. After all, there is provision in the Anglo Irish Free Trade Area Agreement for slowing down the rate of reduction of tariffs. I am not aware of any instances where that clause has been invoked. Perhaps the Minister would enlighten the House if, in fact, this has happened. I would like to mention again to the Minister that in the rapidly changing conditions we are experiencing today, it is difficult to rely completely on the wording of an agreement made, as I have said already, in far different conditions. I do not wish to suggest that a Minister or a civil servant or, in fact, any public representative for that matter, can be a prophet but I think that in an era such as this, of quick change and savage competition, that every possible effort should be made when trade agreements such as the Anglo Irish Free Trade Area Agreement are being negotiated, to provide for any eventuality—particularly in the type of industry which, as the Minister himself has stated, is subject to cycles of change every so often. I think the Minister did say when he was speaking in the other House that it was over a decade since there had been a depression in the wool textile and clothing industry. Well, we now have a depression in that industry, and I suggest to the Minister that he and the Government should look very carefully at any further dismantling of protection in present circumstances.

It is quite true that these cycles do upswing again, and it is quite likely that in a year or two the conditions which we are experiencing today, and which have caused a very serious depression and the closing down of some textile and clothing industries in this country, may change again. I am saying that because, with some experience of that trade, I know, that it is a cyclical trade and that these things can happen. But if it does happen, I think we should assume it is going to happen and take the necessary steps to ensure that in the period of trough there will not be any serious unemployment or redundancies, in so far as the Government can ensure that. Obviously, the Government cannot do everything.

Tomás Ó Maoláin

The Senator is not suggesting this depression is confined to Ireland?

Mr. Russell

I am not suggesting that. Senator Mullins prompts me to say that I made it quite clear that these cycles in the wool textile and clothing industries are international. They come to every country at some time. But I suggest that since we have had this depression over the last two or three years, now is the wrong time to have a reduction in tariffs and, incidentally— although it does not arise under this Bill—an increase in taxation.

When the Minister comes to the House in circumstances such as these— and again I do not want to be specific about the order before us, he should tell the House exactly what is involved, the number of people involved in the industry concerned, the number of redundancies that may arise as a result of the reduction in protection and, on the brighter side, and taking the longer term, what opportunities will be offered as a result of nationalisation and the preparation for free trade.

Tomás Ó Maoláin

Where does he get the crystal ball?

Mr. Russell

That is the Government's job, I suggest. If there is no way of avoiding the Government's commitments—such commitments have been made under the Anglo Irish Free Trade Area Agreement—the Minister should say clearly what redundancies will be involved and what steps the Government are taking to provide alternative employment. In other words, I do not believe, although Senator Mullins might think I am trying to give that impression, that the Govern ment or any Government has a magic wand. These things happen in trade and business, but I think we are now living in an era where Governments in every country have accepted the responsibility for full employment. They just cannot pass the buck any more; those days are gone.

Having said that, I think there is an obligation on the Ministers concerned to come in and say: "Look, we are dismantling tariffs in this particular industry. We can't do anything about it. We have entered into a trade agreement, but in lieu of that industry we have made arrangements for the establishment of another industry in the area and the retraining of workers to take up the unemployment that will arise." I do not think it is too farfetched to say that, and I think it is the policy that should be adopted. As an aside let me say this: this is the policy that has been adopted in certain instances, but not in all instances. We must face the fact that we are entering an era of free trade, whether we like it or not. Nevertheless, the policy of industrial Sinn Féin should still apply, and it should be clearly demonstrated to our people that free trade does not mean free-for-all trade when the big and the strong prosper and the weak go under through no fault of their own.

I am one of those who believe that free trade offers great opportunities to our industrialists and farmers in the long term. In the short term it can hurt a lot of innocent people, if proper and adequate, if temporary, steps are not taken to protect them. In future, therefore, I hope that Ministers concerned will deal fully with the implications of any of these tariff reductions and not come before us with what I may describe as Civil Service-type jargon that could hide a lot of human suffering and cloak considerable disruption in a particular trade or industry.

I have already said that I accept the necessity for the Bill; all I am asking, as one public representative, one Member of the Senate, is that Ministers coming to this House deal quite freely and frankly with us and give us in layman's language the full implications of the changes which these orders are intended to bring about.

Mr. Alexis FitzGerald

I wish to make the point that, as I understand it, in enacting this Bill the Oireachtas will not be doing something which will effect any factual economic fiscal change now. As I understand the position, that economic fiscal change has already been effected. It is effected in respect of the fifth year, which ended, I think, in June of 1970; and the five orders mentioned by the Minister, whch are the subject of confirmation of this Bill, were made presumably subsequent to that date, some time between the end of June and the end of December. Some of them, I think, may have been made as early as July, 1970.

As we would in many another measure, we do not have to consider without being able to get informed, what is to be the consequence of the legislation, because the Minister must now have some information as to the effect on employment, output and imports of the fifth reduction in the protection referred to in the second order, No. 185. He must also have an idea as to the effect on the Irish wine trade—and, surprisingly, there is a good deal of Irish wine being made—of the elimination of the differential between the excise duty and the customs duty on wines of United Kingdom origin. There must be some information as to whether this has affected production in that industry, whether it has led to an increase in imports or has had any effect on the prices of these products of our industry or the employment given by it.

With regard to mobile home type caravans, I would be interested to know when the changeover to the Brussels nomenclature form was effected and how long the industry concerned was without the protection which had hitherto been given to it. What was the experience of the industry during that period of time?

With regard to the fourth order, I am curious as to the necessity for it. I thought we had debated in the House— I have not an exact recollection of the title of the Bill: it may have been the Decimal Currency Act of 1970 or 1971 but it came into effect in February, 1971—a provision for an automatic conversion of shillings and pence in all statutory instruments and that there would not have been any necessity for an order of this type. If there was a necessity for such an order in relation to customs duty I would divine that there is a necessity for similar orders in relation to various other duties. For example, what is the position of the Stamps Act?—is it necessary to make an amendment whereby there is conversion or does automatic conversion take place as an effect of the Decimal Currency Act of 1970 or 1971?

I welcome the reduction in the rate of duty on watches of non-United Kingdom origin. I am glad the Minister has informed both Houses of the contribution made by the Swiss watch industry in developing Irish skills in the matter of watch-making. The Minister mentioned in the Dáil that the contribution of the industry to the Horological Institute was of the order of £10,000 a year and the institute carry on their good work of training Irish boys in this new skill in co-operation with the technical schools. The House would probably welcome a little more information in regard to this. Are there separate premises occupied by the institute? What is the sort of relationship between them and the technical schools? Do the institute collaborate with one or more technical schools, or is it the vocational committee for the city?

Minister for Industry and Commerce (Mr. Lalor)

I am glad the House has accepted that this Bill is necessary to put the various orders made during the course of 1970 in order as is statutorily required. I was upset by Senator Russell's reference that information supplied to the House in relation to those orders was not as properly presented as he would have wished in so far as he indicated that it was not outlined in layman's language. As I stated in my introductory remarks, an Explanatory Memorandum has been circulated in which the Bill is fully explained. I do not think it would be possible to outline in any greater detail for the benefit of the House the basic information contained in the Bill. He said he felt that in presenting the Bill to the House I should be in a position to give an account of the overall effects of the orders. I hope he appreciated that orders Nos. 186 and 187 were not extremely serious and did not merit his comment.

Order No. 185, relating to the straightforward 10 per cent reduction in tariffs on goods imported from Britain, is something that affects a very wide range of industries here. For me to attempt to outline the various industries that might be affected as a result of that order would involve me in covering the full employment range of all our industries.

Senator Russell went on to say that since the completion of the Anglo-Irish Free Trade Area Agreement there never had been any moves to create standstills in respect of any of the reductions. In this regard I must remind him that in relation to Article 19 of that agreement arrangements were made very early in 1967 to protect the tyre industry in so far as Article 19 was used to create a quota situation to give protection to Irish Dunlop against the importation of tyres in a period of 18 months. As was announced immediately previous to 1st July this year arising from the review which took place, starting on 1st July, 1970, and which was completed in April of this year, there were discussions with the British representatives. As a result, the tariff reductions that were due to take place on 1st July of this year were not made in relation to quite a number of articles. I outlined these in the Dáil. They covered certain iron and steel products, agricultural machinery, certain domestic electrical appliances, aluminium hollow ware, blankets, mobile homes, joinery.

The Senator made reference to the footwear industry. I indicated at that time that in relation to the leather footwear industry there had been a standstill in the reduction of the importation of leather footwear until such time as a review had been conducted of the footwear industry and a report on this review was available.

This is the situation: there has not been from the 1st July, 1971, any reduction in duties on the items mentioned or on leather footwear. In addition to that, there were reduced reductions applied in relation to furniture, ropes, cordage and twine, brushes and brooms. All of those stand still, or reduced rates of duty were all effected arising from a review which took place during the course of the year commencing 1st July, 1970. These arrangements have been come to by way of interim measures because the discussions have not been finalised.

I can indicate to the House that discussions are still going on arising from that review aimed at endeavouring to protect some of the industries that are and have become effected by the reductions of protective tariffs that have taken place under the Anglo-Irish Free Trade Area Agreement.

Senator Alexis FitzGerald went through the various orders made and asked if I could give any indication of the effects of the order reducing the duty on wine. Arising from that reduction of duty we have no evidence that the change in the excise duty has created any difficulties for the Irish wine trade. The Senator indicated when speaking that the volume of business was not extraordinarily high.

Mr. Alexis FitzGerald

It has greatly increased over the years.

Mr. Lalor

In actual fact, it has. That particular increase has been maintained and this order has not affected it to any extent. I dealt with the overall effects of the Anglo-Irish Free Trade Area Agreement and the effects of the further fifth-round reductions. The discussions which we had prior to July of this year resulted in the standstill on certain reductions. I am talking about the sixth round of reductions which took place on 1st July of this year.

In relation to Senator Russell's remarks, I can say that world depression in the overall textile industry, which also affects us, is also the subject of discussions on Anglo-Irish free trade at the present time and is one of the matters which is being dealt with.

Senator Alexis FitzGerald mentioned Order No. 186 on mobile homes. The situation there is that it was a considerable time before it was discovered that the particular mobile homes covered under this order were not covered arising from the changeover that took place under the Brussels nomenclature of customs classification. I would love to be able to deal with the Brussels nomenclature in simpler language, but this is the customs term and in the changeover to this nomenclature mobile homes were omitted. It was discovered that there was an escape clause for the importation of mobile homes and it was necessary to make this order to capture them.

Senator Alexis FitzGerald said he understood that the arrangements made in relation to the changeover to decimal currency would have been such that it would have obviated the necessity for making this order. As I indicated, this order was made on the recommendation of the Minister for Finance. It is quite obvious that it was felt there was the necessity to have the £ s. d. rates changed over to the decimal form. Straightforward departmental advice on this order was necessary so as to cover it.

Mr. Alexis FitzGerald

You did not do it under the Income Tax Act.

Mr. Lalor

Having carried out the duty on behalf of the Minister for Finance in this regard, I am satisfied that he was in turn satisfied it was necessary to have it done in this way, but I cannot be more specific about it than that.

Reference was made to the last of the orders—Order No. 188—providing for the reduction in the rate of duty on watches. Senator Alexis FitzGerald said he would like to have more information in relation to the Horological Institute. I indicated to the Dáil that my estimate of the overall benefit the Swiss watch industry had been to the Horological Institute, through the Department of Education, could roughly be assessed at somewhere about £70,000. The Senator was anxious to know what the present arrangement is. There is an arrangement whereby the Horological Institute provides a two-and-a-half year course for young trainees in watch assembly and watch repair. At the present time the Swiss contribute two-thirds of the cost of this training. I understand that the director of the institute, who was seconded from Switzerland in 1964, is still at the institute and imparting his knowledge to the students. It was a six-year arrangement which began in 1964 and should have terminated last year, but the Swiss have co-operated in allowing the director to remain on in the Horological Institute.

The scheme is operated by the County Dublin Vocational Education Committee. It is estimated that the overall cost of maintaining this scheme is in the region of £10,000, to which the Swiss are at present contributing two-thirds. The benefits that accrue to the pupils and the availability of those skilled graduates after training to the watch assemblers and repairers here should be recognised by me. It was because of this that I arranged for the reduction of ten per cent in duty which was conceded last year. I think that covers most of the points which were raised by Senators in their contributions to the debate.

Dr. West

I should like to ask the Minister a question. I should like to ask, through the Chair, for information concerning the third order, No. 186. Could the Minister indicate the total number or the total value of the mobile homes imported into this country as compared with the figure for mobile homes manufactured inside the country? Could he also indicate where these homes come from? Do they come from countries within the EEC or outside it? That is what I should like to know.

An Leas-Chathaoirleach

Perhaps if the question were repeated on Committee Stage, it might properly be answered then.

Mr. Lalor

I am not in a position to give that information at this stage.

Mr. Alexis Fitzgerald

I have a single question for clarification. I was not clear whether the Minister said that orders have been made in this year which must be confirmed and enacted before the end of next year. Have orders actually been made in respect of the year ended 30th June, 1971? If they have not and if orders are made in, say, January, does that mean that we will be confirming orders in respect of the year ended 30th June, 1971, in December, 1973?

Mr. Lalor

This could be. The position is that any orders that are made during the course of this year, 1971, will be confirmed during 1972. They need not necessarily be coming before us in December of 1972. Invariably, the object is to try to have the Confirmation of Orders Bill coming sooner. I should have been able to bring this Confirmation of Orders Bill to the Seanad before the Summer Recess, but various difficulties arose. Each year there is a Confirmation of Orders Bill. Invariably, we have one order anyway, that is, the confirmation of the further reduction of ten per cent annually from the operation of the Anglo-Irish Free Trade Area Agreement.

Mr. Alexis Fitzgerald

My question was: have orders in fact been made in this calendar year?

Mr. Lalor

Yes, they have.

Question put and agreed to.

Agreed to take remaining Stages today.