I beg to move,
That the Additional Import Duties (No. 1) Order, 1955 (S.I., 1955, No. 1433), dated 16th September, 1955, a copy of which was laid before this House on 20th September, be approved.
The Order to which the Motion relates, and about which I have been asked to give some information, is one which seeks to increase from £1 5s. per ton to £2 15s. per ton the import duty on wood wool. The Order was made on 16th September, and came into operation six days after that.
Wood wool is a general purpose cushioning material made from soft wood logs, used mainly—that is, as to about 80 per cent. of total United Kingdom consumption for packing, and it is also used for the production of building slabs.
The previous duty of £1 5s. a ton had remained unchanged since 1933. Since then the average import price per ton of wood wool has increased considerably—I think, by about six times—and the Association of British Wood Wool Manufacturers asked in 1952 that the duty should be increased.
Immediately after the war the import of wood wool, in common with the bulk of our imports, was strictly limited for balance of payments reasons. Quotas were, however, gradually increased, and in 1951 imports reached over 16,000 tons costing nearly £400,000. Since 1952, when quotas had to be reduced, imports have been running at a level of approximately 13,500 tons a year. It is reckoned that the home industry has been meeting between 60 and 70 per cent. of the home demand.
At the time of the application for an increase in the tariff in 1952 it could be foreseen that in due course import restrictions, at least from Western Europe, which is the main source of supply, would be removed as balance of payments considerations permitted. The time did not come to consider the removal of these import controls on wood wool until a year or so ago, by which time the tariff inquiry was well advanced.
It seemed right in those circumstances not to push forward with the removal of this control until the tariff decison had been made. But now that it has been made, it is right to end the restrictions on imports of wood wool from Western Europe and most other countries excepting the dollar area and the Soviet bloc. This has been done from today.
After the application had been made for the increase in the tariff, full opportunity was given in the normal way to all interested parties to make known their views to the Board of Trade. A number of representations were received from representatives of importers, of the manufacturers of wood wool building slabs, of general packers, and of the industries which use wood wool for packing. Meetings were held with the applicants, with the importers' associations and with the representatives of the users.
There is, of course, as the House will appreciate, an export point in this matter. It affects packing materials. Special consideration was given to the objections raised by users for export packing since even the smallest increases in export costs may be of the very greatest importance. But it is clear that any increase in costs which might result from this increase in the tariff will be very small indeed compared with the total value of the goods being exported—considerably less than 1 per cent. even in the case of the most fragile goods that require a lot of packing material, and in many cases less than 0·01 per cent. In the end it was decided that the duty should be increased, as proposed in the Order, by £1 10s. per ton to £2 15s.
We have been able to take advantage of the waiver negotiated two years ago by my right hon. Friend the President of the Board of Trade under G.A.T.T. This enables us to increase a most-favoured-nation rate of duty without im- posing a corresponding duty on Commonwealth goods in cases where the resultant increase in preference is not likely to lead to a substantial diversion of trade from foreign to Commonwealth suppliers.
Very close consideration was given to all the conflicting arguments in this matter. There was obvious strength in the case of the manufacturers that the 1933 level of specific duty gave them much reduced protection now in view of the considerably increased prices. On the other hand, it is quite clearly in the United Kingdom interest that other countries should not be encouraged to raise their tariffs against our exports by increases in our tariff, except for very strong reasons. I understand that the manufacturers in this case are well satisfied with the way in which the inquiry was conducted.
I hope that with that short explanation the House will give its approval to the Order.
Is the Minister prepared to accept the principle which he has just expounded as covering all imported goods? It was that the ad valorem duty on a commodity being the same now is less protection than it was before the war. If that is the case, I can bring to his notice a lot of commodities to which that applies. If he will say that that is the principle on which he has come to this conclusion, we shall have something to say about other articles in the future.
The hon. Member for Ashton-under-Lyne (Mr. Rhodes), who knows the Board of Trade very well, has misunderstood what I have said. I am not talking about an ad valorem duty at all. It is a specific rate of duty. I have laid down no principle. If the hon. Member will study my words carefully, he will see that I told the House of the considerations which applied to this case. Of course the application in this particular case was examined on its merits now and not on its merits comparing now with 1933. All I have told to the House has been the considerations which we had in mind.
We are obliged to the Minister for his explanation, but there are one or two other points upon which I should like answers. First, I imagine that it was a slip when he said the tariff would be raised from £1 10s. to £2 15s. It is in fact from £1 5s. to £2 15s.
Before the war there was the Import Duties Advisory Committee which was a body for suggesting adjustments in the tariff. For war-time purposes that procedure was not followed and subsequently the Board of Trade took upon itself, with Parliamentary approval, the opportunity of adjusting the tariff. I think that the horticultural tariff increase was the first that was carried through under the new procedure, and I believe that the one before the House tonight is the first of an industrial character which has been presented.
Would it be possible for the Minister to tell us what machinery is used and how one proceeds to bring about this increase in tariff? He has explained that the various interests were interviewed, but to some extent this is a quasi-judicial procedure and the House ought to be told more clearly about how it is possible, by the Board of Trade machinery, to adjust a tariff. Would he further tell us, if the tariff is adjusted and price controls are abolished, whether there is any way of being sure that there are no controls by rings? It would be wrong to give an increased tariff to an undertaking that was to have a monopoly. If other firms are interested, it would be more reasonable, because there could be fair competition.
Perhaps the Minister will tell us how this adjusted tariff squares up with G.A.T.T. He indicated that we did not want to impose too high an increase for fear of reprisals from other quarters. What are our powers under G.A.T.T.? Are we clearly within the rules and regulations, and not likely to incur greater pressure upon us in due course by tariffs in other countries being adjusted against us?
My last point is whether the Government are using this increase only in the way in which the past Government did. We heard references earlier to a past Prime Minister, Mr. Stanley Baldwin, and I was then reminded of the words which he used upon an occasion when an economic crisis was confronting the country. He said that the best and shortest way of dealing with the adverse balance of trade, the restriction of imports and the stimulation of exports, was to put on a tariff. I think the Minister now agrees that this would be wrong procedure in trying to correct our present balance of payments difficulties. I accept what he says, that it is right to restrict imports made for balance of payments reasons, and that when a tariff is increased it is right that those restrictions should be removed.
If this change goes beyond that, the Minister ought to tell us that a new policy is being introduced and that he is not merely, as the Order says, following the practice adopted by Governments since the end of the war.
First, I must declare an interest in this matter, which is that my father and my uncle were the pioneers who started this industry fifty years ago. The industry has grown up and is now of considerable importance to this country.
I would thank my right hon. Friend and the Department for giving us this slight increase in tariff duty. At one time, since the war, wood wool was being imported into this country at a lower price per ton than English firms had to pay to buy the wood from Finland. It was essential that some protection should be given. During the war the firms making wood wool were working night and day to provide wrappings for the munitions industry. It is, therefore, essential that the industry should be kept in being so that, in the event of any other hostilities, it will be available to continue the good work it did during the war.
I can assure the right hon. Member for Rochester and Chatham (Mr. Bottomley) that this is only a slight increase in duty and does not imply any sort of protection to enable rings to operate. It is a very small increase and, as the Minister said, amounts only to between 34 per cent. and 0001 per cent. The increase is, therefore, very small.
There is another very useful purpose which the manufacturers of wood wool perform. They use up all the odd pieces of pit props from the National Coal Board. When the Board tried to buy props of a particular length, the sorting of the props in the country of production meant a considerable increase of price when the props were finally landed here. The wood wool industry therefore takes from the Coal Board all the odd lengths which are cut off the pit props and which cannot be used by the Coal Board, except as firewood.
I thank my right hon. Friend for having given consideration to the representations which were made to him to help this vital industry.
May I return to the point I made earlier? The Minister, at the end of his speech, said that one of the reasons the Government were making this increase was the advance in prices since the tariff was originally put on. It was not as powerful a deterrent as it was then. Is that one of the principles on which the Minister has granted this increase in tariff?
If I am in order in speaking again, perhaps I can deal first with the matter raised by the hon. Member for Ashton-under-Lyne (Mr. Rhodes). I did not recite any principle to the House. From my notes I will repeat what I said, which was that there was obviously strength in the case of the manufacturers that the 1933 level of specific duty gave them much reduced protection now in view of the increased prices. That was certainly something to be taken into consideration, but it was by no means the final argument. If the hon. Member will look at the figures he will see how the final decision works out, bearing in mind that consideration.
I am most grateful to my hon. Friend the Member for Leominster (Mr. Baldwin) for the thanks he has given to me and to the Board of Trade for the care which was taken over this inquiry. I can assure him that we are well aware of the good work done by this industry, and I am delighted to know of his personal connection with it. I did not expect, in my present capacity, to take part in a debate in which my hon. Friend, with his great knowledge of agriculture, would intervene. I am very glad that he has been able to do so.
I now come to the remarks of the right hon. Member for Rochester and Chatham (Mr. Bottomley). I think that he was trying to get out of me a general statement on Board of Trade tariff policy. I can only say that I do not think that this is a suitable occasion for such statements. He also mentioned monopolies and price controls, but those are quite irrelevant to our present discussion. In my opening remarks I said that the home industry was responsible for only 60 to 70 per cent. of British consumption. There is, therefore, quite clearly competition from abroad.
No, there are 11 firms in the association, and I think that those 11 firms have 12 factories. There are some other producers of wood wool outside that association. They make wood wool for their own use, and also make building slabs of that material.
Is it not a fact that in this industry, small though it is, there are hundreds of firms engaged in the machining of timber who use their waste for the production of wood wool? That being so, there can be no question of any monopoly there. Those firms are putting to a useful purpose material which would otherwise be wasted.
I do not know about the hundreds of firms, but I am aware that there are 11 firms specialising in making this wood wool, and they have been concerned in this matter. But I am interested in my hon. Friend's remark about their relevancy of talk of monopolies and price control. There is no question of price control or anything in connection with it. I merely close by saying that this is an Order relating to the increase of the tariff on wood wool, and I think that it would be out of order were I to reply to the right hon. Gentleman opposite about general tariff policy.
The Minister has not answered this question. How is it decided in the Board of Trade? Does someone of assistant secretary rank say that there must be an adjustment in the tariff—or how is it done? I think that the House should have that. Is it a Ministerial duty? That leads to the major question that I raised. We are entitled to know the tariff policy of the Board of Trade when such Orders as this are put forward by it. Such Orders may make major policy. That is wrong procedure. We shall have to look at these Orders much more carefully, because if they go against the policy followed since the war we cannot co-operate.
I really do not think that this increase in the wood wool tariff raises all these great issues introduced by the right hon. Gentleman. If he will carefully examine the details I have given him he will see the justification for our action in this instance, and that is what I think it is my duty to put to the House tonight.
What we are here considering is the responsibility and machinery for the increase of this tariff, because my right hon. Friend the President of the Board of Trade is responsible for the decision and makes the decision. Of course, he has the advice of officials from his own Department and from other Departments concerned, and, as I indicated in my opening remarks, full opportunity is given to all concerned, both applicants and those who might wish to oppose the application, to put their representations to the Board of Trade; these are fully considered, sometimes at meetings with the interests concerned, and I think there is no doubt in the minds of anybody involved in this tariff application that the investigation was properly carried out. Perhaps the speech of my hon. Friend the Member for Leominster is some evidence of that. The right hon. Gentleman can take it from me that the manufacturers who made the application were satisfied with the way in which the inquiry was carried out.