Clause 6. — (Eligibility of Imported Goods for Rates of Revenue Duties Applicable to Goods of Republic of Ireland.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 15th June 1966.

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Question proposed, That the Clause stand part of the Bill.

Photo of Mr Stratton Mills Mr Stratton Mills , Belfast North

I wish to probe a couple of matters which arise out of the Clause, which I have read on several occasions but by no means properly understood, as I admit at once. I hope that the right hon. Gentleman can give us some information about the reason for the Clause.

Section 12 of the Import Duties Act, 1958, deals with entitlement to Commonwealth preference and, in particular, the determining of the origin of such goods. The purpose of the Clause appears to be to extend those provisions to import duties on goods from the Republic of Ireland. Presumably, the reason for that is to apply the future Orders to be made under the Anglo-Irish Free Trade Agreement of December, 1965.

The provision seems to envisage an increase of import duties, to give the Government power to deal with Commonwealth preference and increase duties on goods from the Republic of Ireland at some time in the future. I understood that the whole purpose of the Agreement was in the other direction. I hope that the right hon. Gentleman will be able to give us a little more explanation.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

As I understand it, the Clause is necessary to carry into effect the Free Trade Area Agreement signed between the United Kingdom and the Republic of Ireland in December, 1965. We have had relatively little occasion to debate this Agreement and perhaps the Minister of State will tell us whether this is the only matter which will come before the House before the agreement is implemented on 1st July, this year.

The United Kingdom has agreed to abolish import duties and quantitative restrictions on the import of Irish goods, and in return the Irish Government has agreed to reduce import duties and quantitative restrictions on our exports to the Irish Republic, but there is a considerable asymmetry between the timing of the measures which we are introducing and those which the Irish are introducing to facilitate their side of the bargain. As I understand it, most of the exports of industrial goods from Ireland now enter this country free of duty, so that there will be no change in that respect, although we shall be making considerable concessions on agricultural products.

What we are doing is to trade those concessions for a gradual reduction in the Irish duty on our exports to the Republic of Ireland, a reduction over a period of years, but this will not come fully into effect until about 1967–68 for the quantitative restrictions and January, 1975, for some of the tariff reductions. Perhaps the Minister of State can confirm that.

If so, we need to consider whether some consideration should not be given to whether the Clause facilitates an arrangement by which the balance between the two parties is somewhat lopsided. The conditions under which Irish industry operates incentives to investment are significantly different from those under which this country gives investment incentives. At the moment, one can get considerable incentives to investment in the Irish Republic if one is to export to other countries, for example, to the United Kingdom.

Some time ago, I myself was engaged in examining such an investment project and I think that I am right in saying that one can be given complete relief from Profits Tax and certain other taxes if one exports more than a certain percentage and can obtain other concessions for the training of people, and so on. It is easy for the Irish Republic to do this, because the Irish are in the position of either attracting some industry, or not attracting any. We could not make some concession in Newcastle or Merseyside, for instance, because that would mean a general reduction of the revenue raised.

But, given this difference in the two arrangements and given that we are making an arrangement with a country whose incentives are contrary to the General Agreement on Tariffs and Trade, to which the Irish Government does not subscribe, is it right and proper to approve the Clause which implements the Treaty?

I should be grateful if the Minister would say what consideration has been given to these matters. We should not approve of a Clause without some explanation and without understanding that the points which I have mentioned are important for the development districts in this country and probably Northern Ireland as well, and I should like to hear that the position of Scotland, for example, has also been considered. I would be glad if the right hon. Gentleman would favour the Committee with an explanation of precisely what the Clause does, but also placing it within the general context, because it is so rarely that we have an opportunity to debate treaties of the kind which have to be implemented by Clauses such as this.

7.45 p.m.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

I hope the hon. Gentleman will forgive me if I do not respond to his invitation to go into detail. The reason is that this Clause is purely a machinery provision and at this stage has nothing to do with all the issues which, I agree, ought to be discussed before anything is done under the Treaty. The hon. Member for Belfast, North (Mr. Stratton Mills) put his finger on the purpose of the Clause. It is to give the Board of Trade power to make the regulations under the Treaty which would deal with many of the matters which the hon. Member for Worthing (Mr. Higgins) has been discussing. The hon. Member for Belfast, North has, however, put it the wrong way round. This machinery will, in effect, reduce the import duties rather than increase them.

It is needed because the Board of Trade powers, which would be exercised under Section 12 of the Import Duties Act, 1948, to make provision of determining the country of origin of imported goods relate to protective import duties under that Act and to revenue duties only in so far as Commonwealth preference is concerned. The agreement with the Republic of Ireland requires us to remove by 1st July, 1968, as the hon. Gentleman said, any effective protective element in the revenue duties on goods which originate in the Irish Republic. We need these powers to enable such goods to be identilied as to origin, in accordance with the origin rules contained in the Agreement. We have similar powers as a result of the E.F.T.A. Convention and this part of the Bill is taken from Section 1 of the E.F.T.A. Act, 1960.

The Clause extends the powers of Section 12 of the Import Duties Act to cover goods of the Republic of Ireland which are liable to revenue duties on importation into this country. The obvious examples are cigarettes, matches and mechanical lighters. All the Clause does is to give the Board of Trade power to deal with the origin of goods and to carry out the regulations which must come before the House for approval and which ire themselves part of the Anglo-Irish Trade Agreement.

When we have the regulations—and the hon. Gentleman was generally right in what he said about the timing of of the proposals in the Agreement—the Board of Trade will come forward with the appropriate measures under the Agreement and will ask the House for approval. At that stage there will he full opportunities to debate the issues on the Agreement which the hon. Gentleman has raised.

Question put and agreed to.

Clause ordered to stand part of the Bill.