Second Standing Committee on Statutory Instruments, &c.


Wednesday 8 November 1989



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The Committee consisted of the following Members:


Arnold, Mr. Tom (Hazel Grove)

Bruce, Mr. Malcolm (Gordon)

Dunwoody, Mrs. Gwyneth (Crewe and Nantwich)

Henderson, Mr. Doug (Newcastle-upon-Tyne, North)

Illsley, Mr. Eric (Barnsley, Central)

Lewis, Mr. Eric (Worsley)

Meale, Mr. Alan (Mansfield)

Patnick, Mr. Irvine (Sheffield, Hallam)

Redwood, Mr. John (Parliamentary Under-Secretary of State for Corporate Affairs)

Roe, Mrs, Marion (Broxbourne)

Rowe, Mr. Andrew (Mid-Kent)

Shaw, Mr. David (Dover)

Smith, Mr. Tim (Beaconsfield)

Soames, Mr. Nicholas (Crawley)

Steen, Mr. Anthony (South Hams)

Sumberg, Mr. David (Bury, South)

Townend, Mr. John (Bridlington)

Worthington, Mr. Tony (Clydebank and Milngavie)

Samson, Mrs. E. C. (Committee Clerk)

3 Second Standing Committee on Statutory Instruments, &c. Wednesday 8th November 1989

[MR MICHAEL J. MARTIN in the Chair]


10.30 am

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood): I beg to move, That the Committee has considered the Customs Duties (ECSC) (Amendment No. 5) Order 1989. We can be brief, but I am hapy to answer any questions on the order. Its main purpose is to impose moderately low customs duties on specified steel products until the end of the year. It is a direct result of our Community obligations and the Community's agreement with Yugoslavia on trade in those and other products. A specific number is allowed in free of duty, but, when the ceilings are reached, Community countries impose duty. Under the Single European Act we must implement the measure by the affirmative resolution procedure in Committee, and I hope that the Committee will accept the statutory instrument.

10.31 am

Mrs. Gwyneth Dunwoody (Crewe and Nantwich): I am interested in the order, not least because it appears to have been taken under the process of the European Coal and Steel Community treaty—not under the powers given to the Community under the normal EEC treaty, but under a separate order. I am especially concerned because handing the imposition of anti-dumping taxes to the Community almost automatically resulted in the taking of evidence and the assessment of cases being handed lock, stock and barrel to another unit. What is the difference between the gathering of evidence under the ECSC treaty and the normal EC treaty, and the methods of assessment? Did the Commission consult in detail with the Government? In a trade policy notice that was reported in Agence Europe on 1 1 th July, the Commission announced the anti-dumping duty of 54 ecu a tonne, the exact tonnage and the way in which that has shot up recently, but there seems to have been no clear discussion since then. Another matter that concerns me is the way in which the assessment is made in relation to inflation. Inflation Yugoslavia at present is approximately 1,000 per cent. and I would be interested to know how the Commission estimated the currency exchange rate because, inevitably, that will have an effect. The purpose of applying antidumping taxes is to inhibit the ability of foreign suppliers to undercut our industry with the final intention of pushing up the price and thus making it more difficult for member states. I want to know the basis on which the estimates were made. Our trading partners talk to us about the dangers of fortress Europe in 1992, and they inevitably include the imposition of anti-dumping taxes being used as a political weapon. Recently, the Community has used the imposition 4 of anti-dumping measures not only on basic materials from eastern Europe, but, increasingly, on advanced electronics from the Far East. I do not wish this country to be flooded with manufactured goods from either of those sectors, but the political point is important. I do not wish the Community to put up barriers against the products of some of our trading partners for political reasons and then to use the anti-dumping procedure as a means to a political end. If the Minister can answer those questions we shall see more clearly how to proceed. After 1992, that process will be in the Commission's hands. Although the order states that the "Treasury, by virtue of the powers conferred on them" will take that action, is it true that the Treasury has taken evidence, or has the Commission proceeded on the basis of the notice that it issued in July, which appeared to suggest that it had taken the definitive decision by a different procedure?

10.35 am

Mr. Redwood: Fist, I shall clarify the legal position as it is quite complicated. The order implements a decision of the representatives of the Governments of the member states of the European Coal and Steel Community meeting within the Council. Such a decision is not an obligation arising under the ECSC treaty and thus is not directly applicable under the European Communities Act 1972. Only obligations arising by or under the designated treaties are directly applicable in United Kingdom law. Section 5(1) of the European Communities Act 1972 provides for chargeable customs duties which are not otherwise fixed by directly applicable Community provision to be made by order. That is why the order has been introduced in this form. The hon. Lady is confusing two slightly different issuesanti-dumping and the reason why the duties are being imposed, which is the result of a trade agreement that was entered into with Yugoslavia in the spirit of market opening rather than restriction, which the hon. Lady fears. In most trading matters, there is unrestricted trade with Yugoslavia, but in some categories, of which these groups of steel products are the most important, it was agreed that a certain volume of product could enter the Community free of duties each year, but when the ceiling was reached, the Community's usual external tariff would be imposed. The statutory instrument confirms that as the ceiling was reached earlier this year, so the residual product will attract duties until the end of the year. The hon. Lady may be reassured to know that the duty levels are modest—about 5 per cent. Those are the usual external tariffs charged on third country products coming into the Community. The hon. Lady asked about anti-dumping procedures. There have been such cases. Of course, the Community considers the complicated inflation and currency problems that she describes, but there are ways of handling currency issues. I am happy to examine in correspondence specific anti-dumping cases that may be worrying the hon. Lady. However, that is not the matter being discussed today and we should stay with the purpose of the order. The hon. Lady can rest assured that I am no lover of the idea of fortress Europe and that I regard the progress made in our negotiations with Yugoslavia in the 1980s as a 5 positive step towards market opening. I feared that the hon. Lady would say that we were allowing Yugoslavia to get away with too much rather than too little. In the early 1980s, we and our partners decided to make unilateral concessions to Yugoslavia to encourage more trade. That matter was debated in Committee and we shall be involved in more discussions with Yugoslavia about further progress in market opening, although it would be nice if the Yugoslays reciprocated when their economic circumstances permit. The hon. Lady may like to know, too, that our trade with Yugoslavia is more or less in balance this year and our trade in steel products is positive for Great Britain and we bear that in mind when negotiating wider trade issues with our Community partners and Yugoslavia.

Mrs. Dunwoody: Is the Minister saying that our balance of trade in steel with Yugoslavia is positive, and that the order reimposes the normal customs duty? The information issued by Brussels at the beginning of July referred to anti-dumping. It was stated specifically that there was an imposition of what has turned out to be only a temporary duty. Is the hon. Gentleman now saying, in effect, that because we have reached the ceiling, we will return to the normal procedures? However, I would be happy to pursue with the Minister the operation of the Community's powers on dumping. I am especially worried about that and I want the matter clarified.

Mr. Redwood: I do not wish to detain the Committee by referring to anti-dumping issues, as they are not relevant to the order. However, I should be happy to do so in another context. If the hon. Lady believes that particular cases were taken too far or that British industry is suffering as a result of dumping, I shall consider those points, but they must be examined in relation to specific cases. The order will impose for only a brief period the common external tariff on certain products in the light of an agreement that was made several years ago on market 6 openings with Yugoslavia. The hon. Lady might be reassured to know that the ceilings or quotas for the import of duty-free products increase by 5 per cent. each year. Therefore, there is progressive liberalisation.

10.41 a.m.

Mr. Doug Henderson (Newcastle-upon-Tyne): I am sure that the Committee is grateful to the Minister for his initial explanation of the order. I am grateful to my hon. Friend the Member for Crewe and Nantwich (Mrs Dunwoody) for her contribution to the debate—as, I am sure, is the Minister. We listened attentively to his response. The order raises several important issues. As economies change in western Europe, especially in the European Community, and in countries in central and eastern Europe, which have traditionally taken a more independent view on such matters, trading patterns in Europe are changing quickly. I am sure that, in the coming months and years, we shall have many opportunities to review trade. Some of us are worried that an increasing number of decisions are made in Brussels before the House has an opportunity to review such matters in detail. I hope that on another occasion we shall have the opportunity to raise the principles as well as the substance of trading issues. In general, the Opposition accepts the necessity for the order and we shall not press it to a Division.

Question put and agreed to.

Resolved, That the Committee has considered the Customs Duties (ECSC) (Amendment No. 5) Order 1989.

Committee rose at seventeen minutes to Eleven o'clock.


Martin, Mr Michael J (Chairman)

Dunwoody, Mrs

Henderson, Mr

Illsley, Mr

Meale, Mr

Patnick, Mr

Redwood, Mr

Rowe, Mr

Shaw, Mr David

Smith, Mr Tim

Sumberg, Mr

Townend, Mr John