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REPORT1. The Community SchemeThe Generalised Tariff Preferences Scheme (GSP) has been in operation since 1971 and is designed to help developing countries by granting tariff preferences on imports into the Community of certain finished and semi-finished products originating in those countries. The preferences are autonomous and do not depend on reciprocal action by the countries benefiting. The scheme is reviewed annually and the preferences granted are embodied in EEC Regulations and ECSC Decisions which apply for twelve months. The policy has been to improve progressively the preferences each year and to widen their scope. The scheme was intended to last for ten years but the Council has recently indicated that it will be necessary to continue it after 1980. 2. Form of PreferencesPreferences are granted in the form of (a) imports at nil or preferential rates of duty without limit or (b) imports free of duty up to the limit of a quota distributed among the Member States or up to the limit of a specified overall ceiling. In some cases provision is made for the re-imposition of duties in whole or in part where Community producers are adversely affected. 3. Provisions for 1976On 11 June, 1975 the Commission submitted to the Council its proposals* for 1976 in the form of fifteen draft Regulations and two draft ECSC Decisions which are listed in the Appendix to this Report. These proposals were adopted by the Council on 17 November, 1975 (O.J. L310 of 29 November, 1975). In general the quotas and ceilings fixed for 1976 are 15% higher than for 1975, but in the case of vulnerable industries such as footwear and textiles, a 5 % increase only is being given. The improvement for agricultural products consists of an additional 10% reduction in tariffs. The improvements adopted for 1976 are not strictly comparable with the improvements granted in earlier years as the Commission have, with the aim of simplification, suggested a different method of calculating ceilings and quotas. It is probably correct to describe these improvements as modest. Some effort is being made to compensate for inflation but the Commission stress that for technical reasons and reasons of principle, a strict correlation between inflation and the increase is not made and it may well be that in the case of some products the effect of inflation could mean in quantitative terms an actual reduction in quotas and ceilings. Documents numbered Rl, R3, R5, R8, R12, R13, R13 bis, R14 and Dl in the Appendix relate to “sensitive” products (i.e., those likely to affect Community production). “Semi-sensitive” products (i.e., those likely to affect Community production if a limit is exceeded) and “non-sensitive” products (those unlikely to affect overall Community production though capable of adversely affecting the industry of a particular State) are dealt with in documents R2, R4, R6, R7, RIO and D2. Document R9 (known as the “hybrid-Regulation”) deals with products which are deemed to be more than semi-sensitive but not completely sensitive. In relation to certain goods originating in Hong Kong, Macao, Mexico, South Korea and Yugoslavia, a Member State has an option of restricting GSP imports to 50% of the amount charged against the preferences of that State. Processed agricultural products are the subject of document Rll. No ceilings are provided in this case; unlimited amounts may be imported at reduced tariff rates. 4. General View of SchemeIn the Commission document on the Future Development of the European Community’s Generalised Tariff Preferences [COM (75) 17], a number of practical defects in the scheme are examined. In particular, attention is drawn to the fact that only about 50 % of the various quotas and ceilings are being utilised. Furthermore, a small minority of the beneficiary countries, which are economically and administratively better organised than the general body of the developing countries, benefit disproportionately from the Scheme. In its Resolution of 17 October, 1974 the European Parliament drew the Commission’s attention to the need to review the criteria for deciding which countries should benefit from GSP and declared that the only countries to benefit should be “indisputably developing countries”. The Commission document describes this as an “extremely sensitive political issue”. As individual developing countries gain economic strength this aspect may acquire increasing economic significance. The Commission would seem to favour working out with other donor countries objective economic criteria for establishing the status of developing countries. The Joint Committee fully supports the principle of aiding developing countries by according their products preferential treatment and it would point out that Ireland was committed to the principle even before she joined the Communities. However, in the prevailing economic circumstances when the burden of aid is falling on sectors of the economy which are particularly vulnerable, the Joint Committee would welcome the review* called for by the European Parliament with the object of ensuring that aid is concentrated where the need is greatest. 5. Effects of 1976 Scheme on IrelandSince the Commission published its proposals last July, the Joint Committee has been in contact with various bodies about the possible effects of the 1976 scheme on various sectors of the Irish economy. Although the scheme for 1976 has already been sanctioned by the Council, the Joint Committee wishes for two reasons to bring to notice the various representations it received. Firstly, it wishes to highlight the need for the careful monitoring of the effects of imports on vulnerable industries during 1976 so that appropriate action can be taken when preferences for 1977 arc being determined. Secondly, it would like the question of seeking special Community aid for sectors of the economy which may be adversely affected by the operation of the scheme, to be examined. The views of the various bodies consulted are indicated in the following paragraphs. 6. Coras TráchtálaCras Trachtala is concerned with the effects that GSP proposals might have on Ireland’s exports to other EEC countries. In its view the scheme for 1976 is not likely to worsen the competitive position of Irish exports to the other EEC countries. The vulnerable exporting industries are cutlery, wallpaper, locks, carbon paper, cigarette lighters, pens and biros etc., clothing, textiles and footwear. In the case of each of the first five items, Irish exports to EEC countries were worth considerably less than a million pounds in 1974 and these exports were concentrated in the U.K. Exports of pens, biros and propelling pencils amounted to £1.5 million of which £1.2 million went to the EEC. In the remaining three cases the position was as follows:—
Córas Trachtala point out that prior to accession, Irish exporters of these goods were competing on the U.K. market with duty-free or. preferential duty imports from British Commonwealth countries (many of which are now covered by GSP) and the pattern of our trade with the U.K. has not yet altered sufficiently to enable Ireland to make a strong case for the exclusion of the goods in question from GSP. 7. The Confederation of Irish IndustryThe Confederation has informed the Joint Committee that because of the complicated nature of the generalised preferences scheme, it is very difficult for firms to assess the likely effects, particularly a year ahead, on their businesses. The Joint Committee, therefore, recommends that the Department of Industry and Commerce should press the Commission to set up machinery for the better briefing of industry so that an accurate assessment can be made jointly with industry of the problems, effects and benefits of the scheme as far as this country is concerned. The following are the comments of the Confederation on the likely effects on particular industries:— “(a) Apparel Industry Federation (i) Clothing: The availability of sources of raw material for the clothing industry through the GSP Scheme would be advantageous to firms in the manufacturing of clothing. On the other hand, the clothing industry is sensitive to imports from countries outside the Community, particularly, in readymade garments. In this context, the industry would not favour any further reduction in tariffs or increase in quotas for the coming year. (ii) Footwear: The footwear industry is particularly sensitive to imports from third world countries. As you may know, the industry has recently made representations to the Department of Industry and Commerce and the EEC Commission for additional protection on imports from Britain and other countries. A survey is now being carried out at the request of the Commission to assess the likely effects of imports, even from within the Community, before a decision will be taken on a renewal of the additional protection from the end of this year. Severe competition has been encountered from imports from countries who are involved in the GSP scheme. It is essential, therefore, that no further reductions in tariffs or ease of entry to the Irish market should be allowed under the proposals for 1976. (b) Plastics Industry Association Since most of Ireland’s plastic raw materials in particular come from the EEC and USA, the reduction or elimination of duties on products from GSP countries would not have any serious effect on this sector of industry. (c) Food, Drink and Tobacco Federation The main problem here affects the importation of shrimps and prawns. We understand that representation has already been made to the appropriate Government Department concerning the effect of the Generalised Preference Scheme on these commodities. It is felt that the proposed reduction in the tariff for supplies from GSP countries has been accepted reluctantly. (d) Sports Equipment The question of importation of tennis rackets or similar equipment from the GSP countries is of concern to Irish manufacturers. There is at present a considerable volume of imports from countries which would come under the GSP Scheme and it is felt that any further reduction in tariffs would seriously affect the manufacturing of this type of equipment. It is felt, therefore, that no further reduction in tariffs should be agreed. (e) Engineering Industry We understand there have been very few imports during the last year from the countries covered in the scope of the Scheme. The effects of the proposed amendments to the 1976 Scheme would not be significant. The quotas outlined for raw materials and semi-finished products to-date appear adequate for the needs of the engineering industry.” Obviously it is of importance that particular attention should be paid to developments in the clothing, footwear and sports equipment industries. The Joint Committee supports the views expressed by the Confederation of Irish Industry and hopes that when consideration is being given to the 1977 Scheme, the Department of Industry and Commerce will pay particular attention to the problems facing the textile and footwear sectors. 8. Irish Steel Holdings Ltd.Irish Steel Holdings Ltd., are concerned with the ECSC decisions dealing with certain steel products to which documents Dl and D2 refer. The company is highly critical of these decisions. In particular the company complains that in the second decision (D2) the preferences are based on an overall Community ceiling for the products concerned and not on the basis of national quotas. It comments as follows:— “Because of this, the Irish steel industry will be at risk in respect of the global import quota into the Community, not only in respect of direct importation into Ireland but also in respect of products imported through another Community country and having free circulation within the Community. From the company’s point of view, national import quotas are essential for all products falling within our range of production, and we have constantly urged this viewpoint on the Department of Industry and Commerce since the inception of the scheme.” The Joint Committee would like to see this aspect taken up again by the Department of Industry and Commerce on behalf of the Company. The Company has also drawn attention to the fact “that a number of the countries scheduled in the list of developing countries have steel industries large by any standard and much larger than the Irish steel industry.” Clearly this is a factor which should be taken into account when reviewing the criteria for determining beneficiary countries. The Company’s overall attitude to the decisions will be seen from its replies to the following questions:— “Question (1) ‘Would the importation of the products in question into the Community seriously affect either the domestic demand or the possibilities of export to other Member States of your company’s products?’ Yes. The European steel industry, and indeed the steel industry throughout the world, is at present experiencing its worst recession for forty years, and efforts are currently being made on behalf of the entire ECSC steel industry to induce the EEC Commission to invoke Articles 58 and 74 of the Treaty of Paris to restrict importations of steel from outside the Community. Whilst this company traditionally exports some steel mainly to the United Kingdom, it now faces its most critical situation ever, both as regards home demand and exports, and employment within the industry has already been seriously reduced and further reductions in employment level are imminent. Question (2) ‘Are any benefits likely to accrue to your company because of the availability of cheaper products required during further processing?’ The company imports certain cold reduced steel sheet in coil form falling within Tariff Reference 73.13, for further processing. This product was not the subject of national protection by tariff, but naturally imports from outside the Community become liable to the Common External Tariff. Theoretically, the availability of duty-free imports from the developing countries could provide a benefit in respect of the importation of this particular material out of the many covered by the scheme, but, in practice, this would not be so because, in order to maintain our continuity of operation in our Galvanising Department to the extent required in normal market conditions, we must be assured of continuity of supply of the raw material and, in general, our imports of coil have come from within the European Economic Community. Apart altogether from this, any benefits likely to be derived by the company from the availability of cheaper products would be minimal compared to the damage which could be caused to us by the liberalisation of imports of products falling within the company’s production range.” It is apparent from the company’s comments that particular attention will have to be paid to developments in this sector during 1976. 9. Irish Fishermen’s OrganisationThis Organisation is critical of the provision in the Regulation (R11) permitting the importation of shrimps, prawns, etc. at a preferential rate of duty. These products originate in Bangladesh, Pakistan, Sri Lanka and Malaysia. The Organisation’s objections are as follows:— “(a) The consumer is paying relatively high prices in the mistaken idea that he is receiving Dublin Bay prawns, which he is not. (b) The local producer, on the other hand, is unable to compete with these imports, and is, therefore, forced to cut down substantially on his fishing effort for this species. An examination of the official figures for landed value over the past number of years will show a decline in this regard”. Prior to our accession to the Communities, Ireland did not operate any protective measures in the case of these products. The CCT duty is 18% and the preferential rate for 1976 is 7%. In 1973 we imported 197,126 kilograms of prawns and shrimps to a value of £227,955. In 1974 imports were 96,876 kilograms valued £182,143. In these circumstances support for Irish efforts to afford better protection for home produced prawns and shrimps may be difficult to elicit but the matter should be kept under active review. 10. Possible Aid for Particular SectorsThe European Parliament’s Committee on Development and Cooperation has expressed concern that aid to developing countries should not be at the expense of sectors of the Community whose own living standards are not particularly high. In its Resolution of 17 October, 1975 on the 1976 Scheme the Parliament calls on the Commission to submit “concrete proposals on the re-adaptation and restructuring of the sectors and regions affected by measures taken in favour of developing countries”. In the explanatory statement in the Committee’s report it is stated that “your rapporteur can see no objection to, say, drawing funds for the restructuring of particular sectors which incur special difficulties as a result of development policy, from funds available for development aid”. The Joint Committee favours the attitude of the European Parliament in this matter. (Signed) CHARLES J. HAUGHEY, Chairman of the Joint Committee. 10th December, 1975. |
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