No. 28 NAI DFA 315/28
Department of Industry and Commerce summary memorandum for Government on the Foreign Trade (Development) Bill (1945)
Dublin, November 1945
- The foreign trade of Éire shows a considerable excess of imports over exports in the trade with non-sterling countries. Before the recent emergency, this trade deficit was made up to some extent by investments and remittances from abroad, by expenditure of tourists, and by other means. The remaining deficit was met from our sterling credits, which were readily negotiable for foreign currency in London and elsewhere.
- Certain essential commodities, such as wheat, timber, paper, etc., have to be imported wholly or in part from non-sterling countries. Owing to her huge war expenditure, the large reduction in her exports and the liquidation of many of her foreign investments, Great Britain is no longer able to meet her own requirements in foreign currency, much less provide sufficient foreign currency to facilitate the foreign trade of this country.
- It is therefore essential to develop an export trade with non-sterling countries and in view of the intense competition, and the fact that our industries are mainly of recent development and lack the support of a large home market, the Minister is of opinion that some form of State direction and assistance is necessary.
- He proposes to set up a Foreign Trade Corporation to assist, develop and engage in foreign trade, principally in the exportation of Irish goods to countries overseas. The Corporation would have power to act as agent for individual Irish manufacturers or traders for the exportation of their goods or to purchase goods for exportation on its own account. It would also import named commodities when authorised to do so by order of the Minister.
- The Minister also proposes to establish and operate an Exporters' Insurance Scheme, under which he would insure export traders against the particular risks incidental to the export trade; the scheme to be operated on the usual insurance lines, but on a non-profit-making self-supporting basis.
- To encourage Irish Traders to enter the export trade, the Minister proposes that he should be empowered to give approval to claims for exemption from Corporation Profits Tax and from local rates on factory premises of firms whose export trade is satisfactory as to type, quality, volume, presentation, etc., and that such approved claim for exemption should be granted by the Revenue Commissioners and the Local Authority as the case may be.
- The Minister also proposes to grant any or all of the following state assistance to firms establishing a new industrial undertaking, a new line of goods, or increasing production of existing lines of goods, and giving a written guarantee to export specified quantities of such goods to countries overseas for at least ten years - where the giving of such a guarantee necessitates the erection of a new factory or the extension of an existing factory, viz:-
- grant of a free site,
- guarantee of new debentures required for construction of the new factory or extension,
- grant to cover initial cost of training workers.
- The immediate cost and liabilities of these proposals for the development of foreign trade are estimated very approximately as follows:-
- An advance of £2,000,000 from the Central Fund to establish and finance the Foreign Trade Corporation.
- A guarantee up to £5,000,000 from monies voted by the Oireachtas of insurances issued under the Exporters' Insurance Scheme.
- Expenditure on staff to operate the Exporters' Insurance Scheme. It is expected that this will be recouped out of the insurance premiums.
- Expenditure of (say) £30,000 per annum for the provision of free sites, wages for trainees, and guarantee of debentures for cost of new factories for exporting firms; such monies to be provided by the Oireachtas.
- Expenditure on staff required to administer the Act, which it is hoped can be obtained largely from existing staff released from emergency duties.
- The proposals will entail some loss of revenue under Corporation Profits Tax (paragraph 6) and there will also be some loss of rates to local authorities (paragraph 6).
- The Departments of Agriculture and of Local Government and Public Health object to the proposed derating of factory premises, and are submitting separate memoranda thereon to the Government. The Department of Finance accepts the principle that it is desirable to expand this country's export trade on general economic grounds and to secure increased resources of foreign exchange but objects to the Minister's proposals in regard to the establishment of the Foreign Trade Corporation, the administration of the Exporters' Insurance Scheme and the State assistance to exporters. The Department of Finance proposes alternative methods for encouraging and directing export trade as set out in paragraph 23 of the main memorandum.1 That Department considers the proposals for exemptions from Corporation Profits Tax objectionable and unconstit-utional, and appropriate to a Money Bill. The Minister for Industry and Commerce is unable to agree to the alternative proposals of the Department of Finance and in view of the urgency of the matter, has suggested that that Department should submit its objections direct to the Government in a separate memorandum. The Departments of External Affairs and Lands have no observations to make on the General Scheme of the Bill, as now submitted.
- The Minister for Industry and Commerce regards the adoption of these proposals for the development of foreign trade in countries overseas as a matter of urgent necessity and therefore submits the proposals at this stage for the authority of the Government to have a Foreign Trade (Development) Bill drafted on the lines of the General Scheme now submitted, subject to the proposals for exemption from Corporation Profits Tax being dealt with in a Money Bill if such a course is found to be necessary.
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