In 1965, the Anglo-Irish Free Trade Agreement was negotiated. It took effect from mid-1966. Mutual access between British and Irish markets saw the removal of tariffs over a defined period
Opinion
Tariffs were long a weapon of choice for Ireland as well as the US
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Tariffs are viewed by those who use them as an economic weapon, but those who are the subject of tariffs tend to fight back.
An Act passed in 1930 in the United States which imposed severe tariffs on countries exporting to the US led to a wave of tariffs against US trade.
It is believed that all these tariffs contributed to the Great Depression. However, like most wars, tariff wars tend to come to an end.
The Mercosur negotiations between the European Union and Brazil, Argentina, Uruguay and Paraguay are under way at present. They would reduce tariffs very substantially on goods exported from the EU to Mercosur countries. In return, most agricultural goods would flow freely to Europe. Irish farmers are not happy about this. Consumers would enjoy cheaper beef under the arrangement.
US president Donald Trump has used tariffs with vigour. On occasion, he has stepped down from the highest level initially threatened to a lower level.
However, on Thursday he announced plans to hit pharmaceuticals with a 100 per cent import tax from October 1st, unless a company is building a pharma manufacturing plant in the US.
Officials in Brussels and Dublin are assessing where the threat leaves a EU-US tariff deal agreed earlier this year, which limited any coming US tariffs on pharma imports to a 15 per cent cap.
Perhaps there are lessons from the Irish experience. When Fianna Fáil, led by Éamon de Valera, took office in March 1932, the party’s economic policy differed from that of their predecessors in government. Protectionism would replace free trade.
The Finance Act of May, 1932, imposed tariffs ranging from 15 to 75 per cent on 38 types of goods. While nationalist motives may have existed in De Valera’s mind, it is not clear if he would have continued with the policy but for the outbreak of the Economic War.
The Economic War stemmed from a dispute over whether the British or the Irish government should receive the land annuities paid by Irish tenants under the Land Acts.
Agreement had been reached in 1923, but when De Valera’s government decided that the land annuities should be retained in Ireland, the British government responded with a tariff of 20 per cent, subsequently raised to 30 per cent, on Ireland’s main agricultural exports, with the intention of obtaining the equivalent of the land annuities money. The severity of the British reaction probably strengthened willingness for a fight.
The Economic War went on until 1938 when it was finally settled by the Anglo-Irish Agreement as the second World War approached. The Irish government agreed to pay £10 million of an estimated £80 million outstanding in land annuities. Both governments agreed to abolish certain tariffs.
But damage had been done by the Economic War. For example,Guinness, which accounted for 30 per cent of manufacturing output at the time, moved its headquarters to Park Royal in London.
In 1953, when Seán Lemass was minister for industry and commerce, he planned a systematic review of tariffs. The Treaty of Rome in 1958 and the establishment of the European Free Trade Association the following year were significant, although Ireland did not join it.
In the midst of the tariff turmoil, a lecture series was launched in UCD in honour of Fr Tom Finlay, SJ, professor of political economy. Later, the lecture became known as the Finlay/O’Brien lecture, when George O’Brien, a successor of Fr Finlay, was added. Over the years, the lecture was given by some of the world’s leading economists. Sadly, for whatever reason, the last lecture was delivered in 1996 by Barry Eichengreen from Berkeley University. His chosen subject was Europe’s economic and monetary union. Only one woman delivered the lecture – Barbara Solow, in 1980. Her lecture was entitled A New Look at the Irish Land Question.
The inaugural Finlay Lecture was given by John Maynard Keynes in 1933. It was a remarkable occasion. Almost all the members of the new government, led by De Valera, were present. Many members of the government replaced by De Valera also were present. According to another professor in UCD, James Meenan, it was assumed that the lecturer would denounce high tariffs.
Not so. Keynes remarked: “Were I an Irishman, I would find much to attract me in the economic outlook of your present government.” The members of the new government were delighted and De Valera enjoyed a long conversation with Keynes after the lecture.
Tariffs persisted for a few more decades but when Lemass became taoiseach, he said in the Dáil: “We can no longer rely for industrial development, to the extent we require it, on the policy of protection.” Ireland undertook two unilateral reductions in tariffs in January 1963 and January 1964, amounting to 10 per cent each.
In 1965, the Anglo-Irish Free Trade Agreement was negotiated. It took effect from mid-1966. Mutual access between British and Irish markets saw the removal of tariffs over a defined period. Entry to the European Economic Community followed in 1973.
Finola Kennedy is an economist and author of Cottage to Creche: Family Change in Ireland (2001), Frank Duff: A Life Story (2011) and Local Matters: Parish, Local Government and Community in Ireland (2022)
