Quotas on Shoe Imports Rejected by President
President Reagan, setting a collision course with an increasingly protectionist Congress, Wednesday rejected proposed import quotas aimed at sheltering the import-battered shoe industry.
The decision on whether to restrict shoe imports has been viewed as a key test of how firmly committed to its free-trade policies the Administration would remain in the face of a record trade deficit expected to hit $150 billion this year. Political pressure is mounting as the tidal wave of imports costs thousands of U.S. jobs a month.
In rejecting non-rubber-shoe import quotas that had been recommended in June by the International Trade Commission, Reagan argued that such a move could cost U.S. consumers $3 billion over the next five years.
The President’s Council of Economic Advisers estimated that imposing the quotas could have created as many as 22,000 new jobs in the shoe industry, paying an average of $14,000 each. But additional yearly consumer costs are estimated at $26,300 for each job created.
Shoe industry spokesmen reacted angrily and vowed to seek help from Congress. The President’s refusal to impose quotas is a “weak and vacillating response” that will encourage foreign producers to “flood our markets even more aggressively,” said George Langstaff, president of Footwear Industries of America. “The President has thrown down the gauntlet--Congress will pick it up and make trade policy.”
The industry will decide soon whether to ask Congress to override the President with legislation imposing quotas on shoes or to join with other hard-pressed industries in seeking a general bill dealing with rising imports, Langstaff said.
Several influential Republican senators joined the industry in sharp attacks on Reagan’s decision.
Denial ‘a Disaster’
The denial of relief “is a disaster,” said Sen. John C. Danforth (R-Mo.), chairman of the trade subcommittee of the Senate Finance Committee. Administration policy suggests that “the way to cure a pneumonia victim is to make him run the mile,” he added, promising to support a shoe quota bill and to rewrite the trade laws to “provide effective relief” for beleaguered domestic industries.
Two lawmakers from important shoemaking states, Sens. William S. Cohen (R-Me.) and Warren B. Rudman (R-N. H.), denounced Reagan’s action and said they will move quickly to obtain passage of a bill cutting imports.
“The President has abdicated his responsibility to the shoe workers of Maine; now it’s Congress’ turn to act,” Cohen declared.
But Peter Mangione, president of the Footwear Retailers of America, praised Reagan’s decision as a “great victory for the American consumer.” Imports provide almost all of the shoes bought by low- and middle-income consumers, he said, with a typical price of $15 a pair. Import quotas would have driven up that retail price by at least 12%, he added.
Meanwhile, domestic shoemakers dominate the business in the “better-grade” nationally advertised brands of footwear, Mangione said.
Reagan, although pledging to move swiftly against unfair trade practices, often has insisted that protecting one industry usually hurts others, because it provokes retaliation from U.S. trading partners and weakens the ability of foreigners to buy U.S. exports.
“The result (of imposing quotas) would be an immediate and significant loss of American jobs and a dangerous step down the road to a trade war,” he said in a statement.
With imports making up 76% of U.S. shoe sales and 20,000 U.S. shoemakers thrown out of work in the last five years, the industry is one of the worst casualties of the mounting trade deficit. About 75% of the industry’s 200,000 workers are women, and they tend to be low-paid, with an average wage of $7 an hour, about half the average U.S. manufacturing wage.
Already up against lower labor costs in countries such as Taiwan, Korea and Brazil, U.S. shoemakers and other exporters also have had to contend with a strong dollar that has made their products expensive overseas at the same time that it has lowered the cost of imports.
Non-Price Features
U.S. Special Trade Representative Clayton Yeutter told reporters in Washington that the decision reflects recognition that “our footwear industry, by and large, will never be price-competitive with imports”--and thus would not stand to gain from the temporary reprieve offered by quotas.
He noted that some U.S. shoe firms have remained profitable by excelling at non-price features, such as quality or style.
Yeutter refused to say directly whether the shoe decision foreshadows rejection of other industries’ demands for protection. But he said: “The overall sense of direction is fixed. . . . We are not going to go the protectionist route. That is the No. 1 message.”
He said also that Reagan probably would veto legislation that amounted to “sheer protectionism.” But he added that the White House will be “very aggressive in defending, articulating and pursuing the interests of the United States in the case of unfair trade practices.”
Yeutter added that foreign footwear makers have not been found to be engaging in trade practices that are considered unfair, such as selling their products in this country below cost or receiving government subsidies.
In announcing his decision, Reagan called for measures to relieve some of the hardship on shoe industry workers who are losing their jobs to imports. He urged, for example, that some of the $222.5 million available this year to retrain dislocated workers under the Job Training Partnership Act be directed toward out-of-work shoemakers.
Karen Tumulty reported from Santa Barbara and Robert A. Rosenblatt from Washington.
