An interagency review of nonrubber footwear imports, undertaken in connection with the President's 1977 import relief program, has led to the conclusion that imports are expected to fall significantly below 1979 levels toward presurge levels and that import surges such as were experienced last year will not recur. The expected decline in imports, coupled with the overriding importance of avoiding any actions which add to inflation, dictate against revision of the import restraint program at this time. However, the administration review concluded that, should the expectations with respect to imports fail to materialize, the United States will take appropriate actions, with full consideration of the need to fight inflation, to assure that imports in fact do decline toward presurge levels, and that surges do not recur. These conclusions reflect the president's commitment to maintain the integrity of the relief program in a way which balances concerns for domestic jobs and production, inflation, and our trade relations with other countries.
To fulfill this commitment, current monitoring of footwear imports will be intensified in an effort to obtain better and more timely forecasts of import trends.
Imports of nonrubber footwear currently are subject to import relief action taken by the President in April 1977, following an investigation by the U.S. International Trade Commission. At that time, the President directed the negotiation of orderly marketing agreements (OMA's), which were subsequently concluded with Korea and Taiwan. The President also directed that a special trade adjustment assistance program be established to help the domestic footwear industry meet competition at home and abroad. In taking these actions, the President stressed that only problems as extreme as those then faced by the domestic shoe industry could justify the modest mandatory limits on imports. He noted that the long-term solution to the shoe industry's difficulties lies not in the restriction of imports, but in innovation and modification of the industry's facilities.
Since negotiation of the OMA's, imports from Korea and Taiwan have been stabilized at or below the levels provided in the agreements. However, in 1979, imports from noncontrolled countries (those not covered by the OMA's) unexpectedly increased. Aggregate imports from all sources rose by 8 percent to 405 million pairs in 1979. According to preliminary data, imports from Italy in 1979 increased over the previous year by 54 percent to 97 million pairs.
The administration's review of this situation began following the sharp increase in imports last year. In the third quarter of 1979, imports entered at an annual rate of 425 million pairs, which would have been an increase of 51 million pairs, or 14 percent, over imports in 1978. Imports in the fourth quarter of last year fell significantly, however, resulting in the smaller increase to the annual level of 405 million pairs. It is expected that this decline will continue in 1980. The review also showed that from 1978 to 1979, domestic production dropped by about 32 million pairs, or 7.6 percent, and employment was down by about 7,000 jobs or 4.5 percent.
As part of its review, the administration has, in recent months, consulted with shoe exporting nations in an effort to resolve the problem. The administration intends to continue these efforts and will monitor imports, both as to world and individual country figures, so as to be able to identify potential surges and take appropriate action.
The review was conducted under provisions of the Trade Act of 1974, which authorized the President to provide additional import relief if he determines that orderly marketing agreements are not continuing to be effective. In his June 22, 1977, proclamation implementing import relief, the President delegated to the U.S. Trade Representative this authority, as well as the responsibility to manage the import relief provided.