United States-Republic of China Agreement on Shoe Imports Announcement of Signing of an Orderly Marketing Agreement.

The United States and the Republic of China (ROC) today signed a 4-year Orderly Marketing Agreement (OMA), under which Taiwanese exports of nonrubber footwear to the United States will be limited to levels well below their record high of 156 million pairs in 1976. The agreement, signed by Ambassador James Shen of the ROC, and Robert S. Strauss, President Carter's Special Representative for Trade Negotiations, was announced by Ambassador Strauss.

Negotiation of a similar agreement between the United States and the Republic of Korea is nearly complete and is expected to be announced next week, Ambassador Strauss reported.

In announcing the OMA with Taipei, Ambassador Strauss commended the Governments of both the Republics of China and Korea for their "cooperative statesmanship" in developing "fair and equitable negotiated solutions" to pressing international shoe trade problems.

"Any agreement such as the one we have just concluded," Ambassador Strauss noted, "represents a temporary trade restriction which the President has said he is very reluctant to take. These [Orderly Marketing] Agreements are not the ideal long-term solutions to our trade problems."

"Our agreement with Taipei, however," Strauss said, "is a useful, effective, and acceptable way of giving one of our basic domestic industries a reasonable temporary period in which to adjust to severe, sudden, short-term market disruptions, and to become more competitive--which is essential in the long run. As such, it comes to grips with an immediate economic problem, which if allowed to continue to fester, could cause injury to our workers and industry to reach such proportions as to fuel the fever of protectionism. In this total context," Strauss observed, "we have just administered an emergency anti-protectionist prescription."

Ambassador Strauss also noted that "in accordance with President Carter's instructions, the Departments of Commerce and Labor and my Office are working on a newly designed Federal Trade Adjustment Assistance program which will deliver much more effective help to trade impacted domestic firms and workers. Details of this proposed new program will be announced before the end of this month."

The OMA with Taipei provides that in the first year, from June 28, 1977, through June 30, 1978, ROC exports to the United States of three categories of nonrubber footwear leather, plastic, and "other"--will not exceed 122 million pairs. This quota will be increased by 3 million pairs in each of the succeeding years, 1978-79, 1979-80, and 1980-81, up to a limit of 131 million pairs in the final year of the agreement. Each of the three footwear categories has a separate sublimit. Exports of felt footwear liners under the international Multi fiber Arrangement (MFA) are not included in these quotas.

The Republic of China has assured the United States in side letters to the agreement that it will not permit disruptive shifts in the type, material, or price range of footwear that it exports, and that it will not circumvent the agreement by disruptively shifting into lines of footwear that technically are not covered by the OMA, but that in fact compete with lines of shoes that are covered.

The OMA also provides that if other U.S. footwear export suppliers should move to take advantage of Taipei's export limitations by unduly increasing their shipments to the United States, the United States may take unilateral action to correct the inequities.

This OMA, and a similar draft agreement with Korea, were approved by President Carter as appropriate import relief, in the national economic interest under the Trade Act, to remedy serious injury to domestic footwear makers and workers, which was found by the U.S. International Trade Commission (USITC) to have been substantially caused by increased imports. The USITC had recommended a system of tariff-rate import quotas, which the President rejected as not being in the national economic interest.

U.S. imports of nonrubber footwear increased from 265 million pairs in 1974 to 370 million pairs in 1976. Of this 105-million-pair increase, Taiwan accounted for 68 million pairs and Korea 36 million pairs, for a total of 104 million, or 99 percent of the increase over the 2-year period.

The OMA provides for consultations on any future-year quota adjustments warranted by conditions in the domestic footwear industry and other economic factors; the USITC will monitor conditions in the domestic footwear industry as well as any inflationary impact of the agreements on U.S. consumers and prepare appropriate reports on a quarterly and yearly basis. Ambassador Strauss noted in this connection that the agreement should not have any significant inflationary impact nor adverse effect upon consumers.