The International Trade Commission yesterday voted 4-to-2 to recommend to the President that he impose a combination of tariffs and quotas on non-rubber imported footwear.
Selection of a remedy followed a commission finding last Dec. 28 that the U.S. shoe industry had suffered serious injury from imports.
Under the proposed tariff rate quota system, industry stands togain somewhere between 5,000 and 10,000 new jobs, far fewer than the 41,000 it had hoped to gain under the straight quota system it had asked for. Consumers, on the other hand, will have to pay something more than an additional $170 million annually for their shoes, rather than the $1.6 billion straight quotas would have meant, according to ITC staff data.
The commission's action will present President Jimmy Carter with his first major international trade decision. Under the law the Chief Executive has 60 days in which to act upon the ITC's recommendation.
This is the second time within less than a year that the ITC has found injury and recommended relief. The repetition was prompted by Congressional resolution after president Ford refused last April to accept the commission's recommendation and instead ordered trade adjustment assistance or federal loans for retraining unemployed footwear workers.
Mr. Ford took this antiprotectionist course for international political reasons. He was able to ignore the commission's recommendation for increased tariffs because it was not a majority decision. This time, instead of splitting 3,2 and 1, the six-member commission voted a clear majority in favor of tariff quotas. President Carter - unless President Ford decides to act fortwith - must either accept or reject without amendment.
Commissioner Catherine Bedell who had voted for straight tariffs on the first round, was the swing vote this time. She said her first decision had been made with too little preparation. Tariff/quotas, in her opinion present the "most equitable solution for all concerned, for the consumer and the unemployed" (footwear worker).
Chairman Daniel Minchew and commissioners Joseph O. Parker and George M. Moore voted with Bedel. Commissioner Will E. Leonard Jr. favored increased tariffs and commissioner Italo H. Ablondi voted for adjustment assistance.
As voted, tariffs of 40 per cent of port-of-entry prices would be imposed on all imported footwear above 265.5 million pairs annually for three years. (Some disposable slippers and costly athletic footwear would be excepted) In the fourth year the duty would be reduced to 30 per cent; in the fifth year, 20 per cent. After that, it would drop to current levels, now ranging from 5 to 20 per cent.
Chairman Minchew observed that higher tariffs would only encourage the domestic industry to come back for more protection at the end of five years instead of trying to become more competitive with foreign manufacturers.
Since 1968, 274 American shoe factories have closed and 65,000 workers have lost their jobs as imports increased steadily. They now account for about 46 per cent of all non-rubber footwear sold in the United States.
As bleak a picture as the manufacturers presented in ITC hearings, their plight was not altogether that bad in 1976, which showed increased profits over the previous year.
This, combined with the opposition of retail shoe merchants to restrictions on imports, helped push yesterday's recommendation away from stiff protectionism and in favor of a more moderate solution.