Jul 18, 1985

U.S. PROPOSED FOOTWEAR RESTRICTIONS TO BE RAISED IN GATT.

GENEVA, JUL (IFDA/CHAKRAVARTHI RAGHAVAN)— U.S. moves to restrict imports of footwear is expected to be assailed by the European Community, as well as Third World countries, at the GATT Council meetings here this week.-

The issue is not specifically on the agenda, but the Community apparently has decided to raise it under "any other business", and attack the U.S. "protectionist" moves as being inconsistent with its efforts to promote a new trade round.-

Brazil, which exported about 854 million dollars of footwear to the U.S. in 1984, has already publicly voiced its concern over the U.S. moves, and its impact on Brazil's debt servicing.-

The U.S. has notified GATT, and through GATT the other Contracting Parties, of the substance of the rulings of the U.S. Federal Trade Commission (FTC), recommending restrictions on U.S. footwear imports.-

The U.S. has said that it was prepared to hold "consultations" with the principal suppliers to the U.S. market, on the proposed restrictions, before the U.S. administration acted on the recommendation of the FTC.-

The U.S. FTC in June 1985 decided (with one member dissenting) to recommend to the U.S. president measures to protect the U.S. non-rubber footwear industry, by fixing a quota of 474 million pairs of non-rubber footwear, including athletic wear, of a value of 2.5 dollars and above.-

The U.S. imported in 1984 about 725.9 million pairs, for a total value of 4.65 billion U.S. dollars.-

The quota limit proposed would thus represent a 34.7 percent cut in imports, and the new ceiling would be below the imports of 479.7 million pairs in 1982.-

The FTC recommendation went to the U.S. president on July 1, and under U.S. law, the president has to decide within 60 days to implement the recommendation, modify it in implementation, or reject it as being against U.S. national economic interests.-

The U.S. FTC recommended that the licence to import within the quota limits should be auctioned.-

European footwear exporters are seeking to get this changed, and country-quota limits fixed, based on average previous imports.-

They also want to take the average of 1978-84 period for fixing the quota.-

EEC exports went up from a 69.8 million in 1978 to 102.7 million pairs in 1979, and then dropped to 51.5 million in 1980.-

If the average of the last seven years were taken, the EEC imports would average at 69.1 million pairs, while if only the last four years (after the 1980 recession year) were taken, it would average 64 million.-

Under the FTC recommendation, the 474 million pairs quota is to remain for two years, and is to be increased by three percent in the third year, six percent in the fourth year and ten percent in the fifth year.-

The U.S. domestic industry's appeals for protection in 1983 were turned down by the FTC, but after the latest amendments to the U.S. trade law, the U.S. industry again applied for protection in 1984, and won its case partially before the FTC.-

In 1984, the three major sources of imports were: Taiwan (42.3 percent), South Korea (16.3 percent), and Brazil (15.1 percent).-

Italy accounted for another 8.7 percent, France for 0.8 percent, and Spain for five percent.-

Other major sources of import include Hong Kong (3.8 percent), China (1.7 percent), Philippines (1.1 percent) and Mexico (0.8 percent).-

In the U.S. market, the medium to high cost footwear accounted for five billion, and of this market the U.S. industry held a commanding 62 percent share.-

The low cost and athletic footwear end of the market accounted for about 2.5 billion, and of this, imports accounted for about 62 percent.-