611B.9417/134
The Department of State to the Japanese Embassy25
1. The Tariff Commission is about to report to the President the result of its investigation on wool-knit gloves under Section 336 of the Tariff Act of 1930. Indications are that this report will call for a shift in valuation from the foreign to the American selling-price basis, which means a great increase in duty. Action under section 336 will proceed unless a satisfactory alternative is adopted within the next few days. This is the season during which orders for wool-knit gloves are usually placed; early decision in the case is, therefore, vital to all parties interested in the wool-knit glove industry.
2. It appears that wool-knit gloves are being rushed into the United States in anticipation of the results of the Tariff Commission investigation. In the four years preceding 1935, imports during the first five months of the year were very small, varying from 1 to 3 percent of annual imports. Even in the year 1935 imports in these months did not exceed 6 percent. From all accounts, imports during January of this year, however, will be exceptionally large. Moreover, imports of wool-knit gloves actually entered for consumption in December 1935 were about 75 percent of such imports in November of that year, whereas December imports were about 33 percent of November imports in 1931, 12½ percent in 1932, 45 percent in 1933, and 17 percent in 1934. In addition, at the end of December, 34,000 dozen pairs of wool-knit gloves were in bonded warehouse available for entry.
3. Price limitations and improvement of inspection proposed in points 1 and 2 of the statement handed to the Department of State February 1, 1936 are both of only incidental interest to the United States Government. The primary interest of this Government is in a limitation of shipments that will assure a reasonable improvement in the competitive situation in the wool-knit glove industry in the United States. From no imports from Japan in 1933, imports of wool-knit gloves rose to 27,000 dozen pairs in 1934 and to 489,000 dozen pairs in 1935. The large importation in 1935, which is continuing in 1936, creates a very serious competitive situation, particularly in view of the fact that the domestic industry produces only about 700,000 dozen pairs annually.
4. The average of imports of wool-knit gloves from Japan during the three years 1933–1935 is about 172,000 dozen pairs and this figure would seem to afford a reasonable basis for an agreement for the limitation of shipments of wool-knit gloves from Japan to the United [Page 833] States. But in order to prevent the necessity for action under section 336, the United States is willing to accept a basis more favorable to Japan. The most liberal agreement which the United States can accept in lieu of action under section 336 would be an undertaking so to regulate shipments of wool-knit gloves from Japan to the United States that actual arrivals in this country (general imports) during the calendar year 1936 shall not exceed 225,000 dozen pairs. This amount equals approximately one third of production in the United States in 1934 and in 1935; considering the 34,000 dozen pairs of Japanese wool-knit gloves in bonded warehouse at the end of 1935, it will permit a total entry for consumption of 259,000 dozen pairs of gloves, or slightly in excess of the average annual import for consumption of 258,000 dozen pairs in the two-year period 1934–1935.
5. The suggestion, contained in the preceding paragraph has been made as liberal as the existing situation will permit in the hope that a mutually satisfactory arrangement can be reached.
The shortage of time, however, makes it imperative that if action under Section 336 is not to proceed immediately, the suggestion must be accepted without amendment not later than February 8.
- Handed by Assistant Secretary of State Sayre to the Counselor of the Japanese Embassy, February 4.↩