32. Memorandum From the Special Representative for Trade Negotiations (Strauss) to President Carter 1

SUBJECT

  • Footwear Agreements

Pursuant to your directive of April 1,2 we have negotiated orderly marketing agreements with the Republic of China and the Republic of Korea to moderate the problems caused to our domestic footwear manufacturers, workers, and communities by rapid shifts in foreign exports to this country of non-rubber footwear. Since practically all of the increase in imports was attributable to Taiwan (which increased its exports to the United States from 88 to 156 million pairs from 1974 to 1976) and to Korea (which increased its exports to the United States from 9 to 44 million pairs from 1974 to 1976), the negotiations have been limited to these two countries.

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Under the law, your decision of April 1 to grant import relief must be made effective by having trade measures in place no later than June 30. If you approve, I plan to sign agreements with these two countries prior to June 1, if possible.

Both agreements cover a four-year period, starting June 28, 1977. Under the agreements, exports from Taiwan will be limited to 122, 125, 128, and 131 million pairs per year for the next four years, and from Korea to 33, 36.5, 37.5 and 38 million pairs per year. More liberal growth may be provided after the second year if the domestic industry recovers sufficiently.

All footwear on which the U.S. International Trade Commission (USITC) found injury is covered by the agreements except felt boot liners, a non-footwear item that is restricted under the bilateral textile agreements. Subceilings, by type of material in the case of Taiwan and mainly by type of footwear in the case of Korea, are provided in order to prevent shifts into higher-priced shoes or disruptive bunching in particular categories.

In general, the agreements are viewed favorably by the shoe manufacturers, shoe unions (which are small) and workers, and by the Hill. Some concern has been expressed about their effective implementation and about the possibility of disruptive imports from other countries. Concern has also been voiced by importers and retailers about inflationary effects, which we think will be moderate. Although none of the domestic interests are completely satisfied, I think that all can live with these agreements.

Additional background information is contained in Tab A. The principal provisions of the agreements are summarized in Tab B.3

ACTION REQUESTED

Representatives of Taiwan and Korea will seek authorization to sign the agreements as soon as they are advised that we are prepared to proceed. They have indicated that they believe such authorization could be obtained within a few days.

I believe the agreements provide a fair and balanced solution to our footwear problems, consistent with the guidelines in your directive. I have requested an Economic Policy Group meeting on this subject for Wednesday4 afternoon so that interested agencies will have an opportunity to raise any concerns that they may have prior to your decision. Overall, I believe there will only be mild objection from any [Page 127]source. Moreover, the European Community (EC), Brazil, Spain and other nations are exceedingly pleased that we have dealt with this problem in this limited fashion.

A Presidential Proclamation implementing the import relief is also being prepared for your signature. The Proclamation will be submitted to you after we have obtained Justice Department clearance.

Proceed to sign the agreements as indicated above:5

  1. Source: National Archives, RG 364, 364–80–4, Special Trade Representative Subject Files, 1977–1979, Box 4, Footwear 1977. Confidential. Sent to Carter under cover of a June 1 memorandum from Watson. (Ibid.)
  2. See Document 17.
  3. Tabs A and B are attached but not printed. Tab A is an undated background paper. Tab B is an undated paper entitled “Principal Provisions of the Agreements with the Republic of China (ROC) and the Republic of Korea (ROK).”
  4. May 25.
  5. Carter indicated his approval of this option and initialed “JC.” See footnote 4, Document 33.