published on February 7, 1970 (35 F.R. 2731) and effective 90 days thereafter) which appears to treat such footwear as "like or similar" to do

Also included

mestic footwear and therefore subject to ASP valuation. in the footwear which Customs has been admitting under TSUS item 700.60 as not "like or similar" to U.S. footwear are a large volume of folding slippers, scuffs, boots with turned-down cuff of fiber, and shoes with fabric uppers and soles of vinyl--nearly all for women or misses-including some casual styles similar in style, but not in quality, to the casuals produced in the Woonsocket plant.

The imported footwear admitted under TSUS items 700.35, 700.43,

and 700.45 is in chief value of leather.

2/

They have uppers of leather

These imports range in

and soles of leather, rubber, or plastics. style from sandals and more sturdy types made in limited sizes for sale at self-service counters to high fashion types made in the same detailed sizes, and sold in the same outlets, as domestic leather shoes. The footwear admitted under TSUS item 700.35 is for men, youths, and boys and that under TSUS items 700.43 and 700.45 1/ is for women, misses, infants, and children. About four-fifths of the imports under TSUS item 700.35 in 1968 and 1969 consisted of shoes with an average landed cost of about $6 a pair; the remainder was sandals with an average landed value of about $2 a pair. About half the combined

1 Item 700.43 provides for footwear having a foreign (export) value not over $2.50 per pair; item 700.45, for more expensive footwear.

2/ The term "sandals" is used to refer to footwear with uppers consisting wholly or predominantly of straps or thongs, regardless of the

imports under items 700.43 and 700.45 in 1968 and 1969 consisted of women's and misses' sandals having an average landed cost of $2.20 a pair and a selling price at retail mostly in the range of $1.99 to

$6.99 a pair.

TSUS item 700.55 provides for various types of footwear of rubber or plastics which are not subject to ASP valuation for duty purposes as are the types provided for in TSUS item 700.60. The footwear admitted under TSUS item 700.55 consists predominantly of shoes with uppers of supported vinyl that are produced one width to a length for sale at self-service counters in variety stores, discount stores, and department store basements, and for sale by small stores in low-income neighborhoods. In 1969 about 20 percent of the imports consisted of zoris (thonged sandals suitable for beach and other casual wear) with an averaged landed cost of about 15 cents a pair; about 25 percent were folding slippers and sandals that generally sell at retail for less than $1 a pair; nearly all the remainder were street shoes of sturdy construction, mostly in popular casual styles resembling similar shoes of leather. The street shoes generally sell

at retail for less than $5 a pair.

Hereafter in this report, footwear of the type produced in

Uniroyal's Woonsocket plant as well as the imported footwear admitted

under item 700.60, which resembles the Woonsocket products will, in

general, be referred to as canvas footwear.

U.S. Tariff Treatment

Rates of duty

In the Tariff Act of 1930 canvas footwear of the type produced in Uniroyal's Woonsocket plant was originally dutiable at the rate of 35 percent ad valorem under paragraph 1530(e). The President, acting on the basis of an investigation made by the Tariff Commission under section 336 of that act, increased the duty on such footwear "with soles composed wholly or in chief value of India rubber or substitutes for rubber" by changing the basis for assessing the statutory rate (35 percent ad valorem) from foreign (or export) value to the "American selling price" (as defined in sec. 402(g) of the 1930 Act) of like or similar articles produced in the United States (T.D. 46158, effective March 3, 1933). Pursuant to a concession granted by the United States in the General Agreement on Tariffs and Trade, the rate of duty on canvas footwear was reduced to 20 percent ad valorem of the American selling price (ASP), effective September 10, 1955.

In the TSUS (effective August 31, 1963) the footwear of the type produced at Woonsocket was provided for in TSUS item 700.60 at the rate of 20 percent, subject to the ASP provision. As previously indicated, TSUS item 700.60 also provides for footwear which is not like or similar to the domestic articles for which the 1933 ASP proclamation was intended to provide increased tariff protection. The "not like" footwear

1/ In the Commission's investigation No. 332-47 (TC Publication 181, July 1966) it was estimated that on the footwear dutiable in 1965 on the basis of the ASP guidelines adopted in February 1966 (see discussion in last paragraph of this section on U.S. tariff treatment) the duties assessed would have averaged 60 percent of the export values

is dutiable at 20 percent of the export value 1/ in the country of

exportation.

Table 1 in the appendix shows the statutory and GATT concession rates for TSUS item 700.60 as well as for the other TSUS items cover

ing the complained of imports.

Administration of ASP provision

Until the early 1950's, Customs encountered no special problems in the administration of the ASP provision. From 1934 through 1945 most of the small volume of imports consisted of low-priced footwear of a type not produced in the United States; in 1946 and 1947 nearly all the imports were U.S. type footwear for use by the Government and therefore duty-free. During the 1950's and 1960's, however, various innovations were made in the construction of imported canvas footwear having the general appearance of sneakers in order to avoid assessment of the duty on the ASP valuation. For example, small pieces of highvalue leather were inserted in the midsoles, thus making the footwear classifiable as footwear with fabric uppers and soles in chief value of leather dutiable at 20 percent ad valorem based on the export When this opportunity for circumvention of the ASP provision was removed by legislation, 2/ pieces of high-value leather were used in the uppers to make the footwear classifiable as footwear in chief

value.

1/ Rubber-soled fabric upper footwear is on the "final list" published by the Secretary of the Treasury pursuant to sec. 6(a), Public Law 927, 84th Cong. (T.D. 54521). Such footwear is therefore subject to valuation under sec. 402(a), Tariff Act of 1930, as amended. Generally speaking in the absence of an ASP valuation, the valuation would be based on the export value.

value of leather.

This opportunity for circumvention was also

removed by legislation. 1/

Subsequently the use of various plastics in the construction of the sole and/or the uppers generally avoided the ASP provision until Customs issued a ruling to the contrary. In T.D. 55364(2) of April 7, 1961, for example, Customs ruled that footwear having uppers of fibers and soles that resembled, in appearance and general characteristics such as flexibility and resiliency, those of tennis shoes, basketball shoes, "Ked-type" shoes, and sneakers but not in chief value of india rubber were classifiable as footwear with uppers of fibers and soles wholly or in chief value of substitutes for rubber (in par. 1530(e)) and were subject to ASP valuation unless it could be established that the material in the sole was used in its own right and for its own characteristics. Subsequently, T.D. 55583 of March 12, 1962, stated that footwear resembling the canvas shoes here considered and having PVC and styrene soles and other soles with the characteristics of soles commonly found on such canvas shoes would be dutiable on the basis of the ASP whether or not the component material in chief value of the sole was used in its own right and for its own characteristics and not in place of (substitute for) india rubber.

Prior to 1963 the practice of Customs examiners in appraising the dutiable value of canvas footwear which they determined to be like or similar to domestic footwear was to use the unit value of the highest priced like or similar domestic article. In February 1963 the Bureau