Views of Commissioners Thunberg, Clubb, and Moore

Relevant data indicate that workers in the four firms with which

this investigation is concerned are unemployed or underemployed by reason of imports within the meaning of the Trade Expansion Act of 1962. Relevant data further indicate that the Benson Shoe Co. has

been seriously injured by imports within the meaning of the law. These statements are true if one defines the 'like or directly competitive" imported articles narrowly as implied in the factual part of this report. If, moreover, one defines 'like or directly competitive" articles more broadly, as we believe appropriate with respect to as differentiated a product as women's shoes (see footnote on pp. A-5 and A-7), the evidence in support of these statements is significantly enhanced.

Between 1965 and 1969 imports of competing shoes (narrowly defined) septupled; the relative importance of imports in domestic consumption also increased sevenfold. The rate of increase, moreover, quickened in 1968, the year when Kennedy Round rate reductions began to be implemented.

The shoe industry is characterized by intense competition at

all levels of production and distribution; in consequence, profit rates are typically low and business mortality rates high. Enormous variety in quality and style is available at all price levels with

production, imports, and sales being concentrated at the lower end

of the price range where competition is most intense. The four concerns under consideration have all produced for this part of the

market.

A great increase in the range of types, styles, and qualities available to consumers of shoes has been made possible in recent years by technological developments in production and marketing. Partly as a result of the great variety of footwear available, the traditional distinction between dress shoes and casual or play shoes has become less appropriate to actual consumer practice. A glance at the pedal extremities which traverse a city street today confirms such a change in the mode of dressing in the United States.

For present purposes the increased product differentiation means that the range of articles directly competing with the output of any single producer has been expanded. We believe that the imports shown in the table on page A-8 of this report understate the problems of the four firms here considered. The import figures in

that table are estimates representing only the imports of women's and misses' dress shoes of the specific types produced by those four firms. If imports of other competing types of women's and misses'

should be--the figures representing the relevant imports are increased many fold. Imports of women's and misses' footwear with supported vinyl uppers entering under tariff item 700.55, for example, totaled 30 million pairs in 1965 and rose to 71 million pairs in 1969. If a third to a half of these imports are deducted--the portion which is believed to consist of folding slippers and sandals generally selling at retail for less than $1 a pair--and if the remainder is added to the figures shown on page A-8, the relevant imports are approximately 22 million pairs in 1965 and 70 million pairs in 1969. Thus, the relevant imports more than tripled from 1965 to 1969.

In the

Given the extended range of competing articles in today's markets, the role of expanding imports can be of crucial importance to the economic health of firms at the margin of the industry. shoe industry, as is true in other consumer goods industries, marginal producers are frequently those producing for the lowest price ranges. In these price ranges, where a few cents per pair marks the difference between profit and loss, an additional tariff concession of apparently modest amount can be sufficient to cause the demise of the marginal operations. Thus we conclude that increasing imports

of footwear like or directly competitive with the products produced

in these plants would not be at their present level were it not for

the trade agreement concessions,

and that these increasing im

ports are causing unemployment or underemployment to the workers

in the firms covered by this report.

We further conclude that these increasing imports have caused serious injury to the Benson Shoe Co. Total net sales of Benson

Shoe declined from

*

*

*

We conclude, therefore, that the requirements of the Act have been satisfied and that the petitioners should be ruled eligible for adjustment assistance.

1/ The current rate of duty on imports entered under item 700.55-not shown in table 1 of this report--is 8.5 percent ad valorem, which is the third stage of the five-stage concession granted in the Kennedy Round tariff negotiations. Pursuant to section 203 of the Tariff Classification Act of 1962, the July 1, 1934, rate (i.e., the pretrade-agreement rate) on such imports is the column 2 rate, namely,

INFORMATION OBTAINED IN THE INVESTIGATION

Description of Articles Under Investigation

The output in recent years of the four plants with which this investigation is concerned has consisted entirely of footwear for women and misses 1/ made by the cement process in styles known in the trade as dress shoes. The term "dress shoes," originally used to designate shoes designed to wear with formal attire, has been used for many years to refer to the types of footwear intended principally for business and social activities; women's shoes intended for formal wear, which are regarded here as "dress shoes", are now frequently referred to as evening shoes, slippers, or sandals. Generally the term "dress shoes" does not refer to footwear suitable for active sports, beach wear, other leisure activities for which casual attire is worn, or occupations requiring substantial amounts of walking or standing.

the

The cut of the uppers, the style and height of the heels, material used for the uppers, the kind of ornamentation, and the material and construction of the sole are the principal features of women's shoes that are intended to determine the activities for which a particular pair is worn. For many years the principal type of dress shoes worn by women in the United States was the pump--a closed-toe, closed-back, slip-on shoe held to the foot without fasteners (such as laces, buckles, buttons, or snaps), with light-weight soles, and with heels of 2 inches

or higher.

1/ The terms women' and "misses are used here, as in the Tariff Schedules of the United States Annotated (TSUSA), to differentiate size categories of footwear, not age of wearer, as follows: "women" refers to footwear in American women's sizes 4 and larger and "misses" to American misses' sizes 12 and larger but not as large as American women's size 4. In the remainder of this report, the term "women's" will be used in general to refer to footwear intended for both women