Subject: Memorandum of Determination under Section 301 of the Trade Act of 1974

Pursuant to section 301(a)(2) of the Trade Act of 1974 (19 U.S.C. 2411(a)(2)), I have determined that there are no unreasonable or discriminatory acts, policies or practices as alleged in Investigation 301 - 38. To help eliminate the difficulties United States footwear producers have experienced in attempting to gain access to the footwear market in Taiwan, however, I direct that offers received regarding marketing assistance for exporters of United States produced footwear, and of other measures that might provide greater market access for United States footwear exporters, be pursued.

This determination, together with the Statement of Reasons, shall be published in the Federal Register.

Ronald Reagan

Statement of Reasons

Background

On December 9, 1982, the United States Trade Representative initiated an investigation under section 302(b)(2) of the Trade Act of 1974 based upon a petition filed by the Footwear Industries of America, the Amalgamated Clothing and Textile Workers Union, AFL - CIO, and the United Food and Commercial Workers International, AFL - CIO. The petition alleged that trade restricting practices of Brazil, Japan, Korea and Taiwan denied market access to United States exports of non-rubber footwear. The investigations of the practices of Brazil, Japan and Korea are being conducted under the dispute settlement procedures of the General Agreement on Tariffs and Trade.

The investigation of Taiwanese practices centered on the import licensing procedure that allegedly restricted imports of non-rubber footwear and on tariff and customs charges. The American Institute in Taiwan (AIT) and the Coordinating Council for North American Affairs (CCNAA) consulted regarding these matters on January 17 and September 21 of this year.

Basis for Determination

Section 301(a)(2) authorizes the President to take all appropriate and feasible action in response to any act, policy or practice of a foreign country or instrumentality that is inconsistent with the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or that is unjustifiable, unreasonable, or discriminatory and burdens or restricts United States commerce. The investigation revealed that imports of non-rubber footwear into Taiwan have been exempt from import licensing requirements, or have been subject to automatic approval by foreign exchange banks, since 1973. Evidence, therefore, does not indicate that import licensing procedures constitute a barrier to United States exports of non-rubber footwear. Beginning in September of 1982, a series of temporary tariff reductions on non-rubber footwear were implemented. These temporary tariff reductions have been extended administratively until mid-1984. Legislative approval for permanent tariff reductions for these items is being sought.

(TABLE START)

The tariff reductions are as follows:

6400 Footwear with outer soles of leather or composition leather. Footwear (other than footwear falling within heading 1B6401) with outer soles of rubber or artificial plastic material:

.01 With leather uppers .... 65 .... 50

.02 With vegetable uppers .... 60 .... 45

.03 With synthetic or regenerated or glass fiber uppers .... 60 .... 45

.04 With animal fiber or furskin uppers .... 85 .... 60

.05 Safety shoes with steel toe protection for laborers' use .... 25 .... 20

.06 Other .... 60 .... 50

(TABLE END)

No further tariff reductions for footwear are planned in the immediate future. The CCNAA indicated that, in principle, requests for further tariff reductions in specific footwear products might be received sympathetically if there were some evidence that United States suppliers would benefit significantly. The United States has maintained that the existence of high tariffs dissuades United States exporters from exploring the Taiwan market.

The CCNAA has advised AIT of the willingness of the Taiwan Footwear Manufacturers Association (TFMA) to assist the United States footwear industry in marketing and promoting United States produced footwear products in Taiwan. The AIT has offered to include non-rubber footwear in AIT's Market Research Program on Taiwan during fiscal years 1984 and 1985.

The information gathered during the investigation of this case does not indicate that any restrictive trade practices are acting as a barrier to United States exports of non-rubber footwear. In light of the offer of marketing assistance and indications that proposals regarding specific tariff reductions would be received sympathetically, discussions directed toward assisting exporters of United States manufactured footwear to enter the Taiwan market should be continued.

[Filed with the Office of the Federal Register, 1:13 p.m., December 20, 1983]