The Growing “Threat” of Imported Goods in the 1970s (1977)

SOL STETIN, Clothing Union Official: Brothers and sisters, fellow Americans, I`d like to say that in recent months President Carter has been speaking out on the is sue of human rights for people all over the world. I`m for that, but how about some human rights and some jobs for the people here in America! (Applause.)

ROBERT MacNEIL: Good evening. Two of the country`s largest labor unions today mounted a nationwide challenge to President Carter`s free trade policies. Led by thousands of workers in Herald Square, New York, members of the Ladies Garment Workers and Amalgamated Clothing and Textile Workers staged rallies in major cities across the country. They were demanding that the Carter administration impose import quotas on foreign goods which are underselling American goods, and protesting the President`s recent decision not to put import restrictions on foreign shoes in particular.

While the rank and file took to the streets, George Meany and other labor leaders took their case directly to the White House. Tonight, the growing demand for protectionism, and its consequences. Jim?

JIM LEHRER: Robin, to understand what`s happening we only have to look at these two pair of shoes, bought this afternoon in Washington stores. This pair, made in Taiwan, sells for $16.99. This similar pair, made here in the United States, has a $31.00 price tag on it. Well, you don`t have to be an international trade expert to guess the result -- people are understandably buying the cheaper shoes. In fact, more than half of all shoes now sold in this country are foreign made, compared with just twenty-one percent ten years ago. And it`s not just shoes. More than half of all radios, seventy percent of the black and white TV`s, fifty percent of the sweaters, thirty percent of the typewriters, to name just a few others. As a result, American plants are being closed, people are being laid off, and the companies and their unions are crying for help. Their major place to go for this help is to something called the International Trade Commission, set up in 1974 to advise the President on how to help industries hurt by imports. Last month, as Robin said, the ITC sided with the American shoe industry in its specific grievance, recommending a series of protectionist quotas and tariff restrictions on foreign imports.

But President Carter, who does believe in free trade, rejected the proposal, opting instead for trying to negotiate voluntary restraints with the countries involved, particularly Taiwan and the other big shoe manufacturer, South Korea. The man who has the job of negotiating those agreements for the United States is Robert Strauss, former chairman of the Democratic National Committee, now President Carter`s special representative for trade negotiations. Ambassador Strauss, why did the administration reject the proposals for quotas and higher tariffs to help the shoe industry specifically?

ROBERT STRAUSS: In the first place, I reject your opening statement, Jim. This President did what no other President has done.

This President said, "I`m going to grant relief." He didn`t say we were going voluntary, he didn`t say anything; he said, "I`m going to grant relief, and I`m instructing my trade negotiator for the United States, Bob Strauss, to go out and negotiate that relief." Now, we don`t know that it`s going to be voluntary -- maybe there will be orderly marketing agreements that aren`t voluntary, that are mandatory, and that gives you the authority to ...

LEHRER: But the countries have to agree to them, or it`s no negotiation, right?

STRAUSS: But once you get that negotiation, it also gives you control over every other country -- once you get a couple of those bilateral agreements negotiated. So this President said, "We`re going to grant relief." And when you grant relief it`s a delicate balance, a very delicate balance to draw. President Carter does believe in free trade. I believe in free trade. Free trade also means fair trade, it doesn`t just mean open trade; it means that the competitive markets of the world shall be open to the products and the produce of this country, just as ours are open to theirs, and it doesn`t take into account all the tens of millions of jobs that depend on our export as well as our import. These aren`t easy decisions, they`re tough decisions. They`re not popular decisions, they`re hard decisions. This President has to make those decisions, and I have to help him; and I`m going to do so.

LEHRER: All right. Why did he turn down the proposal for quotas and tariffs in the shoe thing specifically?

STRAUSS: In the first place, in my judgment when you begin to balance, one of the first things you have to put into the factoring is the question of inflation; and a tariff that puts thirty percent means that there`s a thirty percent increase at least in price in shoes. Now, there are those who argue that the thirty percent isn`t passed on to the consumer. But all I know is that if you raise your tariff rate from ten percent you raise the cost of shoes to the consumer. The biggest part of the import problem comes from low-cost shoes, shoes that sell for $2.50 and less to the retailer in this country; and had we accepted the ITC solution I don`t think it would help the shoe industry. Taiwan, Korea -- they weren`t concerned about the thirty percent increase in tariffs; all they want is the right to ship in unlimited amounts. We`re going to seek another sort of relief, without tariffs, but maybe to put a cap on that and limit the amounts that come in. And therefore, you`re not charging the consumer near as much, you`re not adding to the inflationary process, and you`re helping the industry. These are the kind of problems that are tough; they`re not simple.

LEHRER: Right, but one of the tough problems that you`re going to face -- let me just ask you about it: how in the world are you going to sit down at a bargaining table and convince the people of Taiwan, say, who make this particular shoe, that they shouldn`t send so many over here and sell them here? How are you going to get them to do that?

STRAUSS: That`s my ,job, how I`m going to get them to do that and I`m in the process of doing it right now, and you can take my word for it --we`ll negotiate some responsible agreements between this nation and other nations that are importing shoes.

LEHRER: Responsible and also that will take care of the complaints that have been registered by the shoe industry and by all the other industries that are affected by these things at this point?

STRAUSS: Jim, you know, I said the other day to my wife, Helen, whom you know very well, that I didn`t take this job to win a popularity contest. I`d have stayed out of it if I was trying to be popular. These are not going to be popular decisions, and I don`t really believe that anyone is going to give me an A+ on my report card when I get through. I`m not going to please anyone entirely, but I`m going to be responsible in my recommendations to the President, and this President`s going to be responsible in discharging his duties in trying to find a balance -- a very delicate balance. I`m well aware; I`ve been in shoe factories; I campaigned there, the President campaigned there, and I know there are those who argue that if the industry can`t make it on their own, why the industry ought to let it die if it can`t compete. That sounds well in the halls of academia and it reads well when you write a text on it. But when you`re talking about human beings and you`re talking about lives, people who need ,jobs, it doesn`t sell very well to me and it doesn`t sell very well to this President, and he understands that. My mother worked until she died, and when someone tells me that they could have just retrained her and instead of selling shoes she could have gone and learned to make valves at the age of sixty-five, that`s hogwash. So I`m not insensitive to that.

LEHRER: All right. Robin?

MacNEIL: The unions claim that nearly half a million workers took part in today`s demonstrations and work stoppages across the country in New York; Los Angeles; Philadelphia; St. Louis; Cleveland; San Francicso; Augusta, Maine, and other cities. One of the leaders here in New York was Gus Tyler, Assistant President of the International Ladies Garment Workers Union. Mr. Strauss just said, Mr. Tyler, that he didn`t expect to make everybody happy. Did what he said make you happy?

GUS TYLER: It made me fairly happy. Bob Strauss said that he wasn`t expecting to get an A+, but if he proceeds to deliver on his general declaration of this evening he`s going to get an A- at least, because he indicates that the President of the United States is instructing him to grant relief; and while he has commented on the weaknesses of a higher tariff Bob did make a point that orderly marketing agreements may be the answer. Now, in the textile and apparel industry we have been living under what should have been orderly marketing agreements from 1973 to the present, and those agreements have been killing us.

MacNEIL: Those agreements include clauses that you will only increase imports at the rate in which our production is increasing in this country - - things like that?

TYLER: Well, Bob Strauss did not negotiate those agreements. Basically what you say is the point. Others before him negotiated those agreements, and now they`re up for renewal. First we have to agree to have a worldwide agreement, and then we have to do the hard bargaining; and it`s not too complicated a problem. We feel that if the American market grows by two percent for a given product -- textile or apparel -- it makes sense for foreign imports to go up by two percent or domestic production to go up by two percent or something in that category. We grow, they grow, we live and we let live, and we share without being shorn. But what has happened up to the present is that in these agreements when our market was expanding only two or three percent imports were permitted to come in at the rate of six percent, and then the next year six percent onto six percent, the kind of a system of compound interest. And then a whole series of loopholes so that they were pouring in at nine, twelve, and twenty-five percent increase per annum.

MacNEIL: Could we get into some of those details a bit later, and just let me ask you: first of all, was it news to you to hear that the President had instructed Mr. Strauss to arrange relief?

TYLER: I`m not at all surprised that the President would have that kind of a sympathetic approach, and I am delighted that Bob Strauss has now put it in this concrete form.

MacNEIL: But that`s new to say it quite as starkly as that, is

TYLER: I think that the impression around the country has been that President Carter in his first statement just said flatly, "No." And I believe that Mr. Strauss` statement is a clarification of that point of view, and it certainly provides much more hope to all of us.

MacNEIL: Could you briefly spell out the damage to your industry so far -- the apparel industry -- by foreign imports in terms of jobs lost?

TYLER: In apparel alone, within a period of seven years, about 50,000 fewer jobs in the industry. In textile and apparel, the largest factory employer in America, 2,300,000 employees. That industry has lost 144,000 jobs within ten years. Now actually, because the demand was growing in this country, there shouldn`t be fewer workers in the industry, there should have been more workers in the industry. And if you view it that way, if we merely held onto our share of the market that we had ten years ago, there would be another 300,000 to 350,000 people employed in the manufacture of textiles and apparels in the United States.

MacNEIL: So you`re talking in terms of roughly half a million jobs either lost or not held onto in terms of market share.

TYLER: And I`m only talking about one industry. I`m not talking about the 100,000 lost in basic steel or the 100,000 lost in electronic assembly or the 70,000 lost in shoes. May I comment on the subject of consumer, or do you want to hold that until later?

MacNEIL: Why don`t we come back to that a little bit later?

TYLE R: All right.

MacNEIL: Thanks. Jim?

LEHRER: Yes, Robin, as I demonstrated earlier with my little bit with the two pair of shoes, the shoe industry has been also hard hit by the imports. Since 1968 some 300 U.S. shoe manufacturing plants have been closed and as was just said there has been a loss of 70,000 jobs. Ronald Ansin knows the problem. He`s the chairman of the Anwelt Corporation, maker of several lines of footwear in factories in three New England states. First, Mr. Ansin, what has been the effect, specifically, on your company?

RONALD ANSIN: Just about all the shoes that we made, going back three or four years ago, have today been replaced by imports. We were in the business of making work shoes for large chains in this country. We were attacked first by imports from the Iron Curtain countries, and more recently literally overwhelmed by imports from Korea.

LEH RER: All right, now what has this meant in terms of employees and plants and that kind of thing? Have you been able to compensate in any way?

ANSIN: We`ve been able so far, Jim, to move into new products and to compensate in that way. It`s getting more and more difficult, frankly. As we move into a new line the imports seem to come right behind us, and it`s very, very difficult to keep apace and very, very costly.

LEHRER: Mr. Tyler was willing to give Mr. Strauss an A-. What kind of grade would you give him, looking at the special perspective of the shoe industry in what he just said he was now instructed to do by the President?

ANSIN: With specific reference to Ambassador Strauss, I`d give him very high grades indeed, based on what I`ve seen so far. Frankly, if this country is to have an ambassador to do this negotiation...

LEHRE R: I didn`t mean Strauss personally, I meant the policy that he`s now going to try to do. Do you think that he can give you the kind of relief that you need in your industry by negotiating these kinds of deals he`s talking about?

ANSIN: He can. The question is, whether that will happen. I would prefer to have seen the President impose the sort of cap to which Ambassador Strauss alluded a moment ago, and then to negotiate from there. This would give Ambassador Strauss some real leverage from which to negotiate. Now, I can understand all the reasons that he didn`t do that. It just would have made the job that much easier. He certainly can do it. What we`d have to have, of course, is agreements with Taiwan and Korea, as the Ambassador mentioned, which have teeth in them, perhaps a couple of other agreements with some of the very major exporters of footwear to this country, and then we`d have to have some sort of an understanding which would prevent the pairage we pick up from those countries from simply shifting to other countries. You know, there`s about eighty percent of the world with wages less than a dollar an hour. There`s an awful lot of people who can make footwear...

LEHRER: In other words, you make a deal with Taiwan and that particular company might just open a plant somewhere else, right? In fact, a lot of American companies have already done that, haven`t they?

ANSIN: That`s been the trend, to move. We used to be faced primarily with footwear from Italy, Spain, Japan -- going back a few years.

LEHRER: Mr. Strauss mentioned a moment ago, and it has been suggested by people that maybe the shoe industry is one of those American industries that ought to just accept the fact that maybe this is not something that the United States can make at a good cost and maybe you and the rest of the shoe industry ought to go on to something else and leave that market to foreign makers. Does that make any sense to you?

ANSIN: I think I could do that. I think it`s extremely difficult, though, for the people who have spent their lives in the footwear industry, and I think Ambassador Strauss put it very, very well. I think it`s awfully difficult for a person who has learned a skill and is making a darn good wage -- but it`s a craft skill -- to simply get retrained at the age of forty or fifty or sixty for another job, particularly when he lives, as most of the footwear people do, in the little towns. Three-quarters of our industry is in communities of less than 20,000, nearly half in communities of less than 5,000. Other factories just don`t move in and those people don`t tend to move out.

LEHRER: In a word, Mr. Ansin, if something is not done., how disastrous is it going to be for the shoe industry and by when?

ANSIN: Extremely disastrous. We have now lost fifty percent of the American market for footwear, amounting to over 100,000 jobs in the footwear industry and its direct supplier industries. There`s still a quarter of a million jobs at stake, and we`re losing them at a preposterous rate. Something must be done; I don`t think there`s any question about that, and I think that was the gist of that part of the President`s announcement to which Ambassador Strauss alluded today -- that footwear is indeed a special case; is a case where it has just gone too far. And the President`s decision to grant relief is long overdue.

LEHRER: Thank you. Robin?

MacNEIL: Yes, Ambassador Strauss, besides the kind of relief you as a negotiator are trying to arrange in those countries which send cheap imports here, what other parts of the President`s policy are there to relieve these industries?

STRAUSS: In the first place, let`s start with what other parts of the President`s problems there are. The President is as sensitive as anyone in America -- maybe more than most -- to the problems of the shoe industry. The President campaigned, as did I, all across this country, in almost every state and most of the communities, and the President traveled second and third floor shoe factories and he saw men and women of middle age and past that working, and working hard, and he saw the job losses there; and he`s very sensitive to that. But I would also point out to you that this President can`t just take that one factor into consideration, although it weighs heavily on him; nor can I. As I advise him, we`ve got a serious problem in this nation, as we all know, of inflation, and when you start talking about doing anything that raises the price to the consumer, then you`re adding to the inflationary process, and if we don`t bring inflation under control in this country we won`t have anything to trade free with, we won`t have anything to be free about, in my judgment or in his. So you`ve got an inflationary problem. The second problem he has is most of these shoes that come in -- the biggest problem comes from Korea and Taiwan, cheap shoes. The European imports have not gone up the past few years; as a matter of fact, several of them have gone down; Italy, for example. People fail to know that their imports to this country have gone down...their exports to this country. But we`ve got a consumer problem. When you reduce the number of cheap shoes available to the low-income consumer you`re taking it out on the poor, who can afford it the least. And so it`s a very complex problem, Robin, and it just doesn`t lend itself to easy solutions. And I might say that those solutions that we`re seeking -- as I said earlier, why, this President has declared there shall be relief; I`m not saying it`s going to be relief that`s going to elate the shoe industry, for example, or labor related to that. But I think when they grade it fairly they`ll know that it was a responsible course.

MacNEIL: Can I ask you again, what else does the President suggest in addition to trying to get Korea, Taiwan and other countries to lower the amounts of their exports to this country? What other forms of relief?

STRAUSS: With respect to what?

MacNEIL: Well...

STRAUSS: One of the first things he did is say that one of the things we took was the ITC ruling in there that I`m not looking on with any great favor, and I don`t think he is, is the tariff aspect of it. The tariff aspect -- putting a thirty percent tariff on isn`t going to cut down the import of shoes from Taiwan or Korea; I don`t care what anyone says. They love it. You can add thirty percent to a shoe that costs $1.20 and send it in here and they still can compete. And that`s one thing that just adds to the price, adds to the inflationary process and doesn`t accomplish another darn thing.

MacNEIL: Okay, thank you. Do you feel that the route the President is going is going to be sufficient if it actually works as Mr. Strauss hopes it will?

TYLER: If they`re able to work out orderly marketing arrangements we will not be able to put unemployed shoe workers back to work immediately, or unemployed garment workers back to work, but the matter won`t just become worse in the coming years. But the real point that the administration appears to be making through Bob Strauss is that they are under some compulsion to go the way they are because they want to protect the consumer, and I would like to say a few words on that. We did see two pairs of shoes. They seem to be alike, one for $19.00 imported, the other for $31.00 domestically produced. I`d like to take a look at those shoes next year and the year after, because we`ve had experience on this one. What happens is, a thing occurs in two stages. Stage one: the import is brought into this country and sold at a somewhat lower level. It takes a year or two, and a whole line of production is destroyed in the United States. Then the American manufacturers who are bringing over the imports or the importers or the chain stores then proceed to move the imported object onto the market at a marked-up price. When they used to sell the American product the markup was 100 percent, a dollar on a dollar. When they bring in the import it goes two and three hundred percent, two dollars or three dollars. Point two: before the Senate of the United States we brought in visible evidence, not just two pair of shoes. We brought in bras, blouses, panties and skirts -- identical; identical item, identical brand name, identical price, one made in America, one made in Honduras, one in Guatemala, one in Taiwan. And what was happening now was that a few producers were in control of the total situation; they brought it over cheaply and ran this very high markup on it so after they`ve knocked out the small independent American producer the price jumps. Final point: there is a tremendous hidden cost that the American public pays. My rough figuring is about two million people have been displaced in the last ten years as a result of the imports. Those are lost wages in the billions. Two million people unemployed cost Uncle Sam $32 billion a year in terms of unemployment insurance, lost taxes, welfare. On top of that there`s a bill for delinquency and crime and disease and death. If you want to add all that up, it`s no bargain for the consumer who thinks that he or she is getting a bargain.

MacNEIL: Thank you. Jim?

LEH RER: First, Mr. Ansin, what has been your experience in terms of competing directly, say, with a foreign-made shoe? Does Mr. Tyler`s rundown pretty well fit with your experience?

ANSIN: It`s remarkably accurate. I think he really understands the shoe business. I have not examined those particular pair of shoes but in truth, as the retailer chains -- and these are the large retail chains that are really benefiting from these imports -- have admitted in their own testimony that the markup on imports is far greater than the markup on domestic production. The real bonanza is to the big retail chains, not to the consumer, in truth, from imports. The other aspect of this question, which is also true, is that we have already seen, starting in the footwear industry, the trend toward price increases from imports once the importers have knocked out the domestic production. Those segments of footwear where import penetration is the greatest have the fastest-rising prices today.

LEHRER: But the fact is, it still costs half as much to buy these shoes right now as it does those, and there`s nothing that can be done about that except either raise the price of these shoes or don`t allow them to be sold, right?

ANSIN: If they were in fact comparable shoes. I think very often when you talk about a fifty percent price differential you`re talking about something that is bought in a mass market as against a branded shoe that is bought in an individual retail store, or different materials, or things of that sort. On comparable shoes you rarely get that kind of a difference.

LEHRER: Mr. Strauss, finally, just a philosophical thing; here we have Mr. Ansin we have Mr. Tyler and all of the people that they represent, symbolically and in a real sense. What kind of responsibility, in a free enterprise system and free trade idea that you and the President and others support, does the federal government have to help these people?

STRAUSS: I think the federal government has a responsibility, unquestionably, to help these people. But it breaks down, Jim, in this way: we`ve got some real tough short-term problems. By short-term

I mean immediate problems that are facing us, that we`re going to have to solve well enough to live with, that we`re going to have to treat well enough to live with for the next year or two, while we try to come to grips with some long-range goal strategies for the free movement of goods around the world. We have to not only talk about free trade, it has to be fair trade; it has to be assured that our exporters have an equal opportunity to compete in the markets of the world, as those who export to this country do. They have to be sure that the rules of the game are fair, and I`m not sure they`ve been. We have to be sure that agriculture gets their fair break in this; I`m not sure that they weren`t left behind in the Kennedy round There are tremendous global strategies to be designed, and President Carter and the leaders of the free world should be directing themselves to that. But to do that, the first thing we`ve got to do is we`ve got to treat these immediate, terribly pressing problems.

LEHRER: All right. Mr. Tyler?

TYLER: I would say that there is an immediate short-term problem in the United States. It is the potential disorder arising fundamentally from growing unemployment. It isn`t just the factors I mentioned. But we are profoundly concerned with crime in the United States, not simply as a governmental cost but what crime is doing to our society. And if unemployment mounts we`re going to have more crime in this society. I don`t believe that negotiating orderly marketing agreements that would limit imports will in any way whatsoever be inflationary. All that will happen is that it may cut into some of the profits of some of the chain stores.

MacNEIL: We have to end it there, I`m afraid. Thank you, gentlemen in Washington, very much, and thank you, Jim. Jim Lehrer and I will be back tomorrow night. I`m Robert MacNeil. Good night.