Reagan sticks to free-trade policy

There'll be no import protection for US shoe makers, but Hollywood hopes to help American industries with a star-spangled `Buy American' campaign.

Americans will continue to find plenty of low-cost, imported shoes in their stores.

President Reagan, turning aside the United States shoe industry, on Wednesday rebuffed its pleas for import quotas on shoes. The quotas would have given American shoemakers five years to install new technology to meet the overseas competition.

The White House decision could save consumers as much as $3 billion a year.

But US shoeworkers and many members of Congress feel the President has given them the boot.

Congress may try to override the decision.

White House officials showed their concern about public reaction by disclosing that a Cabinet-level reassessment of trade policies is underway. The President will reveal more details of his new trade policies during the next two weeks, officials said.

Pollster Lou Harris, who has been tracking public and business attitudes on trade for a number of years, says the President now runs the risk of being seen as weak and ineffective, on the trade scene.

``It isn't so much `free trade' versus `less free trade' ,'' says Mr. Harris. ``The issue is coming down to this: Is the government exercising the power that it has to bargain in a tough way with nations like Japan, which appear . . . to be operating on one-way-street rules.''

Harris concedes, however, that the public is ambivalent on trade issues. Three-quarters of the public say they like access to low-cost foreign products. At the same time, an equal number say there is unfair competition from abroad that is costing the US jobs.

What it comes down to, says Harris, is that people favor open trade, but they want to make sure the government is strongly and forcefully representing their interests in dealings with other nations.

On Capitol Hill, where about 200 bills have been offered on trade matters this year, staff members say the President's decision increases the chances for retaliatory trade legislation.

Two kinds of measures have the best prospects of passage.

One would impose quotas on products such as textiles and shoes. Another would single out certain nations, such as Japan, for retaliation by imposing stiff tariffs on their goods. Either type of legislation would increase costs to consumers and could add to inflation.

America's open doors to imports have been a major factor holding down the inflation rate in everything from TV sets to clothing in recent years.

One House staff member who works on trade issues explains the Capitol Hill mood this way:

``Most members feel that the free market is still pretty valid. But no other countries are still practicing it. The overwhelming trade deficit [expected to reach $150 billion this year] is very real and serious, and makes members here worry about the viability of our whole economy, especially the agricultural and manufacturing base.''

The US International Trade Commission, which investigated the shoe industry's plight, favored quotas. The non-rubber shoe industry, which currently employs 120,700 people, mostly women, has been down-at-the-heels for a decade because of foreign competition.

In recent years, the situation has rapidly worsened, as statistics show:

Eighteen American shoe workers now lose their jobs every day (on average), largely because of foreign competition.

Four out of every five pairs of shoes sold in the US today are imported.

One American shoe factory has been forced out of business every two weeks (on average) for the past 14 years.

The White House, wedded to free trade, turned aside the industry's pleas for help on a number of grounds. US Trade Ambassador Clayton K. Yeutter said White House studies indicated that even with five years of protection, most sectors of the American shoe industry could not be permanently saved.

The US, which pays its shoeworkers about $7 an hour, simply cannot compete on a price basis with nations such as South Korea, where shoeworkers earn about $1 an hour.

Shoe quotas would have raised prices most sharply on the lowest-priced shoes, so that most of the $3 billion annual cost of quotas would have come out of the pockets of low-income workers, Ambassador Yeutter said.

Mr. Reagan, in a prepared statement, said: ``Instead of spending billions of consumer dollars to create temporary jobs, I am directing the Secretary of Labor . . . to develop a plan to retrain unemployed workers in the shoe industy for . . . lasting employment.''

Sen. William S. Cohen (R) of Maine, the largest shoe-producing state, blasted the President, however, for ``worshiping blindly at the altar of `free trade.' '' The President, he said, is ``signing the death warrant of the US footwear industry.''

Ironically, said Senator Cohen, this is happening ``just a few days before Labor Day.''