PRESIDENT Reagan must make a trade decision this summer that should demonstrate how firmly his feet are planted in the soil of free trade. The International Trade Commission (ITC), an independent federal agency, has recommended a five-year program imposing quotas on shoe imports. The President has until Sept. 1 to decide whether to follow the commission's recommendation, raise the current 8.8 percent tariff on nonrubber footwear, work out a combination of the two, or do nothing. Mr. Reagan's Cabinet council on trade policy is to meet July 19, and his decision on protecting the domestic shoe industry could come soon afterward.
We think he should turn down the trade commission's plan, which would cut shoe imports by more than 25 percent, virtually assure higher shoe prices, and possibly cause a shortage of some of the more economical brands of footwear.
Apparently impressed by the industry's drastic decline in recent years, and perhaps by congressional pressure, the ITC earlier this year reversed its previous strong stance against limiting nonrubber footwear imports.
Since 1970 the number of jobs in the US shoe industry has dropped from 215,000 to 120,000. Last year 105 shoe factories closed and 13,300 jobs disappeared. Importers had 49 percent of the American shoe market in 1980; by 1984 that had climbed to 71 percent. For the first quarter of this year the level was above 80 percent.
The commission's quota plan, based on one proposed by the US shoe manufacturers and unions, would cut imports from last year's 726 million pairs to 474 million. The industry promises that, during the five-year protection period, it would modernize plants and make other adjustments that would enable it to better compete with the imports, mostly from Asian nations.
Chain retailers in the US that sell lower-cost shoes, averaging less than $15 a pair, are lobbying heavily against the quota system.
The President has to consider the welfare of thousands of American shoe industry workers spread through 48 of the 50 states. He has to weigh the relative long-term effects of letting what was once a major US industry shrink to a few companies that produce expensive shoes, or trying to protect manufacturers who may simply not be able to compete in the world market.
Factory layoffs and closures continue, and despite the best efforts of current federal job-retraining and relocation assistance programs, many displaced shoe workers are going through a difficult transition.
Possibly the President and his advisers will be able to work out some combination of actions that will ease the strains of change in the shoe industry. The fact that two similar industries -- textiles and apparel -- now get a measure of protection argues for that.
But to adopt the plan recommended by the International Trade Commission Mr. Reagan would have to retreat a good distance from his stated position on international trade.
We do not think he should do so.