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apparel decreased by 44 percent. However, Table 4 indicates that men's apparel is now going the same way as women's apparel: down.

TABLE 3.-ANNUAL IMPORTS OF LEATHERWEAR BY VALUE, 1975–79

[In millions of dollars)

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TABLE 4.—IMPORTS OF LEATHERWEAR BY VALUE IN THE 1ST 6 MONTHS OF 1978, 1979, AND 1980

[In millions of dollars]

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Source: Bureau of Census, IM146.

In the first six months of 1980, men's wear imports were off by 29 percent when compared with the same period of 1979. Women's wear imports for the same two periods declined by 42.5 percent, and the overall import level declined in the first six months of 1980 by 34.9 percent.

In view of this precipitous decline in import levels, the ITC's findings of fact concerning increased imports are clearly no longer tenable. In fact, imports are declining

Discussions with members of the trade in the last few days have shown several reasons for the decline in imports:

1. The fad value of leatherwear has decreased, as consumers have become used to the concept of mass market fashion leatherwear.

2. The expense of leatherwear makes it a luxury item, and one which is easily given up in a recession.

3. When the 1979 raw materials price increases were passed along to consumers, consumers simply stopped purchasing leatherwear. After the market lost its momentum, buyers for retail stores turned to other types of mechandise, and the momentum has not been regained.

In short, the U.S. leatherwear market no longer resembles the market that was studied by the ITC in the latter half of 1979. For that reason, the import relief based on that study is no longer appropriate, if it ever was.

To impose a 25 percent tariff increase on imports that have declined by 35 percent in the past six months is economically irrational and contradictory to the stated purposes of the escape clause provisions.

VII. IMPORT RELIEF WOULD INJURE THE DOMESTIC TANNING INDUSTRY The U.S. tanning industry is the primary supplier of garment leather to Taiwan and Korea. If leatherwear producers in those countries are effectively shut out of the U.S. market, the U.S. tanning industry will lose major customers. Moreover, those tanned leathers that would have gone to the Far East will not be absorbed by the domestic garment industry, for the following reason:

1. A 25 percent tariff increase will raise not only import prices but also domestic prices, since domestic producers will attempt to improve profits.

2. Demand elasticity will lower consumer purchases of all leatherwear, domestic and foreign, as prices escalate.

3. As demand and sales drop, and as foreign sellers drop out of the U.S. market, retail stores will find sources diminishing in number. This, in turn, will deprive the fashion market place of the wide variety of available goods it needs in order to thrive.

4. Thus higher prices will result in an overall constriction of the market, and tanners will not be able to replace lost export sales with domestic sales.

Tanning Council statistics, although not complete, indicate the importance of export sales of garment leather. In 1979, domestic production of cattlehide glove and garment leather was 72.2 million square feet. Of that, 33.4 million square feet (46 percent) were exported. Of those exports, Taiwan and Korea bought 16.7 million square feet, or 50 percent of all exports. In other words, in 1979 Taiwan and Korea bought 23 percent of all the cattlehide glove and garment leather produced in the United States. (Source: U.S. Leather Industry Statistics, 1980 edition, Tanners' Council of America.)

These figures, of course, do not include the significant purchases by foreign producers garment-grade sheep and lamb leathers tanned in the United States. In 1979, exports of such leathers to Taiwan and Korea amounted to 2.5 million square feet. (There are no public domestic production figures for these leathers.)

In 1979, U.S. exports of cattlehide and sheep and lamb glove and garment leather to Taiwan and Korea were valued at $21 million. We submit that this is simply too much leather to be absorbed by the domestic garment industry, and too big an export product to forego on the speculation that the domestic industry may be able to survive the constriction of demand that would accompany import relief herein.

VIII. CONCLUSIONS In discussions with members of the Trade Policy Staff Committee during the President's consideration of this investigation, it became clear that Executive personnel-as well as ourselves—were seriously hampered by the failure of the ITC to provide an adequate statistical base for its recommendation and to calculate the elasticity of demand for leather wearing apparel. These failings on the part of the ITC made its remedy recommendation mere guess work.

If the domestic industry was in fact injured, and if that injury was in fact caused by imports—both of which, we submit, are contrary to fact—then it would be proper to impose relief which equalized prices between imports and domestic product. To equalize prices, one needs to know the quantity of imports (so as to derive

average unit values) and the mark-up at each stage of the distribution chain. The ITC simply failed to obtain adequate data, and its import relief recommendation images this failure.

We therefore urge the Senate Finance Committee to cast a negative vote on Senate Concurrent Resolution 108 on the grounds that the relief recommended by the ITC is not supported by the facts, is excessive, is not consonant with our international obligations, and is not in the national economic interest.

We urge the Committee to support the President's finding that relief would be inflationary and of only dubious benefit to the domestic industry.

Mr. GIBBONS. Thank you.
Mr. Frenzel?
Mr. FRENZEL. Thank you.

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