ADJUSTMENT TO GLOBALISATION: A STUDY OF THE FOOTWEAR INDUSTRY IN EUROPE

the bilateral restrictions on imports into Italy and France were reformed into an EC-
wide quota system, but which has subsequently been removed.

The available evidence suggests that non-tariff trade barriers have not been successful in
preserving total employment in the footwear sector in the UK and have been an
extremely expensive means of protection. Brenton and Winters (1993) and Winters and
Takacs (1991) model the effects of a number of quantitative restrictions imposed by the
UK in the late 1970s and early 1980s on imports of non-leather footwear from the Far
East and imports of leather footwear from Central and Eastern European countries.
Their findings suggest that in 1979 (when all of these restrictions were in place) the
total cost of a job saved in the UK footwear sector was nearly 12 times annual wages
every year for each year that the protection was in place.

This all suggests that trade liberalisation in the form of reductions in tariffs or removal
of NTBs cannot be at the heart of explanations of the decline in footwear employment
in Europe which has been experienced since the 1970s. Tariff protection for footwear
has remained static throughout most of the period. In addition the view that high tariffs
and non-tariff barriers are a useful tool to protect domestic industries from low-cost
foreign competition or to allow time for adjustment to the new competition receives
little support from the experience of footwear. We now proceed to look in more detail at
changes in the quantity of footwear imported into the EU market.

2.2 Import Penetration in the EU Footwear sector

According to Wood (1995) developed countries have shifted from ‘manufacturing
autarky’, in which they produced all the manufactures demanded domestically (skilled
labour intensive and unskilled labour intensive products) to specialisation in the
production of the skilled-intensive activities within all sectors and reliance upon imports
from developing countries to supply their needs of labour intensive commodities. Not
all footwear commodities that are imported compete with domestically produced shoes.
In this framework, a fall in the world price of the imported unskilled intensive products
(for example footwear commodities) would no longer affect skilled and unskilled
workers as factors of production in industrial countries. Relative wages are not tied to
relative world prices and instead both benefit from a lower price of goods they
consume. Relative wages are only determined by domestic factor demand and supply

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