SPECIAL POST: The GATT Kennedy Round: How the Reduction of Import Tariffs Changed the US Handbag Industry

Trio of US-made handbags. Top: 1940s fold-over clutch by Virginia Art. Left: 1950s box bag by Theodore of California. Right: 1950s classically-styled bag by R. Appel, New York. From the collection of The Vintage Purse Museum.

The GATT Kennedy Round:  

How the Reduction of Import Tariffs Changed the US Handbag Industry

While taxes are a bit of a dry subject—albeit a constant part of our lives—The Vintage Purse Museum was determined to explore the 1947-1995 General Agreement on Tariffs and Trade (GATT) and its impact on the handbag industry. This multi-round trade agreement was a major contributor to the decline in the number of handbags constructed in the US, as well as the demise of numerous US handbag and leather goods companies.

GATT is a completely separate subject from the 1944-1965 US federal excise “luxury” tax (FET) placed on handbags and other items, which we have also documented extensively. Still, GATT had a similar all-encompassing effect on a variety of US industries, including handbag manufacturing.

Our goal is to explain why there was an upswing in handbags imported to the US after the "Kennedy Round" of this tariff agreement. Tariffs, which are customs duties or taxes levied on imports, are a very involved topic, so we’re only sharing summaries of some of the events that led to the majority of handbags being manufactured overseas and imported to the US from the 1960s to present day.

First, we must address the idea that foreign-made handbags are of lower quality. We have found that this is not accurate in terms of the vintage handbags in our collection, many of which were made in Asia, in particular Japan and Hong Kong. Sadly, it is a fact of history that there was a great deal of anti-Japanese sentiment in the US during and after WWII, which led to disparaging remarks about items made in Japan. There is also the notion that Italian- and French-made handbags are of better quality than those made in the US. This article is not intended to invite controversy about which country made the best handbags.

Exquisite 1950s-1960s clutch, made in Japan, with original box. From the collection of The Vintage Purse Museum.

Elegant beaded evening bag by Josef, 1940s-1950s, made in France.
From the collection of The Vintage Purse Museum.

There were a vast number of domestically-made handbags in the US during the early to mid-20th century, many unlabeled, and others with labels that say “Made in the USA.” (Country of origin label regulations are yet another complex topic.) Also sold to US consumers were handbags made in France, Belgium, Austria and Germany, many of which were beaded or petit point evening bags. As time progressed, more handbags were labeled made in Japan, Italy and Spain. Eventually, with the increase of Asian imports, many bags sold in US retail stores from the 1960s onward originated from Hong Kong, Taiwan, Korea, Macau and China. It’s fair to say that a good number of handbag makers were importers as well as manufacturers. Among those that we’ve researched are Stylecraft, Gold Seal Importers/Josef Handbags, Tano of Madrid, Simon Brothers/Mister Ernest, and Walborg.

Janet Amalia Weinberg (center left) and Janet's aunt Hilde Weinberg (center right), founder of Walborg handbags, on a business trip in Japan, circa 1960s. Photo courtesy of the Weinberg family

We’ve previously addressed (in other articles and on our various social media platforms) the misidentification of handbag eras. Relevant to this article is that vintage bags labeled “Made in Hong Kong” or “Made in British Hong Kong” are often incorrectly identified as being from the 1940s-1950s, when most were made in the 1960s-1970s, after the GATT Kennedy Round.

1960s-1970s straw bag with travel motif. Labeled Simon/Made in Hong Kong/Styled by Mister Ernest. From the collection of The Vintage Purse Museum.

Although this article mostly concerns that which occurred in the 1960s-1970s, imported handbags are not new to this century nor the previous century. We found newspaper ads for imported handbags as early as the 1880s, although they were certainly shipped to the US even earlier.

1887 advertisement for Japanese leather handbags.
09 Oct 1887, Sun The Macon Telegraph (Macon, Georgia) Newspapers.com

Tariffs are also not exclusive to the mid-century (1940s-1960s). Here are some notable tariff acts: The Tariff of 1828 was meant to protect American manufacturers by raising tariffs on imports as much as 50 percent. While US manufacturers in the north benefitted from this, southerners who relied on British imports were very unhappy and called it the “Tariff of Abominations.” The controversial Tariff of 1883 was said to be complicated and unsuccessful, and its critics called it the “Mongrel Tariff Act.” The 1930 Tariff Act (also called the Smoot-Hawley Tariff) implemented trade policies in the US and raised tariffs on over 20,000 imported goods. This led to retaliation by other countries, which contributed to the reduction of American exports, worsening the effects of the Great Depression (1929-1939).

The General Agreement on Tariffs and Trade (GATT), was signed in 1947 by 23 countries in an effort to boost economic recovery after WWII and minimize barriers to international trade by eliminating or reducing quotas, tariffs, and subsidies. It had numerous “rounds” and over 100 signatories by 1973. GATT was absorbed by the World Trade Organization (WTO) in 1995.

The GATT “Kennedy Round”—named after President John F. Kennedy, who predeceased the negotiations—was the round that most affected handbag makers and other industries in the 1960s and directly afterward. President Kennedy had previously secured the 1962 US Trade Expansion Act, which authorized the US government to negotiate tariff cuts of up to 50 percent. The Kennedy Round, as the sixth session of GATT, continued President Kennedy’s legacy with multilateral trade negotiations held between 1964 and 1967 in Geneva, Switzerland. Representatives from 66 nations were in attendance for the Kennedy Round. 

According to a 1967 newspaper article, the outcome of the Kennedy Round was that 80 countries received an average of 33-35 percent in tariff reductions.

Obviously, there is much more to these negotiations than that which we’re reporting here. In a nutshell, the Kennedy Round led to greater importation of handbags to the US because tariffs had been drastically cut. Prior to that, according to a 1961 newspaper article, handbag imports to the US in 1959 included 1,249,000 (items) from Italy, 592,000 from France, and 325,000 from Japan. 

Just eight years later, after the Kennedy Round, US import numbers began to swell, particularly with bags coming from Asia. (GATT also adversely affected Canada’s domestic handbag business.) While Japan is most often mentioned in newspaper articles and other documents criticizing the influx of imports to the US in the 1960s, Hong Kong was rapidly becoming a veritable capital of industrialization.

04 Apr 1968, Thu The State (Columbia, South Carolina) Newspapers.com

Manufacturing operations in Hong Kong started after the British occupation in the 19th century. By the 1920s, Hong Kong’s textile industry had experienced significant growth. Because of various wars, Hong Kong's business endeavors both gained and lost traction over decades. However, by the early 1960s, Hong Kong’s textile concerns were the largest in Asia, with 1963-1970 being its highest and most rapid period of expansion.

According to the document “Hong Kong Review of Overseas Trade in 1969 – Commerce and Industry Department,” most Hong Kong-made exports in the category of "travel goods, handbags and similar articles (including wallets)" went to the US from 1964-1969. (In other words, other countries imported these items from Hong Kong as well, but the US was its biggest consumer.) In 1964, $9 million (in Hong Kong dollars*) in merchandise in this category was shipped to the US. The figure was $14 million in 1965, $18 million in 1966, $31 million in 1967, $54 million in 1968 and $59 million in 1969. This means that in 1969, post-GATT Kennedy Round, the revenue of Hong Kong exports of handbags and similar items had risen more than 555 percent in five years. (*An online currency converter shows that a Hong Kong dollar in 1969 was worth approximately $252 US dollars today.) 

1960s Hong Kong-made child's coin purse with original packaging. From the collection of The Vintage Purse Museum.

1970 newspaper article. It is unclear if the $17 million figure only represents handbags and not related items such as wallets, but it seems likely considering the information in the document cited above. $17 million US in 1970 is equivalent to the buying power of more than $134 million today.
29 Dec 1970, Tue Valley News (West Lebanon, New Hampshire) Newspapers.com

From 1968-1970, The Committee on Ways and Means, US House of Representatives, Ninety-First Congress, had hearings on “Tariff and Trade Proposals.” These events were complex, but to summarize, hearings were held primarily for the discussion of establishing import quotas. Representatives from US industries—listed alphabetically from aircraft to zinc—would testify about the dramatic effects imports had in recent years on their respective businesses. 

In attendance during part 7 (of 16 parts) of these hearings were representatives from the leather, luggage, and handbag industries. They were there to make a plea for inclusion in House Bills HR 16920 and HR 14870, which were created to enact quotas on imported textiles and shoes, but not handbags. 

Abraham Weiss, legislative representative of the International Leather Goods, Plastics and Novelties Workers, AFL-CIO was present, along with Samuel Harris Cohen, counsel for New York Local 1 (Pocketbook and Novelty Workers Union), Ed Levy, Executive Director of the National Handbag Association, and Jack Citronbaum, Executive Director, Luggage and Leather Manufacturers Association. 

Also present was Steven J. Weiss, counsel of the National Handbag Association, who said, among other things: “There are approximately 499 companies in our industry and about 40,000 workers. Our industry, like the shoe and apparel industries, is experiencing the worst depression in its history, far worse than the great depression of the early thirties.” He proceeded to say that fifty percent of the handbag market had been taken over by imports. According to Weiss, US handbag makers simply could not compete with 10-cents-an-hour employees in Taiwan or child labor in Hong Kong. In New York alone, said Weiss, 7,000 handbag workers had been laid off, and 4,000 were only employed part-time. In addition, he said that retailers were making two to three times the profit on imported handbags. 

This, of course, would be a big factor in discouraging US department stores and other merchants from purchasing domestically-made bags.

According to a brief provided by Abraham Weiss, “…in the period since the US signed GATT…1968-1969…for the first time since 1894…the United States actually buys more from foreign nations than it has sold.”

There is much more to this public hearing, but to illustrate the impact of imports, we screenshot two documents provided by handbag industry representatives to the House Ways and Means Committee. One compares import numbers of 1950 to those of 1968 and 1969.

Screenshot from House Ways and Means Committee document found on Google.

The other is a list of handbag and leather goods firms in  New York that went out of business within two years of the GATT Kennedy Round. 

Screenshot from House Ways and Means Committee found on Google. Among the handbag companies that went out of business after the GATT Kennedy Round, per this list, were some whose histories we've documented here: Lucille de Paris, Soure, and Roger Van S.

Despite the efforts of Mr. Weiss and his fellow industry professionals, we could find no evidence that handbags were added to either of the House bills, although textiles were approved for import quotas.  

From the New York Times, October 16, 1971 (excerpted): “The agreement severely limits the growth of non‐cotton textile imports from the Asian countries for a three‐to‐five‐year period, and in return the United States is lifting the 10 per cent import surcharge that had been imposed in August. However, the surcharge has not been applied to items covered by quota arrangements, so this concession was in line with already existing policy. While there is no question that the meteoric rise of Asian textiles, particularly synthetics, has been a source of great and legitimate concern to certain segments of the American industry, there is also little doubt that the newly imposed limitations will ultimately increase the costs of these products to the American consumer...”

It's difficult to determine if these quotas had any longterm effect on the importation of textiles, but the exclusion of handbags caused grievous harm to US bag makers. One of the biggest understatements in the New York Times article is that “certain segments of the American industry” would still have “legitimate concern.” 

The subject of handbag imports appears periodically over the next few decades in the newspaper archives, but there were no significant changes. And, of course, more trade agreements have been established. 

Regardless, it was, as it is now, more economical for companies to have their handbag lines manufactured in Asia, then imported to the US. This explains why most handbag makers of today, including many high-end designer bag companies, are manufacturing their products in China. 

While ours is not to argue the pros and cons of trade agreements, it is clear that handbag industry professionals of the 1960s did their best to keep their factories open and their workers employed. When handbags became far more expensive to produce domestically, and overseas competition became too steep, US bag makers that did not want to import their wares had no choice but to permanently close their doors or move on to other industries.

This article c2023 by Wendy Dager/The Vintage Purse Museum. Resources used were Newspapers.com, to which we have a paid subscription, and Google. Please do not use any information or photos from this article or website without requesting permission, vintagepursemuseum@gmail.com.