Overdue progress on costs of trade to workers, firms, farmers and communities

Two noteworthy steps toward the “worker-centric” trade policy promised in the last election have recently been taken by Congress and the president’s U.S. trade representative (USTR).  

In Congress, the House has approved and sent to the Senate the Trade Adjustment Assistance (TAA) Modernization Act. Rep. Earl Blumenauer (D-Ore.), chair of the Trade Subcommittee, was the driving force behind this measure. The Act would extend for four years and substantially enlarge the principal federal program (TAA) to help workers, firms, farmers and communities hurt by trade. It is now part of the Build Back Better bill and will be subject to the usual horse trading. But approval by the House demonstrates a new readiness of legislators to recognize government responsibility for the domestic costs of trade.

The revised TAA, administered by the Departments of Labor, Commerce and Agriculture, would

— double funding for training workers from $450 million to $1billion per year

—expand eligibility criteria for workers

—remove requirement workers prove imports “importantly” contributed to their job loss

—increase allocations for job search and relocation

—establish a new childcare allowance

—increase the Health Care Tax Credit for affected workers and make the Credit permanent

—extend income support up to six months for workers who finish training during periods of heightened unemployment

—provide accommodation for workers needing remedial or language training

—require training providers to have a demonstrated record of effective training for underserved communities

—establish a separate pool of funds in the Commerce Department for trade-impacted communities 

—restore funding for community colleges

—restore support for farmers hurt by trade

See Ways and Means Committee Fact Sheet at https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/TAA%20Fact%20Sheet.pdf 

Success of such reforms will depend in major part on the commitment and competence of the 50 state governments responsible for implementing TAA. At hearings on the Act, the Oregon TAA program manager touted successful state practices such as a “petition coordinator” who identifies potential trade-related layoffs and assists the local areas and/or worker groups to file a petition for Labor Department approval of TAA help. As a result, Oregon has one of  the nation’s highest utilization rates of TAA. Ways and Means wisely mandated use of such ‘best practices’ by all states to the provisions of the Act. 

These promising reforms were opposed in the House by those who view TAA as unnecessary handouts. They insist TAA expansion and reform can only come when Congress renews the president’s authority to seek Trade Promotion Authority (TPA). This is a “fast track” method of  approving new trade agreements without amendment. Typically, TPA is renewed only when new trade agreements are nearly complete. For the time being, the administration is deferring additional trade deals to emphasize trade-related domestic reforms such as TAA and the labor and environmental clauses of existing trade deals. But the hope of TAA advocates is the momentum around Build Back Better will overcome any remaining TAA opposition.     

Meanwhile in the Office of the President, USTR and former trade counsel to Congress Katherine Tai has recently [Oct. 14, 2021]asked the International Trade Commission (ITC) to expand its advice to USTR  about the impact of trade agreements to include the probable economic effects of gains and losses for U.S. workers from imports of goods and services. The word “probable” is key because it will help USTR foresee the effects of lowered import tariffs on workers, companies and communities before it offers such concessions in negotiations with trading partners.  

To many, it seems unpardonable the United States has concluded trade agreements since 1945 without those facts at hand. Correcting this failure to consider workforce effects and impact on towns and regions is long overdue. The change did not occur without buy-in from the White House according to participants in the room where it happened. 

The United States, like many other industrialized nations, has never provided an adequate chance for workers to retrain, retool and, if necessary, relocate because increased access to the U.S. market for trading partners has cost them their livelihood. These developments show signs of vitally needed progress toward doing a better job alleviating harm to domestic labor as well as firms and communities hurt by U.S trade policy.

Sherman Katz is a Senior Fellow at the Center for Study of the Presidency and Congress. He practiced international trade law as a partner of Coudert Brothers for 33 years and has then held senior positions at public policy research institutions.