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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy

J. F. Hornbeck, Specialist in International Trade and Finance

January 9, 2013

http://www.fas.org/sgp/crs/misc/R41922.pdf

[full-text, 19 pages]

 

Summary

Congress created Trade Adjustment Assistance (TAA) in the Trade Expansion Act of 1962 to help

workers and firms adjust to dislocation that may be caused by increased trade liberalization. It is

justified now, as it was then, on grounds that the government has an obligation to help the

“losers” of policy-driven trade opening. In addition, TAA is presented as an alternative to policies

that would restrict imports, and so provides assistance while bolstering freer trade and

diminishing prospects for potentially costly tension (retaliation) among trade partners. As in the

past, critics strongly debate the merits of TAA on equity, efficiency, and budgetary grounds.

Nonetheless, finding agreement on TAA remains important for forging a compromise on national

trade policy. This report discusses the role of TAA in U.S. trade policy from its inception as a

legislative option in the early 1950s to its core role as a cornerstone of modern trade policy that

many argue has served to promote the long-term U.S. trade liberalization agenda.

 

TAA was reauthorized through December 31, 2013, in the 112th Congress. Democratic leaders

and the Obama Administration considered TAA a quid pro quo for passage of three implementing

bills for free trade agreements (FTAs) with Colombia, Panama, and South Korea. There was,

however, considerable partisan debate over the direction TAA should take. Congress had

expanded TAA significantly in the American Recovery and Reinvestment Act (ARRA) of 2009

from an earlier version in the Trade Act of 2002. The issue before the 112th Congress was how to

craft a compromise TAA bill that would receive bipartisan support in the both houses, and assure

its passage along with the three implementing bills. Such an understanding was developed and

became part of H.R. 2832, a bill to reauthorize the Generalized System of Preferences (GSP). In

an elaborate legislative procedure, both chambers passed the four trade bills on October 12, 2011.

 

TAA reauthorization reflected a compromise that allowed for passage as part of a larger trade

deal. Because it was understood that TAA was essential to move the three FTA implementing

bills, both parties and houses of Congress eventually embraced this solution, albeit not

unanimously. The bill reauthorized the workers, firms, and farmers programs through December

31, 2013, but discontinued TAA for communities because it was considered duplicative of other

federal programs. Many, but not all, of the enhanced programs and funding levels in the ARRA

were reauthorized, including restoring eligibility to services workers and firms, increasing income

support for workers undergoing job training, raising the Health Coverage Tax Credit, expanding

funding for training benefits, and reinstituting more detailed program evaluation and reporting

requirements. Funding was reduced from ARRA levels for job search, relocation assistance, and

wage insurance for older workers. Public sector workers are no longer eligible for benefits. TAA

eligibility is retroactive to the expiration date of the ARRA enhancements. The firms and farmers

TAA programs were reauthorized at annualized levels of $16 million and $90 million,

respectively, much less than in ARRA, but comparable to current (and historical) appropriated

levels.

 

Although many opponents of expanding TAA programs spoke out against the reauthorizing

legislation, its ultimate passage once again suggests that TAA remains an integral part of the

debate over trade liberalization. Without providing assistance to those hurt by trade liberalization,

moving ahead with the trade policy agenda remains a difficult proposition, an outcome consistent

with TAA legislative history since 1962.

 

Contents

Introduction ...................................................................................................................................... 1

TAA Programs and Rationale .......................................................................................................... 1

Antecedents to TAA ......................................................................................................................... 3

The Randall Commission .......................................................................................................... 4

Early TAA Legislation ............................................................................................................... 5

Trade Expansion Act of 1962 .......................................................................................................... 6

The Failure of TAA: 1963-1974 ...................................................................................................... 7

Trade Act of 1974 ............................................................................................................................ 8

The Trade Agreements Act of 1979 and the 1980s .......................................................................... 9

NAFTA and the Trade Act of 2002: TAA Expansion..................................................................... 10

TAA in the New Millennium ......................................................................................................... 11

The American Recovery and Reinvestment Act of 2009 and TAA Revision ................................ 12

TAA Reauthorization and Trade Agreements in the 112th Congress .............................................. 12

Legislative Procedure .............................................................................................................. 13

The Compromise TAA Bill ...................................................................................................... 14

Outlook .......................................................................................................................................... 15

 

Appendixes

Appendix. TAA Reauthorization, 1962-2011 ................................................................................ 16

 

Contacts

Author Contact Information........................................................................................................... 16

 

 

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