Fact Sheet: Trade Adjustment Assistance (TAA) and NAFTA-TAA Programs


Mar 11, 2002

Fact Sheet LEGISLATIVE BRIEF

TRADE ADJUSTMENT ASSISTANCE (TAA) AND
NAFTA-TAA PROGRAMS

Background

The Trade Adjustment Assistance (TAA) program is a federal entitlement program established under the Trade Act of 1974, as amended. The TAA Program provides aid to workers who lose their jobs or whose hours of work and wages are reduced as a result of increased imports.

Workers whose employment is adversely affected by increased imports may apply for TAA. TAA offers a variety of benefits and reemployment services to assist unemployed workers prepare for and obtain suitable employment. Workers may be eligible for training, job search and relocation allowances, income support and other reemployment services.

The NAFTA-Transitional Adjustment Assistance (NAFTA-TAA) Program was established under the North American Free Trade Agreement Implementation Act of 1993. The NAFTA-TAA Program combines two aspects of two laws that have been in effect for many years: Title I of the Workforce Investment Act (WIA) of 1998, and the Trade Adjustment Assistance (TAA) Program, under the Trade Act of 1974.

The NAFTA-TAA Program assists workers who lose their jobs or whose hours of work and wages are reduced as a result of trade with Canada or Mexico. The program provides affected workers with both rapid and early response to the threat of unemployment and the opportunity to engage in long-term training while receiving income support.

The NAFTA-TAA Program provides assistance to workers whose companies have been directly or indirectly impacted as a result of trade with Canada or Mexico, known as primary and secondary firms, respectively. Primary firms are those which either import production from Canada or Mexico, shift production to Mexico and Canada or are adversely affected by trade with Canada or Mexico. Secondary firms are those which supply materials to primary firms and/or assemble or finish products of primary firms. Family farmers and farm workers that do not meet the group eligibility requirement are also considered under the procedures for secondary firms.

The NAFTA-TAA Program provides a comprehensive array of retraining and reemployment services to all affected workers. The program extends rapid response and basic readjustment services to those who are eligible. Workers in primary firms receive these benefits under the NAFTA-TAA program. An administrative provision was established to provide secondarily affected workers with the same types of services available to those covered by the NAFTA-TAA program. These services are available through the Title I of the Workforce Investment Act (WIA) dislocated worker program which provides training and reemployment assistance to individuals who lose their jobs and are unlikely to return to their previous industry or occupation.

Both the TAA and NAFTA-TAA programs are administered by the state workforce agencies.

Status

Authorization for the two programs expired September 30, 2001, although the current programs can continue to operate without reauthorization due to passage of the continuing resolutions and enactment of the FY 2002 Labor-HHS-Education Appropriations Act. The reauthorization has been tied to pending "fast track" legislation (H.R. 3005) granting President Bush broad new authority to negotiate trade agreements that cannot be amended by Congress. There are several TAA and NAFTA-TAA reform bills and/or proposals pending.

  • Senate Bill
    S. 1209, sponsored by Senate Finance Committee Chairman Max Baucus (D-MT), was favorably reported from the Senate Finance Committee on December 4, 2001. S. 1209 amends the Trade Act of 1974 by consolidating and improving the trade adjustment assistance programs, and providing community-based economic development assistance for trade-affected communities. The bill would expand those covered by the TAA program, as well as the available benefits. Proposed changes in the bill include:
    • Broadening training and income support by covering secondary workers--those who supply or are under contract to firms adversely affected by trade--and to those whose job losses are caused by shifts in production to any country. The current North American Free Trade Adjustment Assistance program, which covers secondary workers whose job losses are caused by shifts in production to Mexico or Canada, would be absorbed by the TAA program;
    • Expanding eligibility for TAA benefits to cover family farmers, ranchers, truckers and independent fishermen;
    • Making income maintenance available for 78 weeks rather than the current 52 weeks;
    • Increasing funding for training, currently set at $150 million, to $300 million to reflect the increase in participants that would result from the expanded eligibility provisions;
    • Providing a tax credit for health insurance payments, increasing assistance for job relocation, and informing TAA participants of potential eligibility for existing child care, transportation and health benefits;
    • Providing technical assistance to trade-impacted communities aimed at helping communities develop strategic plans following job losses with funding through establishment of an Office of Community Economic Adjustment within the Department of Commerce; and,
    • Allowing the President, Senate Finance Committee, and the House Ways and Means Committee to agree by resolution to seek certification under the TAA program for a specific industry hard hit by job losses as a result of trade.
    The bill has not been voted on by the full Senate. Coverage of secondary workers is a key component of this bill.

  • House Bill
    On December 6, 2001, the House passed a TAA and NAFTA-TAA bill (H.R. 3008), that reauthorized the trade adjustment assistance (TAA) program under the Trade Act of 1974, through September 30, 2003, without changes. Training under the NAFTA program was also extended to September 30, 2003. No changes were made to the programs by the bill other than the extension to September 30, 2003.

  • Labor Department's Consolidation Proposal
    The U.S. Department of Labor is proposing to consolidate and streamline the Trade Adjustment Assistance and the North American Free Trade Agreement-Transitional Adjustment Assistance programs in an effort to provide effective, comprehensive and timely reemployment assistance to workers adversely affected by international trade.

    In addition to consolidating the programs, the Labor Department is proposing to speed up the process for certifying benefit eligibility and to coordinate the new program with the Workforce Investment Act. The proposed consolidated program will not expand benefits to secondary workers--those who supply or who are under contract to firms adversely affected by trade.

    The consolidated program envisioned by the Labor Department would apply to workers adversely affected by imports from any country or by a shift in production of their firms from the United States to Mexico or Canada. It also would extend eligibility to workers whose firms shift production to any country that enters into a new free trade agreement with the United States.

    Other aspects of the proposed program would require that recipients of benefits under the program be enrolled in training within 13 weeks of losing their jobs or eight weeks after being certified as eligible for benefits. The Labor Department also is seeking to tighten the criteria for waiving the training requirement.

    The new program would incorporate the on-the-job training requirements of WIA, permitting employers to hire affected workers and receive subsidies for a portion of their earnings to cover the costs of their training. This would allow for the employer to be compensated for the lower productivity of the worker until the appropriate job-related skills are acquired.

    The Labor Department also is proposing a pilot program that would allow workers the option of choosing a $5,000 trade adjustment account in lieu of the training and income support provided under the regular program. To determine whether this option would be appealing to eligible workers and accelerate their reemployment, the pilot would be tested in the five states with the highest number of certified workers, with participation limited to 10 percent of workers who express interest in the option.



    NASWA
    February 2002




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