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STATEMENT OF LEONARD WOODCOCK, PRESIDENT, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW), ACCOMPANIED BY LEONARD PAGE, UAW LEGAL DEPARTMENT, AND HELEN KRAMER, UAW INTERNATIONAL TRADE SECTION

Mr. Woodcock. Thank you, Mr. Chairman. My name is Leonard Woodcock. I am President of the International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW. We represent approximately 1,400,000 UAW members in the United States and Canada. I welcome this opportunity to testify before this subcommittee on the operation and effectiveness of adjustment assistance programs under the Trade Act of 1974 and to bring to your attention some of the problems UAW members have experienced in the administration of those programs. However, before we get into the problems, I must say that the UAW is generally satisfied that the 1974 act appears to have finally established some real commitment to provide adjustment assistance to workers adversely affected by imports. The current legislation is a clear improvement over the mvthical workers adjustment programs of the Trade Expansion Act of 1962. Despite this improvement, many problems still remain. If this country intends to promote liberal trade policies, then all workers injured by those policies must receive Federal adjustment assistance. The security of an American worker's family is far more dependent on his or her job than is the case for a worker in other industrialized countries. In the face of persistent high unemployment, inadequate social security and health insurance systems, it is not surprising that many workers become protectionist when their only option is an inadequate or incomplete adjustment assistance program. Inequities in the present program can only lead workers to cry even louder for quotas and tariff increases. Our presentation today will comment on the current amendments being considered and suggest other areas where relief or new approaches are needed. Some of these problems have previously been brought to the House's attention in my testimony of April 14, 1976, in oversight hearings on the Canadian-American automotive agreement before the Subcommittee on Labor Standards of the Committee on Education and Labor. First I would like to make some general observations about trade policy, full employment, and national planning.

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I. THE NEED FOR A FULL EMPLOYMENT POLICY AND NATIONAL PLANNING

Experience since the trade liberalization measures of the Trade Expansion Act of 1962 has taught us that there is no automatic connection between liberal trade policies and full employment. Even in a full employment economy an adjustment assistance program will be necessary to lessen the social and human costs of displacement caused by increased foreign competition. In a high unemployment economy such as ours today, however, the trade adjustment assistance program cannot work effectively. In the absence of adequate alternative employment opportunities, the provisions for job training and relocation allowances become moot. This is true independently of the inadequacies in the existing program, which fails to deliver the benefits provided for in the law. International comparisons show that adjustment to changes in international competitiveness takes place much less painfully when the domestic economy is expanding rapidly. Serious trade adjustment problems are most likely to arise where overall economic growth in the framework of existing policies is insufficient to bring about a rapid reallocation of resources. There is no substitute for monetary and fiscal policies geared to sustaining an adequate level of total demand for goods and services, but these are insufficient by themselves. Policies are also needed to induce diversification and the establishment of new forms of jobcreating activity. This leads us to conclude that our existing institutions are inadequate to cope with our problems of high unemployment and economic dislocation coupled with inflation. We suggest that what the American people need is not more rhetoric about budget balancing and market forces, but rather the passage of legislation committing the Federal Government to measures guaranteeing the right of every American who wants to work a job at decent remuneration. Implementing this guarantee will require, among other things, a system of national economic planning oriented to regional development programs. The existing trade adjustment program provides only illusory assistance to communities and firms impacted by increased imports. It is no accident that, to date, not a single community has been certified to receive adjustment assistance. The reason is not that no communities have been adversely affected, but rather that the requirements written into the law are so restrictive that no community can qualify. The legislative history suggests that this was intentional. The record on adjustment assistance to firms also shows that this part of the program has been ineffective. Adjustment assistance to firms should be aimed at enabling those firms deemed capable of competing with imports to survive and eliminating others without unnecessary hardship. In every industry there are some line of production and some firms that can survive in a liberal trade situation. They may need to increase their scale of operations in order to generate enough cash flow to finance investment in plant and in research and development and marketing operations. It would be difficult to do this without public assistance, because import-impacted industries cannot easily raise funds from the private capital market or from commercial banks. An investment bank subsidized by public funds may be the solution. Experience with the “New Deal's" Reconstruction Finance Corporation should be reviewed in this connection. A full employment program must include legislation to deal with adjustment assistance needs that go beyond international trade effects; for example, plant closing situations and energy-related dislocations. We advocate an approach whereby employers would be

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required to give advance notification to affected employees and communities of any transfer, closing, or reduction in operations. The Department of Labor should be responsible for providing compre: hensive adjustment assistance to the affected workers and communities.

TRAINING AND EMPLOYMENT SERVICES

A greatly expanded Federal commitment to vocational guidance and training programs is essential to reach the goal of full employment without inflation. Because of the indifference of State employment agencies to the trade adjustment assistance program. it has been reduced to a special kind of unemployment insurance. With very few exceptions, the State agencies pay no attention to the parts of the program relating to employment services, training, job search, and relocation allowances. The pitifully small number of workers who have received these services and benefits is an absolute disgrace, largely attributable to State inadequacies. In major cases of import-related unemployment the Department of Labor should establish a task force in the community to centralize and coordinate all the adjustment assistance programs. The community task force could actively seek new employers and maintain a comprehensive training program. The benefits of the firm assistance program should be made available to new employers to attract them to an import-impacted area and thereby create new jobs. Labor market specialists have long recognized that the public employment services operated in conjunction with the unemployment insurance program have not been effective instruments of job placement. One obvious reason is that most iob onenings are not posted by employers at the State employment offices. This suggests that a first step in improving job placement services is adoption of legislation requiring employers to register all job openings with the public empioyment service. Further, administration of vocational guidance and training programs would be more effective if they were integrated with the job placement services under one agency roof. Existing federally-financed job training programs are not only inadequate in scope, but are scattered among different administering agencies. Under the Comprehensive Employment and Training Act of 1973–CETA—programs have been decentralized and decategorized. The result is to make it more difficult for job seekers to obtain information about available onal guidance and training programs and to actually enroll in them. Sweden's economy is much more dependent than ours on international trade. Nevertheless, Sweden has enjoyed an unemployment rate of less than 2 percent even during the present world recession. One of the reasons is that a full 3 percent of the Swedish labor force has been enrolled in vocational training courses intended to improve the individual’s chances of finding work and to help supply employers with trained workers. In our country special attention must be given to those groups which are presently considered “unemployable”; that is, the functionally illiterate and unskilled individuals who have had no sustained job experience. Because of the disproportionate concentration of such individuals among minority groups, training programs and employment services targeted at this element of the potential labor force are essential to provide equal employment opportunities.

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Special emphasis should also be provided for unskilled and semiskilled workers who have become unemployed due to technological changes.

Although the expansion of employment and training programs in the United States has increased their importance as a complement to monetary and fiscal policies, we are far from having an “active labor market policy” of the Swedish variety. Nevertheless, even our limited programs have helped to reduce povertv and to provide more opportunities for disadvantaged minorities. These programs have reduced unemplovment among those segments of the labor force that are least effectively reached by monetary and fiscal measures. It is clear that these programs can work and much more has to be done along the lines I have indicated if the promise of American society is to be fulfilled.

II. IMPROVEMENTS IN Trade AdJUSTMENT ASSISTANT PROGRAMs
A. IMPROVING STATE AGENCY ADMINISTRATION

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We recommend amending the act to restrict the Secretary's authority to “subcontract” under section 239 the administration of program benefits to the State employment agencies. The Department of Labor must assume greater responsibility for making sure that State subcontractors perform their duties in a timely, competent and thorough manner. Our experience has been that the States have been poor administrators of these programs.

As a general rule, the State agencies are not familiar with the Trade Act programs and have a natural tendency to attach low priorities to these programs. There is strong resistance among overworked State agency personnel to becoming familiar with the various programs available under the Trade Act. We have heard virtually hundreds of stories from workers who were given either incompetent advice or simply brushed off by State agency personnel. The State agencies' lack of familiarity with the Trade Act programs invariably results in numerous erroneous determinations and unconscionable delays in making eligibility determinations while the State agencies o clarification and advisory opinions from the Department of ar)or.

B. EXTENDING THE PERIOD FOR FILING PETITIONS

The committee is currently considering a bill introduced by Congressman Philip R. Sharp to eliminate the requirement under section 223(b)(1) that worker petitions be filed within 1 year of the layoffs. UAW Assistant General Counsel Leonard R. Page testified extensively in support of this bill on September 28, 1976, before the Subcommittee on Trade of the Committee on Ways and Means. We will not repeat that testimony again today, except to reemphasize

our strong support for this amendment. The whole concept of placing such a severe 1-year limit on worker petitions is diametrically opposed to what everyone was trying to do in the current Trade Act. The UAW is concerned with the timely delivery of benefits to workers but unrealistic cutoff dates do nothing to promote this goal. The DOL is concerned with speeding up the petition-filing process; therefore, it should pay more attention to implementing Section 282: The Trade Monitoring System. This section provides that the Secretaries of Labor and Commerce— * * * shall establish and maintain a program to monitor imports of articles into the United States which will reflect changes in the volume of such imports, the relation of such imports to changes in domestic production, changes in employment within domestic industries producing articles like or directly competitive with such imports and the extent to which such changes in production and employment are concentrated in specific geographic regions of the U.S. If such information were obtained, it would be very easy to establish an “early warning system.” Notice of imminent or existing import penetration could be sent to firms, unions, and workers to make them aware of their rights under the act. Mr. VANIK. On that point, is it possible that the International Trade Commission could be involved in that process, or do you feel it should be done in the Department of Labor? so,Woodcock. It is our belief it should be done in the Department of Labor. Mr. VANIK. I was trying to determine where the source information would be more readily available. I would like to implement the use of the International Trade Commission. I feel they have a staff competency that is a resource that we could put to this task. Mr. Woodcock. The statutory reference is to Labor and Commerce. We would be more interested in getting the system in operation. Mr. VANIK. Regardless of where it is done? Mr. Woodcock. Where it could be done most effectively. One of the biggest problems in filing petitions is getting data from domestic employers. Workers and their unions are simply not told what caused their layoffs, particularly where their employer is a multinational company and the imports are from a foreign subsidiary. The act should be amended to require that all employers must advise workers and their unions when the employer becomes aware of losses in production or sales which are attributable to increased imports.

C. PROVIDING EARLY CERTIFICATION WIHEN LAYOFFS DUE TO IMPORTS ARE IMIMINENT

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