linked with the sales of a particular finished product as that of their counterparts making similar components within a highly vertically integrated firm. To be equitable, the statute should be amended to insure that the Department of Labor may certify all workers similarly unemployed by imports, irrespective of the corporate form of their employer.

G. LIBERALIZING JOB SEARCH AND RELOCATION CRITERIA

We have previously discussed the problems of State indifference or hostility to workers adjustment assistance. In addition, the statute and current DOL regulations must be liberalized if the job search and relocation benefits are intended to be anything more than a myth. Section 91.30 of the Code of Federal Regulations provides several highly questionable requirements which were not even a part of the decrepit Trade Expansion Act of 1962.

The new criteria provide that before a relocation allowance is granted, the State agency must determine whether a worker can dispose of his present residence and find suitable housing in the new location, whether the worker or a family member is ill, and whether a family member attending school can be transferred to a new school. These items are no business of the Federal Government. These provisions can only have been intended to prevent workers from qualifying or to discourage them from applying in the first place. The eligibility requirements for these programs must be liberalized.

Another defect in this area is that no worker can qualify retroactively for these benefits. The purpose of these benefits is to permit and encourage workers to migrate to better job markets. Workers interested in relocation often cannot wait for the DOL and State agencies. The State agencies may take several months before they render determinations on individual applications. Workers who may be interested in relocating, however, must wait until they are determined to be eligible before they search for and relocate to a new job. This operates as a disincentive. Workers would be inclined to use these programs as the opportunities arise if they knew that benefits could be paid retroactively. The restrictive criteria must be eliminated.

H. TAX RELIEF FOR WORKERS RECEIVING TRA

Trade readjustment assistance payments are not considered as taxable income. However, the present tax law makes it difficult and cumbersome for workers to get tax reimbursement where the retroactive TRA replaces taxable income.

Many UAW workers who receive retroactive TRA also received supplemental unemployment benefits from UAS-company supplemental unemployment benefit plans. Under the terms of those plans, the Federal TRA is considered the same as a State system benefit. This means that the SUB previously paid for periods when a worker receives TRA becomes an overpayment, and must be repaid to the SUB plan trust fund.

For tax purposes, the net effect is that taxable SUB income for which workers have already paid income tax is replaced by nontax

able TRA. However, the worker who pays back the SUB is unduly burdened when he or she attempts to get back the taxes overpaid on that SUB. We have been advised by the Internal Revenue Service that section 1341 of the Code and the "Claim of Right Doctrine" governs this question, and allows a worker to claim either a credit or deduction depending upon whether the amounts involved are over $3,000. If the amount is under $3,000. a worker can only take a deduction. This does not benefit anyone who takes a standard deduction. A worker cannot file either an amended return or a short form 1040A. In order to get the tax benefit, a worker must file a long form 1040 and itemize deductions.

This is both unfair and cumbersome. Workers faced with this problem are simply trying to recover taxes on income which they are obligated to repay. This is a matter of simple equity not some tax loophole abuse for the wealthy and privileged. Workers should be able to get this tax money overpayment returned in full without having to consult tax specialists or lawyers. The UAW will soon be presenting an amendment to the Internal Revenue Code to deal with this problem and to permit workers to file amended returns. We ask this subcommittee for support when it is considered by the House Ways and Means Committee.

Mr. VANIK. I have not seen any language on the tax code revision. If you have any suggested language, we should try to have that appended to your testimony or it might be submitted later.

Mr. WOODCOCK. We intend to do that later. It is a very real problem.

Mr. VANIK. Thank you very much.

I did not mean to raise that tax question. I thought you were still in the middle of my question.

Mr. WOODCOCK. You anticipated my conclusion.

Mr. VANIK. Mr. Woodcock, your testimony points out very correctly the training and worker adjustment assistance program is not working, and we are well aware of that. You make a very interesting suggestion on page 4 that community task forces should be set up to centralize and coordinate all aspects of adjustment assistance.

Could you elaborate on this idea, particularly how it might be administered with respect to trade impact as well as opposed to workers laid off for other reasons?

One of the main problems seems to be the lack of priority given trade impacted workers under the CETA program. How would you suggest that this operate?

Mr. WOODCOCK. This obviously relates to a much broader context than simply displacement because of import competition. This was done quite usefully in many communities that were totally disoriented after the stoppage of war production at the end of World War II. where the community readily offered itself in seeking a solution to what was a maximum disaster at that point.

It so happened the economy had a market revival that was very quick and unexpected, thankfully so; but we would think this has to be put in the greater context, also within the total notion of moving towards a full employment economy with a national economic planning system using that in the very sensible sense of the word.

Mr. VANIK. Mr. Steiger?

Mr. STEIGER. Mr. Woodcock, I am deeply grateful to you, as I was to Governor Thomson, for the very fact that you would be willing to appear and make your oral presentation. It is indicative of the very deep interest the UAW has in this field and the kind of leadership you have given.

There is another way to look at all of this from the perspective you have given us. Let me raise it with you, and let me let you shoot at me.

The criticism you make of the State employment service, the relationship between CETA, the training aspect, and the impact of import activity stems, it seems to me, not so much from the agencies or who is doing it as it does from the fact that we have different programs with different guidelines and different criteria.

One could argue, I think, that we ought to have a program in place, a manpower system that is sound enough to review problems that may arise as to whether there is lack of skill, training, or imports. And, therefore, looking at it from the standpoint of trying to play with the pieces that exist now, rather than talking about what one does to fit those pieces together more effectively than we do.

I have been bothered by the concept of an unemployment program for workers on imports as a separate kind of program. Why should you have a separate program just for that, rather than having developed our own basic unemployment compensation well enough so that it could respond in those kinds of cases?

How do you react to an analysis when one looks at it from that perspective?

Mr. WOODCOCK. Let me say first, sir, that the concept is that society is better off by getting these imports which may be cheaper, or whatever, and therefore reduces costs to the consumer, and therefore it is a general society benefit, and you proceed from that.

Why should this group of workers who are adversely affected by it as a small portion of the total society pay the full cost of the benefit to the total society, and from that flows the notion that they need some special treatment.

Having said that, let me say I agree with you in the broader concept, if we had, for example, a full employment economy, and then displacements by virtue of imports would be much more easily handled than in a society plagued by very high levels of unemployment, the highest levels outside of recession periods that we have had since the 1930's.

I think, too, the question of manpower placement and all the rest, would be much better handled if we had a truly national system, than varying systems at different standards and different qualifications, and so on and so forth.

Absent a total commitment to have a rational economic system, then we have to attack it in bits and pieces as the problems present themselves.

Mr. STEIGER. I met yesterday with some new employment security administrators who were here for a training session at the interstate conference. We got into a discussion of this very point. I raised with them the fact that there has been a substantial amount of criticism,

not just yours, but others, to the role of the State employment service in adjustment assistance.

They are very mindful of their role. They recognized that they have not done as well as they should. They thought that was as much a function of timing and trying to get the knowledge out to the field as it was any other single factor. The act passed, and all of a sudden this whole new program went into place. În Phil Sharp's district, as you indicate in your testimony on his problem, they frankly said, “We did not get up to snuff well enough and quickly enough, we did not get all that material, and we were not able to get it out.

The other part of the problem is much more fundamental. Namely, all of the work that is required to certify what has to be done to say this companys' layoffs resulted from imports and trying to get all of that together. They said we ought to be able to look at that. They are going to send me some suggestions on what we could do to improve it from their standpoint.

I will pursue that with the subcommittee.

I have also suggested to this subcommittee that, frankly, I am not sure we ought to have this program. The trade adjustment assistance for workers really ought to be in the Unemployment Compensation Subcommittee, where I think a better job could be done of putting it together. This would get me more toward what I would like to see, which is this meshing rather than the diverse parts that now exist. My hope is that, no matter what we do, we will not do it on our own, but in consultation and with very close cooperation with Jim Corman and Guy Vander Jagt and others to make sure we are doing the best job possible.

I am very, very grateful to you for being willing to give us your time by coming here.

Mr. WOODCOCK. We are critical of the State agencies, but they did have this new program piled on top of them when they had immense problems due to the depths of the recession of 1974–75. A good many citizens of your State, employees of American Motors, are happy with the TRA assistance they are getting since their subplans have effectively disappeared because of their poor place in the market. Mr. STEIGER. Yes, sir, I am very mindful of that.

Mr. VANIK. Mr. Frenzel.

Mr. FRENZEL. Thank you, Mr. Chairman.

Mr. Woodcock, thank you for your testimony. I think it is extremely helpful.

I want to thank you for your recent service to your country which you took on as an additional duty. I tell you we are all very grateful to you for that.

Although you have been critical of the State agencies and of the Department of Labor, I understand that you are not suggesting that we relocate that function, but rather to improve it, is that correct?

Mr. WOODCOCK. We are concerned about the massive passout to the States, the authority. If it is to be done, then we would like to see much better supervision in how it is handled.

Mr. FRENZEL. On the other hand, the community and industry assistance which is handled through the Department of Commerce has also been criticized, and there have been suggestions that that

authority might well be relocated. Have you thought about that, and would you be willing to make a recommendation?

Mr. WOODCOCK. From within Labor?

Mr. FRENZEL. No; from within the Department of Commerce. I would think we would want to leave the employee assistance in the Department of Labor, but we might want to transfer the authority that is now in the Department of Commerce elsewhere. I wonder if you have had any thoughts on that.

Mr. WOODCOCK. Could we submit a response in writing on that, sir? Mr. FRENZEL. Surely.

Thank you, Mr. Chairman.

Mr. VANIK. Mr. Woodcock, I had occasion very, very recently to raise some questions about the Canadian-American automobile parts agreement, and I have been concerned about the impact on American jobs in the production of automobile engines in a third country and then shipped into Canada and then brought in a vehicle under the Canadian-American automobile parts agreement.

How extensive is this business? Can you give me any idea as to what impact it is having on American production?

Mr. WOODCOCK. It has got a lot of visibility, sir, when Ford Motor Co. was bringing engines manufactured in Brazil, delivered for assembly into final vehicles in St. Thomas, Ontario, and bringing the completed vehicle under the auto pact without the payment of any tariff on that engine.

At the same time when, in Lima, Ohio, at the Ford Motor plant we had substantial numbers of people laid off when we had substantial numbers off of making that same engine or an engine very comparable in its specifications.

In terms of overall impact it is relatively minor, but that was a little difficult to explain to those several hundred workers in Ohio that its impact was limited

Mr. VANIK. Those were the smaller engines for the Mustangs? Mr. WOODCOCK. It was going into the Pinto.

Mr. VANIK. Do you have any idea of the numbers that come over annually? What would be the 1976 quantity? Do you have any way of knowing?

When you look at an automobile, you cannot determine where the component parts are made, but I would suppose that you have a pretty good idea.

Mr. WOODCOCK. First of all, on overall basis relative to volume of sales, total workers affected, it was never major except in the particular locality where it was impacted.

With regard to the specific engines, it has declined in the model

run.

Mr. VANIK. That is because the whole model run declined.

Mr. WOODCOCK. That is because of the relative decline in the sales of the Pinto, not because of change in company policy, and we pursued it very vigorously in our bargaining last fall.

Mr. VANIK. You have no idea how many engines or components or units come over that way?

Mr. WOODCOCK. We can get that.

Mr. VANIK. I would appreciate your providing us with an update on that. We have some major plants in Cleveland.

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